Voluntary benefit offerings expand to address health care costs in tight labor market

Employers are finding innovative ways address rising health care costs and expand wellness benefits as they compete for talent in a tight labor market.

“HR leaders on the frontlines are crafting holistic benefits packages that meet diverse workforces where they are,” according to a new report from Goldman Sachs. “The focus many employees have today on benefits is a clear shift we observed during the pandemic. Employees depend on and expect more of their employers, especially when it comes to benefits. In turn, benefit offerings are evolving to keep up.”

The report analyzed compensation and benefits trends at approximately 400 companies to which Goldman Sachs Ayco provides financial counseling. Initiatives used by employers to control costs include:

• Shopping across medical plan carriers in hopes of finding better rates. “Changes to medical plan carriers isn’t something we see often,” the report said. “This year, close to 10% of our corporate partners switched.
• Absorbing premium increases rather than passing them on to employees. Almost 40% of corporate partners absorbed increases, and about 5% were able to offer lower medical premiums than in 2022.
• Increasing HSA contributions and reducing or eliminating the requirement to complete wellness activities to earn them. Almost 5% of respondents increased contributions as a way of offsetting increases to medical premiums.

Companies also are adding benefits to help employees control costs, such as:

• Supplemental specialty medical programs, including cancer diagnosis/treatment, degenerative disease management, musculoskeletal support and diabetes treatment;
• Expanded resources, such as telemedicine, nurse advice lines, price transparency tools, digital navigation tools and advocacy service to help employees find the right provider based on quality and cost; and
• Financial wellness resources to help educate employees on rising costs and provide resources and tips for minimizing expenses.

Voluntary benefits have steadily grown in popularity over the last decade. The majority of Golman Sachs Ayco’s corporate partners now offer some mix of group-priced benefits, and employees increasingly expect these offerings as key components of a competitive benefit package. The fastest-growing voluntary benefits from 2020 to 2023 are child and elder care assistance (177% growth), hospital indemnity (152%), pet insurance (120%) and critical illness (120%).

Mental health support is the most prevalent ancillary benefit offered by respondents, with more than 95% offering mental health assistance to employees in the form of an Employee Assistance Program and/or independent mental health applications and resources.

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“Investing in mental health benefits shows employees that their employers look after their whole — not just their work – lives,” the report said. “These programs can also help improve employee productivity, reduce use of sick time and decrease health insurance costs.”