5 benefits and health care trends that may surprise you in 2021
A turbulent 2020 could give way to a year of opportunity for employers and benefits advisors in 2021.
That’s especially true in health care and employee benefits. As we look ahead to 2021, we are leaning heavily on outreach and feedback from partners, consultants, brokers, clients, and participants to shape our planning and strategy. With that in mind, here are five trends we’re anticipating in the employee benefits and health care space for the coming year:
Move to virtual open enrollment experiences
The pandemic forced many employers and their benefits advisors to implement a virtual open enrollment for their 2021 plan year. That was especially true in cases where part or all of the workforce was working from home.
We recently surveyed employers whose open enrollment periods were finished. The survey results revealed that some form of virtual open enrollment appears to be here to stay. Among respondents who conducted a virtual open enrollment in 2020, 85 percent said they plan to continue to do so in future years. Our survey results showed that the percentage of employers that hosted in-person open enrollment fairs declined dramatically from last year to this year, from 45 percent to 3 percent. It is very unlikely that in-person open enrollment will return to previous levels.
With so many employers planning for virtual open enrollment going forward, expect demand for personalized, customizable, on-demand benefits education and enrollment to increase.
Benefits changes in a post-pandemic world
The COVID-19 pandemic disrupted the day-to-day bottom line and the long-term goals for many businesses. When executive leadership and human resources evaluated their employee benefits offerings for 2021, many chose stability in an unstable economic environment. In our employer survey, only 15 percent of respondents said they changed their benefits offerings due to the pandemic.
Related: Lessons of pandemic are remembered as businesses plan for 2021
As COVID-19 vaccination speeds up our economic rebound, it’s likely that employers will look for new ways to meet current employees’ needs while standing out in a competitive hiring market with attractive benefits offerings. Much has changed, but the cost of employee turnover remains high. The Work Institute estimated in a 2019 study that the cost of losing a single employee is $15,000. In that same study, compensation and benefits was the fourth-most common cause of employee turnover. Identifying the top needs and expectations employees have around benefits packages will continue to be a key factor in mitigating the cost of attrition and developing a workplace culture built on the best employees.
Emphasis on employee financial wellness
As businesses work to regain their footing post-pandemic, human resources leaders will be looking for ways to address employees’ financial wellness.
The Employee Benefit Research Institute (EBRI) released its Financial Wellbeing Employer Survey in October 2020, which found that employers are viewing financial wellness as part of a broad employee wellness initiative that’s taken shape amidst the pandemic. The survey findings concluded that top issues financial wellness programs addressed were “health care costs and retirement preparedness.”
The value of addressing employees’ financial wellness is clear. PricewaterhouseCoopers (PwC) revealed in its annual Employee Financial Wellness Survey that “financial or money matters/challenges” was far and away (at 54 percent) the most common cause of stress among full-time employed U.S. adults. In a previous PwC study, 47 percent of employees said financial stress either caused them to miss work or has negatively impacted their productivity.
For that reason, we anticipate additional increases in health savings account (HSA) offerings and participation in 2021. HSAs provide a unique opportunity for employees to address both short-term health care needs and long-term retirement planning needs, especially since HSA funds can be invested and all funds carry over from one year to the next.
Surge in HSA-eligible high-deductible health plans
As the economy bounces back from a recession that was largely brought on by the pandemic, looking to the past can provide some indications as to what the future might hold. Following the 2008-2009 U.S. recession, more employers turned to high-deductible health plans (HDHPs) as a way for themselves and their employees to cut costs. At that time, HSAs experienced a surge in participation as HDHPs became more available.
According to Kaiser Family Foundation, the percentage of firms offering benefits that had an HSA-eligible HDHP among their benefits was:
- 10 percent in 2009
- 12 percent in 2010
- 18 percent in 2011
During that two-year period, HSA assets increased from $7.2 billion in 2009 to $12.2 billion in 2011, according to Devenir. The benefits of HSAs are more widely understood today than they were a decade ago, when they were still in their infancy. That could lead to an even greater surge of employers turning to HSA-eligible HDHPs as a way to increase savings and offer more diversified health care options that cater to individuals looking for a benefits plan that offers short-term and long-term upside.
Demand for price transparency
The approach on Capitol Hill to health care in 2021 is a little tough to predict, with the 2020 election not too far in the rearview mirror. But we have seen growing support on both sides of the aisle for greater price transparency for both health care consumers and employers. That will likely continue to be a legislative emphasis going forward with bipartisan support.
The Journal of American Medical Association has indicated that about 30 percent of all health care spending is considered waste. Transparency would help brokers’ employer clients ensure they are providing the highest value care for their employees while also helping them eliminate wasteful spending. Their employees would also benefit from transparency with less potential for surprise health care or drug costs. Consumer-driven health care, such as HSAs, also keeps employees more directly engaged with their health care and the costs associated with it, which can reduce wasteful spending.
A turbulent 2020 could give way to a year of opportunity for employers and benefits advisors in 2021. Preparing for what’s to come will help us come together to provide the best health care solutions and employee benefits to support employees tomorrow and beyond.
As president of Health, Robert Deshaies is responsible for WEX’s health and benefits solutions.