The Hidden Cost of Benefits Employees Don't Understand

By Victor Morgan, Founder & Lead Broker, Victor Insures You | 8-minute read

Key takeaways

Employers pay most of the cost of employee health coverage. The average family premium reached $26,993 in 2025, and workers paid $6,850 of it (KFF). That value disappears if employees don’t understand what they have.
Fewer than half of employees say they understand the costs of their benefits well, yet 79% of employers believe their workforce does (Aflac).
Benefits confusion shows up as repeat HR questions, enrollment mistakes, underused programs (including mental health support) and weaker retention.
A structured benefits education meeting, held shortly before open enrollment, is one of the simplest ways to close the gap.

Every fall, HR teams put enormous effort into open enrollment. Plans are negotiated, contributions are modeled, guides are designed and enrollment links go out. Then the questions start.

“What’s the difference between my deductible and my out-of-pocket max?” “Is my doctor in network?” “Why did my paycheck change?”

If that sounds familiar, it’s more than a communication issue. It’s one of the most overlooked costs in employee benefits: a package your people don’t understand. A benefit employees don’t understand is one they won’t use, won’t value and won’t think about when a recruiter calls with a competing offer.

What does benefits confusion actually cost an employer?

When employees don’t understand their benefits, employers lose value in four places: benefits dollars that don’t translate into perceived value, HR hours spent answering the same questions, enrollment mistakes that are hard to undo mid-year, and weaker retention because employees underestimate what their total compensation includes.

1. You pay for value your employees can’t see

According to the KFF 2025 Employer Health Benefits Survey, the average annual premium for employer-sponsored family coverage reached $26,993, with workers contributing $6,850. For every family enrolled, the employer covers roughly $20,000 a year.

That’s one of the largest investments you make in your people. When employees can’t explain what their coverage does for them, a large share of their compensation becomes invisible to them. They feel the payroll deduction every two weeks, but they don’t see the value behind it.

2. HR becomes the benefits help desk

Employees want help understanding their benefits. Aflac’s workplace benefits research found that 79% of employees want access to a live representative for benefits questions, and 74% want benefits information outside of open enrollment.

Without a structured way to meet that need, the demand lands in HR’s inbox one question at a time, all year long. Here’s a simple illustration: if 150 employees each ask three benefits questions a year and each one takes 10 minutes to answer, that’s 75 hours of HR time. That’s nearly two full work weeks spent explaining the same concepts over and over.

3. Enrollment mistakes that last all year

Most employees spend less than 30 minutes choosing their benefits, according to industry reporting cited by Aflac. In that window, confused employees tend to roll into last year’s plan without comparing options, choose the lowest premium without understanding the deductible, skip supplemental coverage they would have valued, or miss out on HSA contributions.

Most benefit elections can’t be changed mid-year without a qualifying life event, so a rushed decision in November can shape an employee’s healthcare costs, and their frustration, for the next 12 months.

Voluntary and supplemental benefits deserve a clear explanation, too. Accident, critical illness and hospital indemnity coverage can help address specific financial gaps, but employees may skip these options if they do not understand what they cover or how they complement the core medical plan. A brief explanation of purpose, cost and common use cases can help employees make a more informed choice during enrollment.

4. Trust and retention take the hit

The MetLife 2025 Employee Benefit Trends Study found that employees with positive benefits experiences are 2.4 times more likely to feel holistically healthy and 1.8 times more likely to trust their employer’s leadership.

There’s also a perception gap. Aflac found that 79% of employers believe their workforce has a firm grasp of their benefit costs, while fewer than half of employees say they understand those costs well. Leaders often assume the message landed. Employees often assume there’s nothing to understand.

The mental health support that often goes unused

World Mental Health Day is October 10, and this year’s theme from the World Federation for Mental Health is “Lived Experiences Heard: Real Voices, Real Change.” For employers, it’s a timely reminder to ask a simple question: do our employees know what support is already available to them?

Many benefits packages include mental health resources that employees rarely use: an Employee Assistance Program (EAP), often bundled with group life or disability coverage; behavioral health coverage within the medical plan; and telehealth options. In a 2018 Business Group on Health survey, employers reported a median EAP utilization rate of just 5.5%.

Low use doesn’t always mean low need. Often it means employees don’t know the resource exists, don’t know how to reach it or aren’t sure how their privacy is handled. A benefits education meeting is a natural, low-pressure moment to walk through where these resources live, how to access them and what they cost to use.

Why enrollment guides and portals aren’t enough on their own

A clear enrollment guide and a modern benefits platform are essential. Aflac found that roughly 82% of employees say it’s important to manage their benefits online. Tools like Employee Navigator make enrollment, onboarding and administration far easier for HR teams.

But a PDF can’t answer a follow-up question, and a portal can’t tell an employee which plan fits a family expecting a baby next spring. The most effective approach combines both: a streamlined platform for enrollment and a real conversation that explains what the options mean.

What is a benefits education meeting?

A benefits education meeting is a structured session, held virtually or in person, where a benefits advisor walks employees through their coverage in clear, practical terms before they enroll. At Victor Insures You, a Benefits Education Meeting covers:

How the plan structure works, including deductibles, copays, coinsurance and out-of-pocket maximums
The differences between coverage options, so employees can compare plans with confidence
What employees will pay out of pocket in common scenarios
How to use the network to find in-network providers and avoid surprise costs
What changed at renewal, so nothing catches employees off guard

Sessions are designed for all benefit-eligible employees. They’re especially valuable when plans are changing or when employees are choosing between multiple options.

When should you schedule a benefits education meeting?

The best time is shortly before open enrollment begins, after final plan details and contribution strategies are confirmed. That timing lets employees ask questions about the actual plans they’ll be choosing from, while there’s still time to think before they enroll.

If you’re still working through renewal decisions, our 150-day renewal plan for employers with 100+ employees and our open enrollment checklist for HR leaders can help you map out the weeks ahead.

Five signs your employees don’t understand their benefits

The same questions reach HR every week, especially about deductibles, networks and paycheck deductions.
Most employees re-enroll in last year’s plan without comparing options, even when the plans changed.
Participation in supplemental benefits is lower than expected, even though employees say they value financial protection.
Employees are surprised by bills after care, a sign they don’t understand cost sharing or network rules.
Employees undervalue your benefits in recruiting or exit conversations, even when your package is competitive.

If two or more of these sound familiar, your benefits may be working harder than your employees realize.

How Victor Insures You helps employees get more from their benefits

At Victor Insures You, insurance placement is only the beginning. We represent employers, not carriers, and we stay involved year-round so your team is never left without answers. That includes:

Benefits Education Meetings that walk employees through their coverage in plain language, virtually or in person
Employee Navigator access at no cost to streamline onboarding, enrollment and administration
Strategic plan design and negotiation for group health and supplemental benefits
Year-round support, not just at renewal. Learn more about the Victor difference.

Help your employees understand and use their benefits

Walk into open enrollment with fewer questions and more confident employees. Schedule a Benefits Education Meeting aligned with your renewal timeline, or start the conversation with our team at (214) 226-5988.

Frequently asked questions

Why don’t employees understand their benefits?

Health insurance uses unfamiliar terms like deductible, coinsurance and out-of-pocket maximum, and most employees see benefits information only once a year during open enrollment. Many spend less than 30 minutes making their choices. Without a clear explanation, even well-designed plans can feel confusing. The HealthCare.gov glossary is a helpful plain-language reference.

How much does benefits confusion cost employers?

There’s no single number, but the costs show up in four places: benefits spending employees don’t value, HR time spent answering repeat questions, enrollment mistakes that can’t be changed until the next plan year, and weaker retention when employees underestimate their total compensation.

What is covered in a benefits education meeting?

A benefits education meeting explains how the plan structure works, the differences between coverage options, what employees will pay out of pocket, how to use the provider network and what changed at renewal. Employees can ask questions about their own situations before they enroll.

When is the best time to hold a benefits education meeting?

Shortly before open enrollment begins, after final plan details and employer contribution strategies are confirmed. That way, employees learn about the exact plans they’ll be choosing from.

Can benefits education meetings be held virtually?

Yes. Victor Insures You conducts Benefits Education Meetings virtually or in person, depending on your workforce structure. Virtual sessions work well for remote, hybrid and multi-location teams.

How can employers increase use of mental health benefits like an EAP?

Start with awareness. Explain what the EAP and behavioral health coverage include, how employees can access them and how privacy is handled. Then repeat that message outside of open enrollment. Including mental health resources in your benefits education meeting helps employees remember that support is available when they need it.

The Hidden Cost of a Benefits Package Your Employees Don’t Understand