The affordability trap: Why cheaper choices cost employees more
When costs rise faster than wages, employees make affordability-first choices
Benefits decisions are often made fast - sometimes in less than an hour - and employees default to what feels safest: keep what they had, choose the cheapest option or pick the middle. They’re not optimizing. They’re triaging.
And when costs rise faster than wages, employees make affordability-first choices: lower-premium plans with higher deductibles, skipping supplemental coverage or cutting dental or vision to keep medical. The savings are immediate. This is the affordability trap: optimizing for today’s paycheck at the cost of tomorrow’s crisis.
Gaps are then created that employees don’t see until something goes wrong.
Our research explores six gaps, and what employers can do to close them.
Methodology
Securian Financial’s 4th annual workplace benefits study draws on a quantitative survey of 1,000 employees and qualitative interviews with HR decision-makers.
The affordability reality
30 minutes
Time most employees spend on enrollment
86% vs. 32%
Confidence when communication is strong vs. poor
11%
Employees unsure if they’re enrolled in supplemental health
Gap 1: The generational gap
How one-size-fits-all communication is failing
Generational differences are less about preferences and more about context — caregiving load, financial responsibilities and proximity to retirement. Employees don’t need different benefits. They need different conversations.
When internal channels don’t feel useful, employees find answers elsewhere, sometimes wrong, sometimes incomplete. Gen X and boomers default to inertia. Gen Z and millennials turn to coworkers, friends and search engines. Both behaviors signal the same thing: the information experience isn’t meeting them where they are.
31% of Gen Z vs. 15% of boomers
prioritize simplicity
24% of Gen Z vs. 3% of boomers
value wellness perks
What employers can do next
- Segment by generation, then layer in life stage to personalize the moment.
- Design for where employees already look. Make benefits information findable and scannable where they’re searching.
- Treat simplicity as a feature, not a concession. Complexity is a barrier to engagement.
Gap 2: The affordability and confidence gap
Why employees triage instead of optimize
Here’s the math most employees are doing at open enrollment: How much comes out of my paycheck? When decisions feel rushed and stakes feel abstract, people default to shortcuts that can drive major costs later.
2/3 of employees
spent less than one hour on open enrollment. About 30% spent less than 30 minutes.
54-point swing
in confidence when benefits are communicated well vs. poor (86% vs. 32%)
Top barrier:
25% say it’s difficult to calculate total out-of-pocket costs
What employers can do next
- Show total cost, not just premium - use real-dollar scenarios (routine year vs. hospital stay).
- Design for 30 minutes: lead with the most important decision and surface key trade-offs.
- Invest in scenario-based decision-support tools that are simple and easy to find.
- Measure confidence, not just completion. Add: “How confident do you feel in the decisions you just made?”
- Design for accessibility: plain language, mobile-first, screen-reader compatibility and clear hierarchy.
Gap 3: The supplemental health gap
Under-enrolled, misunderstood - yet high value when activated
The problem isn’t that supplemental health doesn’t work. It’s that many employees never experience its value because they don’t enroll, don’t understand what triggers a claim or don’t remember they have it when it matters.
Employers who offer supplemental health coverage but don’t communicate its value are leaving retention impact on the table. Employees don’t value what they don’t understand. Position benefits in easy-to-understand ways, such as “accident insurance - cash to cover what your deductible doesn't.“
30%
enrolled in supplemental health benefits
67%
found it helpful among those who used it
62%
say employer contributions toward supplemental health would make them more likely to stay
What employers can do next
- Position these benefits as “financial shock absorbers.”
- Bundle guidance at decision points (e.g., when someone chooses a high deductible health plan, surface protections that offset exposures).
- Simplify activation, not just enrollment: triggers, how to file, how fast it pays, and visible retroactive filing.
- Use contributions as a credibility signal — even modest contributions can reinforce value.
Gap 4: The life insurance gap
The gateway benefit employers underuse
Life insurance is one of the benefits employees intuitively understand: a number, a beneficiary, a purpose. That clarity makes it a gateway to broader protection literacy if employers choose to use it that way. There are two gaps to close: the employees who feel underinsured need a nudge, not more convincing; the employees who don’t know their coverage amount need visibility, not education.
55%
have basic employer-paid life insurance; 20% have basic + supplemental
17%
feel they need more; 12% don’t know how much they have
7 in 10
say a life event shifted benefits priorities in the past 2–3 years
What employers can do next
- Use life insurance as a gateway: start here, then bridge to disability and supplemental health.
- Intercept life events (dependents, marriage, home purchase) with a coverage check-in; don’t wait for open enrollment.
- Make coverage visible year-round (simple annual statement: “Your coverage is $X. Here’s how to change it.”).
- Close the intent-action gap with low-friction steps (pre-populated forms, one-click increments, deadline reminders).
Gap 5: The AI gap
Where technology helps and where humans still matter
Employees are already using AI to define terms, compare plans and estimate costs. The question is whether employers will shape AI’s role or let employees figure it out on their own. Employees want AI for routine questions and cost scenarios, but for high-stakes moments such as denied claims, serious diagnoses and disputes, they want a human. AI can answer “What’s my deductible?” It shouldn’t deliver difficult news.
AI usage
varies by generation; millennials and Gen Z lead adoption
52%
say personalized AI cost predictions would completely change or significantly influence decisions
What employers can do next
- Design for explainable help: plain language, scenario estimates with visible assumptions, and clear trade-offs.
- Start where confusion is highest: total cost, deductible vs. out-of-pocket max, claims guidance.
- Build escalation into every interaction. “Talk to someone” should be visible, not buried.
Gap 6: The trust gap
Transparency doesn’t require flexibility - just honesty
When employees can’t see the rationale behind changes, they assume decisions are cost-driven. Transparent trade-off communication protects trust, even when budgets are tight. If younger employees are more skeptical of employer intent, generic reassurances won’t land. They need specifics: what was considered, what constraints existed, what changed and why.
75% agree
employers make benefits decisions with employee needs in mind (with variation by generation)
What employers can do next
- Make communication two-way: being asked matters, even if the outcome doesn’t change.
- Show how decisions were made (process transparency, not just the change).
- Publish a renewal brief: what changed, what didn’t, why, and what employees should do next.
- Close the feedback loop visibly: what you changed, what you couldn’t and why.
Closing the gaps
The affordability trap isn’t about employees making bad decisions. It’s about employees making rational decisions with incomplete information and paying for it later.
Employers can’t eliminate the trade-offs. But they can make the trade-offs visible so employees choose with their eyes open, not just their wallets.
Learn about our benefits
Learn how innovative life insurance and supplemental health benefits can help navigate complexity and close trade-off gaps for a diverse workforce.
See more research
See more research conducted by Securian Financial, including data on family-building benefits, caregivers in the workplace and mental wellness benefits.