As a new decade begins, employee benefits specialists share their expectations for the future. Below are six benefits trends that many who are "in the know" believe will gain momentum and transform the employee benefits landscape in 2020 and beyond.
No. 1: Personalization of benefits packages becomes paramount.
"Companies need to offer benefits that meet the needs of today's diverse, multigenerational workforce and bring real value to their lives," said Jeff Oldham, senior vice president of BenefitsPlace at Benefitfocus, a cloud-based benefits management platform firm.
Presenting a broader array of options that address employees' needs during all stages of life is becoming critical, he said. "Progressive employers are beginning to understand this and have begun to offer a spectrum of options across traditional health care, but also financial and lifestyle categories. These are the employers that will be most competitive moving forward."
Emily Bailey, managing principal at HR technology and services provider OneDigital, advised employers to consider adding a variety of choices tailored to the needs of each demographic in the workforce. To appeal to younger workers, for instance, "tuition reimbursement and fitness reimbursement programs have become commonplace in this new benefits environment," she noted.
Beth Zoller, legal editor at HR information resource XpertHR, said "older workers may be more interested in long-term disability and younger workers may want benefits such as day care and gym memberships."
"After studying and surveying your specific subset of employees, offering a menu of benefits where employees can choose what best fits their age and lifestyle is a great option to keep a happy and engaged workforce," said Elliot Dinkin, president and CEO at benefits consultancy Cowden Associates.
The good news, Bailey observed, is that many of the additional benefits offerings being requested can be added on a purely voluntary, employee-paid basis. "Take a fresh look at the benefits package in its entirety, make sure you are not funding things that are no longer necessary or valued, and divert the investment into some of the newer, more valued benefits," she advised.
No. 2: Student-loan-repayment aid helps attract and keep debt-challenged workers.
The Society for Human Resource Management's 2019 Employee Benefits survey, which polled 2,763 HR specialists, found that 8 percent of respondents worked at organizations that offer tuition-repayment benefits, up from 4 percent in 2018.
Employers are creating benefits packages "that not only help employees pay student debt off sooner, but also help them manage their expenses and forecast their financial needs," Oldham said.
Some cutting-edge employers are making 401(k) matching contributions tied to employees' student-loan payments, which helps employees start saving for retirement while paying off student loans. "That way, saving for retirement doesn't have to get sacrificed to paying off student debt," Oldham noted.
Other employers are offering to make loan payments in exchange for employees not taking vested paid time off, such as vacation days.
While these may be creative and innovative ways to assist employees in repaying student loans, Bailey noted, "even approaches as simple as facilitating payments through payroll deferral or providing onsite financial advice to help guide employees as to the best approach for their loan repayment and financing" can help employees whittle down their loan burdens.
[SHRM members-only guide: How to Design an Employee Benefits Program]
No. 3: Shifting health plan costs to employees reaches its limit.
"Since 2009, average family premiums have grown by 54 percent with workers paying 71 percent of the increases," outpacing wage growth of 26 percent during the past decade, said Mike Barone, North American president for employee benefits at broker Hub International. "But moving into 2020, more employers are shouldering that share of premium increases, partly to relieve the pressure on their people but also as a recruitment necessity, despite the bottom-line impact."
Scott Cawood, CEO of WorldatWork, an association of total rewards professionals, said he expects "more U.S. employers will conclude that high-deductible health plans aren't sufficiently meeting the needs of their people, and they will rethink, reduce and even eliminate deductibles, following the lead of Amazon, Berkshire Hathaway and JPMorgan." Fewer large employers are offering high-deductible health plans as the only option for employees, which "is a dramatic change from what we were seeing just two-to-three years ago," he pointed out.
Employees have asked for more predictable health care costs and additional choices to help manage serious health conditions, Cawood said. "Employers are delivering on this promise in the form of new plan designs, more transparent pricing tools, the re-introduction of co-pays, and more specialty care options. Even if out-of-pocket expenditures do not change, these structures alleviate financial stress and hold more promise for healthy outcomes."
Jeff Kolker, senior vice president for benefits consulting at GCG Financial, an Alera Group Company, is seeing more employers take cost-controlling steps such as directly contracting with health care providers, whether those are local hospital systems or national centers of excellence that specialize in areas such as joint surgery or cancer treatment. "Direct contracting allows vendors to negotiate with outside networks and obtain more-favorable pricing for certain services," he said.
He also noted that more plans are adopting narrow provider networks that limit the number of in-network doctors and hospitals, or tiered networks that reduce employees' out-of-pocket costs when they choose highly rated, cost-competitive care providers, "to steer employees to lower-cost and sometimes higher-quality providers."
HR professionals should consult with employees to determine what their health needs are and whether the benefits offered are meeting those needs, advised John Wylam, staff attorney for Aimed Alliance, a nonprofit health policy organization. "Employers are too often forced to make difficult choices to try and rein in costs, which can have a substantial impact on the health of their employees."
No. 4: Stand-alone HRAs earn consideration as a group-plan alternative.
In 2019, federal agencies finalized a rule permitting employers regardless of size to offer individual coverage health reimbursement arrangements (ICHRAs), pronounced "ick-rahs." Starting in 2020, employers can fund ICHRAs with pretax dollars and employees can use them to buy health coverage on a public exchange.
In 2018, the agencies finalized a rule limited to employers with fewer than 50 full-time employees, allowing these employers to offer qualified small employer HRAs (QSEHRAs), pronounced "q-sarahs." ICHRAs and QSEHRAs are similar but have some regulatory differences.
"The new reimbursement strategy isn't for everyone, but business owners in cities with healthy individual markets should take a close look at this new way of doing health insurance," said Jack Hooper, CEO of Command Health, a firm that administers HRAs and other health accounts.
Employers have just begun evaluating whether to shift away from group health plans to a direct-contribution health care model, said Nicole Williams, senior vice president at ConnectYourCare, an employee benefits and health insurance broker, "but let's not mistake its value. … We will see more interest and adoption" in these approaches. Providing employees with subsidies to purchase coverage on an exchange could appeal to employers financially burdened by rising group insurance costs, employees who were previously uninsured and those who previously had to pay for individual insurance with no subsidy from an employer, she said.
Colin Rogers, senior vice president and general manager of benefits solutions at HR software firm Zenefits, hopes that ICHRAs and QSEHRAs "will lead to wider health care access for small businesses" that have not wanted to take on Affordable Care Act (ACA) compliance challenges. In addition, he sees other non-ACA benefits offerings, such as short-term health plans and supplemental hospital indemnity plans, continuing to gain momentum in 2020 "as alternatives or as adjunct to ACA plans."
No. 5: Mental-health and well-being benefits expand.
Employers will offer more benefits and initiatives to support employees at all stages of their mental-health and well-being journey, said Brian Marcotte, president and CEO of the nonprofit National Business Group on Health (NBGH), which represents large employers. Nearly half (48 percent) of 147 large employers surveyed by NBGH in 2019 said they would include anti-stigma campaigns and training for managers to help recognize mental-health issues and assist employees accordingly. Employers will increasingly adopt other tactics as well, including bringing counselors onsite and reducing medication co-pays, Marcotte said.
More than half of large employers are planning to expand the range of telehealth benefits offered in 2020 to include services such as virtual mental-health counseling, said Ellen Kelsay, NBGH's chief strategy officer.
"Employers are focused on improving access to providers [that address] mental-health and substance-abuse issues, including anxiety, mood disorders and trauma-related disorders such as PTSD," said Pearce Weaver, senior vice president at Fidelity Workplace Consulting.
Rajaie Batniji, co-founder and chief health officer at Collective Health, a third-party administrator for health benefits, suggests that in 2020 more employers will change their health plan designs by considering one of the following options:
- Treating out-of-network behavioral-health services as in-network so employees pay the same amount for treatment regardless of who they visit.
- Covering out-of-network behavioral-health services on their plan even if the plan doesn't cover out-of-network services for other care areas.
- Setting a lower co-insurance amount for out-of-network behavioral health than for other out-of-network benefits.
No. 6: Caregivers get a helping hand.
"Aging parents present a new level of anxiety for Millennials," said Rachel Lyubovitzky, CEO of benefits administration software firm EverythingBenefits. "Many larger enterprises have already begun to offer care-assistance plans for employees' parents or respite care for busy, caregiving employees. Now we will begin to see more mid-market companies follow suit."
More than one-sixth of working adults in the U.S. are also caregivers and billions of dollars each year are lost to caregiver absenteeism, according to Gallup-Healthways, Lyubovitzky pointed out. Care-assistance resources and care subsidies, along with flexible work options, "will be looked at favorably by Boomers and older Millennials trying to juggle whatever life throws their way," she noted.
There are different types of employee caregivers, said Dennis Healy, chief sales officer at ARAG, a provider of legal coverage plans:
- Members of the so-called sandwich generation taking care of children and aging parents.
- Spouses caring for each other during serious or chronic illnesses, like cancer or Alzheimer's.
- Grandparents stepping in to care for their grandchildren.
Companies are providing assistance through voluntary benefits to "help caregivers navigate the documentation, lifestyle changes and emotional toll that caregiving entails," such as legal resources to help with agreements and contracts or caregiving-assistance services that help with finding the right long-term-care facilities, Healy said.
"If you're looking for a competitive advantage that's highly valued by employees and prospects, consider expanding your leave benefits" for new parents and family caregiving, said Bob Armour, chief marketing officer for ALEX by Jellyvision, an employee benefits platform. "Not only are more and more companies following this trend, just in the past few years, eight states have passed legislation to implement statutory family and medical leave programs" that are more generous than the unpaid leave required by the federal Family and Medical Leave Act, and, in 2019, 23 states introduced similar bills, he noted.
Making the Case
A note of caution was sounded by Bobbi Kloss, HR leader at Benefit Advisors Network (BAN), a consortium of health and welfare benefits brokers. Being able to show "a positive impact on the business, people and culture—along with a solid strategy—will be key" to winning management support for introducing or expanding benefits offerings in the new year, she said.
"Many 2020 trends industry professionals are discussing, such as student-loan-debt programs, really depend on an organization's goals and objectives," Kloss noted. "Some are cost-prohibitive, or just costly. And at a time when organizations are conscious of where their dollars are being spent, some trendier ideas are simply not making the cut."
Added Jellyvision's Armour, "Just as important is making sure your prospective and current employees understand the value of—and appreciate—those great benefits." If they don't, "you're putting your investment at risk."