Dive Brief:
- Employers can design appealing health benefits packages while managing costs, according to a May 25 report by McKinsey & Co.
- In a survey, employers reported that benefits are increasingly important to talent management. “Compared with before the pandemic, the proportion of employers reporting that benefits are “very important” in talent management increased 11 percentage points […] highlight[ing] the intensity of competition for talent and the growing need for employers to optimize employee benefits,” according to the report. Seventy-eight percent of respondents said they offer at least one voluntary benefit to attract candidates and retain employees, and many indicated they appreciate the increasing value of these benefits in their overall workforce strategy.
- To manage costs, however, employers said they’re turning to solutions like high-deductible health plans and member advocacy services.
Dive Insight
Prompted by the pandemic, a constricted labor market is shifting employers’ perspectives, strategies and offerings in employee healthcare benefit plans.
McKinsey’s report supports other research concluding that benefits are high on workers’ wishlists: Health benefits were second only to pay in April survey results from Willis Towers Watson about new hires’ priorities.
Beyond talent attraction, such offerings can support employees’ overall well-being, McKinsey respondents said, and drive diversity and inclusion. For example, employers can offer mental health benefits on par with physical health benefits — and ensure access to those benefits is simple and not stigmatized — one employer previously told HR Dive.
Still, cost concerns persist and, according to the McKinsey respondents, won’t abate any time soon. Sixty percent of respondents reported experiencing healthcare costs outpacing inflation over the past few years, and slightly more (63%) said they anticipate a continuation of those rising costs.
Employers identified high-deductible health plans as an effective cost management option and said they’re increasingly satisfied with such offerings. Likewise, interest in member advocacy services is up, with employers aiming to improve employee benefits navigation and satisfaction. Though typically fee-based, these service providers may “also provide performance or return guarantees of as much as three times the investment,” according to the report.
These findings generally align with stakeholders’ predictions from the beginning of the year — rising costs associated with the pandemic and talent challenges stemming from the Great Resignation. Sources speaking to HR Dive at that time encouraged employers to look beyond typical returns on investment and see rewards like employee retention and wellness.
