As the new year rapidly approaches, employers are grappling with increasing health care expenses, scarcity of qualified candidates, inflation, and recession fears. Despite these challenges, it is incumbent on businesses to balance the needs of the business with those of current and future employees in their benefits package.
Talent shortages and inflation woes
Mineral's 2023 State of HR Report found that the talent shortage was the #2 trend business leaders were worried about, with 68% of leaders worrying it will negatively affect their business. Benefits play an important role in attracting and retaining employees. More employers are considering ways to provide benefits to part-time workers, like offering individual coverage health reimbursement arrangements (ICHRAs).
Inflation is a huge consideration for both employees and employers, and an opportunity for financial wellness benefits to thrive. Employers who offer retirement plans likely have a huge resource already available and built into their plan to provide financial education and planning support. Employees are vocal about wanting flexible work options, but even those businesses that cannot offer flexible work can make their in-office employees feel appreciated by providing commuter benefits as attractive incentives.
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Small employers generally don't entertain a self-funded arrangement for health insurance due to the risk involved; however, level-funded plans are an alternative to traditional fully insured plans. Level-funded plans are great options for small and mid-size employers to reduce costs without sacrificing quality benefits, and help to keep employee contributions or deductibles low.
Health and wellness
Fortunately, employers have caught on to the importance of providing health and wellness benefits and its connection to employee retention. According to Mineral's 2023 State of HR Report, "improving health and wellness benefits" was the #2 improvement employers are planning to increase employee retention over the next 12 months. The shape of those benefits, however, can prove challenging. News sources and social media are contributing to the hype around the trending glucagon-like peptide 1 antagonist (GLP-1) medications (i.e., Ozempic and Wegovy) for weight loss. Employers are in a precarious position on whether to cover the high cost of GLP-1 drugs, and how.
The Centers for Disease Control and Prevention states 1 in 5 children and 1 in 3 adults struggle with obesity, which costs the U.S. health care system nearly $173 billion per year. Self-funded plans may have more leeway to include these drugs, while weighing the cost of obesity as a disease and FDA-approved usage. Some employers may add requirements or limited duration coverage to help offset the high cost of these drugs for obesity-only diagnosis, versus diabetes and obesity diagnosis.
Balancing rising costs
Employers have the difficult task of balancing the rising cost of benefits with the need to attract and retain employees. With the significant decrease in the Affordable Care Act affordability percentage plummeting to 8.39% in 2024, employers will need to be strategic with traditional benefits like health insurance, and non-traditional benefits based on their population demographics.
A comprehensive benefits package that contains a variety of options will help employers better cater to the differing needs of their workforce. Younger workers place a high value on plans that include student loan assistance and tuition reimbursement as the reprieve ends on student loan repayment. Older workers crave resources for financial wellness and are often the largest contributors to health savings accounts (HSAs). Mental health benefits will continue to trend in post-pandemic employment for all workers due to economic and social pressures. Providing workers with meditation apps like Calm and Headspace is a cost-efficient way to help manage mental health along with an employee assistance plan (EAP).
Regardless of trends, the most critical component of any benefit plan is when and how it is communicated to current and potential employees. Employees and candidates are interested in both monetary and non-monetary components of a job, and your job postings may be ignored if you aren't communicating about the job features that candidates value. Providing more information than the basics required by law is best practice. Here are some ways to boost the impact of your next job posting:
- Feature your medical benefits. A job posting simply listing "comprehensive benefit package" may not be descriptive enough. Consider including some of the great facets of your plan. For example, if the plan has a lower-than-average deductible, include some language highlighting that feature. Noting a high deductible may not be attractive, but if there is also a health savings account with an employer contribution, a candidate may consider that to be valuable.
- Highlight unique benefits. Traditional benefits like dental and vision coverage are important, but employers that offer tuition reimbursement or adoption assistance programs may find those attract a broader range of candidates.
- Feature your voluntary benefits. Voluntary benefits are essentially free to employers since they are generally paid for by employees. However, the perceived value of cancer insurance, accident insurance, or pet insurance may carry high value for some candidates.
- Spotlight your commitment to mental health. Going through the pandemic brought mental health and wellness to the forefront for many. Including perks that provide support for both physical and mental health are especially attractive to potential employees.
- Think beyond insurance. Benefits are not only insurance products. Other valuable benefits include bonus programs, recognition programs, flexible or remote work programs, unique vacation packages, extra paid time off for health issues, and more.
- Feature opportunities for career advancement. Candidates and current employees may place a higher priority on a company that highlights career advancement.
Open enrollment is not the only time to discuss benefits with employees. Communicating with employees about benefits is best done on a regular basis. Your broker would love to assist you in crafting a benefits communication plan.
Angela Surra is a contributor to BenefitsPro and the Principal Benefits Expert at Mineral, which provides HR & compliance services for over 1 million small-to-medium sized businesses (SMBs).
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