Many employees are currently feeling financially strained because of the impacts of inflation. The cost of everything has gone up in their lives — from the price of a chicken breast to a gallon of gas to healthcare. As Open Enrollment draws near and employees are poised to make their annual selections, we’re starting to see the impact inflation will have on the choices employees make in regards to their benefits.
Employees are feeling the squeeze.
According to The Hartford’s Future of Benefits Pulse Survey, 40% of U.S. workers reported that they will cut back on the Benefits they select during 2023’s Open Enrollment because of inflation. People are really feeling the squeeze on their finances — a lack of pay increases is made even worse by inflation — and as a result, they may make some tough choices to scale back when it comes to their Benefits selections. Without relief in the form of salary increases or help in increased employer contributions, many workers are expected to cut back on their benefits.
The perfect storm.
As an employer, the impact of inflation on their employees’ finances may make Open Enrollment more challenging than usual. Inflation has placed Employee Benefits at the forefront of many employers’ attraction and retention strategies. Employers have worked hard to put together creative offerings that are appealing. However, the combination of employers trying to ramp up Benefit offerings because they’re not able to offer pay increases that keep pace with inflation and employees not having as much spending power for said Benefits is creating the perfect storm.
What can employers do?
It’s important that going into Open Enrollment, employers take steps to help their employees better understand their Benefits options so they can make more informed decisions. This can help employees better protect themselves and their families in the upcoming year. Employers can assist employees this open enrollment season by doing the following:
- Use multiple communication channels.
- Employ clear language that features personalized messaging. Don’t just throw bullet points at them and expect them to absorb everything. Demonstrate how the insurance products relate to their lifestyle, financial security, and overall wellness.
- Highlight the services that come with coverage. Employees often genuinely want to know that they’re choosing the plan that will benefit them the most. Sometimes, even when they choose the right plan, they don’t know how to optimize it. Communicate how they’re actually being covered and educate them on how they can best optimize these benefits.
- Help employees look into the future. Finances may be tough right now and there are certain Benefits that they don’t absolutely need in the moment. Employers can help clearly communicate that cutting back on Benefits can actually place them in more financial harm.
- Use creative storytelling. A lot of Benefits details can go over the majority of peoples’ heads. Create clear examples of what these Benefits might actually look like in real world situations that are relatable and understandable.
- Listen to your employees year round. If your employees have specific feedback, take the time to listen. Try and understand what their pain points are so you can support them and retain your best team members.
Why clear communication matters.
Employers have the opportunity to simplify and personalize their open enrollment this year. This will help employees determine how best to allocate their potentially limited resources strained by inflation.
Let’s take the Health FSA Limit Increase for 2023 as an example. On Oct. 18, 2022, the IRS announced various inflation-adjusted tax limits for 2023, including the limit on employees’ salary reduction contributions to health flexible spending accounts (FSAs) offered under cafeteria plans. Many employees may not fully understand what this will mean for them. Increasing the FSA limit by 7% is meant to alleviate some financial concerns. In short: this increase can be helpful to workers. But without clear communication, many employees may overlook the details of this Benefit entirely.
By communicating effectively and providing employees with Benefits information through multiple communication channels, employers can help them optimize their resources and make the best benefits selections for themselves and their families during this period of financial difficulty.
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If you need help with your Open Enrollment, let’s talk. Email us at marketing@corpstrat.com