401k Auto-Enrollment Practices Can Reduce Employee Stress During Open Enrollment Season
401k auto-enrollment has worked well in the retirement plan industry to help boost employee participation and overall savings rates. 401k auto-enrollment practices might also be a useful tactic for other workplace benefits.
The benefits open enrollment season, from October through December, is a high-anxiety time for employees. According to an Unum poll cited in a recent HR Dive article, signing up for benefits causes workers to feel stressed (21%), confused (22%), and anxious (20%). Some of that stress, confusion, and anxiety might be self-fulfilling, however, since employees normally spend 30 minutes or less actually reading open enrollment materials. Such apathetic behavior drastically limits an employee’s understanding of the company benefits being offered. This is where the 401k auto-enrollment practices could be introduced in the interest of improving overall benefits outcomes.
Employee benefits provider Unum is a proponent of translating the 401k auto-enrollment practices into a company’s entire benefits package. This would help simplify and de-stress the annual open enrollment period. Unum believes that enrolling employees in beneficial coverage, such as disability insurance while allowing them to opt out is the best way to help employees maximize their benefits and protect against unforeseen catastrophes while reducing employee stress and anxiety.
This strategy dovetails nicely with workers’ sentiment about disability coverage. Consider the statistics of what occurs with that benefit alone. Just 26% sign up for disability coverage during open enrollment, however, 88% of Americans believe their employers should offer disability insurance to protect their finances in the event that they can’t earn a paycheck due to illness or injury. Just over half, 56%, even say they would pay the full premium for disability coverage. So, while employees desire disability protection, for whatever reason statistics demonstrate that employees are reluctant to self-enroll. This mirrors the exact reason 401k auto-enrollment practices were first implemented. Using 401k auto-enrollment practices in benefits like disability insurance with an opt-out option could help to mitigate this high-risk disconnect.
Given that employees spend very little time actually reviewing open enrollment materials, understandably, they don’t have a good handle on the benefits their employers offer. This contributes to employee stress and adds to employee anxiety. A 2016 Guardian Insurance study, again cited by HR Dive, found that while 80% of employees claimed to fully comprehend their benefits, just 49% actually demonstrated understanding when their knowledge was tested.
Employers can help ease workers’ anxiety and boost their benefits savvy by encouraging in-person interactions such as town hall meetings, small group sessions with benefits specialists, and one-on-one meetings with HR staff. Taking a page from the 401k auto-enrollment practices, employers should also nudge employees to use the company intranet and benefits providers’ websites to boost their understanding of the benefits available to them. In addition, employers should tap into technology to give employees 24/7 access to their benefits and allow them to receive information based on their preferences. Text message, phone, email, telemedicine, or social media are among the technology-driven tools that employees can use to receive benefits information.
As open enrollment season kicks into high gear, employers should keep in mind that it’s a stressful time for employees. Providing assistance where and when possible is key. However, leveraging technology and implementing a feature which resembles 401k auto-enrollment provision can help mitigate anxiety and confusion, resulting in a happier, smoother benefits enrollment period for both employers and employees.
Latest posts by Robyn Kurdek (see all)
- Managed Account Services Require Careful Consideration - November 18, 2018
- Happiness in Retirement is About More than Money - November 13, 2018
- Offering an Effective Retirement Plan Starts with Education on Tools and Resources - November 11, 2018