Two years later: Employee benefits changing to meet new challenges, opportunities created by pandemic
Employees' definition of a "benefit" has shifted during the course of the pandemic.
Employee benefits will never be the same in the wake of the pandemic and the ongoing economic fallout. “The combination of the pandemic and the hiring environment right now is really changing what we define as a benefit,” said Douglas Nagel, executive vice president, employee benefits, for HUB International.
Nagel and other industry leaders shared their insights during “Two Years Later: Lessons Learned from a Global Pandemic,” a webinar sponsored by Benefit Resource. Before the pandemic, benefit packages traditionally were based on what Nagel called a “hit-by-a-bus” scenario. If an employee is hit by a bus and has minor injuries, there is medical insurance. If the injuries are more serious, there is long-term disability insurance. And in the worst-case scenario, if the employee is killed, there is life insurance.
Related: Report: Pandemic shakes up disability claims numbers for 2020
“But in a lot of people’s minds, they’re not planning on getting hit by a bus, so is that truly a benefit to them?” he asked. “Probably not. When someone is together with their friends and they say, `why do you work at Benefit Resources?’ it’s probably not going to be because of the long-term disability plan or the health insurance. It’s some other reason. Culture is a benefit. A bereavement day for a pet is a benefit. All of these small things that we offer people really need to be positioned as part of the employee benefit package.”
A look at health care utilization during the pandemic provides insights into the types of benefits that employees value. As people began to catch up on delayed care, overall health spending increased by 21% in the first quarter of 2022 compared to the same period the previous year. This was led by increases in spending for hospitals (92%), chiropractic (52%), lab tests (27%) and dental (21%). But perhaps more than any other area, the pandemic shined a spotlight on mental health issues.
“Forty-three percent of individuals with mental illness currently are receiving treatment,” said Bill Riegner, vice president, employee benefits, for USI Insurance Services. “People diagnosed with depression will miss, on average, 19 days of work per year, as well as 46 days of being at work but unproductive. When a person has depression and is diagnosed with another disease, the costs go exponentially higher.”
Nance Lee Mosquera, benefits manager for the city of St. Paul, Minn., looked for solutions that would meet the needs of a broadly diverse workforce.
“The two things we have done so far that have had the biggest impact are working with our vendor to see if out-of-network mental health could be priced the same as in-network mental health,” she said. “We have so many departments that have different needs. There are specific out-of-network facilities that focus on mental health for firefighters, for example. Our vendor worked with us, and now our people can go wherever the doctor is, whether they are in-network or not.
“We also brought in an organization to work with employees on the web to focus on resilience. There was an initial survey that everyone took, and then they work with you in ways that are fun and engaging. We get quarterly reporting, and we really have seen the needle move, even during the pandemic. People are not necessarily feeling less stressed, but they feel there is more company engagement, more like the city understands and values them. “
Mental health also is a top priority for HUB International.
“If there is one good thing that came out of the last two years, it’s that it made seeking mental health services OK and made it OK for people to struggle,” Nagel said. “There are a ton of products out there to help with this, but one thing we have realized over the past couple of years is that one size fits none. Everybody engages mental health differently.
“One thing we are encouraging employers to do is create the white space, whether it is in the day or in the week, to take their own steps related to mental health. Sometimes that’s taking a nap, or sometimes that’s walking the dog.”
The pandemic changed not only the types of benefits desired but also how they are delivered and communicated. “The pandemic made virtual not just acceptable but preferable,” Mosquera said.
Riegner agrees.
“There is a big trend toward the digitization of employee benefits,” he said. “As benefit communication increases, the employee perception of the benefit program increases. Also, as employees perceive their benefits package better, they perceive their organization better and are more likely to stay. The bottom line is that employee communication is extremely important.”
The days of simply passing out brochures during open enrollment and referring to them a couple of times during the year are long gone. “The biggest impact has been employee benefits really going virtual and communication being a big part of that,” he said.
A number of other issues, such as billing transparency and the shift to remote or hybrid work, also will shape the future of employee benefits. But the pandemic has reinforced the point that the most important word in employee benefits is “employee,” as Nagel’s hypothetical situation shows.
“Now when they are with their friends, they say, `my dog passed away three months ago and they gave me the day off. That was a big deal to me,’” he said. “That’s a lot of work for HR and consultants, but in this hiring environment, we feel it is of the most hyper importance.”
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