The impact of COVID-19 on employee benefits and how organizations approach them
As employee well-being climbs toward the top of the priority list, benefits are front and center.
Organizations recognize the importance of employee benefits, but it wasn’t until 2020 that this recognition went all the way to the top. While benefits have always been the primary concern of benefits managers and chief HR officers, COVID-19 reignited the conversation among the C-suite, who looked for ways to support their employees through these challenging times. Now, as employee well-being climbs toward the top of the priority list, benefits are front and center. With the right platform, benefits advisors can help organizations provide what employees want and deliver a compelling benefits package that’s personalized to meet their individual needs.
There are still many unknowns about how COVID-19 affects employees, their needs and their benefits usage, but an analysis of clients across our analytics tool reveals the true impact.
Related: COVID has been a wake-up call for millennial employees—and benefits leaders need to act
We found that employee attrition has been significantly higher for those under age 25, as well as those over age 50, when compared to workers in other age groups. These findings were irrespective of length of service. Our analysis also found that more holiday days were sold during the first six months of 2020 versus the same period in 2019 as employees chose to hunker down and remain indoors.
Whether staying home or venturing out into the world, the need for health care remained high during the pandemic. Utilization of both life insurance and medical coverage increased. However, total reimbursement spend was lower during the first six months of 2020 when compared to the year-ago period.
Chief executives have taken notice and are taking action
As COVID-19 cases increased and employees shifted to the home office, health and well-being became an important topic. The c-suite began to take a closer look at how they could provide benefits that would help employees during the pandemic. Employees were understandably concerned, wondering if they had the right level of coverage.
At the same time, many organizations were expected to do more with less and had to re-evaluate their expenditures. If costs were to be cut, they had to be sure they didn’t cut the wrong thing. For example, they did not want to take away a particular benefit if it was still offered by competitors or valued by their employees.
This highlighted the growing necessity to obtain and utilize data whenever possible. Data is invaluable in supporting business decisions and helps advisors and employers avoid mistakes while ensuring they make smart, guided choices.
Organizations also understood that, despite the need to cut costs, HR tech warrants additional investments. Data from insurance broker Arthur J. Gallagher & Co. shows that 69% of employers plan to invest in HR tech platforms by 2022.
The need for benefits technology has never been more pressing
Benefits have remained top of mind throughout the pandemic as employees worry about how their health might be impacted by the virus. But while outpatient hospital visits initially declined upon the arrival of COVID-19 as people stayed home to stay safe, things began to change last fall. According to a report by The Commonwealth Fund, outpatient hospital visits rebounded to pre-pandemic numbers in October 2020.
It is also worth noting that, in addition to the concerns surrounding the pandemic, many are finding it difficult to cope with the stress of being separated from colleagues, family and friends. This has led to feelings of isolation, which in turn has increased the frequency of mental health problems. Kaiser Family Foundation research shows that, during the pandemic, the number of U.S. adults who reported anxiety or depression increased from 1 in 10 to roughly 4 in 10.
This is easily one of the most difficult experiences we all will ever face, but employers are in a position to help. They can best support their staff during this challenging period by providing great benefits technology that offers the level of flexibility and personalization that employees need most.
Make smarter benefits decisions without spending more
The importance of benefits technology is even more apparent in today’s climate. Millions of employees are working from home, and according to reports from Gartner and Global Workplace Analytics, many may remain at the home office even after the pandemic has subsided. This will require employers to continue evaluating employee needs, particularly benefits uptake. With the right benefits technology – which provides invaluable insights into benefits use – organizations can make smarter decisions that serve employees without hurting the bottom line.
Chris Bruce is managing director and co-founder at Darwin.
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