Summary
Optimizing every dollar in an employee benefits program can be an effective strategy to manage costs. This Q&A with Katey Koll covers important factors about the “next best dollar” concept, such as:
- How employees can gain confidence in their benefits choices.
- Why employee data can play an important role in benefits spending.
- How the “next best dollar” can guide employee decisions on retirement and spending accounts.
- Technology that helps process complex information into easy-to-understand benefits guidance.
Q: What does the “next best dollar" mean in the context of benefits spending?
Katey: Most employees are making tradeoffs with every dollar they earn. When benefits enter the picture, deciding where to put that next dollar can quickly become overwhelming. “Next best dollar” is commonly considered in helping employees answer a simple but powerful question they face every year during their benefits enrollment: where will my next dollar matter most?
Q: How should employers think about optimizing their benefits investment to get the most value for both the organization and employees?
Katey: Optimizing benefits isn’t about offering more, it’s about impact. Benefits are a major cost for employers and a major commitment for employees. When employees can personalize their benefits based on their financial goals and make the most of employer-sponsored contributions, they may gain confidence in their choices. That confidence then has the potential to lead to more engaged, less stressed employees who show up stronger at work.
Q: What role does employee data and analytics play in determining the optimal allocation of benefits spending?
Katey: Employee demographic data such as age, gender and life stage helps employers allocate benefits spending in a way that aligns with the evolving needs of their workforce. These insights can inform plan design decisions and guide investments in benefits like family planning support, mental health resources or financial wellness programs. By analyzing aggregated workforce data, employers can make more intentional benefits investments that drive engagement, value and cost efficiency.
Q: How can employers use claims data, utilization patterns and employee feedback to guide their benefits spending priorities?
Katey: Analyzing claims data to inform plan design decisions or introduce targeted point solutions allows employers to distribute benefits spending based on the current needs of their workforce. For example, if analytics indicate a high risk of musculoskeletal (MSK) conditions across the population, an employer may choose to invest in a solution like Sword* to proactively address that risk. Analyzing aggregated employee data enables strategic, timely benefit investments that are intended to improve outcomes while optimizing spend.
Q: There’s clear value in employers understanding the “next best dollar” in benefits spending so let’s shift towards the employee perspective. How does this concept apply to individual employees making decisions between their 401(k), health savings account (HSA), flexible spending account (FSA) and other benefit options?
Katey: This concept applies differently for every employee because each person’s health and wealth picture is unique. After selecting the optimal benefits for their family, employees may be left wondering: Am I on track for retirement? Am I maximizing employer contributions? Am I being tax‑efficient? The “next best dollar” idea triggers those questions about using their next dollar in a way that aligns with their personal and family financial goals.
Q: What tools or guidance can employers provide to help employees optimize their own benefits spending and contributions?
Katey: To help employees optimize their benefits spending, employers can provide next dollar guidance directly within the benefits administration experience in a way that connects today’s decisions to long‑term outcomes. Just as important, that guidance should be simple and low‑effort, using what’s already known about the employee to minimize friction. When employees can get meaningful results without digging up documentation or answering endless questions, they can stay focused on making the right decisions.
Q: How can technology help employers and employees make holistic decisions about where to allocate their next benefits dollar?
Katey: Technology plays a powerful role in helping employees make meaningful benefits decisions when it is trusted, unbiased and transparent. The ideal tools are built on credible expertise and thoughtful checks and balances, giving employees confidence that the guidance they’re receiving is objective. When that trust is in place, employees can use technology to make clearer, more confident decisions about where to allocate their next benefits dollar.
Q: How does artificial intelligence (AI) and decision support technology help employees understand the true value of different benefit options?
Katey: Health and wealth benefits are inherently complex, with year-over-year changes to plan designs, contribution limits and tax rules. AI and decision support technology can help by processing that complexity and translating it into personalized, easy‑to‑understand guidance for employees. One role of AI is to simplify and inform—not to decide—so employees can use technology to receive and digest the information while remaining empowered to make choices that are right for their individual circumstances.
Q: Rising benefits costs is a complex issue that likely won‘t be resolved overnight. Looking ahead, how do you see the approach to benefits spending and optimization evolving over the next 3-5 years?
Katey: As new generations enter the workforce with a stronger focus on physical, mental and financial wellbeing, employees will increasingly expect a clearer understanding of what their benefits can actually do for them. Over the next 3–5 years, intuitive technology—paired with education and personalized guidance—will be pivotal in helping employees confidently decide how to spend their next best dollar.
In the benefits space, we’ll see a shift toward choices that actively support healthier outcomes, not just coverage. In the wealth space, AI and decision support technology will play a larger role in helping employees understand the broader economic environment and model financial outcomes—putting powerful insights directly at their fingertips.
Q: How will the integration of health and financial wellness continue to influence where organizations and individuals invest their benefits dollars?
Katey: Employees generally don’t separate health and financial wellness. They experience both through a single wallet. As those two worlds become more integrated, organizations and individuals will increasingly look at benefits decisions holistically when deciding where to invest their next best dollar. Tools that bring together an employee’s full health and financial picture help reduce stress and build confidence, giving employees assurance that they’re making the right decisions for themselves and their families.
