Employee Benefits Roundup - February 2023

Each month, Mployer Advisor collects and presents some of the most relevant and interesting data, information, and insight we've encountered over the past month covering areas related to employee benefits.

Value-Based Care

Healthcare expenditures are expected to climb by 8.5% to an average of  $15 thousand per employee in 2024.

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Currently, more than half (54%) of all healthcare spending in the private sector continues to operate under the increasingly antiquated fee-for-service model, but that number is likely going to shrink quickly as consensus on the benefits of value-based care grows and employers.

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Some of the advantages that employers can gain from the transition to value-based care include: 

• Cost Savings: McKinsey estimates that companies who adopt a value-based care approach can save between 3% and 20% on healthcare spending. On the public side, Value-based care programs have saved Medicare billions, including $1.8 billion in 2022, which was the 6th year in a row that VBC has resulted in a net reduction in Medicare expenses, and resulted in fewer hospital admissions and readmissions. 
• Improved Care: 59% of employers reported improved outcomes among the results achieved from utilizing a value-based care model, and 96% of payers agree that value-based care will lead to better outcomes for patients.
• Higher Satisfaction: Given that the quality of healthcare an employee receives is often seen as a reflection of the quality of the employee benefits offerings and employer more generally, higher rates of satisfaction - via better chronic illness management, for example - can have meaningful impacts on both employee productivity and retention.

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Centers for Medicare and Medicaid Services setting the year 2030 as the target date for getting nearly all Medicare and Medicaid patients enrolled in value-based care programs, what remains to be seen is how quickly the private sector will follow suit. 

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Bereavement Leave

In a resiliently tight labor market, bereavement leave and other enhanced grief and loss-related offerings are not only a means of differentiation in the competition to attract top talent, they also provide an opportunity to display meaningful support, flexibility, and generosity in a time when those efforts are most likely to be appreciated, remembered, and reciprocated by way of loyalty in return.

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Much of the conversation surrounding bereavement leave and potential enhancements to bereavement policies involves 2 questions: How many days of paid time off should be allotted following the death of a loved one, and who qualifies as a loved one? 

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• According to Mercer, the average number of days of bereavement PTO offered by US companies is 5 days.
• Currently, only 5% of US companies offer more than 6 days of bereavement leave, although trends indicate that number is likely to grow with about 20% of a group of HR professionals known as the Disability Management Employer Coalition declaring their intent to expand their bereavement policies in the next year.
• One professor with the University of Alberta who researches grief recommends bereavement policies that allow for 14 days of PTO.
• More than two-thirds of companies that offer bereavement leave have expanded bereavement leave to include extended family members like grandparents and grandchildren.

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Some companies of note that have expanded their bereavement leave policies up to 20 days of PTO include Adobe, American Express, Bank of America, Goldman Sachs, and JPMorgan Chase.

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The Generational Divide In Benefits Prioritization

The challenge of providing benefits that meet employees’ needs becomes all the more difficult in the midst of a generational shift in how employees view benefits and which ones they most prioritize.

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Some of the generational divergence is the result of practical considerations related to the fact that different generations are currently experiencing different points in their lives and often have very different requirements. 

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For example, given that college has only gotten more expensive over time and given that older workers on average have paid off more of their tuition debt than younger workers, it is not surprising that benefits related student loans are less in-demand among Gen X employees, 20% of whom list student loan repayment as the top employee benefit, than Millenial and Gen Z workers, 27% and 34% of whom do so, respectively. Among workers aged 18 to 24, 39% put student loan repayment at the top of their ideal benefits list.

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Similarly, older workers tend to prioritize retirement-related benefits more so than younger workers do, with 401k matching ranking as the number 2 benefit priority among workers across all demographics with one exception - workers aged 18 to 24. 

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Other discrepancies between generations, however, seem to indicate a shift in opinion that goes beyond simply reflecting the different stages of life each generation is experiencing. 

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For example, although fully-paid healthcare premiums was the number 1 employee benefit listed by the majority of survey respondents, with 51% of all respondents listing it as their top priority, the proportion of Gen Z respondents that put fully-paid healthcare premiums on the top of their list of employee benefit priorities was actually slightly lower than those Gen X respondents who listed free food at the top of their list, at 41% and 42%, respectively.

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For context, the percentage of Gen X respondents that listed free food as their top priority is 21% while the percentage of Millenials that did the same is 29%.

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Despite intergenerational differences of opinion, however, many opportunities remain for employers to both add additional flexibility and customization to their benefits packages and to seek out the common ground where the Venn diagram circles for each generation overlap. 

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For example, despite the popularity of fully-paid health insurance premiums across generations, the number of firms offering this benefit has been dropping dramatically in recent decades, falling from 34% of the Fortune 100 companies offering it in 2001, to 9% in 2017, and just 1% as of 2023, which represents a significant edge for employers who can better meet this need of growing consensus. 

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Strategic Benefit Design

Non-profit research organization The Integrated Benefit Institute recently conducted an in-depth study involving more than 300 human resources professionals in order to better understand some of today’s most pressing issues in workforce management. 

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Based on the information that was gathered and the resulting analysis, the study organizers and authors make the following recommendations as to how employers can best execute employee benefits strategy to bring their offerings in line with a changing market::

• Evaluate current policies in light of the company mission and the evolving tactics being employed in the furtherance of that mission;
• Create flexible work arrangements and policies that consider the needs of each role/team on a smaller, more granular scale as opposed to a one-size-fits-all solution;
• Develop employees internally to fill skill gaps and build a stable talent pool; 
• Prioritize quality benefit outcomes over employee benefit engagement rates; and
• Provide additional, specialized training for managers and company leaders;

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You can read more about this study and the resulting analysis here.

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