With the open enrollment season fast upon us and benefits managers making sure everything goes off without a hitch, a lack of benefits understanding could be hurting employees in the long run.

Although 80% percent of U.S. workers believe they understand their benefits “very well,” only 49% demonstrate they actually do, according to Guardian’s new study, Closing the Gap. Responding to a 10-question quiz on benefits coverage and terminology, individuals received an averaged C-level score of 72.

Generalities — such as knowing what a deductible is and knowing that medical insurance does not cover all costs related with long-term disability — were largely well understood by most employees. However, fewer seem to have a firm grasp on supplemental health benefits, such as critical illness and hospital indemnity insurance.

“Employers should be concerned about workers’ overconfidence in their benefits knowledge for several reasons,” says Guardian’s Gene Lanzoni, assistant vice president of thought leadership, group and worksite markets. “Not taking advantage of important insurance and retirement benefits can leave employees and their families at financial risk -- especially those who have limited coverage/savings outside the workplace.”

It isn’t just one group of employees that is struggling with understanding the complexities of benefits, the study finds.

While one in five working Americans received an “F” grade:

  • One in 10 early boomers received an “F” grade.
  • One in four millennials received an “F” grade.
  • One in four employees says that making benefit selections is more of a guessing game than an educated decision.

To help combat these challenges, Lanzoni suggests collecting feedback. It’s “an underutilized best practice,” he notes.
“Find out from employees of different generations/life stages what works and what doesn’t with regard to existing benefits offerings, the messaging and the channels used to engage them,” he says, adding that personalization of benefits communication and decision support tools/recommendations is a slowly emerging best practice.

A positive enrollment experience, Lanzoni says, also can help engage and strengthen an employee’s benefits understanding.

Workers have three suggestions to help with the timing of enrollment, Lanzoni says:

  • Provide advance information/reminders about noteworthy changes and the timing of the upcoming enrollment period.
  • Allow at least two weeks for the enrollment period.
  • Do off-cycle enrollment when introducing new benefits – especially more complex products such as permanent life insurance, individual disability insurance or supplemental health insurance (e.g. accident, hospital indemnity, cancer, critical illness).

“Today, working Americans want greater access to insurance benefits via the workplace,” says Dave Mahder, vice president and chief marketing officer of group and worksite markets. “But more choice requires more effective benefits communication and decision-support tools that meet the needs of increasingly diverse groups.
An effective benefits enrollment experience adds significant value for and employers, Mahder adds. “It is critical for all employees, notably millennials, to fully grasp how benefits like medical, supplemental health and disability insurance can work together to provide the financial protection they need.”

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