THE NEW BENEFITS LANDSCAPE: REVISITING OPEN ENROLLMENT STRATEGY
REINVENTING YOUR HEALTH & BENEFITS PROGRAMS FOR VALUE
2020 will forever be remembered as the year that defined a decade of progressive and innovative employer benefits strategies. This pandemic is one of the most significant global threats to financial stability that many will see in their lifetimes. In Mercer’s COVID Employer Response Survey, 85 percent of respondents estimated that the pandemic would have a moderate to high impact on overall financial performance for 2020. What 2021 holds is still not clear. The COVID pandemic greatly accelerated forces that were already pressuring employers to reinvent their health and benefits programs.
This means the time is now for employers to reinvent for value. The ideal future of healthcare includes four key components:
- Quality, affordable healthcare that is accessible;
- Benefits that are valued and drive engagement;
- Vendors that are aligned and continuously improve; and
- Dollars that are spent to deliver value to businesses and their employees.
Cost pressures are mounting on employers, requiring them to make difficult benefits decisions while balancing the financial uncertainty of their businesses. Mercer’s National Survey of Employer Sponsored Health Plans showed that while cost management remains a business imperative, a focus on value and concerns about affordability are shaping employer strategies.
Employers cannot afford to waste money on low-value benefits, especially as costs continue to rise and employees scrutinize how plans support their needs. Affordability is top-of-mind for employees, but the human element has influenced most employee decisions. Our survey found that only 7 percent of small employers shifted more cost to employees in 2021 and 10 percent made plan design changes to lower costs. These results tell us that most small employers have exhausted these tactical benefits strategies and need to reinvent for value. Some small employers have moved to level-funded (partially self-funded) or self-funded plans only to be unprepared to manage the risk that comes with these alternative programs.
How else can PEOs help their worksite employers offer benefits packages that help them feel secure in today’s unstable environment and not cause hardship on business owners?
Our survey data shows only 20 percent of small employers added or expanded benefits or resources, while 75 percent of Fortune 500 companies did. To help their clients compete with larger companies for talent and keep offering them Fortune-500 benefits, PEOs need to keep their eyes on these trends. There has been a proliferation of new vendors in the benefits space, causing disruption and allowing access to solutions that can address the specific needs of various populations. These solutions still may not be financially feasible for small employers to get on their own, but PEOs provide the perfect vehicle for access. Here are a few trends we have seen.
- Given the importance of minimizing in-person visits to health facilities when there’s a highly infectious disease in the community, employers are adding or expanding coverage for virtual care and telemedicine. Most carriers offer this as part of their services, but not all. If so, are you providing access to this benefit to all of your enrolled employees? Are you promoting it?
- There are new point solutions that allow employees to access health savings account (HSA) funds at the beginning of a plan year, much like flexible spending accounts (FSAs), while still maintaining all of the HSA perks. This has helped employers drive participation in high-deductible healthcare plans (HDHP) plans.
- Voluntary benefits are being offered by more employers. Employees are investing more time to understand how to fill gaps in their core medical coverage or replace that coverage.
- Tools are being used to promote pharmacy consumerism.
Just offering new solutions is not enough. PEOs need to embrace consumerism and make it infectious for their worksite employers. There is an incredible number of solutions in the market, but it is the PEO’s responsibility to narrow the focus onto the best-in-class tools and resources for its clients. For example, while employers are not doing a full replacement with HDHP plans, we are seeing more employees enrolling in these plans. Education is key. HSA-eligible plans cost on average about 20 percent less than traditional preferred provider organizations (PPOs). This can translate into significantly lower paycheck deductions, along with the opportunity for tax-advantaged savings, both of which can help offset the higher deductible. A multi-touch education strategy illustrating the advantages during the enrollment process can help drive further participation. Enhancing a worksite employer’s consumer strategy helps drive lower costs for the employer and the PEO master health plan.
How can this be accomplished when the days of onsite client visits and enrollment meetings are not an option? We saw increased demand for virtual benefit fairs in 2020. These allowed employees to shop for their benefits in a marketplace-like environment. They can be used for open enrollment only or maintained throughout the year. This allows new hires of PEO clients the opportunity for the same experience they get during open enrollment, resulting in better participation in benefits programs.
DIVERSITY, EQUITY, & INCLUSION (DEI)
The variety of needs across populations has been amplified by the spotlight on social justice, COVID isolation, and the new normal facing employees. Companies are driving change in support of all employee cohorts, including race and ethnicity, LGBTQ+, gender, differently-abled, veterans, and more. Recognizing that a one-size-fits-all approach no longer works, employers have an opportunity to reinvent and successfully support diverse, equitable, and inclusive workforces. Even if current employee populations are not diverse, society is paying more attention to employers’ actions to promote equity internally and in their communities. How can employers drive value in this area?
- Bridge the “say/do” gap with a multi-faceted benefits strategy for diversity, equity, and inclusion;
- Identify employee needs through data analytics and active listening;
- Implement benefits that support diverse personal needs, with a focus on underrepresented groups;
- Adjust benefits communication materials to be more inclusive and diverse; and
- Conduct a deep-dive into the DEI philosophy, strategy, and current state of each vendor/carrier partner.
Things may never be quite the same as they were pre-COVID. In some ways, though, the pandemic has pushed us into exciting new directions from a benefits standpoint. The new norm is not just renewing health, dental, vision, life, and disability with your current carriers, but also pushing them in new directions, adding to your offerings, and creating a benefits experience that meets the needs of all the diverse populations you serve.
Principal—PEO Practice Leader
Mercer Health & Benefits, LLC
Mercer Health & Benefits, LLC