Which benefits trends will affect employees most in 2023?
Here’s my take on the top benefit trends employers need to address in 2023 – and some solutions you can offer to help their employees.
2023 is off and running! But before things get too busy, let’s just take a moment to acknowledge that employees have been through some stuff these last few years.
To say the U.S. workplace has seen dramatic changes during that time is a significant understatement. The global pandemic created additional challenges for employers (Great Resignation, anyone?) and yes, opportunities like more flexible work arrangements for employees. But the pandemic also magnified the impact of some underlying issues for employees that were emerging even before its onset.
Based on what employees have been through, what reverberations will they feel the most this year? What issues are weighing heavily on their minds? And most importantly, what benefit solutions can advisors and employers use to help them resolve the challenges they face? Based on what we’re hearing from our clients and industry insights, here’s my take on the top benefit trends employers need to address in 2023 – and some solutions you can offer to help their employees.
1. Employees across the country are still in financial pain.
With inflation running at over 8% for most of 2022, employees’ spending power decreased decidedly in the past year. In fact, according to Mercer’s 2022 Inside Employees’ Minds© study, “covering monthly expenses” now claims the top spot of employees’ concerns, up from #9 in 2021. Looking to this year, the International Monetary Fund contends, “The worst is yet to come, and for many people, 2023 will feel like a recession.”
While some employees had additional protections through the pandemic (stimulus checks, foreclosure protection, etc.) and the economy has stabilized to some degree, they are still feeling the lagging effects of this fragile financial situation. According to a recent Gallup web survey:
- A majority of Americans (55%) say rising prices have caused financial hardship for their household, an increase from 45% a year ago.
- 13% of Americans say higher prices are causing a severe hardship for their family.
- Inflation has taken a greater toll on lower-income Americans, more than three-quarters of whom say they have experienced hardship because of rising prices.
The financial dilemmas many employees face are now starting to spill over into other areas of their lives, often in the form of increased medical and mental health issues as they try to make ends meet from paycheck to paycheck. It can lead to increased absenteeism and loss of productivity as they fret more over money matters.
We have also seen that these financial hardships are morphing into a growing need for legal representation and support. For example, we saw requests for help with a potential bankruptcy up 18% in 2022 over the previous year – and up 44% in the last 5 months of 2022.
2. Most employees aren’t prepared to become caregivers.
Caring for aging parents is a modern-day reality. More than 1 in 5Americans are caregivers and the majority (61 percent) are caring for an adult relative or friend while working.
Many times, employees become a caregiver unexpectedly due to a sudden and significant health event experienced by their parent or loved one. Having to shoulder caregiving responsibilities is already a cause of significant stress and taking on the caregiver role without a plan in place can create a major disruption in the caregiver’s life. The medical needs and financial hardships, coupled with logistical and legal issues that emerge can wreak havoc on an employee’s ability to provide care while remaining fully employed, let alone staying focused at work.
Many of today’s employees are having to address the caregiving challenges of their aging parents who didn’t have a solid plan in place for their changing medical, financial and legal needs. As these employees themselves age, their children,who are the younger employees in the workforce, will have to face the same caregiving reality. This vicious cycle will continue unless we help today’s caregivers become better prepared and reduce the challenges they pass on to their children.
Employers and their advisors can help break that cycle by rethinking how benefit offerings either support or fall short of employees’ needs in these situations. Caregiving solutions, life insurance with long-term care coverage, and legal insurance are examples of voluntary benefit offerings that can help address the caregiving challenge.
3. Addressing mental health concerns is a growing focus
Stress and anxiety continue to be a significant driver of employee absence and angst. The good news is the focus on employee wellbeing is at an all-time high. For example, companies spent $51 billion on employee wellness in 2020, and that number is expected to rise to $100 billion by 2030. Overall, companies are working more proactively to bolster their employees’ mental health resources, recognizing that it plays a major role in ensuring employee productivity, satisfaction and retention. In 2022, the most popular solutions were employee assistance programs, digital health tools, and educational resources.
This focus on employee wellbeing becomes even more important when thinking about Gen Z employees who are expected to comprise a third of the workforce by the end of the decade. This generation of employees are reported to have disproportionate levels of mental health issues. According to a 2022 Harmony Healthcare IT Survey of Gen Zers, nearly a third (31%) of Gen Zers would rate their overall mental health in 2022 as “bad,” and more than 2 in 5 have a diagnosed mental health condition.
Perhaps it’s because they’re more attuned to voicing their mental health needs, or they’ve seen the impact of financial stress on their parents while having to manage their own stresses, such as pursuing an education or entering the workforce during a global pandemic. They see costs going up and wonder if they’ll be able to find or keep a job in a potential recessionary environment.
Given that Gen Z is the workforce of the near future, employers need to be aware of their financial security and social needs and be proactive in offering solutions that help reduce stress in their lives. Financial literacy and counseling, various savings programs, and legal insurance can help employees feel more in control and reduce stress. For example, in a recent survey, the vast majority (84%) of our members reported that having a legal plan while handling a legal situation made them feel less stressed overall.
Solutions you can offer employers
Industry trends are highlighting the need for companies to continue to take a more personalized approach to employees’ individual needs. In fact, 68% of executives report they are pursuing future workforce strategies that will be more customized to individual needs.
In 2023, look for:
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Companies more actively addressing burgeoning stress levels with offerings like flexible work arrangements, access to tools, such as employee assistance programs and mental health apps, as well as perks that enable employees to choose their preferred ways to stay healthy and well-rounded.
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The latest industry trends and legislative changes that may have a direct impact on employees’ lives – and pocketbooks. This could include addressing recent developments like changes in state mandates for long-term care benefits and accounting for the significant changes slated for retirement savings plans.
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Companies will continue to add voluntary benefits focused on addressing both today’s and tomorrow’s stresses in their employees’ lives. Life insurance with long term care coverage, financial wellness programs, identity theft protection and legal insurance are some examples of coverages that specifically address some of today’s challenges.