New Challenges Emerge in Employee Benefits — but More Options, Too
Give and Take
With five generations in today’s workforce, employee benefits are no one-size-fits-all proposition — yet, they remain a key issue for employers looking to attract and retain a skilled workforce. Striking a balance between what employees want and what the business can afford is certainly a challenge — but the flexibility and options available to employers these days makes the task a little easier to navigate.
By Mark Morris
Between demographic changes in the workforce and the impact of the pandemic, employers face multiple challenges these days in offering health insurance and other benefits to their workers.
In the U.S., 49% of people receive health-insurance coverage through their employer. According to the Kaiser Family Foundation, that percentage represents approximately 156 million Americans. Many of those workers also receive coverage for dental care and disability, as well as access to a retirement plan as part of a complete benefits package.
And, despite the increasing costs of health insurance, employers are not cutting back on this essential coverage, said Peter Miller, partner with Millbrook Benefits and Insurance Services in Springfield.
“They are trying to strike a balance between offering a benefits package that is attractive to new hires, while also trying to control costs and keep the business running,” he noted.
Traditional benefits, such as healthcare coverage and retirement plans, have always been important to employees. According to Patrick Leary, vice president of Work Benefits Research at LIMRA in Windsor, Conn., traditional benefits make up the core of an employer’s value proposition to employees.
In putting together a benefits package, an employer decides whether a particular offering will be paid 100% by the employer, or use a cost-sharing approach in which employees contribute as well. A third option, known as a voluntary benefit, is completely paid for by the employee.
LIMRA provides research for the insurance and financial-services industry. One significant trend Leary has studied is the expanding demographics of the workplace.
“There are now five generations in the labor force,” he said. “The oldest workers are staying longer, while Gen Z is just beginning to enter the workforce.”
Each generation has different benefit needs, and they are all looking to their employer to address them. Voluntary benefits are one way for an employer to accommodate different needs among a diverse employee population.
“They are trying to strike a balance between offering a benefits package that is attractive to new hires, while also trying to control costs and keep the business running.”
“A company can offer a broad-based plan where some benefits appeal to younger workers and some to older,” Leary said. “Because they are voluntary benefits, the employer can address the various needs of their employees without increasing their costs.”
He emphasized the importance of employers working with a benefits consultant to find the right mix. “Part of the process involves the employer understanding their current employees and the types of workers they plan to recruit for the future.”
Employers typically add benefits to make their companies more attractive to the specific types of workers they seek. For example, Miller has been discussing benefit packages with a tech company looking to attract engineering graduates from prominent colleges. While traditional benefits are important, flexible work arrangements and college debt-repayment programs also have a strong appeal to this group.
“It’s important for employers to think outside the box to make themselves more attractive to the people they’re trying to hire,” he said.
College debt repayment offered as a formal benefit is relatively new, but it’s quickly becoming a popular benefit as more graduates enter the workforce saddled with large debt obligations.
Meredith Wise, president of the Employers Assoc. of the NorthEast, said employers are using different tactics to help new employees manage their student-loan debt. Some employers offer a hiring bonus so new employees can pay off a chunk of their student loan.
Another approach allows employees to pay down their debt and contribute to their retirement savings at the same time. Based on his conversations with employers, Leary said the 401(k)/student-loan payment approach strongly resonates with young employees.
“The amount the employee pays each month toward their debt is matched up to 5% by the employer in a 401(k) plan,” Wise said. “This is helpful to young workers who would not normally be thinking about their retirement savings because they are saddled with debt.”
What COVID Wrought
There’s nothing quite like a worldwide pandemic to remind everyone of the importance of having healthcare coverage. After 14 months of operating during the pandemic, the benefits professionals BusinessWest spoke with cited two notable trends: an increase in telehealth offerings and usage, as well as an increased demand for mental-health services.
“There’s definitely been an increase in utilization for traditional medicine and mental health,” Miller said.
Wise agreed. “Employers are looking at the mental-health benefits covered under their policies and, in many cases, are augmenting those benefits with employee-assistance programs,” she noted.
A survey released in March by America’s Health Insurance Plans reported that 56% of employees said their telehealth and mental-health services are more valuable now than they were a year ago, before COVID-19.”
Offering wellness programs as a benefit is another trend that has gained popularity in the last several years. “Employers are adding or increasing benefits around wellness, nutrition, stress management, and other areas,” Wise said.
In addition to health wellness, Leary said employers are increasingly offering financial wellness programs as a benefit.
“Some older employees might be sandwiched between taking care of their children and their parents at the same time, while others are looking at their planning needs for retirement.”
“If an employee is stressed out about their personal finances, it affects their productivity at work,” he said, pointing out that financial wellness is a benefit that can help employees at every stage of their careers by providing guidance tailored to their individual needs.
“It’s a chance to help younger employees get off to a good start and to check in with older Millennials, now approaching their 40s, about retirement planning and the telehealth benefit they can access,” Leary explained. “Some older employees might be sandwiched between taking care of their children and their parents at the same time, while others are looking at their planning needs for retirement.”
Because employees have so many different needs, communication around benefit offerings becomes essential. As COVID disrupted so many other norms, it also caused significant changes in benefit communications. But in this particular case, Miller said, the change was an improvement.
For years, the model for enrolling employees into a company’s benefit plan involved on-site meetings and speaking directly with as many employees as possible to make sure all their questions and concerns were addressed. Miller said the strong in-person presence continued even after the actual enrollments were done online.
“We’re doing many of our open-enrollment meetings now on Zoom,” he said. “One advantage is that you can gather employees no matter where they are for the live presentation, and they can ask questions, either by shouting them out or using the chat box.”
For employees who may be on vacation or traveling, the Zoom meeting is recorded and uploaded to a video-sharing platform like YouTube.
“Lots of people want to discuss their benefit options with their spouse,” Miller said. “Now they can, because everyone can access the presentation whenever they want.”
Miller said the video gives employers a tool they can use for the entire plan year. “When a new hire comes in, they can be directed to the link and listen in on the entire employee-benefit presentation. The video approach was one of the few positive developments that resulted from adjusting to COVID concerns.”
Sometimes, a new employee benefit can emerge from a catastrophe. At the onset of COVID, Leary said, employers were frantically setting people up at home just to keep their businesses in operation.
“Several months later, they began seeing the benefits of having people work from home,” Leary said. “While many are discussing a hybrid approach, where employees split their time between the office and home, working from home to some degree is now undeniable.”
Because his business lends itself to working remotely, Miller said his employees definitely perceive it as a benefit.
“If you asked me last February if working from home would be feasible, I would have said ‘no way,’” he noted. “But it not only works, it works very well.”
These days, employers need every benefit they can offer when recruiting new employees. Despite businesses itching to expand, Miller said, employers face new challenges in doing so. “I’ve been doing this nearly 30 years, and I don’t ever remember so many different employers saying they can’t get good people.”
Local employers he’s speaking with are increasingly hiring workers from other states to meet their needs.
“My clients are looking for health plans that are more robust and have a national presence,” Miller said. “I’m hearing that from employers right here in Western Mass.”
For many, traditional benefits remain important, but they make up only a part of the employment experience. Leary said the move to remote work means employers and benefit consultants need to think in new ways to communicate benefits and enroll employees in a new hybrid environment.
“You can make the argument that flexible work schedules and the ability to work autonomously without having a manager look over your shoulder are also benefits that go beyond traditional health, dental, and disability plans,” Miller said.
It’s a trend to keep an eye on — one of many employers need to consider as they determine which benefits will attract and retain employees in a changing economy — while making sense for the company’s bottom line.