SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being
Health and wellness benefits expanded as the COVID-19 pandemic surged
LAS VEGAS — Newly released findings from the 2020 Society for Human Resource Management (SHRM) Benefits Survey, delayed due to the COVID-19 pandemic, show that employers enhanced a range of offerings to support employees' physical and emotional health, even as organizations dealt with uncertain revenues last year.
The findings in the 2020 Employee Benefits report, released Sept. 11 at the SHRM Annual Conference & Expo 2021 in Las Vegas and virtually, reflect the responses of 2,504 HR professionals across the U.S., collected Sept. 28, 2020, through Nov. 10, 2020. Supplemental data was collected from May 17, 2021, through June 28, 2021. Respondents were asked to provide answers on what employee benefits their organization offered during plan year 2020. Overall findings are charted here.
The COVID-19 pandemic caused many employers to revisit and revise their employee benefits last year, as highlighted below.
Benefits Expand to Support Remote Work, Caregiving and Health
"When COVID-19 began triggering states of emergency across the U.S. in March 2020, everyone needed more support, whether for managing remote work, caring for family members, or protecting their physical and mental health," said Alex Alonso, SHRM-SCP, SHRM's chief knowledge officer.
Accordingly, he added, "benefits that address such challenges were the ones more likely to have been expanded, with employers demonstrating ingenuity in their approach to serve others."
Top 5 Expanded Employee Benefits Percentage of respondents who indicated their organization increased the benefit.
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A Shift in 'Most Valued' Benefits
Health care remained the benefit employers believe to be most important to employees. However, rankings of importance for other benefits shifted in 2020 compared to years past, with the biggest impact to retirement benefits, which sunk from its longtime position as second-most important to sixth-most important.
Top 6 Benefits Employers Viewed as Most Important Percentage of respondents who ranked this benefit area as extremely or very important.
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Flexible work and leave tied as the second-most-important benefits employers felt they could offer to employees last year.
"Future surveys will determine whether these benefits will remain in these positions of importance in the years ahead as the world of work recovers," the report noted.
Family-Friendly Benefits
The added burdens of caregiving driven by the COVID-19 pandemic—in terms of both increased illness and the closure of schools, day cares and senior centers—led more employers to increase their family-focused leave options and paid family leave beyond the requirements of the Family and Medical Leave Act (FMLA), which includes up to 12 weeks of unpaid leave during a 12-month period for eligible employees.
The share of organizations offering paid family leave increased to 31 percent in 2020, up 7 points from 2019, likely due to the impact of the Families First Coronavirus Response Act (FFCRA) and state and local legislation requiring employers to provide paid leave in some localities.
"Companies are being more mindful of how employee experience and flexibility can be successfully integrated into their policies and culture," said Michele Floriani, chief marketing officer at Sequoia Consulting Group. "Clients are telling us, as they come out of the most challenging year in a generation, that changes initially brought on by temporary necessity now make for good permanent solutions."
Health Care
The most prevalent health plan types offered in 2020, the survey found, were:
- Preferred provider organization (PPO) plans—cited by 79 percent of respondents).
- High-deductible health plans (HDHPs) linked with health savings accounts (HSAs)—62 percent.
- Health maintenance organizations (HMOs)—31 percent.
- HDHPs without HSAs—16 percent.
- Point of service (POS) plans—16 percent.
A small decrease last year among employers contributing to employees' HSAs was likely a pandemic-related cost-saving measure, and the long-term trend of more employers funding HSAs is likely to resume, benefits specialists say.
Wellness
Even as COVID-19 swept through the population, many benefits promoting physical wellness in the workplace decreased in 2020. This may be due to the difficulty of delivering programs in the physical workplace or the inability of employees to utilize incentives like gyms, personal trainers or physician visits.
On the other hand, benefits that are more easily offered online or practiced solo were more likely to increase.
Financial Wellness and Education Assistance
Financial wellness benefits saw cutbacks last year, with less than one-quarter of organizations (24 percent) providing financial education that was not about retirement—a 13-point reduction since 2019. Similarly, just 17 percent offered employer-sponsored credit counseling services, down from 19 percent the previous year.
The percentage of organizations offering undergraduate or graduate tuition assistance—47 percent in 2020—was down 9 points since 2019, "likely caused by their tight finances, concern about the quality of higher education being provided during the pandemic and reduced employee demand," the report said.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law at the end of 2019, allowed employees to use tax-advantaged 529 accounts for qualified student loan repayments—up to $10,000 annually. Nevertheless, just 10 percent of organizations offer their workers access to these savings plans, down 1 point since 2019. Just 1 in 100 employers contributed to these plans in 2020.
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, employer contributions toward employee student loans—up to $5,250 per employee annually—became nontaxable for both federal and state purposes through 2020. The Consolidated Appropriations Act, 2021, extended this relief through 2025.
Still, the percentage of employers offering student loan repayment benefits remained at the same low level as 2019 (8 percent).
"SHRM anticipates a ramping up of employers offering this benefit as the pandemic relief legislation allows employer-provided student loan repayment as a tax-free benefit to employees," at least through 2025, the report stated. "Education benefits are ripe for expansion, as employers could see real advantages in talent acquisition and retention by being early adopters of these relatively rare but popular offerings."
"SHRM has long championed policies that allow employers to offer education assistance programs relevant to the modern workforce," said James Redstone, director of public policy at SHRM. "Greater certainty regarding the tax treatment of education assistance is an important step in expanding the availability of such benefits."
According to Amit Ahluwalia, national employee benefits practice leader at Lumity, a benefits technology and advisory firm, "COVID-19 has increased financial, physical and emotional stress for many employees, and employers are tuned in to this as they consider their benefits strategy." For 2022 benefits, she added, "financial wellness is front and center."
Retirement
Following a surge in 2019, the number of organizations offering a traditional 401(k) in 2020 dropped back to 2016-2017 levels (91 percent, down 3 percentage points).
Traditional defined pension plans also decreased by 3 points to 19 percent, their lowest in 5 years.
"The movement away from these plans may reflect cost-cutting measures from employers, and the corresponding 4 percentage point rise in those offering Roth 401(k)s, which allow tax-free withdrawals, may indicate these investments are more attractive to employees than a [traditional] 401(k) during an uncertain economic climate" the report explained. "SHRM will be watching to see if this movement continues beyond the COVID-19 period."
Among other significant 401(k) trends:
- Organizations automatically enrolling new or existing employees in their plans rose to 51 percent last year, up from 43 percent in 2019.
- Organizations that automatically increase participant contributions annually (unless the participant opts out) rose to 26 percent, up from 20 percent in 2019.
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