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Decision Inertia – Why Employees Make the Wrong Benefits Decisions

Decision Inertia – Why Employees Make the Wrong Benefits Decisions
Posted on Friday, August 14, 2020 by Marcy Klipfel

Whether they’re choosing their benefits for the first time, or making changes during annual enrollment, it’s no secret that employees don’t always make the best decisions.


You can’t really blame them; benefits can be complex. In fact, 31% of employees find benefits confusing. And some employees even find them a bit boring. The reality is, employees don’t like to shop for benefits and unless it’s done right, the enrollment process may seem overwhelming causing employees to stick with the status quo.

Benefits are more important now than ever before with COVID-19 still ravaging the US.

As employers, you can provide better support for empowered decision-making if you understand where employees are off-base and focus on addressing the underlying reasons.

The upcoming annual enrollment season is going to be a unique time for employees and employers alike. This is the very first enrollment season during a global pandemic and your employees are going to be hyper sensitive to their benefits since they may have thought about them more this year then they ever have before. 

By providing your employees with the right information at the right time so they can make the right benefits elections for their family will be vastly important to their overall well-being and decision making process.

Despite the fact that COVID may have thrust employees into unique situations where benefits have center stage, it’s still important to realize that choosing benefits can be an overwhelming process, especially to those who don’t understand them and not to mention, current home distractions like having to take care of children and worry about the future. 

Distractions, stress and feeling overwhelmed with confusion can lead to benefits decision inertia. 

Decision inertia goes hand in hand with confusion.

Remember your “go to” dish at your favorite restaurant? Now, it’s probably more like takeout, but the metaphor makes sense when talking about why sometimes employees will make the same elections year over year, despite big changes that may affect their benefits decisions. They get comfortable with the same old same old. 

But the fact is, change happens. A global pandemic hits. Employees get married or divorced. They have kids. During quarantine, they start eating right and exercising. Their spouse retires.

As the employer, you may make plan design changes or update rates, you may add more benefits to support your employees during these trying times. All these things can, or should, impact your employees benefits decisions, but sometimes employees often don’t make the connection when it comes time to enroll for the coming year. Or, they simply don’t want to think about it. In fact, 93% of employees don’t make changes to their benefits during annual enrollment. 

In behavioral economics terms, this is called decision inertia, or status quo bias. Even when other options come along that offer cost savings or better service, or when their own circumstances change, people may fail to act due to confusion and lack of benefits knowledge. The data says it all. 

  • 51% don’t understand some aspect of their health insurance. 
  • 22% didn’t feel confident that they understood everything they signed up for during their last enrollment.
  • More than 50% would rather do something unpleasant (like cleaning up after their dog) than enroll in benefits. 
  • 14% don’t do any research on their benefits during annual enrollment.

Additionally, employees only spend, on average, 17 minutes enrolling in their benefits. That’s shorter than most podcasts! And, what’s worse, your process may be adding to this behavior. 

For more information and solutions to prevent decision inertia, check out our ebook below.