The pandemic has had a profound effect on employers, transforming the way workers view benefits and creating a labor shortage that has left businesses looking for new ways to attract talent. In 2022, employee benefits are playing a central role in recruiting and retaining employees. Here is a look at the latest benefits regulations and consumer trends.
Benefits Regulations And Consumer Trends
Benefits regulations have been changing throughout the country in recent times. In California, state law now dictates that employers that do not offer any type of group retirement plan offer the CalSavers retirement program to employees, while Colorado’s Secure Savings Program requires businesses with more than five employees to offer them a way to save for retirement.
However, some of the biggest consumer trends in benefits are focused on lifestyle and leave rather than retirement. In 2022, companies are increasingly devoting their benefits budgets to attracting and retaining a healthy workforce — and absence management, personalized benefits and alternative healthcare plans are all taking center stage.
Employee Reassessment Will Equal Employer Readjustment On Benefits
Although salary is still important to employees, it is becoming increasingly clear that money is not the sole factor in choosing a job. This is good news for employers as increasing salary and bonuses to give hiring and retention a boost is not sustainable in the long-term.
Organizations need to take a closer look at their value propositions. These days, it makes more sense to configure their offerings in terms of total rewards, focusing on not only salary but also work arrangements, benefits, and other factors.
It is also important to think beyond tangible benefits such as health insurance, life insurance, and compensation. Other benefits, like mental health services, leadership coaching, child care, and company culture can also inspire modern employees. Recruitment and retention are now about winning over workers’ hearts and minds, and a well-designed total rewards package can make all the difference.
Employers Want Assurance On Absence Management And Leave
Leave policies have become a major component of a holistic benefits strategy as employers seek more effective paths to improve recruiting and retention. In addition to meeting statutory requirements, leave policies should reflect competitive benchmarks and align with wellness programs.
The importance of employee leave became apparent during the pandemic, and absence management policies are starting to change as a result. Three-quarters of small- and medium-sized employers report that the pandemic changed how they approach leave management in general, according to research from HUB International, while 40 percent of survey respondents believe that their leave policies are not sufficient for remaining competitive; a quarter have already changed their paid time-off programs.
Maryland recently became the tenth state in the nation to enact a paid family leave law, but many businesses are getting ahead of legislation and recognizing the value in enhancing their paid leave options.
Paid parental leave is one area all employers should be considering as many employees who are reassessing their work situation are seeking improved leave policies to help them manage the realities of working from home. Some workers are looking to spend more time with their families through leave and are avoiding companies with strict policies that will force them to forfeit their time off.
The HUB research found that just a quarter of employers currently offer paid parental leave, while 84 percent have no plans to add or expand paid parental leave benefits. This means there is significant room for improvement.
Childcare support is another concern for many employees, with 90 percent of parents in one survey responding that they consider it even more important now for employers to provide employees with access to reliable childcare and two-thirds reporting that their employer benefits are inadequate in this regard.
A report from Bright Horizons revealed that employers who offer childcare support have an advantage in the current tight labor market when it comes to both recruiting new hires and retaining current employees.
Personalized Benefits Packages Will Become The Norm
With workers enjoying unprecedented opportunities to switch jobs and many now prioritizing lifestyle over income, organizations can use personalized benefits to set themselves apart. A total rewards approach that is based on personalized benefits is becoming increasingly important.
Businesses need to look beyond the basic demographics of their employee base and use workforce persona analysis and HR data analytics to better understand benefits usage and identify gaps that can be bridged via voluntary benefits. Benefits communications strategies also need to be improved.
Personalized benefits do not just give employees more choices; they should also improve the way they access, experience, and engage their benefits, and this can only be accomplished through a deeper understanding of which benefits are important to different employee segments.
In a post-pandemic society, experts believe that lifestyle benefits that allow employees to form personal connections to the organization and raise their engagement and interest are a good way forward. This should go beyond basic perks like offering employees coffee and snacks to address more pressing needs. Some areas companies should explore include student loan repayment assistance and tuition reimbursement.
Mental health support is another area where employers can set themselves apart. The rate of depression in the U.S. has tripled since the pandemic began, according to the Centers for Disease Control and Prevention (CDC), while anxiety is also rising dramatically, jumping from 7.4 percent of adults in 2019 to 37.2 percent of adults in 2021.
In response, employers and health plans have been expanding their coverage for issues such as anxiety, depression, and stress. According to the Kaiser Family Foundation’s 2021 Employer Health Benefits Survey, since the start of the pandemic, nearly 40 percent of employers have updated their health plans to expand employees’ access to mental health services. Nearly half of companies that employ more than 5,000 people have reported a marked increase in employees using mental health services since the start of the pandemic.
The survey also revealed that nearly a third of companies with more than 50 employees are starting to provide additional ways for their workers to access mental health services, such as via telehealth. Sixteen percent of companies have developed new mental health resources, such as employee assistance programs.
Around 6 percent of employers reported increasing the number of substance abuse and mental health providers that are considered in-network, which is an important step as one in four patients say they do not have access to an in-network therapist. However, only 4 percent of businesses have waived or reduced their cost-sharing offering for mental health services.
More Employers Will Turn To Captives And Other Alternative Health Insurance Plans
Healthcare plans are a popular area for employers to explore cutting costs. These plans can see annual premium increases of 5 to 10 percent or even more, and this is prompting some employers to consider different options. For example, employee benefit captives are increasing in popularity as they aim to control claims volatility and improve drug cost management.
Individual Coverage Health Reimbursement Arrangements (ICHRAs) are one way that employers can comply with Affordable Care Act (ACA) mandates while providing an affordable option to younger employees who opt out of participating in traditional health plans.
Self-funded health plans are also becoming more popular as care costs rise throughout the country thanks to their better cost control and reduced exposure to expensive claims. In 2018, 29 percent of medium-sized organizations and 13 percent of small companies offered one or more self-insured health plans.
Alternative healthcare plans can be complex, so employers who are interested in this approach should work with benefits consultants to ensure that they find a solution that reduces costs while keeping their employees happy.
Work With New City To Set Up Your Benefits Plans
Staying on top of the latest benefits regulations and consumer trends can give companies an edge in the tight labor market. For more information about finding the right benefits plans to suit your workforce and attract new talent, reach out to a benefits consultant at New City Insurance.