Don’t underestimate importance of non-medical benefits

Commentary: Employee optimism is on the rise in America, and the numbers back it up. This month, Lincoln Financial Group released findings from its Special Report: Measuring Optimism, Outlook and Direction (M.O.O.D.) of America on Employee Benefits, a study focusing on non-medical employee benefits and the impact these products have on the financial and health care concerns of workers across the country.

The study finds that 88% of Americans feel optimistic, and 75% feel in control of their lives. Despite this positive uptick, less than one-in-five Americans feel secure about their financial future, and only 18% feel confident they could cover their current expenses in the event they suffer a major injury or illness. In fact, respondents reported that when faced with a serious illness or injury, they would be most likely to cover out-of-pocket expenses through their savings or checking account,  by using a credit card, and alarmingly, by dipping into their retirement savings, or 401(k) account.

Health care is a significant source of concern among today’s workers. While 86% of all employees surveyed are confident they can afford their health care today, this number goes down to 74% when asked about their future confidence in affording health care costs. In addition, employees are twice as likely to say that health care costs will make it harder for them to retire when they want, and 40% believe that health care costs will affect their ability to retire in a negative way.

Fortunately, data suggest a strong correlation between an employee’s overall sense of confidence in the future, and the benefits they participate in at work – particularly non-medical benefits like life insurance, accident insurance, critical illness insurance, vision and dental insurance and disability insurance. From an employee’s standpoint, a comprehensive benefits package that includes both medical and non-medical benefits can influence their decision to work for or stay with a particular employer, and even their decision to retire. This underscores the importance of offering these benefits as part of a comprehensive benefits program.

Three tips to enhance a benefits offering

In general, non-medical benefits provide a low touch point environment for employees and are often overlooked as part of an employer’s overall benefits offering, as many participants will have few interactions with these benefits over their lifetime. A low understanding of these benefits can be a barrier to enrollment, presenting an opportunity for benefit providers to educate employees about the importance and value of these products. As employers look to optimize their benefits package, they stand to gain by understanding how non-medical benefits can impact an employee’s sense of optimism and ultimately how these products can enhance their current offering.

1. Boost employee confidence through critical illness and accident insurance. Research supports the sentiment that participation in non-medical benefits can help stem fears regarding overall health concerns and associated health care costs. Lincoln’s study shows that critical illness and accident insurance enrollees feel significantly more secure about their financial future and in control of their lives compared to non-enrollees, and also report higher levels of optimism.  However, the data show that employees know very little about these offerings, and could benefit from education surrounding how they work and what benefits they can provide employees.

2. Provide education, on employee terms. Nearly 95% of those surveyed agree that they are more likely to enroll in benefits they feel more familiar with and educated about. An employer’s human resource department is cited as the top source of advice for information about non-medical benefits, and employees are also more likely to utilize their benefit provider’s website and materials provided by HR when considering non-medical benefits. Providing employees with a simple enrollment process that makes it easy to understand the products available to them, as well as access to educational materials throughout the year and an adviser they can speak with about their choices,  are some of the best ways today’s employers can help improve employee engagement in non-medical benefits.

3. Offer benefits that attract talent. While a competitive salary never hurts, today’s employees are looking at the bigger picture when considering a new job opportunity or deciding whether to stay with a current employer. A robust benefits package that includes access to and education surrounding non-medical benefits is one way today’s employers can attract and retain talent within their organization. And while all benefits are important, Lincoln’s research shows that dental insurance is the most important non-medical benefit to employees, and its availability in a comprehensive benefits package is most likely to influence a career decision. Disability and life insurance are ranked as the top benefits among African Americans. Knowing your workforce and structuring a plan that will meet their diverse needs and preferences is a great way to find success in a benefits program.

Today’s benefits have the ability to influence employees’ major career and life decisions, like retirement. Because of this, the importance of providing workers with a comprehensive benefits package that offers medical and non-medical benefits cannot be understated. After all, these benefits have the ability to bridge the gap between today’s financial confidence and tomorrow’s concern.

Eric Reisenwitz is senior vice president, head of group protection operations and product, with Lincoln Financial Group.