This year, employees' benefits decisions are financial

As the year comes to a close, everyone is feeling the stress of selecting the best benefits. But too often, we get so focused on the minutiae of what's covered and what isn't that we miss the bigger picture: our financial health.

Over 60% of personal bankruptcies are tied to medical issues, giving benefits decisions the potential to become a source of major financial stress for employees. And as the cost of healthcare benefits and increased cost sharing measures show no signs of slowing, the financial burden of healthcare coverage on employees is surging. In turn, employers deal with increased absenteeism, lower productivity, and in some cases, workplace safety concerns as their workforce is occupied with financial stress and its well-documented consequences.

The best option for our financial health is not always the lowest premium or out-of-pocket maximum. With healthcare benefits increasingly essential to financial health, employees need to consider the two in tandem.

The New Year opportunity
With this top of mind, it's clear nobody should make decisions about their benefits without considering their financial health. Employees often choose the wrong plans by prioritizing options that seem affordable upfront, but end up exposing themselves to financial vulnerability during health emergencies due to high deductibles, unexpected out-of-network costs and poor coverage options. In extreme cases, it can lead to the accumulation of medical debt. The issue is widespread; 53% of employees regret their health plan choice, fueling a financial health crisis with widespread impacts.

Employers — and benefits leaders in particular — can play a key role in stopping this misselection before it happens. To preempt this financial stress, they need to prioritize benefits education and offer personalized financial guidance to ensure employees are supported in making informed choices about their health coverage and benefits usage with their financial health in mind.

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Benefits education is the first step
Each employee's financial life is closely tied to the benefits provided by their employer, from their salary to retirement options to their health coverage. Yet 86% of employees across all age groups are confused about their benefits, with the true value of these offerings often going untapped as employees struggle to navigate and fully understand their total rewards. 

That lack of understanding has major costs to both employees and their employers. Over 60% of adults are concerned about being able to afford unexpected medical bills for themselves and their families, and roughly half report being unable to pay an unexpected bill of $500 — issues that only increase as a result of uninformed health plan choices. This stress trickles down to their mental health and job performance, with 42% of employees indicating that financial stress impacts their presenteeism and ability to focus on work and 62% reporting an impact on their mental health.

End-of-year benefits selection offers a prime opportunity to address this knowledge gap. Employee-specific benefits education sets each employee up with the information they need to make the best possible decisions for themselves and their families, with an understanding of how their choices interact with one another. After all, the more employees understand their offerings, the better they understand both their financial position and the impacts of their available options. 

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Beyond education, financial guidance is key
When it comes to benefits, informed choices save money and stress down the road. While comprehensive benefits education should be the baseline, different employees ultimately have different needs, which often require personalized guidance to meet. In addition to education, benefits leaders should facilitate personalized financial guidance to support employees — both during open enrollment and throughout the year — in making the best choices for their unique circumstances.

Take one example in Cam, a 55-year-old working at a leading restaurant technology company. He sought guidance on whether he should shift from his current healthcare plan, a high deductible healthcare plan (HDHP) offered by his employer, for which he expected to hit the annual deductible. With their higher deductibles, HDHPs aren't the best solution for everyone. But in this case, a one-on-one meeting with a certified financial planner led Cam to determine that he was on the best plan for him and his financial health. 

Benefits, particularly healthcare coverage, are rarely one size fits all, and personalized financial guidance can provide employees with the financial confidence they need to feel secure in their decisions about their benefits and everything else.

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Beyond open enrollment
After open enrollment, it is a critical time to check in with employees who need support as they try to make the best decisions for themselves and their families. They're stressed, confused, and they know their choices during this period will have huge implications on their health, both physical and financial, for years to come. Making the correct choice can help them work towards financial security.

The best way to proactively protect employees from financial stress and all its long-term negative consequences is to provide benefits education and personalized financial guidance that set them up for success. This path forward can lead to better informed benefits choices, less financial stress and happier, healthier, more productive workforces.