Five Common Mistakes Employees Make in Benefits Planning

March 17, 2016

I’m sure you’ve heard the phrase “start off on the right foot.” It’s a guideline that can be applied to everything in life, from starting a new career to getting married. But a lot of times, we make initial mistakes that lead to others – we’re not only on the wrong foot; we’re wearing the wrong shoes.

You probably see this with employees in their benefits plans: They are using their benefits wrong from the get go. Instead of helping them reach financial milestones, like retirement or to pay for costly health care expenses, benefits end up costing employees more or become lost opportunities.

As workplace financial educators, we often see the mistakes employees make with their benefits after it’s too late. Mistakes are common because employees are either unaware of or misunderstand their benefits. Here are the five most common mistakes we see.

1. Going for the lowest premiums. Many employees think low-premium health care plans are best because they see an immediate savings. But, in reality, these plans can end up costing employees more later on if they have a major health issue and out-of-pocket expenses cost more.

2. Setting it and forgetting it. Auto-enrollment and auto-escalation in company-sponsored retirement plans are valuable features to both the company and their employees, but they often give employees the idea that everything in their plan is on autopilot; they forget to manage their own increases and other options.

3. Using target date funds with other investment options. Employees often misinterpret their allocation because they use target date funds as one investment option in their portfolio. But target date funds should be used alone or not at all. In this recent video, Target Date Fund Tips on Forbes.com, our planner Erik Carter shares tips on how to use them properly.

4. Buying and selling at wrong times. Employees who are actively managing their investments are often trying to time the market but end up losing value because they are buying at high points, rather than low ones. As much as we would like to “buy low,” active trading is a common mistake that often leaves employees short of retirement goals.

5. Unaware of the benefits they have. Probably one of the most detrimental mistakes employees make about their benefits is not knowing what they have. Many companies now have preventative health and financial wellness programs that offer incentives, such as tuition reimbursement and life insurance, which is often less expensive and easier to qualify for through an employer than individually.

Benefits, in the scheme of everyday life, can help employees not only meet milestones and pay expenses but also build wealth. If you’ve seen mistakes that cost employees, share them with us. As plan providers, you can educate them on common mistakes, so they can maximize their benefits. If you would like a worksheet you can share with your clients and their employees, e-mail us at [email protected].

 

“Bright Spots” in Benefits Communication and Education

March 17, 2016

We’ve all heard that we learn more from our failures than our successes.

 

But is that really true?  Recent research demonstrates the opposite to be true—that there is actually a tremendous amount we can learn from our success.  And, further, that leveraging our successes can create major, systemic change and transform cultures within organizations, often in relatively short amounts of time.  In their best-selling book, Switch, Chip and Dan Health call these successes “bright spots” and draw upon large scale research studies to show the impact of studying and replicating success.

We’ve seen the same thing from a benefits communication and education perspective:  Most employers have experienced major successes in their benefits communication.  Maybe not consistently, but if they go back over the last few years they can identify campaigns that really engaged employees, significantly increased  participation in benefit programs, and really helped employees better manage their benefits.  In some cases, the campaigns may have been so successful they took on a life of their own—becoming viral and even institutionalizing themselves into a culture as an annual event or contest.

 

When we work with employers, we recommend they examine their best campaigns and initiatives—starting with benefits communication and planning but expanding into overall HR initiatives to determine what the successful programs have in common.  In every case where our clients have gone through this exercise, they’ve been able to identify common themes.  In some environments, a sense of community is extremely important.  Therefore, creating a forum where employees actively participate in the dialogue and interact with each other is vitally important.  For others, it’s about target marketing—getting the right groups the right information in the right way at the right time so the communication has a highly personal feel.  In other cases, it’s about repetition and making it part of day to day communications and ultimately the culture of an employer group—or even making it part of employee identity.  Of course there are always those environments that are all about fun—where employees work incredibly hard and can become burned out and immune to communications because they simply don’t have the energy or enthusiasm to look at one more thing.  In these environments, it’s about creating special occasions and events that are fun and allow employees to get their minds completely off work and focused for a moment on themselves and what they need to do to maximize the benefits they have in order to achieve their most important life goals.

 

At the end of the day, every company is different, but you can almost always find a pattern in your success, and then use these patterns as your roadmap in developing new campaigns that will resonate with your employees.  Over time, you’ll end up developing a brand and culture  associated with your benefits communications that differentiates your company as an employer of choice and creates a more cohesive (and ideally a more fun) working environment.