The Loop

Changes in Benefits Offerings

Filed under: Benefits

The fate of the Patient Protection and Affordable Care Act (PPACA) may be uncertain, but the fact that people need health insurance continues on. As does the cost. One of the key requirements of the health reform law is the employer mandate, which states that all U.S. businesses with 50 or more full-time equivalent employees provide health insurance to at least 95 percent of their full-time employees and dependents up to age 26, or be subject to penalties.

As it stands now, the mandate could be eliminated by the end of April when Congress passes the remaining 2017 budget. However, it remains to be seen if employers will reduce certain benefits if no longer required to offer them.

Over the past few years, many companies have replaced comprehensive Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) insurance with Consumer Driven Health Plans (CDHP). CDHPs combine a tax advantaged and funded spending or savings account with a high deductible insurance policy. These lower-cost plans are required to cover the categories for 10 Essential Health Benefits (EHB) as mandated by the PPACA. However, employers have shifted a higher share of their cost to workers.

Some employers have switched to offering self-insured plans, which are not subject to all of PPACA's mandates and regulations. While self-insured plans are not required to cover the EHBs, they tend to be benefit-rich but tailored with benefits that their specific workforce is more likely to use.

While rising health insurance premiums continue to challenge employers, the country's newly recovered and historically low unemployment rate creates a contradictory problem – now companies must vie for the most qualified job candidates. Traditionally, recruiting efforts have been emboldened by strong benefit and compensation packages. Therefore rather than reducing benefits, many employers have stepped up their game.

Popular Benefit Trends
More employers are adding or enhancing wellness programs. A recent survey by Transamerica revealed that 55 percent of businesses offer some type of wellness program. In fact, one issue is not so much that employers aren't offering them, but rather that they're not doing a good job of promoting them. To illustrate this point, another survey found that only 46 percent of workers believe their employer offers a wellness program.

Perhaps this is because in this new era of technology, people expect easy access to information without having to make a big effort. In other words, workers are no longer interested in completing paper forms or attending benefit enrollment meetings. The rise of consumerism is characterized by not just what is offered, but how it is offered.

Today's workers, particularly young adults, expect live Web education sessions and on-demand seminars with simple side-by-side comparisons to help them make benefit decisions. They want year-round communications to remind them of benefits they may forget to use. And techno-savvy workers prefer a one-stop shop to be able to see how much premium is deducted from their paycheck, review benefits and claims, and pay their bills all at one online dashboard they can access either at home or work.

In recent years, employers have increased the number and variety of voluntary benefits offered to workers, such as:

• Gym membership                                         • Tuition assistance
• Cell phone plan                                             • Transportation subsidy
• Year-round career training                          • Elder care
• Identity theft insurance                                • Adoption assistance
• Pet insurance                                                 • Student loan repayment

In 2016, 79 percent of surveyed workers said they recognized the growing need for certain types of voluntary insurance policies. In response to this demand, these offerings have become an integral component of an employee benefits package, including supplemental life, disability, critical illness, hospital, accident, and cancer insurance.

Focus on Financial Wellness
While health wellness remains in focus, some employers have begun to recognize the correlation between poor health and financial stress. One recent study found that:

• 67% of Americans believe that financial stress affects their health
• 61% say it impacts their home life
• 50% complain that it affects their social life

From an employer's perspective, research has demonstrated that workers who do not have to worry about money tend to have lower absentee rates.

When you combine everyday financial anxiety with the fact that employees now shoulder a much larger burden for building their retirement nest egg, many business owners feel compelled to help workers manage their financial lives. A 2016 study by Aon Hewitt found that more than 50 percent of employers now offer an employee financial wellness program with educational models that include budgeting, debt reduction, and home purchases.

Customized Benefits
Today, the Internet features millions of websites and cable television offers hundreds of channels. In this era of widespread personal choice, workers want to choose from a vast array benefits to customize their own, unique benefit package. This is a tricky proposition given that today's workforce is comprised of employees ranging from 18 to over 80 years of age. To put this in perspective, consider that younger workers may respond more to an employer-issued Fitbit or student loan repayment assistance, while older workers are interested in cancer insurance.

To accommodate the demands of a multi-generational workforce, some companies use Big Data and analytics to stratify benefit offerings into categories of like-minded workers. For example, pre-selected benefit packages may be catalogued into early career, newlyweds, new parents, and those nearing retirement.

Paid Leave
Paid-time-off continues to be a growing trend given the prevalence of dual-earner households that share responsibilities for infant care, childcare, and aging parent care. The additional stress of 24/7 on-call availability via phone, text and email also creates a more dire need for workers to use their vacation time and seek more work/life balance.

According to one annual open enrollment study, 46 percent of today's workers expect a flexible work schedule and 27 percent expect the option to work from home. Within the next few years, there also may be an increased push for six weeks of guaranteed paid maternity leave in federal unemployment insurance laws.

Competitive Advantage
There are several factors driving changes to employer benefit offerings. The first is that companies are shifting a larger share of the cost of health insurance and retirement savings to workers, so they are trying to compensate for that by offering more low-cost but high-value benefits.

Second, with the unemployment rate below five percent, today's tighter labor market encourages employers to find new ways to attract and retain workforce talent. Despite what you read about growing independence and the "gig" economy, large numbers of workers still look for good benefits. A recent MetLife survey found that 57 percent of employees said they would be more likely to remain with their current employer if their benefits improved. Among jobseekers, 78 percent report that the benefits package is a critical factor in their decision to accept or reject a job offer.

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