Concepts covered in the book, filtered through the lens of employee benefit enrollment decisions, include:

Libertarian paternalism – this is the guiding principle of using nudges. It is the authors' somewhat awkward way of saying that behavioral tricks should be used to help people make good decisions that benefit themselves and their families, as opposed to encouraging purchasing decisions that may be better for the seller than the buyer.
Choice architecture – the positioning of choices organizing to help guide employees through enrollment decision-making. An example is positioning HSA options and supplemental medical products in a benefit administration system so they follow the employer's core medical election, which keeps the employee in a mindset of thinking of protection related to health-related losses–and the gaps in core medical coverage.
Behavioral biases – these are biases employees may bring to the decision process. For example, many employees have a bias towards thinking "it can't happen to me" when it comes to health-related risks. As a result, younger employees might be biased against disability income protection or critical illness coverage. the use of nudges in this context might include personal stories to make it relatable to the employee.
Sludge – complex or needless steps in a process which represent barriers to easy enrollment processes. The classic example of sludge in the enrollment process is the complicated forms that may pop up when evidence of insurability is required for a voluntary purchase (Remember, a recent survey found that the open enrollment process was as painful to employees as paying income tax).

Let's consider some of these principles in light of supplemental medical products: critical illness insurance, accident insurance and hospital indemnity insurance. This trio of benefits serves as a suite of options that can enhance the benefits paid by the employer's medical plan. Each product answers a different facet of need. When enrolling online, it is beneficial for the employee to see that these products are designed to fill gaps in the protection provided by their core medical plan. In fact, allowing a single election to purchase all three at once eliminates sludge. And offering a single election can be managed on many benefit administration systems.

Instant Insights /

Nudging employees into better enrollment choices

More From HR Executive

Related Stories

Recommended For You