When employees see changes to their benefit costs, whether through higher premiums, adjustments to cost sharing, or updates to plan structures, it can quickly lead to confusion, frustration, and even mistrust. However, transparent communication about benefits costs is one of the most powerful ways to build trust with your workforce, demonstrate the true value of employer contributions, and keep employees engaged during periods of change.
By clearly explaining both the "what" and the "why" behind benefits costs, HR teams can transform these moments from potential tension points into opportunities to educate employees and reinforce the full value of their total rewards.
Why Transparency Around Benefits Costs Matters
Benefits are a major part of total compensation. According to the Bureau of Labor Statistics, benefits can account for up to 30% of an employee’s total compensation. However, many employees overlook or underestimate this value because they focus only on paycheck deductions without understanding how much their employer contributes behind the scenes.
Transparent communication achieves three key goals:
It builds trust by demonstrating honesty and openness during times of change.
It reinforces value by showing the extent of employer contributions to health, retirement, and wellness benefits.
It minimizes frustration by providing context and preventing rumors or misinformation from spreading.
When cost changes are paired with education and a clear explanation of employer support, employees are more likely to see their benefits as part of a larger, meaningful package rather than a series of line item deductions.
Best Practices for Communicating Benefits Costs Transparently
Use Total Rewards Statements to Show the Full Picture
A personalized Total Rewards Statement (TRS) is one of the most effective tools for putting benefits costs into context. By displaying employer-paid contributions alongside employee deductions, you help employees see that their company is investing far more than they might realize.
For example, a TRS can break down:
• Health insurance premiums with employer and employee contributions shown separately
• Retirement plan matches
• Employer-paid perks such as life insurance, disability coverage, or wellness stipends
This visual approach reframes benefits as part of overall compensation and shifts the focus from "what’s being deducted" to "what’s being provided."
Explain the “Why” Behind Cost Increases
If premiums or out-of-pocket costs are rising, do not just share the numbers, share the context.
Common reasons include:
• Increases in medical or prescription drug coverage costs across the industry
• Enhanced coverage options or expanded benefits that were recently added
• Efforts to remain competitive with market benchmarks
Linking cost changes to these broader trends helps employees understand that adjustments are not arbitrary but part of maintaining sustainable, high-quality benefits.
Provide Comparison Tools and Scenarios
Employees often benefit from practical examples that illustrate how costs impact them. Consider providing:
• Side-by-side plan comparisons that break down monthly costs and employer contributions
• Sample scenarios such as a single employee versus a family plan to show real-world applications
• Calculators or interactive tools that allow employees to see how choices affect their paycheck and benefits value
These resources turn abstract percentages into tangible, personal insights.
Reinforce Employer Investment During Cost Discussions
When employees hear about a cost increase, their initial reaction may focus on their own additional expense. Counterbalance this by emphasizing what the company continues to cover. For example:
• Highlight that the company still pays a large majority of health plan premiums
• Show how much employer contributions to retirement or wellness programs have grown year over year
• Reinforce any new or expanded benefits that were added despite rising costs
This approach reframes the conversation and demonstrates the company’s commitment to employee well-being.
Use Multiple Channels to Deliver the Message
Benefits cost communication is not effective if it is shared only once. Use several touchpoints to ensure the message is heard and understood:
• Personalized Total Rewards Statements for individual details
• Manager talking points to facilitate team discussions
• Virtual or in-person Q&A sessions where employees can ask questions
• Visual infographics or short videos that simplify complex cost data
Repetition across different formats helps reinforce understanding and reduces confusion.
Pair Transparency with Education on Benefits Usage
Sometimes employees may feel frustrated by rising costs because they do not fully understand or utilize the benefits available to them. Offer education around:
• Preventive care coverage
• Health savings account (HSA) or flexible spending account (FSA) benefits
• Employee Assistance Programs (EAPs) or mental health resources
Helping employees see how to maximize their benefits can increase perceived value and reduce cost-related concerns.
How Total Rewards Communication Helps
A strong Total Rewards Communication strategy integrates all of these elements, including clear cost breakdowns, employer contributions, contextual explanations, and education, into a cohesive, ongoing message.
Rather than delivering cost updates only during open enrollment, HR teams should weave benefits cost education throughout the year. Regular reminders of employer contributions and total value help employees feel informed, supported, and appreciated even before changes occur.
Less Pushback, More Trust
Transparent communication around benefits costs does more than prevent frustration. It strengthens the employer-employee relationship. When employees see the true investment their company makes in them and understand why changes happen, they are more likely to feel engaged, loyal, and valued.
By combining cost transparency with a robust Total Rewards Communication strategy, HR teams can turn challenging conversations into opportunities to build understanding and reinforce the total value of employment.
Explore how backstitch can help enhance your Total Rewards Communication Strategy.
