Most Workers Underestimate The Value Of Employer-Sponsored Benefits

Lack of employer communication about the cost of the benefits they provide to their employees means many workers fail to appreciate the value of these benefits, two recently published studies have suggested.

A MetLife survey of 2,445 adults on employee benefits trends found that 28% of full-time employees believe their companies spend less than $1,000 per employee annually on health insurance, and 49% believe their employers spend less than $2,000. In fact, MetLife researchers said, U.S. employers spend an average of $3,137 per employee per year for single coverage, and $7,289 for family coverage, according to figures released by the Kaiser Family Foundation and Health Research and Education Trust.

Divorced or separated survey participants, or those in domestic partnerships, were more likely to assess their employers' contributions realistically, with more than 40% of these groups estimating their companies' annual spending on medical insurance at $3,000 or more per employee, compared with 38% of all employees.

MetLife researchers speculated that failure to communicate may be partially to blame for the tendency among workers to underestimate benefit value. The survey indicated only 31% of employees give high marks to their companies' benefits communication programs, and just 36% give high marks to their employers' benefits packages.

Workers also spend relatively little time mulling their benefits choices, with 57% of full-time employees reporting that they spend 30 minutes or less making benefits decisions during open enrollment periods.

"Rising health care premiums are having an impact on many companies' bottom lines," said Beth Hirschhorn, chief marketing officer, MetLife. "Yet far too many employers are not taking the time to educate their employees on the value of their investment, causing employees to underestimate the worth of their individual and family benefits."

Hirschhorn noted that, among full-time employees highly satisfied with their companies' employee benefits, overall job satisfaction was nearly three times as high as it was among employees unhappy with their benefits package.

These findings were echoed by a study conducted by human resources consultancy Watson Wyatt, which concluded that companies with effective employee benefits communication strategies were also more likely to have satisfied employees.

According to Watson Wyatt, 22% of surveyed employees at companies that do a poor job communicating the value of their generous benefit programs were satisfied with their benefits packages, compared with 76% of employees at organizations considered effective in communicating the value of their less-generous benefits packages.

Watson Wyatt researchers also found that turnover rates for top-performing employees were higher at companies with low ratings for health benefits communication, than at firms pairing less costly benefits with more effective communication strategies.

"The results really drive home the fact that effective communication is vital for employers if they want to see returns on their health benefit investments and retain top talent, said Kathryn Yates, global director of communication consulting at Watson Wyatt. "Employers can spend huge sums of money on benefits, but if their employees aren't aware of the cost or don't appreciate the value of the benefits, they aren't going to see a return on their investment."