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WCI, Inc
July 13, 2022

Health Benefit Strategies for 2023

Finding the right balance between a benefit package that supports attraction and retention but is financially sustainable has never been easy, but it’s especially challenging given the current labor market and volatile economic conditions. Employers recognize that employees have become more concerned with the “lifestyle fit” of the company they work for and compensation alone will not draw in—and keep—the people companies need to succeed. According to Mercer’s Survey on Health and Benefit Strategies for 2023, over two-thirds of the 700 employers responding plan to enhance health and benefit offerings in 2023 to improve attraction and retention or better meet employee needs.

"Employers are grappling with finding a delicate balance between what they need to do for talent attraction and retention in tight labor markets versus the challenges of the current economic environment,” said Tracy Watts, Senior Partner and National Leader for U.S. Health Policy, Mercer. "Employers need to be really thoughtful and specific about their benefits enhancements to ensure they will get a return on their investment. This requires an understanding of the values and needs of their unique workforce."

The survey showed 61 percent of participating U.S. employers are conducting surveys on employee benefit preferences. Informed, thoughtful and data-based strategies will help employers focus on what is right for their people, culture and business.

Mercer's 2022 Global Talent Trends study found that over 50 percent of U.S. employees surveyed say not being able to work remotely or hybrid permanently is a deal breaker when considering whether to join or stay with an organization. Employers have recognized this, and the Health and Benefits Strategies survey found that now 78 percent of participating U.S. employers provide the option to work from home regularly, compared to 26 percent last year, and 66 percent are allowing flexible work schedules—even including a four day work week.

"In situations where there are no additional dollars to invest, flexibility is a great place to start. Flexibility can take many forms, directly supports work-life balance, and often doesn’t come with a high price tag," added Watts.

According to the survey, health benefit strategies today are focused less on reducing healthcare costs and more on supporting the emotional, physical, social and financial well-being of employees—which starts with convenient access to affordable healthcare. Virtual care is now playing an increasingly central role, given its potential to replace some in-person care with lower-cost virtual services and engage employees through channels they are comfortable with. While traditional telemedicine services (a critical source of care during the pandemic) is now offered almost universally, the majority of survey respondents will offer virtual care solutions beyond telemedicine in 2023, with over half of large employers (52 percent) offering virtual behavioral health care in 2023, and 40 percent offering a virtual Primary Care Physician (PCP) network or service.

Improving healthcare affordability. Health care affordability is a top concern for many workers, in particular low-wage earners or those coping with a chronic medical condition. While high-deductible health plans have grown rapidly over the past decade, employers have recognized that these plans aren’t a good fit for some employees. Over two-fifths of large employers (41 percent) surveyed currently provide a medical plan option with a low deductible or even no deductible (such as a copay-based plan) in 2023, and an additional 11 percent are considering it. In addition, 11 percent offer free employee-only coverage (i.e., no paycheck deductions) for at least one medical plan option, and another 11 percent are considering it. While free coverage historically has been relatively common among small employers (29 percent currently offer it), it is a newer strategy for large employers.

Special focus on hourly and low wage workers. When asked whether benefits enhancements would be targeted to specific employee groups, about a fifth of large employers say they are focusing on their hourly and low-wage workforce.

“In today’s competitive labor market, employees are able to leave jobs for others offering only slightly higher pay. Employers are looking to create a stronger bond with this workforce by offering health and well-being benefits and resources that their employees will value,” says Watts.

Addressing benefit gaps and health disparities for under-represented workers. With a new understanding of the health disparities that exist within their populations, employers are just getting started with efforts to address the problem and make a difference. Inclusive family-building support is quickly becoming the norm. Nearly a third of large employers surveyed will offer benefits such as access to fertility treatment coverage and adoption and surrogacy benefits by 2023, and almost another third are considering it. Benefit gaps and disparities for people with disabilities can be overlooked in diversity, equity and inclusion (DEI) conversations, and it’s notable that only about half of respondents cover hearing aids and cochlear implants (49 percent), and cover body support devices and prostheses (48 percent).

While there has never before been so much focus on health disparities for Black workers and other underserved populations, employers are just getting started with efforts to address the problem and make a difference. When it comes to closing gaps for racial and ethnic groups, the two most common initiatives currently in place are advanced search functions to help plan members find acceptable health care providers and multilingual communications (each offered by a third of respondents). Specialized behavioral healthcare is provided by 27 percent of survey respondents, with another 29 percent planning or considering adding this type of support. Survey respondents also expressed strong interest in enhancing coverage for maternal care to improve birth outcomes for Black mothers and babies; while 11 percent currently provide this type of coverage, another 20 percent is planning or considering it.

Family-friendly benefits and support. The survey also showed rapid growth in offerings on a wide range of family-friendly benefits, with 70 percent of surveyed employers currently offering or planning to offer paid parental leave in 2023, and 53 percent providing or planning to provide paid adoption leave. In addition, nearly one in 10 large employers (5,000+ employees) say they provide on-site child care now or will by 2023, and 22 percent will provide access to back-up childcare services.

Employers are also starting to focus on the special needs of women in regards to reproductive health—from preconception family planning to support during menopause. Across U.S. employers of all sizes, 37 percent of survey respondents provide at least one specialized benefit or resource to support reproductive health, which could include benefits to support high-risk pregnancies, lactation, pre-conception family planning, pregnancy loss, or menopause.

About the survey. The survey examined how employers are reworking benefit programs to meet new needs and expectations, and how they are planning to deliver total well-being in 2023. The survey was conducted April 26–May 13, 2022. In total 708 organizations participated, from all industries and of all sizes: fewer than 500 employees (36 percent), 500-4,999 employees (46 percent), 5,000 or more employees (18 percent).

Source: Mercer.

Edited from WCI's HR Answers Now ©2022 CCH Incorporated and its affiliates. All rights reserved.

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