Benefits literacy: a key ingredient for productivity in the workplace

Key takeaways: Benefits literacy helps employees confidently understand, choose, and use their benefits to support their health and financial wellbeing. When employees possess high benefits literacy, they can navigate plan options, enroll correctly, and make informed decisions that reduce financial stress. Benefits leaders can help by:

• Moving beyond open enrollment for year-round educational opportunities.
• Using AI tools for developing education materials and answering questions.
• Personalizing benefits education to appeal to different age groups and life stages.

Financial stress doesn’t stop when an employee badges into the office. It follows them to their desk, sits in on meetings, and—perhaps most critically—impacts their ability to focus. Lost productivity due to financial stress is estimated to cost employers $40 billion each year.¹

HealthEquity’s recent Healthcare Affordability Pulse revealed a stark reality. Approximately 1 out of 4 survey respondents shared that their financial stress was affecting their ability to focus at work, and this held true across all income levels.²

While benefits leaders can’t necessarily impact the broader economic trends, they do hold a powerful tool to make a difference for employees: benefits literacy.

What is benefits literacy?

Benefits literacy is an employee’s ability to understand, choose, and use their benefits with confidence.³ Employees with a high level of benefits literacy will:

• Grasp the key differences between your health plan options.
• Know how to enroll in your programs.
• Navigate benefits decisions with ease.

Benefits education is how benefits teams build this literacy in their employee populations. They prepare educational materials, hold benefits webinars, answer employee questions, and guide decision making. Ideally, benefits education is happening all year round, not just in a concentrated blitz during open enrollment or for new hires.

How does benefits literacy impact employee focus and productivity?

Our Healthcare Affordability Pulse found an interesting link between benefits literacy and work focus. Employees who said they understood their benefits “very” or “extremely” well were 45% more likely to say financial stress does NOT affect their work focus.

Interestingly, generational data shows a shift in understanding:

• Gen Z and Millennials: Report higher understanding rates (53% and 62%, respectively).
• Gen X and Boomers: Report lower understanding rates (both at 47%).

Additionally, HSA holders are 46% more likely to understand their employee benefits compared to non-HSA holders.

Think about what that means for your benefits education planning. When an employee understands how their health plan covers preventive visits, or how they can use a Health Savings Account (HSA) to save for their annual out-of-pocket max, they are more likely to feel focused and productive in their everyday tasks.

By demystifying high-deductible health plans (HDHPs), HSAs, pharmacy benefits, and more, benefits leaders empower their people to plan ahead and reduce financial uncertainty.

How can I build a culture of benefits literacy?

Knowing that benefits literacy can help reduce financial stress at work is one thing; achieving it is another. Fortunately, you don’t need to overhaul your entire benefits education strategy to see results.

Here are three practical ways to enhance understanding right now.

1. Move beyond open enrollment.

Information overload during open enrollment is real. If that is the only time employees hear about their benefits, they may forget the details by January.

The Fix: Shift to a year-round education strategy. Break complex topics into bite-sized pieces delivered monthly or quarterly.

• Example: Dedicate April to promoting financial benefits like HSAs, HPAs, or 401ks during Financial Literacy Month.
• Example: Use tax season to highlight the triple-tax advantage of an HSA.⁴
• Example: Tap HealthEquity’s Content Library for insightful, timely member education.

Continual opportunities for learning may help employees absorb information at their own pace.

2. Leverage AI and digital tools.

You don’t have to answer every question manually. As a recent piece by HealthEquity CEO Scott Cutler noted, younger employees are particularly likely to want on-the-spot answers, and AI is perfectly suited to meet this need.

The Fix: Utilize AI tools for on-demand question support or preparing benefits education materials.

• Example: Tools like HealthEquity’s HSAnswers leverage artificial intelligence to provide instant, conversational support for benefits questions.⁵
• Example: Use generative AI tools like Claude or ChatGTP to create benefits one-pagers, blog posts, or other content (with careful checks for accuracy).

3. Personalize the experience.

A recent college graduate likely has different financial concerns, questions, and goals than an employee nearing retirement. Your communication strategy should reflect that. Use data to segment your audience and tailor your messaging.

The Fix: Use data to segment your audience and tailor your messaging.

• For younger generations: Send information about student loan repayment assistance or budget-friendly Lifestyle Spending Accounts (LSAs).
• For older employees: Target this cohort with information about catch-up contributions, retirement savings, and long-term care.

By investing in benefits literacy, benefits leaders do more than explain the nitty-gritty details of deductibles, commuter benefits, or HSA contributions. You give your employees the clarity they need to navigate their financial lives with confidence, be more productive, and feel more focused at work.

Frequently Asked Questions

Q: What is the definition of benefits literacy?

A: Benefits literacy is the degree to which an employee understands their benefits packages, including how to select the right plans and utilize them effectively to manage their health and finances.

Q: Why is benefits education important for employers?

A: Benefits education is crucial because it may reduce employee financial stress, improve work focus, and encourage employees to make sound benefits decisions.

Q: How can I improve benefits literacy in my organization?

A: You can improve literacy by offering year-round education (not just during open enrollment), using AI tools for benefits support, and personalizing communication based on employee life stages and demographics.