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Forty Percent of Employees Don't Understand Their Benefit Options

December 13, 2011 at 12:00 AM EST
Forty Percent of Employees Don't Understand Their Benefit OptionsMedia Contact:
Bob Nersesian
Senior Director, Corporate Communications
ADP, Inc.
(973) 974-7820

ROSELAND, New Jersey -- December 13, 2011 -- A new ADP® survey shows a wide gap between the goals and reality of how employees understand their benefit plans. Eighty percent of HR decision makers believe it's important for employees to fully understand their benefit options, yet they estimate only about 60% of their own employees do – a finding with serious implications for how companies communicate one of the most important parts of their employees' total compensation.

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"With many employees asked to take on greater responsibility for managing their own benefits, there is room for improvement by HR departments to engage employees in the decision-making process," said Tim Clifford, President of Benefits Services at ADP, Inc., a leading provider of human resources management, payroll and benefits administration services. "With the power of web-based and mobile technologies and decision support tools, we have new, innovative and cost-effective ways of educating employees and helping them make critical choices anytime and anywhere."

The ADP HR/Benefits Pulse Survey on Employee Benefit Tools was conducted by the ADP Research Institute, a specialized group within ADP which provides insights for leaders in both the private and public sectors around issues of human capital management, employment trends and workforce strategy. The online survey engaged 501 HR decision-makers from midsized-to-large companies, ranging from 50 to over 1,000 employees. Survey respondents were evenly split with 251 midsized companies (50-999 employees) and 250 large companies (1,000+ employees) participating.  Following are the top findings:

Employee Benefits Communications: Budgets Are Being Squeezed

  • A surprising number of large employers and the majority of midsized firms do not have an employee communications budget related to their benefit plans.
    • 66 percent of midsized employers have no employee communications budget
    • 36 percent of large employers have no employee communications budget

It is unlikely this will change in the near future as HR decision-makers at about half of companies say their budget has remained the same in the past year and only a minority expect it to increase in the next one or two years.

  • Of companies with a budget, HR decision-makers in about half of large and midsized companies say their budgets have remained the same in the last year.
    • 53 percent of midsized employers' budgets remained the same
    • 47 percent of large employers' budgets remained the same
  • Looking ahead, more than half of HR decision-makers in both large (57 percent) and midsized companies (63 percent) say they are likely to maintain their employee communications budget in the next one or two years and only one in five (21 percent) of both groups plan to increase their budget.

Decision Support Tools: Tools Increase Employee Understanding Of Benefits

  • The majority of HR respondents surveyed believe that decision support tools increase employee understanding of benefits and their overall engagement, yet the majority of large and midsized companies don't provide them.
    • 72 percent of midsized employers don't provide
    • 51 percent of large employers don't provide
  • Decision support tools, typically software applications accessed through a company portal, give employees the ability to compare healthcare plans to determine which plans best meet their needs. 
    • Approximately half of large (53 percent) and midsized companies (50 percent) offer these tools the entire year and about one-quarter of large companies (23 percent) and one-third (33 percent) of midsized companies only provide them during open enrollment and qualified events.
  • Among the companies that provide decision support tools, the most common tools reported are a flexible spending account (FSA) calculator, a plan comparison chart, a medical cost calculator, and wellness incentive modeling. 
  • One out of five large companies that do not provide decision support tools plan to in the next couple of years, but almost half (49 percent) will not and about a third (31 percent) are unsure. Very few (only 13 percent) of midsized companies that do not currently provide decision support tools plan to do so in the next year or two, 38 percent will not, and almost half (49 percent) are unsure of what they will do.

Mobile Applications: New Tools Becoming Common in the Workplace

  • Mobile access to benefits information is deemed important by approximately six out of 10 HR decision-makers, regardless of company size, yet fewer than half of companies provide mobile access now (46 percent of large companies and 39 percent of midsized companies). 
  • Among the top five mobile application features HR/benefits decision-makers are most interested in are: healthcare provider information, benefits alerts, and single sign-on.
  • HR/benefits decision-makers estimate that, on average, about two out of five employees use mobile technology in their regular workday activities and half of respondents believe that this will increase over the next two years.
    • Employees using mobile technology in regular workday activities today:
      • 38 percent of employees in large companies
      • 42 percent of employees in midsized firms
    • Employers who expect that employee usage of mobile technology will increase in the workplace over the next two years:
      • 52 percent of large companies
      • 47 percent of midsized firms

Web-based Portals: Portals Are Ubiquitous in the Workplace

  • Nearly nine out of 10 large companies (86 percent) and seven of 10 midsized companies (71 percent) have a web-based portal which hosts employee benefits information.
  • The vast majority (86 percent) of both large and midsized employers with a web-based portal think it is important for employees to have 24/7 access to benefits information, yet only 72 percent of large employers and 66 percent of midsized employers provide this access.  
  • Four out of 10 large companies and 38 percent of midsized businesses that offer web-based portal access to employees have a single web-based portal that provides access to multiple types of information versus multiple portals for each primary task (HR, PR, and benefits). Employees of companies that offer a single portal have access to a wide variety of information – including benefits, pay stubs, time and attendance, tax withholding and more.
  • Approximately two-thirds of large and midsized companies with a single web-based portal (66 percent and 60 percent, respectively) allow employees to modify personal information, most commonly annual benefits enrollment and address and tax withholding information. 
    • By allowing employees to modify their own data, the majority of HR decision-makers see three benefits: they are able to maintain more accurate information, fewer calls to the HR/Benefits department are reported, and most think their portal has reduced administrative burden.
  • Among companies that provide web-based portal access to benefits information, approximately half (57 percent of large employers and 44 percent of midsized employers) use a third- party hosting vendor.

About the ADP HR/Benefits Pulse Surveys: The ADP HR/Benefits Pulse Surveys are quarterly surveys executed by the ADP Research Institute on key topics that are top-of-mind among HR and benefits professionals.  Conducted from July 6th through 18th, the Employee Benefits Tool survey asked 501 HR decision-makers to respond to a 10-minute online questionnaire.  ADP was not identified as the study sponsor.  The study universe was a statistically projectable random sample of all U.S. enterprises with 50-999 (251 interviews) and 1,000 or more (250 interviews) total U.S. employees. Federal, state, and local government and public education were excluded from the study universe.

The survey respondents were policy change decision-makers or purchase decision-makers for systems/services in HR and benefits.  Titles/functions included:

  • 32 percent HR/Benefits/Compensation (Department Head/Sr. Director/Director/Sr. Manager/Manager)
  • 24 percent Finance/Accounting (Controller, CFO, Department Head/Sr. Director/Director)
  • 10 percent Administration (Department Head/Sr. Director/Director)
  • 8 percent Executive C-Suite (Department Heads/Sr. Director/Director, Sr. VP/VP)

For more information on the ADP HR/Benefits Pulse Survey on Employee Benefit Tools, please go to To listen to a pre-recorded complimentary webinar on these findings, please register at

About the ADP Research Institute

The ADP Research Institute is a specialized group within ADP which provides insights for leaders in both the private and public sectors around issues of human capital management, employment trends and workforce strategy.

About ADP

Automatic Data Processing, Inc. (NASDAQ: ADP), with about $10 billion in revenues and approximately 570,000 clients, is one of the world's largest providers of business outsourcing solutions. Leveraging over 60 years of experience, ADP offers a wide range of human resource, payroll services, tax and benefits administration solutions from a single source. ADP's easy-to-use solutions for employers provide superior value to companies of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine, recreational vehicle, and heavy equipment dealers throughout the world. For more information about ADP or to contact a local ADP sales office, reach us at 1.800.225.5237 or visit the company's Web site at


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