HR.com: 3 Employer-Sponsored Benefits Trends For 2020
Employee preferences for compensation and benefits have evolved significantly over the past decade. As many studies show, employees – millennials in particular – increasingly prioritize benefits over salaries when choosing where to work. In fact, one study reports that 64% of millennials say benefits are extremely or very important to employer loyalty. This reality makes it critical that employers offer enticing benefits options to attract and retain top talent.
However, designing superior benefits options has become a bit more difficult in recent years. Benefits such as standard health care, voluntary dental, vision and disability coverage have become table stakes in today’s employment market. To stand out, employers need to supplement these offerings with personalized benefits packages that meet the diversified needs of the modern employee.
To understand how employers are adjusting to evolving market conditions, DirectPath, in collaboration with Gartner, created the “2020 Medical Trends and Observations Report” based on an analysis of more than 1,000 employee benefits plans from 200 companies. The results indicate which benefits employers believe will make them more competitive and attractive to employees. Read on to learn how employers approached designing their benefits packages for 2020.
Trend #1: Continuing to Invest in HRAs, HSAs and HDHPs
Year over year, the number of employers offering HRAs, HSAs and HDHPs has remained steady. Similar to last year, HSAs continue to be the most popular type of account offered – likely because they permit employee contributions and are portable. Sixty-nine percent of employers offer HSAs, versus just 12% offering HRAs, while about 19% of employers offer both. While HDHP plans seem to be waning – they represent only about one-third of all plans offered – 77% of employers still offer at least one HDHP.
As HRAs and HSAs remain integral to health plans, employers should invest in robust communications strategies to ensure their employees understand:
- The value of these accounts.
- How they interact with other accounts, such as FSAs.
- How they can best be used in the short and long term.
- How to maximize their value (through additional contributions and/or investments)
Trend #2: Increasing Family-Focused Benefits
Employees value family-focused programs in their benefits packages – and employers are getting creative in response. In 2020, employers are offering more benefits that address broader lifestyle needs – a trend originally reported in 2019. The most common of these benefits include:
- Fertility treatments
- Child and eldercare support
- Adoption assistance
- Extended parental leave
- Dependent care
- Flexible spending accounts
- Flexible scheduling
As employees’ lives become more mobile, remote and focused on work-life balance, it is important for employers to show they are willing to support them. Employers offering these programs should make a point to highlight them in their employee onboarding, during open enrollment and throughout the year so they are top of mind for employees.
Trend #3: Diversifying Wellness Initiative Rewards
In the midst of a more competitive market, employers continue to focus on personalization by tailoring their incentives to meet the varying needs and interests of their workforce. As was the case in 2019, health risk assessments and biometric screenings are the most rewarded wellness behaviors, followed by the broad “wellness activities,” with participation typically rewarded by premium discounts. However, employers have also explored other options, such as:
- Offering matching HSA contributions or a choice of an HSA contribution, 401(k) contribution or cash.
- Varying incentive values by plan option or by salary.
- Enabling employees to exchange rewards for raffle entries, auctions, sweepstakes, discounts or charitable contributions.
Still, some employers maintain there is little to no value in offering wellness programs and have eliminated them, or plan to in the near future. As other employers expand their reward systems, the coming year may shed further light on the effectiveness of these programs. Employers who do invest in rewards programs should track their savings, especially as it relates to smarter employee health care spending.
Implications for the Year Ahead
Employers need to offer creative, diverse benefits to remain competitive. The 2020 Medical Trends and Observations Report shows that employers and HR are recognizing that an inadequate benefits package will directly impact their ability to hire and retain talent – especially as healthcare-related benefits become expected among employees. The savviest employers will couple these diversified benefits with education and communications that ensure employees are aware of what’s available to them and how to leverage those benefits fully.
In a year that has already been dominated by healthcare-related issues – from the uncertain future of the Affordable Care Act, the repeal of the Cadillac Tax and calls for Medicare for All, to the far-reaching implications of a global pandemic – it’s more important than ever that U.S. employers evaluate market conditions and employee preferences as they develop their healthcare strategies for 2021. While much is unknown at this time, what remains constant is the need for healthcare consumers to understand how to get the care they need at the most affordable cost. Having a dual-layered strategy in place will be the differentiator employers need to keep employees safe, improve satisfaction and increase ROI on benefits investments.
Read the article here.
Kim Buckey is vice president of client services at DirectPath)