Lower premium benefits are prized by employees in today’s economy, but thousands of dollars in unexpected out-of-pocket costs haunt many later

As rising costs continue to outpace wages, many Americans are cutting costs by prioritizing lower premium insurance benefits offered by their employers during open enrollment — often at the expense of long-term financial protection.

According to Securian Financial’s fourth annual workplace benefits study, “The Affordability Trap: Why cheaper choices cost employees more,” this cost-first decision-making is creating significant hidden exposure that surfaces when medical events occur.

The research identifies a growing “affordability trap” — a pattern in which employees choose high-deductible health plans (HDHPs), skip supplemental coverage or reduce voluntary benefits to save on payroll deductions. While these decisions lower immediate monthly costs and produce bigger paychecks, they can result in thousands of dollars in unexpected out-of-pocket expenses later.

“When budgets are tight and enrollment decisions feel overwhelming, employees default to the one number they can control — the premium,” said Adam Taylor, vice president for Employee Benefits Solutions at Securian Financial. “But what looks cheaper today can become far more expensive tomorrow.”

The hidden financial exposure behind “cheaper” plans

Securian Financial’s study found cost dominates benefits enrollment decisions, with nearly two-thirds of employees, especially older generation employees, saying it’s their top workplace benefits priority during open enrollment. Most employees say they choose lower-premium plans with higher deductibles or stick with bare-minimum coverages because it’s all they can afford.

For many employees, the out-of-pockets costs these “cheaper” plans come with can end up hurting them financially and beyond. In the past 12 months:

• 22% of survey respondents received a surprise medical bill that was higher than expected
• 20% used savings or emergency funds to pay medical bills
• 18% experienced significant financial stress due to medical bills
• 17% went into debt for medical expenses
• 13% delayed or avoided medical care due to cost concerns
• 3% filed for bankruptcy or considered it due to medical debt

“The math employees are doing is simple: ‘What comes out of my paycheck?’” said Taylor. “The math they’re not seeing is what happens if they’re hospitalized, need surgery or face a serious diagnosis. That’s where the affordability trap snaps shut.”

Recommendations for employers

The study urges employers to move beyond premium comparisons and make total exposure visible:

• Show real-dollar scenarios: Illustrate premium + deductible + out-of-pocket maximum in routine and high-cost years.
• Bundle guidance at decision points: If employees select HDHPs, be sure to show them supplemental insurance protections like accident, critical illness and hospital indemnity insurance that can help offset likely exposure. Only 30% of employees surveyed said they were enrolled in supplemental coverage, but 67% who are said they find it helpful.
• Invest in scenario-based benefit decision-support tools: 70% of employees said in the study they use these AI-based tools when available.
• Design for time-constrained decisions: Lead with the most consequential trade-offs, as the study found one in five employees (20%) feel pressured to decide quickly during open enrollment.
• Communicate trade-offs transparently: Explain what has changed since last year, why and what employees should consider next.

“The affordability trap isn’t about employees making bad decisions,” said Emma Thomas, director of marketing at Securian Financial, who leads the company’s annual workplace benefits research. “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 those trade-offs visible.”