Pandemic wake-up call: More workers purchasing expanded health benefits
Aflac found that people who had tested positive for COVID-19 were more likely than others to purchase at least one new health benefit.
American workers are looking for ways to hold the line on health care costs as the economy slowly rebounds from the pandemic. Employers are seeking ways to bolster recruitment and retention during the ongoing labor shortage. Expanding health benefits can help achieve both objectives.
Nearly half of all U.S. employees purchased at least one new health benefit in response to the pandemic, according to the 2021 Aflac WorkForces Report. Half of those added life insurance, and roughly one-third of respondents said they purchased critical illness, hospital indemnity, telehealth services or mental health resources.
“Last year’s report showed that the pandemic was a wake-up call for workers to consider spending more time and effort in researching health-care benefits during the open enrollment period,” said Matthew Owenby, chief human resources officer for Aflac. “This year’s survey demonstrates the heavy impact COVID-19 has had on American consumers. Now we are seeing that wake-up call turned into action, opinions and actions regarding their health insurance and financial security, which was even stronger for those who actually had a positive COVID-19 diagnosis.”
The survey found that respondents who had tested positive for COVID-19 were more likely than other respondents to purchase at least one new health benefit:
- 38 percent purchased life insurance vs. 16 percent without a COVID-19 diagnosis.
- 29 percent purchased hospital vs. 9 percent without a COVID-19 diagnosis.
- 26 percent purchased critical illness vs. 12 percent without a COVID-19 diagnosis.
- 24 percent purchased mental health services vs. 10 percent without a COVID-19 diagnosis.
Even as they plan to invest more in their workforces over the next 12 months, companies struggle with offering robust benefits within their budgets. Employers made a number of tough decisions over the past year to reduce or maintain their operating costs, such as cutting back on hiring, eliminating or delaying raises, and reducing or eliminating bonuses.
However, as the economy continues to bounce back, employers plan to reverse course slightly and invest more in their workforces by increasing hiring of both full- and part-time employees, as well as offering larger raises.
Benefit costs may put a slight damper on these plans, however. Additional financial-related challenges include the following:
Offering robust benefits while staying within budget is the top challenge employers face. Most employers, 60 percent, indicate that they have observed an increase in benefit costs over the past year. These increased costs will negatively affect their operating plans, including improving the quality of their benefits programs, offering bonuses and offering raises.
Cost also is cited as the top barrier for employers who do not currently offer benefits to their workforces. Despite these rising costs, employers plan to keep their existing coverage. In fact, employers are 70 percent more likely to offer more benefit options than they are to say they will reduce the options that are available to their employees.
Employers have a slightly inflated sense of employees’ satisfaction with their overall benefits packages. Three-fourths of employers believe their employees are highly satisfied with their benefits, compared to only 62 percent of employees who express high satisfaction.
Employers also may mistakenly believe their employees have the finances to meeting health care costs. An overwhelming majority of employers (81 percent) believe their workforce can financially meet their health care obligations, yet almost half of employees report that they could not pay more than $1,000 for out-of-pocket medical expenses, and a similar proportion could not go for more than one month without a paycheck.
“COVID-19 is still very top of mind for employees, and they are seeking ways to help offset the financial burdens they have either experienced or have feared over the past 17 months,” Owenby said. “Financial vulnerability will continue to be a concern during this year’s open enrollment season as rising health care expenses continue to affect Americans during these uncertain times.”
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