Many businesses succeed or fail based on their ability to master a "Goldilocks" ingredient: something that is important, but should not be overdone or underdone. With voluntary benefits, "choice" is that ingredient.
Choice is the foundation that makes voluntary coverages successful. Allowing employees the ability to tailor their benefit package to their personal circumstances and needs is the fuel that powers the voluntary business. Rather than accept or reject predetermined benefits from their employers, people today want those benefits to be relevant and tailored, and they're willing to pay for them. Eighty-nine percent of employees feel that it is important that their package offer them choices. Measured another way, only forty-five percent of employees are unwilling to pay more for their benefits in order to have these types of choices.
Employees value choice, and they're willing to pay more for choice, but what do they value in the range of choices? What are they looking for? Ninety percent of employees say that the ability to match their benefit choices to their individual needs is an overall important plan characteristic. Employees want choices that are relevant to their personal circumstances.
On the other hand, too much choice is dangerous. As we have reported in the past, as the number of choices increase, response rates are depressed and more and more people opt for the default or automatic response. Greater choice can breed greater uncertainty and a perceived increase in the likelihood of making a bad decision. Support and affirmation are key ingredients in a high-choice environment.
So, like Goldilocks, we need to balance having the porridge too hot and too cold. We need to be devising offerings that consist of a limited number of simple, flexible options. Employees need to be able to understand the range of options, and then tailor their selection to their personal situation. And we need to provide support and affirmation (advice) as needed. If we can find that balancing point, our benefits porridge will be "just right."
Gil Lowerre can be reached at (860) 676-9633 or glowerre@eastbridge.com.
Bonnie Brazzell can be reached at (803) 738-1236 or bbrazzell@eastbridge.com.
