Today’s workers are being asked to pay more benefit costs themselves, review more benefit choices and make more critical benefit decisions. Often, they must make these decisions within limited open enrollment periods and without effective education and communication.

To probe the impact of these developments, Prudential Insurance Company undertook a study covering a broad range of employee benefits issues.

The “Study of Employee Benefits: 2007 & Beyond” was based on responses from a national sample of 1,400 employee benefits decision-makers and 1,028 employees. It focused on 5 major themes including employees’ concerns, uncertainty and resulting inaction on the role of disability insurance for income replacement.

One important finding of the study was that employees are often confused about the availability of disability insurance and allocate little time to considering it.

While U.S. workers do not generally express strong interest in DI, they do worry about the financial impact if a wage earner in the household were not able to work. In fact, 60% of employee respondents ranked “financial security if a wage earner can no longer work due to disability or a serious illness” as important.

Only 21% of employees in the study felt their companies are addressing these concerns–despite the fact that more than two-thirds of all employers offer short-term or long-term disability benefits.

Apparently, employees simply do not make the connection between the likelihood of an injury or illness forcing them out of work, their desire for income replacement and the availability of group DI.

Prudential’s study found 4 other major themes revealing factors that contribute to the gap in understanding disability insurance. Each of these themes can provide context or direction as you seek to encourage employees to participate in voluntary DI programs. For example, the study found the following:

1. Plan sponsors struggle to reduce benefit costs while offering competitive benefits. To contain costs and still deliver the range of benefits needed to recruit and retain skilled employees, including DI, more plan providers are shifting increased benefits costs and financial responsibility to employees.

This strategy is most successful when employees receive effective benefits education and communications. Based on survey responses, the need for improved education and communications will grow 20% by 2012.

The quality of online tools will also be a key factor in choosing a benefits provider. Over the next 5 years, employers projected that the percentage of plan administrators considering online tools “very important” will grow by 22%, while the number of plan participants deeming such tools very important will grow by 27% (see chart).

2. Employees believe communication, education and enrollment efforts do not meet their needs. Workers are often dissatisfied with ineffective benefits communication and education. They also feel pressured by limited open-enrollment periods. Plan sponsors feel this dissatisfaction, too.

Only 35% of employee participants rate their employer’s benefits communication as highly effective. An even lower number of plan sponsors, just 21%, give their own communications high marks. Education and enrollment obstacles can further limit participation in DI programs.

3. Multinational companies must now take a global view of delivering benefits, including disability insurance. Offering a full range of benefits, from retirement plans to DI, becomes increasingly challenging, as more multinational companies anticipate growth in their overseas businesses.

While midsize firms expect significant growth in their overseas employment, they are more likely to have well coordinated, global benefits strategies, including DI programs, by 2012, the study found.

4. Women employees have their own benefits priorities, related to their unique financial and lifestyle needs. The study found more women ranked all benefit categories as “highly important” than men did. Women also indicated a strong preference for receiving benefit information from a financial professional rather than from written information or even from their company’s human resources staff.

In one part of Prudential’s employee benefits study, participants were asked to allocate a hypothetical $100 to 7 different employee benefits. They allocated that money as follows: $49.75 to retirement, $19.49 to medical, $7.53 to dental, $7.50 to long term care, $6.26 to life, $4.84 to disability and $4.63 to vision.

In other words, only vision was treated as less important than disability insurance. While disturbing, this finding is not surprising. It clearly shows the need to educate employees about DI.

Only 12% of employers in the survey said they’re doing a great deal to help employees determine their disability needs. Respondents indicated that by 2012, that number will grow to 22%. In other words, even with that improvement, less than one-quarter of employers will address an issue that is important to 6 out of 10 employees.

Jean Wiskowski is vice president of group insurance marketing, Prudential Insurance Company of America, Newark, N.J. She can be reached by e-mail at jean.wiskowski@prudential.com