Health literacy and financial confidence: Helping employees make smarter benefits decisions
October is Health Literacy Month, a time dedicated to helping individuals better understand and navigate health information and resources. Health literacy is the ability to find, understand and use health and benefits information to make informed decisions. Health literacy also can have a significant impact on both short-term financial stability and long-term retirement readiness. For employers, improving health literacy is more than helping employees understand their healthcare coverage. It is an opportunity to empower employees to make smarter benefits decisions, maximize available resources, and strengthen their overall financial wellbeing.
Why health literacy matters
Today's benefits landscape can be complex. Employees are often asked to choose between multiple healthcare plans, evaluate spending account options, and make decisions about coverage that could affect both their health and finances.
When employees struggle to understand their options, the consequences can extend far beyond enrollment season. They may delay or avoid healthcare, miss opportunities to save money, or underutilize valuable employer-sponsored benefits.
Low health literacy can contribute to:
Increased confusion during annual enrollment
Higher financial stress related to healthcare expenses
Missed opportunities to take advantage of available benefits
Employees who understand their benefits are more likely to make informed choices, engage with available programs, and feel confident about managing healthcare costs.
Benefits literacy is financial literacy
Healthcare and financial wellbeing are closely connected. For many individuals and families, healthcare is one of the largest ongoing expenses they will face before and during retirement.
This is where benefits education can play a critical role. Understanding how to use Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) can help employees better manage healthcare expenses while supporting broader financial goals.
Employees who understand these resources may be better positioned to:
Reduce taxable income through tax-advantaged accounts
Budget for anticipated healthcare expenses
Save for future medical costs, including those incurred in retirement
When benefits are viewed not only as healthcare tools but also as financial planning tools, employees can gain greater value from the programs available to them.
Annual enrollment is a critical education opportunity
Annual enrollment is one of the few times each year when employees actively focus on their benefits. As a result, it presents a valuable opportunity for employers to strengthen health literacy and improve employee decision-making.
Rather than simply encouraging employees to enroll on time, organizations can help employees understand how their benefits work together and how those choices may impact their long-term healthcare and financial wellbeing.
Topics employers may want to emphasize include:
Comparing healthcare plan options
Understanding spending account opportunities
Estimating and planning for healthcare expenses
Accessing available decision-support resources
Clear, straightforward communication can help employees feel more confident in their selections while reducing uncertainty throughout the enrollment process.
Supporting better outcomes through education
Health literacy is more than a healthcare issue. It is an important component of financial confidence, retirement readiness, and overall wellbeing.
During Health Literacy Month, employers have an opportunity to help employees better understand the benefits available to them and the role those benefits play in their financial future. By providing clear education and practical guidance, organizations can help employees make more informed decisions about their healthcare and finances.
When employees understand their benefits, they are better equipped to maximize their value, prepare for future expenses, and feel more confident about the decisions that support their long-term wellbeing. Ultimately, empowering employees with knowledge can lead to healthier financial outcomes for both individuals and the organizations they serve.
