Why Employees Don't Understand Their Benefits...And How Employers Can Fix It

For many mid-sized employers, one of the most overlooked challenges in their benefits strategy is also one of the most costly: employees simply don’t understand their benefits.  Studies consistently show that fewer than 40% of employees feel confident selecting or using their health plan.  For smaller and mid-sized organizations where every dollar of premium matters, benefits confusion can directly translate into higher claims, lower engagement, and diminished ROI.

The root problem is not a lack of benefits options, but a lack of clarity.  Employees are overwhelmed by insurance jargon, complex plan structures, and enrollment materials that feel more like legal documents than decision-making tools.  As a result, many default to the same plan every year without evaluating alternatives that might save them (and the company) money.

The path forward starts with implication and education.  Mid-sized employers can make a significant impact by redesigning communication around how people actually learn.  This includes using plain-language explanations, visual comparisons, and short videos that break down key concepts like deductibles, HSAs, out-of-pocket maximums, and provider networks.  Digital decision-support tools can help employees model costs in real time, so they can see the financial impact of their choices…not just read about it.

Equally important is year-round communication.  Benefits literacy shouldn’t be a once-a-year event.  Quarterly micro-topics, such as preventive care reminders, urgent care vs. ER guidance, and HSA contributions strategies, keep employees engaged and avoid costly misuse of the plan.

Finally, personalized guidance can make a measurable difference.  Offering short “benefits coaching sessions" during open enrollment or making HR and brokers available for talk-throughs helps employees feel supported, not overwhelmed.

When employees understand their benefits, they make smarter healthcare decisions, help control claim costs, and feel more valued.  For mid-sized employers, improving benefits literacy is one of the most effective, and low-cost ways to strengthen retention, culture, and financial performance.

My Benefit Advisor (MBA) guides employers of all sizes through planning, communicating, and managing a successful employee benefits program. We are ready to help you find the solution that fits your needs, from group insurance to individual coverage. For more information about MBA, contact us.