There has been a growing trend in the marketing of employer-sponsored voluntary benefits that would have you believe that “more is better” and employees demand variety so they can choose benefits to fit their unique lifestyles.

What we see now are things like prepaid legal counseling, pet insurance, travel insurance, mortgage protection, tuition reimbursement, elder care insurance and many, many more. Employers may feel like if it is voluntary, why not offer it? And we are being told consumers want these choices.  This is a slippery slope, at the very least. 

 A Harvard Business Review article published in June 2018 entitled “How Many Choices Do Consumers Really Want” found that consumers almost always tell researchers they like many versions of a product.  Yet, we need to go back to 2000 when psychologists Sheena Lyengar and Mark Leper from Stanford and Columbia Universities, respectively, did a famous study that upended this generally accepted marketing premise. On the first day of the experiment, shoppers at an upscale grocery store were presented with twenty-four varieties of gourmet jam. Those who sampled the product got a dollar off any jam. The next day, shoppers were presented with only 6 varieties. When the time came to purchase, people who saw the large display were one-tenth as likely to buy as the people presented with the small table.  

 So why did Harvard researchers find that people almost always say they want more choices? The Harvard study found there were nuances. Consumers’ perceptions of how many choices they prefer change depending on whether they intend to use a product for pleasure or for a functional need. Other studies show that there is a point when consumers get choice overload, no matter what the product or their perceived desire for more variations. 

 So how does this apply to your benefits strategy? First, insurance is a functional product. That means it won’t take much to reach decision overload. In his book, The Paradox of Choice, Barry Schwartz writes that when consumers have too many options, they may end up not choosing at all. Schwartz shows the results of employees who were offered fifty mutual funds, versus 5 funds, in which the employer matched contributions. Those who were offered fifty funds were ten percent more likely NOT to enroll in anything at all and walk away from the employer’s matching funds. Decision paralysis is proven when employees turn down free money from their employer. 

 You could end up in a similar position. Employer-sponsored voluntary health insurance benefits meet a critical need for low-wage workers, that only you can give them. You bring buying-power and vetting knowledge to the table, that employees cannot get on their own. The high deductibles and co-pays under ACA plans mean workers must come out-of-pocket with thousands of dollars to even get to any coverage. Your voluntary health insurance benefits fill that critical gap in coverage. But when an employer lumps this essential medical care coverage in with dozens of non-essential voluntary benefits, overwhelmed employees may just walk away. This is nothing short of a tragedy. Low-wage workers may be one accident or illness away from financial ruin that could have been prevented. 

 The bottom line is you are bringing no value to your employees by offering a smorgasbord of benefits that they could get more easily, at the same price, on their own. In fact, it is a disservice to them if they end up turning down valuable healthcare benefits because it’s too overwhelming to decide. And finally, many of these benefits are not meant to be administered in a payroll-deducted environment. So, on top of everything else, you may end up in an administrative quagmire, with angry employees. 

 Voluntary medical insurance is more critical than ever in the world we live in today. Not only can you provide for the health and welfare of your employees, you will find that these valuable benefits will give them peace of mind and increased job satisfaction which leads to better employee retention.