Employers spend thousands of dollars per employee each year on employee benefits. Health coverage, employer contributions, tax-advantaged accounts, reimbursement arrangements, and other programs can represent a significant investment in an employee’s overall compensation.

But there is often a disconnect.

Employees don’t always see what their employer is spending, understand the financial value of the benefits being offered, or recognize how those benefits can help them personally.

As a result, employers can invest heavily in a benefits package while much of its value is lost on the very employees it was designed to benefit.

Putting the “benefit” back in employee benefits starts with helping employees understand what’s actually in it for them.

Employees Don’t Think About Benefits Like HR Does

HR professionals naturally think about plan design, compliance requirements, enrollment deadlines, eligibility, and administration.

Employees tend to have a much simpler question:

“How does this help me?”

That’s the question benefits communication needs to answer.

When communication focuses primarily on plan mechanics, employees may never make the connection between a benefit and its impact on their own finances.

Consider benefits such as:

These programs don’t all work the same way, but each can provide meaningful financial value when structured and used appropriately.

The challenge is making sure employees understand that value.

Speak in Dollars, Not Just Benefits

Employees immediately understand a pay increase because they can see what it means to them financially.

Benefits aren’t always as obvious.

For example, pre-tax contributions to eligible benefits such as an HSA or FSA can reduce an employee’s taxable income. Depending on the benefit and the employee’s circumstances, that can mean paying less in federal income tax, Social Security and Medicare taxes, and potentially state income taxes.

Employer contributions can provide additional value. An employer contribution to an HSA gives employees additional dollars for eligible healthcare expenses. An ICHRA or QSEHRA can provide employer-funded reimbursement for eligible individual health insurance premiums and other qualified expenses.

Those are different forms of financial value, but employees may overlook all of them if benefits are communicated only as plan features.

Instead of simply saying:

“Our benefits package includes an HSA.”

Help employees understand what that means:

“An HSA allows you to set aside money for eligible healthcare expenses on a tax-advantaged basis, and unused funds remain in your account from year to year.”

The goal isn’t to turn employees into benefits experts.

It’s to help them understand why the benefit matters to them.

Benefits Employees can Understand are Benefits Employees can Value

A benefit employees don’t understand can easily become a benefit they don’t use, appreciate, or even consider part of their compensation.

Effective benefits education should help employees answer practical questions:

  • How could this benefit save me money?
  • Is my employer contributing toward it?
  • How does it affect my paycheck?
  • What expenses can I use it for?
  • What happens to unused funds?
  • How does this fit into my healthcare or financial decisions?

Real-world examples can often communicate more than pages of technical plan information.

Instead of leading with rules and terminology, start with the employee’s situation and then explain how the benefit may help.

Make the Benefit Personal

Not every employee values the same benefit for the same reason.

A new parent may immediately recognize the value of a Dependent Care FSA.

Someone enrolled in an HSA-eligible health plan may value the ability to use an HSA for current healthcare expenses while also building savings for the future.

An employee receiving an ICHRA may focus on how the employer’s contribution helps offset the cost of individual health insurance.

Someone approaching retirement may be especially interested in the long-term value an HSA can provide for qualified healthcare expenses.

The benefit hasn’t changed.

The way its value is communicated has.

That’s why benefits education is most effective when it connects benefits to situations employees actually experience.

Benefits Communication Shouldn’t Happen Once a Year

For many employees, most benefits communication happens during open enrollment.

Then it largely disappears.

But employees experience life changes throughout the year. They get married, have children, encounter new healthcare expenses, change financial priorities, and start thinking differently about saving for the future.

Those moments create opportunities to remind employees about benefits they may already have.

Employers can reinforce benefit value throughout the year through short educational emails, employee meetings, webinars, benefits portals, payroll communications, and simple real-world examples.

The objective isn’t simply to communicate more. It’s to communicate value more effectively.

There can be Value for Employers, Too

Helping employees better understand their benefits isn’t just good for employees.

For certain benefits funded through eligible pre-tax salary reductions, such as FSAs and other benefits offered through a Section 125 plan, increased employee participation may also reduce the employer’s taxable payroll and associated payroll taxes.

But the larger opportunity is getting more value from the money employers are already investing.

When employees understand and appreciate their benefits, employers have a better opportunity to turn benefits spending into something employees actually recognize as part of their overall compensation.

Help Employees see Their Total Compensation

Employees naturally pay close attention to salary when evaluating their compensation or considering another employment opportunity.

Benefits are easier to overlook.

Employer contributions toward health coverage, HSA contributions, reimbursement arrangements, and access to tax-advantaged benefit programs can represent meaningful additional value beyond an employee’s wages.

When employees understand that value, they have a clearer picture of their total compensation, not just the number on their paycheck.

That doesn’t mean benefits alone determine employee engagement or retention.

But if an employer is investing significant money in employee benefits, employees should understand what they’re receiving in return.

Put the “Benefit” Back in Employee Benefits

Employers don’t necessarily need to spend more on benefits to make their benefits package more valuable.

Sometimes the opportunity is making sure employees understand the value that’s already there.

Before explaining another plan feature, start with the question employees are already asking:

“How does this help me?”

Show them the employer contribution. Explain the tax advantage. Demonstrate the potential savings. Connect the benefit to something happening in their lives.

Then explain how the plan works.

At Flyte HCM, we help employers administer HSAs, FSAs, HRAs, ICHRAs, QSEHRAs, Section 125 plans, and other tax-advantaged benefit programs.

But administration is only part of a successful benefits strategy. Employees also need to understand what their benefits do for them and how to use them effectively.

Your organization may already be investing significantly in employee benefits. Make sure your employees understand just how valuable that investment can be. Connect with us and we’ll walk you through the steps.