Progress report: How far have employee benefits come in 2021?

As 2021 comes to a close, the COVID-19 pandemic continues to cast a long shadow over the country’s health care system, economy and workplaces. And while some degree of normalcy returned in 2021, the Delta variant of the disease set off new waves of illness and threatened or disrupted plans to return employees to the workplace.

A hornet’s nest of political conflict, the spread of misinformation and rebellion against preventive measures, and concerns about privacy and individual rights combined to make 2021 a chaotic, contentious year—souring any progress toward unity and consensus about the ongoing health crisis.

Employers, in many ways, were caught in the middle—desiring a return to normal while still seeking to protect workers and customers. As remote work continued for some, new issues around burnout arose, and policy steps such as vaccine mandates created additional headaches for company boardrooms.

For brokers, the disruption of the pandemic has led to innovation around benefits and new insights into achieving a better work/life balance. The regulatory approach of a new administration means that some benefits and compliance rules are seeing changes. Meanwhile, the continuing need for remote work has altered the workplace dynamic, requiring new benefits communication strategies and tools.

This overview looks at some of the top benefits and workplace issues that dominated headlines in 2021. But it is not comprehensive, and new issues are currently evolving and forming that will come to the forefront in 2022. As COVID-19 infection rates decline, there is some room for hope that the economy and the workplace will make sustained progress in recovering from the pandemic over the next twelve months.

Fingers crossed.

Women in the workplace: DEI raised hopes, COVID brought setbacks

In 2021, women saw better representation among corporate leadership, according to a study by McKinsey and LeanIn. But while the demand for more attention to diversity, equity and inclusion (DEI) did result in some positive gains for women in the boardroom, the same report also outlined serious setbacks for women in the workplace, caused primarily by the ongoing pandemic.

“Women are even more burned out than they were a year ago, and the gap in burnout between women and men has almost doubled,” the McKinsey/LeanIn report said. “In the past year, 1 in 3 women have considered leaving the workforce or downshifting their careers—a significant increase from 1 in 4 in the first few months of the pandemic.”

According to Beth Robertson, managing director, Atlantic Region, Benefits Division with brokerage firm NFP, the impact on such caregiving pressures can vary from company to company. “I would say our company is feeling the same pressure, but we have really put forward a people-first approach, so we’re trying to work around it as best we can,” she says. “We’re being as flexible as we can with our workforce,” she adds. “We’re doing our best to provide workers with flexibility on work hours and what days they’re working, to allow them to care for their families.”

Robertson notes that the benefits business is based on relationships, and that Zoom calls and remote work have their limitations for brokers and clients. “As we get back to work and see clients in person, I think it’s going to be more of a challenge to offer that flexibility,” she says.

Returning to work—in stops and starts

With millions of Americans vaccinated and COVID-19 infection rates dropping during the summer of 2021, many employers announced plans to return workers to the office or reduce restrictions previously in place.

Then came the Delta variant.

Although many companies have moved forward with more normal work arrangements, others continue to keep large numbers of employees working remotely. Wells Fargo originally hoped to bring workers back into the office after Labor Day, a deadline that has been repeatedly moved since then. The latest plan is to have most Wells Fargo workers return to the office on January 10, 2022. Many companies’ plans have followed similar up and down trajectories.

The unpredictable nature of the pandemic since the emergence of the Delta variant has wreaked havoc on many employers’ plans. Industry observers note that the return to worksites will not be a return to the “old normal,” but a new reality, which will require more flexibility and worker support on a number of levels. On the other hand, analysts, including IT research and consultancy company, Gartner, have noted that many workers miss some aspects of office work, such as social interaction, and may be ready to leave remote work behind, or at least embrace mixed arrangements that include both onsite and remote work.

Benefits brokerages will have their hands full not only dealing with their own return-to-office strategies, but helping employers develop new strategies for communication and engagement for their employer clients.

Innovations in benefits: Taking care of workers is the top priority

Necessity is the mother of invention, and the dramatic changes brought on by the pandemic have certainly driven a high degree of innovation, especially around communications and technology, as companies have adapted to remote work.

In the benefits area, the events of 2020 and 2021 put a new emphasis on valuing employee input and wellness. The DEI movement led to progress in hiring, promoting, and supporting workers who were often overlooked in the past. In some cases, benefits design also expanded to promote and support caregiving, as many workers now had additional family care challenges.

Mental health benefits were an area of emphasis, as well; there was a consensus that companies had to pay better attention to mental health wellness during an exceptionally stressful time. Mental health issues have been reported among all types of employees, from managers to low-wage workers.

The sharp increase in telehealth options, a successful technological innovation on its own, gave employees more resources and opportunities in this area. Other benefits and programs to enhance work/life balance have also become a priority for employers. As these changes continue, brokers can help employers find more effective ways to communicate with workers and reach them (sometimes literally) where they live.

The labor market was tight even before the pandemic; current shortages of workers and uncertainty about the future are creating even more motivation for companies to provide attractive benefits to workers. Some have noted a growth in benefit offerings around professional development, career growth, and skill attainment.

For benefits advisors, the labor shortage is both a challenge and an opportunity. Brokers can use their wealth of information on how to attract and retain workers to help employers with this issue. Fine-tuning benefits plans to provide more support for employees or more flexibility in work arrangements could also open up new avenues in addressing labor shortages.

Gig workers: Seeking clarity on who is an employee

The gig economy has become huge in the U.S.—by some measures, 35% of American workers are involved in some fashion. Contract workers are used in a wide range of industries, but with the rise of independent contractors, questions about benefits and employee status have become more pressing.

As an analysis by the Littler Workplace Policy Institute recently found, companies can face serious regulatory consequences if they misclassify employees, so clarity on this issue—especially for federal regulation—has been sought.

In 2021, the incoming Biden administration took several steps in its regulatory approach, including canceling a Trump administration rule which imposed an “economic reality” test to determine a worker’s status.

With a more labor-friendly approach in general, the Biden Department of Labor (DOL) has been looking at models such as California’s “ABC” test to classify workers. According to the Littler analysis, “Under the ABC test, a worker is considered an employee unless the hiring entity can demonstrate that: (a) the worker is free from the company’s control and direction in how they perform their work, (b) the worker is performing a job that is outside the normal business activities of the company, and (c) the worker is typically engaged in independent work of the same type they are performing for the company.”

Robertson says her firm has been noticing more clients using gig workers, and added that employers are embracing the concept more quickly than many insurance carriers. “We are seeing more and more clients moving to a gig model,” she says. “They are feeling the pressure to provide benefits in some shape or form. We’re finding that the insurance industry is lagging behind in providing for the gig workforce. Carriers don’t really know how to underwrite accounts for the gig workforce. And I think we’re going to see more gig work, as people figure out how to provide for their families.”

Another challenge for brokers and employers in 2022 and beyond may be in shaping a benefits strategy that includes gig workers as well as traditional employees.

Telehealth: A new world of virtual care begins

Perhaps the biggest success story in the health benefits world during the pandemic was the rise of telehealth. Like remote work, it has shown game-changing potential, but it also has its limits and even possible drawbacks.

For many, telehealth has provided a convenient way to get health care at a time when in-person visits were difficult or even impossible. Both provider organizations and insurers have embraced the solution and poured resources into creating telehealth options for consumers. In addition, larger employers such as Amazon and Walmart expanded their telehealth offerings to employees—and in Walmart’s case, added virtual visits to its menu for customers using the Walmart Health Centers.

Telehealth use declined as 2021 drew to a close—in large part because in-person care is no longer seen as high-risk. But many observers expect telehealth to remain an important—and less expensive—part of the health care equation. This year has already seen its share of new insurance products focusing on a “virtual first” approach, and we can expect to see more innovation and development in this space in 2022. Given the enticing price tag such plans can offer, benefits professionals should be prepared to discuss the pros and cons with their clients, as well as the feasibility of integrating new features with existing technology and services.

Some of the areas that are most promising for telehealth include mental health care and chronic disease management. For employers, worksite telehealth options can boost productivity; however, challenges remain, as some areas of medical care will always require in-person visits, and access to the necessary technology is an issue for some patients.

Remote work: A big success story, but issues continue to emerge

After years of hesitation, it took a pandemic to convince employers to embrace remote work. Not only were companies able to get remote workers up and running, but in many cases, the switch to working from home or other locations increased productivity and worker satisfaction. But there has also been a growing realization that remote work is not a perfect solution for everyone and that it often comes with some drawbacks, as issues such as worker burnout and difficulty finding a work-life balance became more prevalent.

As time went on, other drawbacks began to emerge. A study from the Journal of Occupational and Environmental Medicine found that remote workers were reporting higher rates of lower back pain, which the researchers attributed to lack of proper equipment.

“The rapid shift in working conditions of millions of office workers raised some significant ergonomic considerations,” the study said. “In a typical home environment, furniture is selected based on emotional response, comfort perception, and build quality—not the features required to do work healthily and efficiently.”

A Pew Research Center survey outlined other problems, including feeling less connected to colleagues; getting less exercise; and problems with sleep and motivation.

All of this could add up to an increased incidence of chronic conditions in the years to come, as well as higher costs for employers. Especially for companies that are making remote work a permanent option, wellbeing programs focusing on stress, good physical and mental health habits, and preventive care will take on greater importance.

DEI: Building on a corporate awareness

The death of George Floyd in 2020 sparked a wave of protests across the country, a movement seen as the result of many years of injustice and unequal treatment of people of color in the U.S.

The business community responded, and a new emphasis on diversity, equity and inclusion (DEI) has become a priority for many companies. A year and a half after the movement began, we’re seeing a lot of progress but also recognizing just how much more there is to be done.

According to Tony Lee, managing partner of Dickerson Insurance Services, corporate America has made a concrete commitment to addressing DEI issues, with millions invested in programs seeking to increase inclusion and support diversity. “I think there’s been some institutional progress,” he says. “There’s a lot of money flowing through the system that corporations are dedicating to diversify their supply chain, bring in diverse partners, and diverse staffing.”

But Lee, like many, is wary of the tendency for the business community to “check boxes” while underlying problems are not addressed. “Money is not going to cure the problem,” he says. “Good policies and money will cure the problem.”

There’s also a growing consensus that the key to developing good policy around DEI is linked to data analytics. A recent Boeing study found that using health assessment data could identify issues with health benefit spending on different ethnic cohorts. As one of the participants in a roundtable on the study noted, data-driven benefits policies can be an effective way to create a more equitable environment at work. “Benefits are an important part of building a diverse and inclusive workplace,” he said.

Now that the issue of DEI is established, putting processes in place to track data and progress will be the next essential step, allowing employers and their advisors to pursue evidence-based solutions.

Paid family leave: Progress stalled

One of the biggest pieces of news from the ongoing congressional debate over President Biden’s “Build Back Better” plan is the decision to cut out a federal paid family leave program. Budget hawks in the Democratic party succeeded in eliminating that provision, although some Democrats promised to take up the issue again.

According to the Organization for Economic Cooperation and Development (OECD), the U.S. is the only country among 41 developed nations that does not mandate any paid leave for new parents. The Trump administration also talked about creating a paid family leave program but failed to make this change.

Many large employers in the U.S. do offer some form of paid family leave, but small and mid-size employers often do not—and even among large employers, low-wage workers often do not have this benefit. This basic gap in American employment benefits results in more inequity in the workplace. And during a pandemic, it could be a reason why many workers are not returning to their old jobs.

A recent study in Health Affairs noted that reliance on the decades-old Family and Medical Leave Act (FMLA) has left U.S. companies at a competitive disadvantage—and even that limited benefit is unavailable to many workers.

“The FMLA exempts workplaces with fewer than 50 employees. No other country in the world has broad restrictions on sick leave eligibility based on employer size,” the report said. “Second, the FMLA requires a minimum of 12 months and 1,250 hours working for the same employer… Finally, the FMLA is unpaid, making the U.S. the only country globally with a national policy providing only unpaid leave.”

Financial wellness: Still a top benefit for employees

Although new developments in the area of virtual health care and mental health benefits were topics of conversation in 2022, financial wellness and financial planning benefits continue to draw interest as well.

Employers seeking to attract and retain workers have found that such benefits are sought out by employees and can result in relatively quick improvements to the finances of individuals and families. Many have discovered that simply having more peace of mind about financial health is its own payoff.

While financial benefits have traditionally been separate from wellness and health offerings, the line is becoming increasingly blurred as the connection between financial, physical and emotional health becomes more established. According to Laura Carstensen, Ph.D., founding director of the Stanford Center on Longevity, “Good health and financial wellness are intricately linked. If you are healthy, you can work more, you can work longer and you can engage more.

People who are healthy are going to be more financially secure. Emotional well-being, physical fitness, and financial security are three legs of a stool. If any one is missing, we are in trouble.” Benefits brokers needn’t run out and pick up a CFP designation, but being able to intelligently discuss the role of financial health on overall wellness, and feeling comfortable bringing solutions and partners to the table, will offer an advantage in the years to come.

Health care price transparency

Transparency in medical bills has been a problem for a long time, but in the past two years, new regulations have been enacted to address an issue that continues to draw attention from government, business leaders and consumers.

On the regulation side, the Affordable Care Act’s “Transparency in Coverage” (TIC) rules have been coming online, and the more-recent Consolidation Appropriations Act of 2021 (CAA) has sought to bring more transparency to medical billing. The CAA includes the “No Surprises Act,” which specifically addresses surprise billing, a major issue for consumers in recent years.

Surprise billing usually occurs when a patient gets treatment from an in-network hospital, but some of the providers involved are not in-network, leading to larger-than-expected bills. Although several states have enacted laws regulating this practice, the CAA’s “No Surprises Act” sought to bring a federal solution that would help consumers in all 50 states. A recent JAMA study of the existing state laws suggests that those regulations can be helpful in bringing down the high costs of surprise billing.

Earlier this year, the Departments of Labor, Treasury, and Health and Human Services released new guidance on the existing regulations, seeking to address confusion and overlap around the various rules. Employers will be leaning heavily on their benefits advisors and compliance teams to ensure they’re properly prepared for the latest CAA and TIC rules and deadlines.

It’s clear the pandemic has set into motion a number of major new developments in the world of work—some that have been stubbornly resisted for some time, and some that have been pleasant surprises. This snapshot captures just a few of the key issues that will be on benefits advisors’ and employers’ radar in the year to come. But one thing is for sure: Now that the wheels are in motion, benefits professionals and employers are perfectly positioned to take the wheel and steer the future of employee benefits in the right direction. And hopefully even hit the gas pedal.