Uncharted waters: Inflation and open enrollment
New employee demands for mental health and financial planning benefits, along with the ongoing impacts of a tight labor market, have many employers looking at offering more, not less, when it comes to benefits.
However, the post-pandemic world may turn out to be more complicated than anyone could’ve predicted in 2020. New employee demands for mental health and financial planning benefits, along with the ongoing impacts of a tight labor market, have many employers looking at offering more, not less, when it comes to benefits.
Cost containment will have to come from finding new efficiencies, with an emphasis on prevention, many benefits professionals say. Another option is cutting future costs by ensuring they don’t happen in the first place.
In conversations with several experts in the benefits world, the emphasis seems to be on doing more for employees. This coming open enrollment season should reflect that trend, with fewer companies reducing benefits and many more expanding their offerings to meet employees’ demand.
Worry about the recession when and if it happens
Even with talk of recession dominating the headlines, the tight labor market and relatively strong business environment has companies taking a wait-and-see attitude when it comes to preparing for an economic downturn.
Regina Ihrke, a senior director of health and benefits at WTW, notes that in past years, employers engaged in cost-shifting to employees as a way to deal with increased health care costs. But more recently, most employers have dropped that approach. “We haven’t seen that cost-shifting mentality in a long time,” she says, adding that there is more emphasis on addressing big-ticket claim areas like cancer, diabetes, and musculoskeletal conditions. She says companies are asking themselves, “Are there enough good solutions to help people manage their costs and steer them to the highest quality care, so that ultimately the longer-term impact would be health care savings?”
The fierce competition for workers among companies has given employees more power in the equation. Considering how many people are reporting burnout or job dissatisfaction, it may be that this change was inevitable, and the pandemic simply triggered it.
Stephanie Nebes, manager of benefits, wellness and payroll at the consulting firm Catalant, says that American workers can no longer be considered “just” employees.
“Employees are humans first and foremost and they have needs far greater than their job functions,” she says. “It’s important for us to not only be cost-conscious as a business, but to make sure that component doesn’t inhibit our ability to offer our employees the education and resources that they need.”
Related: How to recession-proof your benefits and compensation package
Gloria Sachdev, CEO of the Employer’s Forum of Indiana, says her group surveyed a range of business executives, and found that most are hedging on the likelihood of a recession, while keeping the cost of benefits flat for employees. One HR executive in a county government said that benefits are not the area being looked at for cost cuts. “As competitive as the market is, we are making budget considerations, but not around benefits at this time,” the executive says.
In that same survey, another small business executive said they were staying the course in not raising costs to employees. “We will continue to educate our team members about the overall cost of health care and how the decisions they make impact the cost they incur,” the executive says. “We have structured our benefit offerings to provide several different options for our team members. We have always had a focus on financial wellbeing as part of our benefit package and this won’t change. A year from now, this might be a very different story, but we are always mindful that our team members have a well-rounded, affordable benefit package.”
Hot offerings: Mental health and financial support lead the way
In addition to holding the line when it comes to costs, brokers and business leaders say they are keenly aware of the need to expand offerings in order to attract and retain workers, with many offering new programs in mental health and financial education and support.
“The No. 1 thing that employers are addressing is mental health,” says Ihrke. “Companies are looking to give people access and resources that they haven’t had in the past.”
She adds that in a global benefits survey conducted by her company, demand was high for retirement benefit options, workplace flexibility (especially among women), and mental health benefits, which were most popular with younger workers.
Amy Mosher, chief people officer at isolved, a workforce management company, says she has noticed a demand for elder care benefits. “A lot of families came together during the pandemic more than they had in the past,” she says. “That’s an area that can create a significant financial burden for employees. This didn’t use to come up, but it has jumped significantly; 19% of respondents in our most recent survey said that elder care services were something they were interested in.”
Both Ihrke and Mosher agree that employees are embracing virtual care solutions as well. “Brokers need to look at where the market is going,” Ihrke says. “It takes time to embrace new ideas. I talk about the robustness of virtual care—this is not just acute telemedicine; there’s so much in virtual care that could change how we test at home. We’re all really good at testing ourselves at home for COVID at this point, but there are a lot of at-home tests that are coming on the market. You don’t need to go to the doctor’s office anymore. If you can do a virtual care visit, you can do that in a much more timely fashion than you can by going into an office.”
Areas for fine-tuning: Partnerships and population data
The experts may agree that more is more when it comes to benefits during this open enrollment season, but that doesn’t mean efficiencies can’t be found. Two areas they mentioned were focusing on employee population data and finding the right third-party vendors.
Ihrke says that the benefits space is more top-of-mind for employees than it has been in recent years. She adds that lower-wage workers may need more attention as they navigate areas of benefits that might not have been available in the past.
“Sometimes lower wage workers lack the tools they need to make the right decisions for themselves,” she says. “So how do we provide the tools to guide those members and help employees make better choices from a benefits perspective, to balance those out-of-pocket costs that are out there?”
Mosher adds that more employers are also looking for better analytics tools, such as a dashboard that shows ROI and cost dynamics. “Technology on the data analytics side is really being leveraged a lot more,” she says.
Some employers also have a better grasp of how to manage changing markets, she says. “The companies that are doing this well are the ones that know their populations. They’re partnering with their benefits advisors to survey employees, so that they have an understanding of what is truly important to them.”