How Can We Improve Employee Understanding of Benefits?

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Author

Kimberly A. Landry
Associate Research Director, Workplace Benefits Research
LIMRA and LOMA

December 2025

Open enrollment season is upon us, and many employees are being presented with new or different benefit options than they’ve had in the past. To determine which benefits are right for them, workers need a clear understanding of the purpose and features of those offerings, as well as how new options might align with other elements of their benefit plans. Unfortunately, recent data from LIMRA’s 2025 BEAT study suggest that the current state of employees’ benefit knowledge leaves much to be desired.

Confusion Reigns

Only 57 percent of employees feel they understand their insurance benefits well, while 58 percent say the same about retirement benefits. The picture is even worse for younger workers — less than half of Gen Z employees feel they understand their benefits, perhaps because they have less experience with these offerings. Other demographic groups that report lower knowledge of benefits include women, part-time workers, and those with lower job levels, lower incomes, or less education.

In fact, there’s reason to believe employees understand benefits even less than they say. When quizzed on basic benefit features and details, even highly engaged employees tend to score poorly.

Understanding also varies considerably by product, with employees reporting the most knowledge of dental and medical plans — benefits they are likely to use with some regularity. In contrast, they are least confident in their understanding of disability and supplemental health plans — all low-utilization products that employees may never even hear about outside of open enrollment communications.

Poor Understanding

When employees lack an adequate understanding of their benefits, it presents a variety of challenges for employers and benefit providers. First, workers who do not understand a benefit are less likely to enroll, leading to low participation rates that might impact the long-term success of the plan. Those with poor understanding are also less willing to spend money on benefits — about $100 less per month, on average — compared to workers with a very high understanding.

In addition, benefits are an attraction and retention tool for employers, but workers cannot fully appreciate the value of their benefit packages if they don’t understand their offerings. As a result, companies may not be getting the full return on investment for the benefits they make available.

Moreover, employees who don’t understand their benefits are less likely to know how to use them properly. They may file claims for scenarios that are not actually covered by their plans, such as misunderstanding what counts as a “critical illness.” These inappropriate claims will, of course, be denied, resulting in poor customer experience. Alternatively, employees might neglect to file valid claims when they should, preventing them from receiving the full value from their benefits.

Improving Benefits Communication

Clearly, benefits communications are falling short, and employees tell us as much. Only 53 percent of workers say their employer conveys benefits information to them very or extremely well, with younger employees giving the lowest ratings.

So, how can we improve communication? Research points to several promising strategies for enhancing employees’ understanding of their benefits:

Utilize multiple channels. The more different types of educational resources employees have available, the better they understand their benefits (Figure 1). Employees all have unique learning styles — not everyone uses email, not everyone will watch a video, and so on. Multichannel communication increases the odds that workers will receive benefits information through at least one channel they’re actually willing to engage with.

Figure 1 : Percent of Employees Who Feel They Understand Their Insurance Benefits Well, by Number of Educational Resources Available

Represents the percentage of employees who feel they understand their insurance benefits very or extremely well. Based on employees who are offered insurance benefits and have had an open enrollment period within the past two years.

Source: 2025 BEAT Study: Benefits and Employee Attitude Tracker, LIMRA.

Summarize the value of benefits. Employees who receive total compensation statements — documents that summarize the total value of a worker’s compensation and benefits package — report a better understanding of their insurance and retirement plans. Given that wages and salary account for only about 70 percent of total compensation, these summaries can help workers recognize the full value of the investment their employer is making in them.

Provide personalized guidance. When considering the educational resources they used during open enrollment, workers say the most helpful opportunities were the ones that allowed them to talk to someone or get advice. The most helpful resource was one-on-one in-person benefits meetings — while group meetings, interactive recommendation tools, and phone consultations all ranked within the top five. Although noninteractive digital communications also provide value, many workers are looking for guidance, and it is essential to give them the opportunity to ask questions and obtain personalized advice when they need it.

Communicate throughout the year. Employees who receive benefits information periodically throughout the year, rather than only during open enrollment, report a better understanding of their benefits. In addition, 73 percent of workers prefer to receive benefits communications either a few times or frequently throughout the year — while only 46 percent currently do, suggesting a need for employers to increase the frequency of communication. Time and resource limitations often prevent human resources teams from communicating about benefits more often, so carriers may be able to help by providing additional educational tools and support.

Conclusion

Poor employee understanding has been a persistent, ongoing challenge for the workplace benefits industry, particularly when it comes to nonmedical and voluntary products. Improving the situation will require a multipronged approach and collaboration from numerous stakeholders, including carriers, brokers, benefits technology providers, and employers.

The potential payoff is big — employees who understand their benefits well are dramatically more likely to be satisfied with their offerings: 18 percent satisfaction among workers who do not understand their insurance benefits at all versus 73 percent satisfaction among those who understand them extremely well. By improving benefits education, the workplace benefits industry can raise overall satisfaction and help both employers and workers gain the maximum value from their benefit packages.

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