Resetting employee benefits in 2021: Where to focus
COVID has changed the entire landscape for benefits, compensation, wellness, diversity and more.
Employers have their work cut out for them in 2021 as they respond to the employee benefits challenges that reached unprecedented levels of intensity in 2020.
As the coronavirus pandemic is pretty much guaranteed to be a fixture in our lives through at least the first half, likely three-fourths, of the year, the organization that isn’t figuring out how to reset is going to be the exception. Because this disruption has changed the entire landscape for benefits, compensation, wellness, diversity and more – and it’s necessitating major recalibrations if everyone’s interests are best served.
Related: 3 health care trends fueled by the COVID-19 pandemic
Here’s what benefit pros should be looking at as they tackle the reset process:
1. Health plans and benefit programs – a good time to redesign
The pandemic created a variety of reasons for employers to take a look at their health plan designs as well as the basis of their overall benefits programs. Think about it:
Yes, rate increases are ongoing, but medical insurers are providing premium returns or holiday programs since they didn’t meet the Affordable Care Act’s required medical loss ratios in 2020. Still, the jury’s out on whether routine health services that were delayed with the pandemic have been canceled completely. Large COVID claims may still be pending – who knows how chronic health issues may worsen due to delayed services in COVID’s early days. And then there’s this: furloughs and layoffs reduced headcounts and health plan costs, giving employers some financial flexibility for their planning.
A health plan reset is especially timely given the way the pandemic heightened employees’ appreciation for health benefits. Telemedicine and health savings accounts have been particularly popular; one survey found that 25% boosted their HSA contributions and 44% have a more positive view of telemedicine. It didn’t hurt that it’s free of cost-sharing under the CARES act for high deductible health plans before January 1, 2022.
The impact of the pandemic makes it key for employers to look further than just deductibles and carrier networks to how, specifically, their plans come together to make their employees’ lives easier or better. It makes an argument for a benefits design strategy driven by employee insights, data analytics and third-party data. Not only will employers be able to better understand their costs, but the right strategy will allow them to move away from costly and less effective one-size-fits-all benefits.
2. Respond now to the building crisis in mental and financial health
The impact of the second coronavirus surge may be even worse than the first when it comes to affecting the public’s mental and financial health. It makes the case for managers to remember the importance of the human connection as they step up their communications and work at being flexible and inclusive. People especially need this support as they adjust to working from home, but outside resources are also helpful. Start with employee assistance programs, especially that offer virtual consultations.
Employers also should be mindful that the mental health crisis can be rooted in the deepening financial ill-health of the American public – and worker. This was an issue before the pandemic, leading as many as 83% of employers with 100 or more employees to initiate programs to help]. EAP services often include financial counseling; solutions can also be tailored to generational needs. Another option? Limited benefit medical plans for lower paid workers who can’t afford the premiums or deductibles of more traditional plans.
3. COVID vaccines cometh…now what? And what about those specialty drugs?
Even as the new COVID vaccines await a plan for distribution, no one’s expecting the inoculations to perform like a miracle and make the pandemic magically disappear overnight. In the interim, employers are watching developments closely for the long-term impacts on their plans, having been assured that nearly all health plans will be forced to cover the vaccine costs.
The bigger financial worry might actually be specialty drugs – still. They continue to dominate the pharmaceutical R&D pipeline and those on the market drive big spending, especially as they are approved to treat more conditions. While government relief may eventually come, employers shouldn’t wait: They should review and fine-tune their pharmaceutical plan with the assistance of their broker, pharma benefits manager or health insurer.
4. Doing diversity, equity and inclusion right – the drive continues
In an ideal world, diversity, equity and inclusion will remain critical concepts that business leaders strive to weave tightly into the fabric of their organizations well beyond 2021. Employers must hold steady with the drive to effect meaningful and lasting cultural change.
The business case for diversity has been well-documented for over two decades. The events of 2020 only reinforced the need to understand how diversity can play a positive role in organizational success. But there is no playbook. The right approach is nuanced and complex. It requires addressing important issues and executing changes with education, conversation and understanding. There is no quick solution, but those that keep at it will win.
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