- Employees have low health literacy. A recent survey of workers found many have difficulties understanding health plan types, costs and terms.
- Health literacy and well-being are tied. A lack of understanding of health benefits can lead to physical and mental health challenges and diminished financial well-being.
- Employers can better educate workers. Offering personalized, easy-to-understand resources related to health benefits can increase health literacy, lead to more-efficient use of health plans and ultimately benefit workplaces.
Most Americans don’t understand their health benefits, and that’s a problem — and an opportunity — for organizations and their total rewards professionals. By better educating workers on benefit plan components, employers can improve employee health and strengthen the business.
Fewer than one-third of employees earned a “passing” grade in a health care literacy quiz offered through a recent Employee Benefit News survey — struggling to understand plan types, terms such as coinsurance, what is covered by their plans and how much services cost.
The lack of health literacy in the United States — another study placed it at only 12% — heavily bleeds into the workplace, said Karen Frost, vice president of health strategy at Alight.
“When people understand their benefits, and those benefits can help them focus on their total well-being, we clearly see that people are more present at work and they’re more productive,” she said.
Why Don’t Workers Understand Their Health Benefits?
Almost 40% of employees don’t know where to get information about picking the right health plan — and 44% regret a health care decision they made because they took bad advice, jumped too quickly into treatment, or didn’t check costs or find out if a provider was in-network, according to Alight’s 2023 International Workforce and Well-being Mindset Study.
Workers of any age who do not regularly use health and medical services may struggle to understand their benefits because of the complexity of the healthcare system, said Jennifer Benz, senior vice president at Segal Benz.
“When something happens [to your health], you really need to know what to do, and it is nearly impossible to gain expertise in the moment,” Benz said. “There are so many easy mistakes to make because we’re juggling so many things in our lives.”
Other factors may include living in a rural location or an area without strong public health programs, or having transferred from another country with a different health system. There is a connection between health disparities and health literacy, noted Casey Hauch, managing director of employee experience at WTW.
“Health literacy disproportionately affects individuals of lower socioeconomic status or minority groups,” she said. “There’s a lack of equity present, in that higher health literacy is relative to higher education and pay.”
The Costs of Low Health Literacy
Not understanding or effectively using health benefits can harm both physical and mental health, which are closely intertwined with financial well-being.
“People misunderstand what’s covered with preventive care,” Benz said. “So, they avoid health care because they’re worried about the cost, and that has very serious long-term health consequences.”
Regularly seeing a primary care physician can lead to 33% lower health care costs and a 19% lower likelihood of dying prematurely, according to Purchaser Business Group on Health, a nonprofit coalition representing nearly 40 private employers and public entities across the U.S.
How to Educate Employees
Effective health benefit education and support for employees is twofold, Frost said. It includes:
- A benefit portal that serves as a one-stop shop, offering around-the-clock digital resources personalized to individuals’ specific needs at that point.
- Access to a person who can answer questions and point to resources.
Providing bite-sized, easy-to-understand education throughout the year — rather than one large annual information dump at the time of open enrollment — is key, Benz added.
She said organizations should target effective benefit education to specific groups and needs, such as:
- Employees with chronic conditions
- Those early in their career or who are inexperienced in using health benefits
- Workers facing an acute or sudden health event, such as cancer or an injury
- Employees from other countries
- Parents or those wanting to become parents
- Workers navigating menopause
- LGBTQ+ employees
- Employees who are Black, indigenous and/or people of color (BIPOC)
- Employees living in rural areas with less access to health information and services
“Be inclusive in your communication,” Hauch said. “Know your audience, and make sure your message is relevant to them. If people don’t see themselves in your messaging, they’re not going to care.”
Keep in mind that although HR and total rewards professionals or managers are typically first in line to answer questions about health plans, they’re typically not benefit experts, Benz cautioned.
Employers should equip managers with the same health benefit information they give employees, but earlier — and they should have additional training about connecting employees with resources, Frost said.
Better Health Literacy Is Good for the Workplace
Health benefits play a key role in talent recruitment and retention: 53% of workers in WTW’s 2024 Global Benefits Attitudes Survey said their health plans were a top reason they choose to stay with their current employer. But satisfaction with benefits starts with understanding them, Hauch said.
Improving that understanding benefits the entire company, Frost noted.
“We want people to get the highest-quality care in the most cost-effective facility at exactly the right time,” she said. “If we do that, it’s a much better outcome for the person, and a good outcome for the person is a good outcome for the company.”
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