Industry studies from 2023 to 2025 reveal a common theme: employees struggle with complex benefits, jeopardizing their financial and personal well-being.
Meanwhile, employers face their own challenge, rising benefit costs. While a greater variety of complex solutions promise savings, they typically result in cost-shifting to employees and restricted access to care.
These tensions frequently result in both employers and employees defaulting to the suboptimal status quo, despite recognizing the essential role of benefits in attracting and retaining talent.
A closer look at the data reveals the solution lies not in increased complexity, but in simplifying benefits and enhancing understanding for both employers and employees. The result: lower costs, happier more engaged employees, improved outcomes, and sustainable cost trends.
IN THIS PIECE:
- The Benefits Satisfaction Gap
- Employers: Staggering Spend
- Employees: Staggering Struggle
- Solving the Benefits Catch-22
The Benefits Satisfaction Gap
A Bureau of Labor Statistics News Release confirmed what executives and employees already know: competitive benefits offerings are essential to attract and retain the best employees. In fact, benefits account for 30% of total compensation. Link to BLS news release
Independent surveys confirm this finding:
So, where's the gap?
With such strong alignment on the value of benefits, it would be natural to assume successful companies are already meeting their employee’s benefits needs. But the opposite is true:
With universal agreement on the value of benefits (and the hefty price tag), a 22-point gap in satisfaction should be a major area of focus for CPO’s, CFO’s and even CEO’s. The good news: The best solution is also the simplest.
Employers: Staggering Spend
From the employer's point of view, it’s easy to conclude they are providing great benefits.
For example, the average cost of healthcare benefits alone have soared to over $25K per family. With employers on average paying 75% of these costs, taking their contribution to over $20K per family. KFF Report
Adding even more burden to the employer, more than 60% of employers report that their benefit costs continued to increase this past year. Simply absorbing the cost increase is not a realistic solution leaving employers with a set of equally difficult choices:
The market has responded with a range of new solutions that promise cost saving to employers but do nothing to address underlying costs and employee challenges.
Employees: Staggering Struggle
The challenges employees face are even more dire, and often go unseen by employers. At first glance, things may look on track: multiple sources indicate that anywhere from 77% to 92% of employees report staying with their same benefits selection as the prior year. Savvi Financial - Blindfolded Benefits, AFLAC 2020 Workplace Benefits Trends, Flair HR - 165 Employee Benefits Statistics)
On the surface, it may appear that employees are satisfied with their plan selections but this is shortsighted:
Given the complexity and proliferation of benefit solutions (and lack of effective employee education), this confusion is understandable. Put simply: employees are struggling financially, physically, and emotionally.
Financial Indicators
Emotional & Physical Health Indicators
While this list is far from comprehensive, it demonstrates that employees are facing real financial, emotional, and physical struggles related to their employee benefits. Over time, these struggles drain employee energy, satisfaction, and — ultimately — productivity.
Solving the Benefits Catch-22
Conflicting priorities, complexity and proliferation of offerings, and the sheer scale of the problem can leave heads of benefits feeling they are in an impossible situation. The path to meeting both employee and employer needs requires a new approach:
- Change Your Perspective
Employee benefits are a strategic tool to support company growth — not a necessary evil. Companies are accustomed to long-term product roadmaps and go-to-market strategies that align with growth objectives. Why should employee benefits strategies be any different?
Nearly 40% of companies never request feedback from their employees on health benefits. But changing your perspective means considering benefits from both the employer and employee point of view. Source
- Expect more from your benefits advisor
Demand more from their benefits advisor. A recent survey found that 86% of companies say they are very satisfied or satisfied with their broker-client relationship Zywave 2024 Broker Services Survey.
When asked what criteria they use in selecting a broker the answers were overwhelmingly administrative or transactional rather than strategic.
A Strategic Benefits Advisor provides guidance beyond that of a traditional broker including:
- Broad market expertise of both new and traditional solutions including the pros and cons of each type of solutions
- Solutions that optimize value for both employees and employers
- 360 degree support in the design and implementation of your benefits program
- Employee education and engagement
- Offer simple, value-driven benefits
Complex plans result in employees defaulting to overly rich coverage that does not support their long term health and financial wellbeing. Poorly designed high deductible, narrow network or limited coverage plans result in employees avoiding care or limiting access.
Conversely, well-designed benefits can empower employees to prioritize their health. Comprehensive coverage, including preventive care and mental health services, can encourage early detection and intervention. Access to telehealth, digital health tools, and other care solutions can improve care convenience and member engagement.
- Employee Education and Engagement
Employees who understand their benefits have significantly higher satisfaction with their benefits (84%) than employees who don’t understand their benefits (59%). Source
Simpler employee benefits directly boost employee satisfaction, transforming a typically frustrating process into a positive one. By eliminating complexity, employers reduce the stress and confusion that employees often feel during open enrollment, leading to a more satisfying experience. This clarity empowers employees to make confident choices about their health and financial well-being, which minimizes the chance of future regret and fosters confidence with their decisions.
The key is to provide periodic foundational education for employees combined with real-time access to information when a specific need arises for an individual.
.png)
