The Real Reasons Employees Don’t Use Their Benefits

Employers work hard to build competitive benefits packages, especially as employee expectations around benefits have evolved. Yet every year, many employees either underuse what’s available or don’t use their benefits at all. It’s rarely because they don’t care. More often, it’s because team members don’t understand what benefits they have or how to use them.

For busy employees, benefits can feel confusing and overwhelming. Deductibles. Copays. Coinsurance. Networks. Enrollment windows. Most employees don’t speak “insurance.” And when communication only happens once a year during open enrollment, it’s easy for people to tune out or make rushed decisions.

The result? Employees overpay, miss opportunities, or avoid care altogether.

The good news is that this is a fixable problem. With the right education, communication, and HR partnership, benefits become something employees actually value and use.

Why Employees Don’t Use Their Benefits

In our experience, the issue isn’t the plan design. It’s the delivery of information.

Here are a few common breakdowns we see:

1. Employees don’t understand the language. Insurance terminology isn’t intuitive. Without clear explanations, employees may choose the wrong plan or skip coverage they actually need.
2. Team members may feel uncomfortable asking questions. Large group meetings don’t work for everyone, as some employees don’t want to discuss personal or financial concerns in front of peers. Without annual one-on-one conversations, important questions can go unanswered.
3. Communication only happens once a year. Open enrollment can become a firehose of information that happens during one of the busiest times of the year. Within a few weeks, employees may forget most of the key information. As a result, they could miss out on important benefits like telehealth visits, HSA/FSA investing, or other auxiliary benefits. 
4. They don’t realize what’s included. Many plans already offer valuable extras. Virtual care, wellness programs, mental health support, or over-the-counter reimbursements often go untouched simply because employees don’t know they exist.

When benefits feel complicated or distant, people disengage. When benefits feel simple and accessible, they use them. 

What Actually Works

Companies that see strong benefits utilization take a different approach. They treat benefits education as an ongoing process, not an annual update

1. Keep communication simple. Instead of long emails full of insurance jargon, it’s essential to share short, clear messages that get straight to the point. Plain language always beats complicated explanations.
2. Meet employees where they already are. Not everyone reads every email, so it can be helpful to mix it up. A quick text reminder, a short video, a team huddle, or a portal update can go further than one big announcement. Small touchpoints throughout the year can keep benefits from fading into the background.
3. Educate rather than announce. It’s not enough to say, “Here are your benefits.” The best teams slow down and walk through what things actually mean. Use real-life examples to show employees how to use their coverage when it really matters.
4. Make room for real conversations. Some questions feel too personal for a group setting. Offering individual meetings gives employees the space to ask what they really need to know and choose plans with confidence.
5. Keep benefits top of mind all year. A few simple nudges can make a big difference. Quick reminders like “Your HSA can cover these everyday purchases” or “Don’t forget to access telehealth during flu season” can help employees take advantage of what they’re already paying for.

The goal isn’t more communication. It’s better communication.

A Proactive HR Partner Can Make a Difference

The primary reason small and mid-size businesses struggle with benefits is because they think they can’t afford them. Another reason is because HR teams already juggle compliance, payroll, and day-to-day operations. That’s where a partner like LBMC Employment Partners steps in.

Our human resource business professionals don’t just set up your plans and disappear. We work alongside you year-round. We help explain benefits in plain terms. We lead open enrollment meetings. We offer one-on-one support for employees who need extra guidance. We answer questions by phone or email. We send reminders that keep benefits relevant long after enrollment ends.

Most importantly, we build relationships.

We’ve seen firsthand how meaningful this support can be. Something as simple as walking an employee through how the U.S. healthcare system works or helping them understand their options can completely change their experience and confidence.

When employees understand their benefits, they use them. When they use them, they see the value. And when they see the value, they’re more likely to stay. 

That’s good for your people and your business.

Create a Better Benefits Experience for Your Team

If your employees aren’t engaging with their benefits, it’s a signal that communication and education need attention. With the right strategy and the right partner, benefits become more than a line item. They become a tool to attract, retain, and support great people.

LBMC Employment Partners is here to help you simplify the process and make benefits easier to understand, use, and appreciate. Ready to improve benefits engagement for your team? Connect with us to start the conversation.