5 Predictions For Employee Benefits In 2022 And Beyond

5 predictions for employee benefits in 2022 and beyond | BenefitsPRO

Source: BenefitsPRO, by Becky Seefeldt

The pandemic and the Great Resignation have created a perfect storm for employers. Employers need to be forward-thinking regarding employee benefits because this crucial feature can make or break a company. As people are less likely to stay at their current positions, they’re also much less interested in applying with any company that doesn’t offer them benefits such as health care or vacation time.

Related: 10 recruiting trends for the years ahead

The future of benefits is uncertain, but there are five predictions for where they’re headed in the next few years that could help employers adjust their current package.

1. A push to improve HSAs

There’s a chance that some common-sense changes could be made to health savings accounts (HSAs). These adjustments will allow those who are eligible for Medicare or Tricare benefits the ability to contribute towards their own HSAs. There’s also interest in revisiting how we define what a “qualified high-deductible plan” entails so as not only to accommodate more Americans but also do away with any unnecessary restrictions altogether.

The solution to this problem is not one-size-fits-all. Some would like the requirement taken away altogether, while others are open to compromise. This may include modifying how high-deductible plans should work so that anyone, even those with limited benefits, can contribute towards an HSA. With these changes, individuals will be able to prepare themselves better because they can use their HSA as needed now or put money away for the future.

2. A convergence of health plan options

For roughly the past 20 years, premiums have been increasing. The average premiums for family coverage have increased from $7,000 in 2001 to more than $22,000 by 2021. Deductibles have also risen, with the average deductible for a PPO rising from $201 in 2001 to nearly $1,700 in 2021. The average deductible is so high that it’s beginning to meet the criteria for a high-deductible health plan. PPOs (and all plans) have been increasing their deductibles, which may indicate convergence between health care and savings options.

The best option for employees can be to utilize these new and improved tools. Some people hesitate to move into a high-deductible health plan because of the name: “high-deductibles.” But, this is an excellent option for certain employees who want more control over their expenses and savings rates if something happens unexpectedly. The contribution and eligibility for an HSA can be adjusted by making a few changes to the PPO design. This way, employees will save more money since they’ll have access to managing their medical expenses, which benefits employers, too!

3. Increased or improved price transparency

Increased or improved price transparency has been on the table for about two decades; however, there is more reason than ever to expect forward progress in this area. First is the No Surprises Act, which protects consumers from being surprised by unexpectedly high bills. This includes air ambulance claims, emergency services, and even non-emergency medical treatments that are billed as out-of-network when performed at an in-network facility. This act establishes limits on what can reasonably be charged and provides dispute resolution between plans and out-of-network providers.

Next, the Transparency in Coverage Act requires plan providers, including employers with group coverage or individuals purchasing their own plan to be transparent about prices and out-of-pocket costs. The start date for this act has been pushed back to July 1, 2022.

4. A move to strengthen health and wellness

When it comes to health and wellness, there are several options available. Help employees identify and address health risks before they result in costly medical procedures. As an employer, you can provide them with more comprehensive management and assistance using digital programs, online counseling services, etc.

Another option is utilizing a “specialty account” that caters to unique needs. This type of pre-tax savings plan has been gaining traction with employers who want to help their employees save money on afterschool programs, fitness classes, or even scooters for commuting purposes.

5. An increase in targeted benefits communications

The final prediction is regarding an increase in targeted benefits communications. With targeted communications on the rise, this trend is just getting started. We live in a world where personalization is everything, and benefits should be no exception. Benefits have traditionally been a data dump that occurs every few weeks in which employees are overwhelmed by the sheer volume of information. As employees continue to demand more from their employers both digitally and physically, companies must find ways to elevate their offerings. Consumers want personalized everything — from meals at home or takeout to how much information is given about them when they buy something. Why should employee benefit plans be any different?

While the future of benefits is uncertain, employers should be proactive in preparing for changes. Employers need to be forward-thinking regarding employee benefits and stay up-to-date on the latest industry trends. These five predictions offer a glimpse into what could be ahead, so it’s essential to start thinking about how they may impact your organization and employees.

Becky Seefeldt is vice president of strategy at Benefit Resource LLC (BRI), a leading provider of dedicated pre-tax account administration and COBRA services nationwide.

Worker Pay and Benefits Grow at Record Pace, Pressuring Inflation

Worker Pay and Benefits Grow at Record Pace, Pressuring Inflation - WSJ

Source: Program Business, by Neilson

Compensation for American workers increased rapidly in the first quarter, as a tight labor market put more money in workers’ pockets while keeping inflation under control.

Without adjusting for seasonality, business and government employers spent 4.5 percent more on worker costs in the first quarter compared to the same period a year ago, according to the Labor Department on Friday. That was the fastest increase since records began in 2001, and it surpassed 4.0 percent annual growth in the fourth quarter.

On a quarterly basis, compensation for workers increased by 1.4 percent in the first quarter, compared to a 1.0 percent increase in the fourth quarter. The expansion reflected higher wages, salaries, and benefits.

This has allowed households to continue spending and supporting the economy. The Commerce Department reported on Friday that consumer spending increased by 1.1 percent in March. Americans increased their spending on services such as travel and dining, as well as goods such as gasoline and food, demonstrating a willingness to spend despite the highest inflation in four decades.

Workers’ large pay raises reflect their increased bargaining power, but they also threaten to keep inflation high. Economists believe that companies must raise prices to compensate for higher labor costs.

Consumer prices rose 6.6 percent year on year in March, up from the revised 6.3 percent increase in February and the fastest rate since 1982, according to the Commerce Department on Friday.

Workers at Pinches Tacos, a family-owned Mexican restaurant chain with seven locations in Los Angeles and Las Vegas, recently received wage increases. Miguel Anaya, president of Pinches, stated that he increased the pay for a cook from $16 to $20 per hour in order to keep the employee from leaving for another job.

Mr. Anaya added that in a job market where poaching is rampant and labor is scarce, he is increasingly having to offer higher wages to retain kitchen staff. Meanwhile, prices for ingredients such as poultry and pork have risen rapidly.

Due to higher labor and food costs, Pinches increased menu prices for burritos and tacos by about 5% on average at the start of this year, after increasing them by the same amount last summer, according to Mr. Anaya.

“The price for everything, including labor, was just too much for us to bear,” he explained. “There’s only so long you can hold on.”

The wage-price dynamics have implications for the Federal Reserve, which raised its benchmark rate by a quarter-point from near zero in March to tame inflation. More increases are likely to follow, according to central bank officials who will meet next week to discuss their next steps.

“The Fed is closely monitoring the data for signs of a wage-price spiral,” said Rubeela Farooqi, High Frequency Economics’ chief U.S. economist. “These readings, which show no signs of easing, will worry policymakers as they make monetary policy decisions in an environment where the labor market is tight and prices are at a 40-year high.”

Employer demand for workers far outnumbers the available pool of job seekers. According to the Labor Department, there were 11.3 million job openings in February, compared to 6.3 million Americans who were unemployed but looking for work.

Due to the difficulty of recruiting workers in such a tight labor market, employers have been forced to not only raise wages, but also to entice workers with more robust benefits. Benefits increased by 1.8 percent in the first quarter, the fastest quarterly increase since 2004, with gains in management, sales, and manufacturing jobs.

Companies say that higher compensation costs are one of the factors driving them to raise prices on goods and services. They also point to supply-chain disruptions, high energy and commodity prices pushed up by the Ukraine conflict, and strong consumer demand.

Rising prices are reducing wage increases for workers. Adjusted for inflation, private-sector wages and salaries fell 3.3 percent year on year in the first quarter. Restaurant and bar workers defied the trend, with pay increases in the lower-wage sector slightly outpacing inflation, according to a Labor Department report released on Friday.

The high rate of job switching is an important factor that could keep wage gains high. Workers who change jobs typically receive larger pay raises and put pressure on employers to raise pay for current employees.

Some companies believe that increasing pay will be necessary in the future.

“Labor continues to be an area with the greatest inflationary pressure in both professional driver and nondriver salary wages and benefits, and we expect that trend to continue throughout the remainder of the year,” J.B. Hunt’s chief financial officer, John Kuhlow, said on an earnings call last week.

However, some economists believe that as pandemic savings dwindle and Covid-19 case counts fall, more Americans are returning to the labor force. As a result, more workers will be available to fill openings, relieving employers of the need to pay higher wages.

“The labor-force participation rate has begun to rise in earnest over the last several months,” said Ben Herzon, executive director at IHS Markit. “If that continues, it will help to limit the rate of wage growth.”

RSVP Party Rentals, a Las Vegas-based events company, is seeing signs that wage pressures are easing as demand for its services has recovered from earlier in the pandemic, according to President Brad Smithers. The company had to scramble to hire dozens of people. It now has around 70 employees, up from eight earlier in the pandemic and similar to pre-pandemic levels, according to Mr. Smithers.

The majority of the jobs are in logistics—warehouse work, delivery, and event setup and cleanup—but the company has also added office workers. “It’s becoming more difficult to find truck drivers.” “They are in high demand,” he explained.

He estimates that his labor costs are 5% higher than a year ago, but he believes the upward pressure is easing.

“Corporate events are down, and private events are up a little bit,” Mr. Smithers explained. “Some of those guys who worked corporate are coming to us for work.” “It’s gotten better—a good number of people are coming to us for work.”

Prescription Drug Use Rises for the Newly Insured

A survey of more than 3,000 U.S. employers finds that 54% are paying at least 5% more for employee medical insurance this year. Nearly one in four has seen increases of at least 10%, according to a study by Arthur J. Gallagher & Co. Sixty-seven percent say that medical and pharmacy benefits are the cornerstone of their employee benefit package and an important tool to recruit and retain talent in a tightening labor market. Telemedicine, now used by 24% of employers, is predicted to reach 42% in 2018. Narrow network healthcare plans show a growth trend from 18% to a predicted 27% in 2018. A rise in adoption of consumer directed health plans is expected from 36% to 51% in 2018. Self-insuring is expected to grow from 28% to 38% in 2018. Fewer than 5% of employers have used a private exchange, but that figure is expected to triple by 2018. Employers that excel at healthcare cost management take a comprehensive, data-driven and multi-year approach to compensation and benefit planning. However, just 8% of employers do multi-year planning with multiple data inputs. Seventy-six percent plan their benefits year-to-year, which puts them in a reactive position and less able to manage costs. For more information, visit ajg.com/NBS2016.

How Medicare Advantage Plans Can Increase Consumer Satisfaction

Medicare Advantage plans are more likely to achieve high satisfaction scores when they offer a consistent product message and brand experience and have control over the delivery of care, according to a J.D. Power study. Members frequently choose a plan they understand and find easy to work with. The study measures member satisfaction with Medicare Advantage plans based on six factors in order of importance: coverage and benefits (26%); customer service (20%); provider choice (15%); cost (14%); information and communication (13%); and claims processing (13%).

Improving communications with enrollees is one of the greatest opportunities for health plans to improve member satisfaction. It’s the only factor in the study that has not seen a significant improvement in member satisfaction. Valerie Monet, director of the insurance practice at J.D. Power, said that many plans have multiple product design features and come with technical manuals that are 20 pages or longer. Expecting members to be experts on these services and benefits is a losing battle for the plan and the member. Members expect their plan to provide guidance, ranging from assistance in selecting a doctor to helping them understand prescription costs.

Forty-eight percent of members agree strongly that their health plan is a trusted partner in their health and wellness, which increases satisfaction by 166 points. Satisfaction is 136 points higher among the 89% of members who completely understand how to find a doctor under the plan. Satisfaction is 110 points higher among the 88% of members who say their doctor spends the right amount of time with them.

Members expect immediate attention or advice when they call their health plan provider. Forty-one percent of those who called their plan had to give the same information more than once to get their issue resolved. Only 35% of members said that customer service provided all of the information they needed on the costs of prescription medications. Ninety-one percent of customers who are delighted with their Medicare Advantage plan (satisfaction scores of 901 or higher), say they will definitely renew their policy, and 89% will definitely recommend their plan to family and friends. Loyalty drops to 71% and advocacy to 66% among members who are pleased with their plan (scores of 751-900). Plans garnered the following member-satisfaction scores:

  • Kaiser Permanente 851
  • Highmark 791
  • Humana 782
  • UnitedHealthcare 775
  • Cigna 774
  • Aetna 773
  • Anthem 765
  • Health Net 756
  • WellCare 742

In 2016, members reported an average increase of $117 in annual premiums to $1,497. They also have more out-of-pocket expenses. On average, member deductibles are $1,705 in 2016, a $310 jump from 2015. Satisfaction is 136 points higher when members completely understand their out-of-pocket costs. Monet said that members are more satisfied and see the value of their plan when they have a better understanding of how much they are paying and what the costs cover.” For more information visit http://www.jdpower.com/resource/us-medicare-advantage-study.

LGBT Employees and Benefits: Impact of Marriage Equality

A year after the Supreme Court’s historic marriage equality ruling (Obergefell v. Hodges, June 2015), Lincoln Financial surveyed LGBT employees about their benefits. Since the ruling, 28% of the LGBT community overall, and 35% of those married or in a domestic partnership have reevaluated their workplace benefits, enrolled in a new benefit, or increased their contribution to an existing benefit. Thirty percent are making changes to their workplace benefits as a result of the ruling. But 50% are still unaware of how the ruling affects their benefits. Thirty-eight percent of LGBT employees who are married or in a domestic partnership are not aware how the marriage equality ruling affects their workplace benefits. The study also finds the following:

  • 14% of LGBT employees who are married or in a domestic partnership have enrolled in a new non-medical insurance plan.
  • 11% of LGBT employees have enrolled in a new health insurance plan.
  • 7% LGBT employees have made changes to their retirement plan by enrolling in a new plan or increasing contributions.
  • 51% of LGBT employees would like to speak with someone about their benefits.

For more information, visit http://newsroom.lfg.com/mood-of-america-special-report

Voluntary benefits that improve financial wellness can boost the bottom line

People who are under financial stress are less productive employees, bringing down businesses’ bottom lines, studies show, but employers can help by offering education, tools and voluntary benefits. “In addition to securing online financial education resources, companies can take advantage of value-added programs and financial wellness platforms offered by their current benefit providers, as well as other non-traditional voluntary benefits, such as financial counseling services and employee purchase programs that address further aspects of financial wellness,” Elizabeth Halkos writes.

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Younger Consumers Favor Income Stream Life Insurance Benefits

Forty percent of consumers under 40 prefer a monthly life insurance income benefit while about 30% favor a lump-sum payment, according to a LIMRA survey. Scott Kallenbach of LIMRA noted that life insurance is most often paid as a lump sum. But the study reveals that products offering monthly income would have strong appeal among younger and middle class consumers. Offering these products could be a way to reach these consumers more effectively. Sixty-one percent of all consumers own life insurance to replace lost income, and 44% own life insurance to supplement retirement income. When consumers were asked about a policy that could change with their needs, 70% expressed interest with one third being very or extremely interested in these flexible products.

Pet Health Insurance Is One of the Fastest-Growing Employee Benefits

One in three Fortune 500 companies offers pet insurance as a voluntary benefit, according to Nationwide. As one of the fastest-growing voluntary benefits in the U.S., more than 5,000 companies and organizations have added Nationwide pet insurance to the voluntary benefits portfolio, including Chipotle Mexican Grill, Hewlett-Packard, Levi Strauss & Co., Microsoft, T-Mobile, Xerox, Adidas, and Yahoo!. “Since 65% of Americans own at least one pet, two-thirds of employees may be shouldering sizable pet-care costs. Offering pet insurance as a voluntary benefit will appeal to prospective pet lovers and help retain pet-owning employees,” said Scott Liles, president and chief pet insurance officer for Nationwide. As the popularity of pet health insurance expands, some companies are subsidizing a percentage of their employee’s cost. Several employers now pay as much as 100% of their employees’ pet insurance premiums. “With the cost of core benefits on the rise, companies are looking for offerings that can be added to a benefit portfolio at no expense to the employer. Pet insurance fills that need,” said Liles

Employees Appreciate Voluntary Insurance Benefits

Seventy-nine percent of employees see a growing need for voluntary insurance compared to last year. And of those, 60% say the need is driven by the rising cost of medical services, according to an Aflac survey. Employees who are offered voluntary benefits report higher satisfaction with their jobs and their benefits. Employees whose work site offers voluntary benefits are more likely to say the following:

  • They are prepared to pay for out-of-pocket expenses not covered by major medical/health insurance related to an unexpected serious illness or accident (73% versus 56%).
  • They are extremely or very satisfied with their jobs (73% versus 57%).

Employers Want Guidance About Voluntary Benefits

Thirty-nine percent of employers that don’t have a financial advisor for voluntary benefits say it would be extremely valuable to have one, and 57% say it would be at least somewhat valuable, according to a study by MassMutual. The study, conducted by Greenwald & Associates, surveyed 565 U.S. employers ranging from those with fewer than 25 employees to those with 1,000 or more. Tom Foster of MassMutual said, “Employers are increasingly looking for help from financial advisors with voluntary benefits as their employees’ financial needs become more complex. Our research shows that advisors with the appropriate knowledge and expertise may have a clear and compelling opportunity to expand their financial practices to offer at least some guidance about voluntary benefits.”

Thirty-three percent of firms with fewer than 25 employees say such assistance is extremely or very valuable compared to 55% of firms with 1,000 employees or more. Seventy-five percent of the smallest employers and 80% of larger firms say that such advice as at least somewhat valuable. Fifty-three percent of employers that work with a voluntary advisor say they got excellent or very good advice and 77% say that got good advice.

Sixty-one percent of employers that have an advisor encourage employees to take advantage of retirement savings and other voluntary benefits compared to 49% of employers that don’t have an advisor. Also, 48% of firms with an advisor promote financial well-being for employees compared to 33% of firms without an advisor. Employers that participated in the survey offer the following insurance benefits in order of popularity: healthcare (92%), dental (73%), life (72%), vision (60%), short-term disability (52%), long-term disability (51%), accident (32%), employee assistance program (21%), wellness program (20%), critical illness (17%), cancer (16%), and long-term care (13%).

Last Updated 06/29/2022

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