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Businessolver MyChoice® Recommendation Engine Benefits Insights Report Reveals Clear Effects of Behavioral Economics on Employees’ Financial Preparedness and Risk Tolerance

Posted on 3/9/2021
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Proprietary data from third-annual report show COVID-19 spurred employees to save at record levels, yet also feel highest levels of discomfort around health care spending

WEST DES MOINES, IOWA (March 9, 2020)—Businessolver®, a leader in Saas-based benefits technology and services, today released a comprehensive report showing the long-tail effects of COVID-19 on employees’ benefits decision-making—specifically, boosting their commitment to healthy saving habits while simultaneously raising their anxiety around health care spending.

Now in its third year, the MyChoice® Recommendation Engine Benefits Insights Report annually examines employees’ understanding, confidence, financial preparedness and risk tolerance when making benefits enrollment decisions. Comprised of proprietary data from the MyChoice Recommendation Engine, Businessolver’s decision guidance tool integrated into its Benefitsolver® platform, the 2021 report takes a multiyear lens (from fall of 2018 to fall of 2020) to analyze and compare employees’ state of mind around benefits choices.

“Our multiyear analysis confirms what benefits professionals and behavioral economists alike have long known and understood: Employees don’t make benefits choices in a vacuum,” said Sherri Bockhorst, Businessolver Senior Vice President of Innovation and Strategy. “They are unquestionably affected by outside circumstances and events that shape how they perceive their benefits plans and prioritize coverage and savings for themselves and their families.”

Employees saving at record levels, yet lower earners remain vulnerable

The health and economic uncertainty created by COVID-19 drove employees to double down on increasing their savings cushion, Businessolver finds, with the workforce saving more consistently than ever in the three-year history of the Benefits Insights Report.

  • In 2021, a full third of employees (33%) say they “always” spend less than they earn, and regularly make deposits into a savings account, up 3 percentage points from 2020 and a 7 percentage-point leap from the 26% who said the same in 2019.
  • The gap between employees who “always” spend less than they earn and those who say they “never” do is at its widest in 2021, with a 21-point gap in favor of those who say they “always” spend less and save more, compared to the 12% who “never” do.
  • The same gap was smallest in 2019, when—despite greater economic prosperity—the difference between employees “always” and “never” spend less than they earn was a mere 9 percentage points (26% and 17%, respectively).

Each generation has made strides over the last three years, with Boomers seeing the most improvement in their ability to save consistently; 40% of Boomers this year say they “always” spend less than they earn compared to 31% in 2019. However, saving seems to be more a function of income than generation.

  • Those earning the least, less than $30,000 per year, showed the smallest improvement in their ability to spend less than they earn and save, 16% in 2021 over 15% in 2019.
  • Employees in the middle range lost ground during the past three years. Those earning $50,000-$60,000 who “always” save dropped to 26% in 2021, compared to 28% in 2019.
  • Employees earning over $100,000 showed the most gain in their saving habits, with 54% indicating they always save, versus 48% in 2019.

Loss aversion grows alongside financial preparedness

A basic concept of behavioral economics is loss aversion, the idea that people don’t like to give up what they have. In the 2021 MyChoice Benefits Insights Report, loss aversion applies to employees who have money earmarked for health care costs but are uncomfortable with the prospect of using it for an out-of-pocket cost.

Although employees are saving at their highest levels in three years, according to Businessolver, loss aversion—likely driven by the same uncertainty borne of the pandemic—is at its highest levels as well.

  • In 2021, 45% of employees say they could cover a large ER bill but would “prefer not to.” This preference to hang onto savings compared to 43% in 2020 and 41% in 2019.
  • Along the same lines, the number of employees who would be “panicked” by a large ER bill dropped to its lowest point in 2021, 44%, versus 47% last year and 50% in 2019.

Technology uniquely poised to strengthen employees’ connection to understanding of benefits

The differences in how various generations and income levels approach benefit decision-making highlight the importance of personalizing the benefits experience, from selection to activation. Businessolver found that fewer than 1 in 5 employees (17%) is confident in their benefits this year.

“Even for all the differences we saw in this year’s data around financial preparedness and risk tolerance, the great equalizer was that benefits literacy remains at low levels across all groups,” Bockhorst explained. “Technology can play a key role for employers in improving that understanding and taking the positive strides we saw in financial preparedness even further by offering employees a single, integrated benefits experience that’s personalized to their unique benefits journey for how they choose and then use their plans, both those they elect and those programs many employers make available at no cost. With so many employers indicating they’ll keep their workforces remote or socially distanced for the foreseeable future, benefits technology can be invaluable in maintaining a year-round point of connection and communication as we work through COVID-19 recovery and can all be together again.”

Visit Businessolver to find the full 2021 MyChoice Recommendation Engine Benefits Insights Report, along with related special content and an interactive dashboard that filters data by various demographic metrics.

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About Businessolver

Since 1998, Businessolver has delivered market-changing benefits technology and services supported by an intrinsic responsiveness to client needs. The company creates client programs that maximize benefits program investment, minimize risk exposure, and engage employees with easy-to-use solutions and communication tools to assist them in making wise and cost-efficient benefits selections. Founded by HR professionals, Businessolver’s unwavering service-oriented culture and secure SaaS platform provide measurable success in its mission to provide complete client delight.

Media contact

Grant Stoker, Edelman (on behalf of Businessolver)

206-939-7298

grant.stoker@edelman.com