When employers look for innovative ways to attract and retain workers while simultaneously cutting costs, benefits tend to emerge as the answer.
But the benefits landscape shifts each year, and the pandemic brought an unprecedented level of disruption. Despite that uncertainty, the experts say one thing is clear: Those who are able to customize benefits for both workers and workforces will be well-positioned to leverage such offerings in the future, regardless of the problem they aim to solve.
This report details multiple aspects of that issue, including:
How the pandemic confirmed virtual care's importance;
Why emergency savings are crucial for benefit plans;
How to approach open enrollment during a pandemic; and
Whether employers are holding onto fitness benefits.
These are just a few of the many aspects of employee benefits that employers are thinking about. We hope you enjoy this deep dive into the current trends.
Pandemic leaves large employers with 'no doubt' about virtual care's importance
Though telehealth and similar services have gained traction for years, COVID-19 has accelerated that trend, said the Business Group on Health's president and CEO.
By: Ryan Golden
The nation's largest employers reported a strong trend toward virtual care options, including telehealth, during the COVID-19 pandemic, according to survey results from the Business Group on Health (BGH).
More than half (53%) of the 122 employers represented in the survey included the implementation of more virtual care solutions among their top healthcare benefit initiatives for 2021. This was the top priority among respondents to BGH's annual survey for the third year in a row, said Ellen Kelsay, the organization's president and CEO.
"There's certainly no doubt that virtual care is here to stay," Kelsay said during a press call. "We've already seen significant traction in the virtual landscape for the past several years and [COVID-19] has done nothing but accelerate that."
BGH has seen an "explosion" of an investment in virtual resources in response to the pandemic, she added, "and that's probably for pretty clear reasons." Stay-at-home orders, for example, required healthcare providers to pivot care delivery as employees were unable to see providers as they normally would have. According to the survey results, 76% of respondents made changes to allow better virtual care access in response to COVID-19, and 71% "accelerated telehealth and virtual care offerings."
At the same time, virtual solutions also appeal to consumers from a convenience standpoint, Kelsay said, and both providers and employees have "very willingly embraced" virtual care. Employee benefits industry sources who recently spoke to HR Dive noted that employee response to virtual care solutions during the pandemic has been largely positive, although hurdles to adoption may remain in the long term.
But for now, the vast majority of employers in the survey see virtual care playing an important role: 80% said they believe virtual care will have "a significant impact on how care is delivered in the future," up from 52% of respondents in 2018.
The mental health connection
Expanding access to mental-health resources was the second most common priority cited by respondents in the survey. As with virtual care, the pandemic has reinforced for employers the importance of mental health and well-being strategies, Kelsay noted.
"This has been a very key area of focus of employers for many years pre-dating the pandemic," she said. "You'd be hard pressed to find a single soul out there who hasn't felt at some point during the recent months some moment of stress, anxiety, isolation or loneliness."
Employers are primarily looking to increase access to mental health resources by directing employees to online resources like apps, videos, articles and webinars, according to the survey results. Slightly fewer than half (45%) said they were working with their health plans to expand mental health networks. Culture is also an area of focus, and 65% of employers named managerial training to recognize mental health issues and direct employees to appropriate services among their strategies for 2021.
As with other areas, virtual care growth has played a large role in mental health. Eighty-eight percent of employers in the survey had virtual service offerings in place for mental health in 2020, and an additional 8% are either adding such services in 2021 or considering them for 2022 or 2023. More than 60% currently have virtual solutions in place for emotional well-being and resilience.
Telehealth can also help reduce the costs of mental health treatment. More than half of surveyed employers said they planned to offer no or low-cost virtual counseling through telemental health in 2021.
Issues with reimbursements remain
Employers in the survey largely sought to keep virtual-care costs low for employers, particularly during the pandemic. Sixty-nine percent said they waived costs for virtual care due to the pandemic.
But payment parity for virtual care is a topic of conversation for employers, Kelsay said. She added that BGH supports payment flexibility, which may in some cases mean more or less reimbursement for telehealth costs compared to in-person health visits.
"We want to be careful that virtual does not overlay additional costs onto already challenging healthcare cost infrastructure."
After COVID-19, emergency savings may be even more important for benefit plans
The pandemic-induced recession has forced many to access their long-term savings to combat short-term financial pressures, sources told HR Dive.
By: Ryan Golden
Prior to the COVID-19 pandemic, retirement preparedness and financial health were common concerns for U.S. workers. Now, a recession has forced many to dig into their long-term savings for short-term needs.
Federal lawmakers recognized that need when enacting the Coronavirus Aid, Relief, and Economic Security Act. The law enhanced the ability of consumers to make special distributions for certain eligible retirement plans — including defined contribution plans like 401(k) plans.
Employers largely responded to the CARES Act's signing by enabling employees to access retirement plan assets. A May 2020 survey by Willis Towers Watson found 65% of employer respondents planned to increase employees' ability to do so. By September, those rates rose, according to Mark Smrecek, senior director, retirement, and financial well-being market leader at Willis Towers Watson. Smrecek said that "we're seeing upwards of probably 4 out of 5 employers providing additional access" to COVID-19-related distributions.
It's likely that many needed that access. Americans, particularly those who are low-income, continue to face financial hardship during the pandemic. Data from Pew Research Center showed that 48% of middle-income adults and only 23% of lower-income adults had "rainy day funds" that could cover their expenses for three months in case of an emergency.
The 401(k)'s short-term outlook
"Once early March and April hit, we knew employees were being directly disrupted," Smrecek said, with short-term cash needs heightened particularly for workers dealing with changes to either their own employment situation or that of a family member.
But even some of those who did not necessarily need the money in the short-term made withdrawals to build emergency savings, he noted.
Year-over-year, HR services company ADP actually saw a decline in the number of 401(k) loans, said Kristin Andreski, senior vice president and head of the company's retirement services business.
But ADP also observed a "significant increase" in the number of withdrawals from these accounts, Andreski said, "clearly the result of the pandemic, clearly the result of the capabilities that the CARES Act put forward." She added that about 60% of the CARES Act-related withdrawals made by ADP clients were for the maximum amount allowed by the law.
At the same time, Willis Towers Watson has found that the level of contributions made to defined contribution plans "has not materially changed," Smrecek said; "We're actually seeing additional contributions going into the plan."
In the long-term, a focus on saving behaviors
As companies continue their gradual shift toward reopening, Andreski said that ADP and its clients are mainly focused on getting employees back on track from a retirement planning and financial readiness standpoint.
"The fact that people have had to access their retirement funds says a lot in terms of what their readiness was in terms of emergency savings ahead of this pandemic," Andreski said. "The conversation has shifted … to be a more broader conversation."
There is also speculation that employers might increase their focus on areas like emergency savings within the defined contribution plan context moving forward, according to Smrecek. Such an emphasis could be placed using an array of financial products, like flexible benefit plans or student-loan matches. "All these things play a part in building resilience," Smrecek said.
Employers will also need to continue to emphasize financial benefit offerings that may have been underutilized, particularly those that help workers meet their day-to-day needs, and position them "front and center" for employees, Smrecek said. Remote work can make this process more difficult, he acknowledged, but employers might use tactics like virtual focus groups of employees to aid their understanding of workers' needs.
"A lot of this has to do with education and awareness," Andreski said. "The challenge has always been what I refer to as activation, the just general awareness of getting employees to utilize and engage, and I think that is our biggest opportunity."
The end of 2020 will likely be no easier than the start. As companies head into the last leg of the calendar, employees are likely to face seasonal demands that could further strain their mental health. Long term, sustained levels of high stress can quickly send employees into a state of fatigue﹣ defined as tiredness and diminished function connected to high physical or mental demands. Fatigue negatively impacts an employee's connection to their work and company, which can translate to absenteeism and retention issues in the new year.
5 factors contributing to year-end employee fatigue
Numerous professional, social, and biological stressors appear to merge towards the final weeks of the year. Challenges that may otherwise be easier to manage in isolation can feel more disruptive when they accumulate over a short window of time.
Business reviews. According to the American Institute of Stress, nearly 83% of employees experience work-related stress. Performance reviews, business presentations, benefit enrollment, a final sales push, or a home-stretch quota can heighten internal pressure, especially when connected with a bonus or other forms of compensation.
Seasonal Affective Disorder. In the winter, many people experience Seasonal Affective Disorder (SAD). SAD is linked to a decreased exposure to the sun (a source of Vitamin D) in the winter, combined with staying indoors more often when temperatures fall. Employees who live with SAD can feel a cluster of depressive symptoms, such as feeling low, sleeping too much, and lacking motivation.
National & religious holidays. Deciding whether or not to embrace holiday social traditions is likely to be a first-of-its-kind conversation for many families in 2020. Travel, family time, and added expenses can feel draining, but so can feelings of loneliness. Employees are likely to feel emotionally conflicted in new ways this holiday season.
U.S. presidential election. During any election year, employees may find themselves on edge and uncertain. Political leanings tend to be woven tightly with emotions, personal values and one's general outlook on the future. A workplace that feels opposed to an employee’s political views can contribute to personal feelings of isolation.
Latent pandemic stress.More than 40% of U.S. adults report that the coronavirus pandemic has negatively impacted their mental health. Continued uncertainty surrounding transmission, vaccination, and the impact of the flu season will continue to keep general health and safety top of mind for employees as 2020 comes to an end.
Everyday signs of fatigue
Although fatigue has a direct impact on actions, feelings, and energy levels, many managers may not pick up on signs from team members, even those they interact with daily. "It can be easy to miss early signs in others when you're also feeling incredibly stressed," says Dr. Amy Cirbus, Talkspace Therapist and Director of Clinical Content. "One key behavior to look for is disengagement patterns related to communication, collaboration, and execution. Changing workplace dynamics affect our ability to detect signs of stress in colleagues and team members." We don't have the opportunities to see typical changes in behavior more easily visible when working together in a shared space.
For a data-oriented way to observe such changes, leaders can implement pulse check surveys throughout the quarter. For a more personalized approach, simply open the door to conversation. Peers and managers were cited as the two audiences employees were most willing to speak with about mental health.
Simple steps to address rising workplace fatigue
Avoid the temptation to wait out or push through chronic stress.
Managers can be the most effective line of defense against employee fatigue if they are given the right tools and encouraged to acknowledge stress and champion healthy interventions. Dr. Cirbus and fellow Talkspace therapists have come together to give managers a handy one-page guide to quickly recognize 15 common signs of fatigue and build easy solutions to boost employee morale today.
Article top image credit: Stocksy
'Posters aren't going to cut it': Open enrollment in a pandemic
DirectPath's Kim Buckey offered communication tips for practitioners heading into open enrollment season.
By: Katie Clarey
As the term "virtual reality" comes closer to defining the year 2020, HR professionals will find the coronavirus has moved yet another thing online: open enrollment. The communication methods employers use to encourage workers to select benefits will need to follow suit. As DirectPath VP of Client Services Kim Buckey put it, "posters aren't going to cut it."
Like birthday parties and weddings, open enrollment education events have adapted to the virtual environment, said Buckey, whose company provides enrollment support services to employers and employees. DirectPath has noted a developing interest in virtual benefit fairs, for example. "You're not going to be able to set up something where people can meet with vendors, but you can certainly do that online," Buckey said.
Telephonic enrollment has also garnered more attention amid the pandemic. Employees can schedule an appointment to chat with a representative about an employer's benefits offerings and, in the same phone call, learn about their options and enroll on the spot.
Even as benefits education and enrollment mediums morph to the demands of COVID-19, HR professionals must clear the hurdles of informing employees they exist and convincing them to take action. Buckey offered three tips for practitioners heading into open enrollment season.
1. Start early. Communicate often.
If benefits professionals haven't initiated any open enrollment communications plans, they should start now, Buckey said. "Lay the groundwork. Remind people that enrollment is coming up."
Employees may welcome this information. The novel coronavirus has refreshed many employees' interest in their benefits, prompting workers to investigate the coverage they have and consider what they may want to change in the coming year, Buckey said.
While employees' attention lingers on benefits, employers can remind them to tend to benefits-related tasks. Workers need to check in with their primary caregivers, for example, to ensure they're still in business. "In some areas where there are primarily private practices, a lot of those practices have had to close because they lost so much income during the shutdown," Buckey said. "This is a good opportunity to think about where you're going to receive care going forward."
2. Bring communications into focus.
Open enrollment necessitates an overarching strategy. Employers ought to consider what they want to accomplish during the season, Buckey said. Employers may want to shift employees to a certain plan. They may want to increase participation in offerings such as health savings accounts. Or they may want to ensure workers looked into their options.
As employers deploy communications about open enrollment, they must ensure each message is crafted for a specific purpose and a specific audience. "Having a plan so you can target your communications is essential," Buckey said. "That way, you're not advertising student loan benefits to someone entering retirement."
Messaging should be brief. "Don't try and do all things with each communication. Have a reason for what you're sending out, and keep it short and simple," Buckey said. "No one these days, or even in the best of times, has time to go through a fifty-page document." Buckey suggested communications run no longer than half a page to a page. "That's about how much we can handle. Keep it engaging and visual."
Employers should make clear how the communications relate to employees. "Emphasize the 'what's in it for me,'" Buckey said. "If you can point out the value of an employee taking action, usually that translates into dollars."
3. Use a variety of employee-facing tools
"Meet employees where they are," Buckey suggested. The "overdone phrase" offers employers a useful open enrollment communication strategy, and one that's particularly applicable during a pandemic.
Employers can start by sending out mailers. "Get materials in front of other family members," Buckey said. Then go virtual. DirectPath serves clients who have used Facebook pages, Twitter chats and email campaigns to advertise benefits offerings. "There are so many tools out there that can be used," Buckey said. "There's no excuse for not taking advantage of these opportunities when these tools are so widespread."
Article top image credit: Iven, William. (2014). [Photograph]. Retrieved from Pixabay.
Fitness benefits moved online during COVID-19 — but will they stay there?
Companies largely haven't cut back on fitness classes, citing cultural and employee-health concerns as cause for continued investment, sources told HR Dive.
By: Ryan Golden
During the U.S. public-health response to COVID-19, many employees witnessed the closure of their physical workplaces and other community fixtures, including gyms, yoga studios, spas and similar facilities.
The latter group of closures affected employee engagement and retention efforts among employers that offer benefits programs centered around physical fitness and personal wellness. According to the Society for Human Resource Management's 2019 Employee Benefits survey, nearly one-third of U.S. employers offered fitness center memberships or subsidies or reimbursements for fitness classes. Such arrangements were more common than on-site fitness centers or classes, offered by 29% of employers as of last year.
Prior to the pandemic, physical fitness benefits formed "a major component" of wellness strategy, according to the SHRM survey. But providers that facilitate these benefits told HR Dive that COVID-19 necessitated a massive shift.
Providers follow the remote trend
Since the pandemic told hold in the U.S., a number of employers closed physical worksites and asked employees to work from home. Per a survey by Gartner, more than 80% of company leaders planned to permit some form of remote work after the pandemic.
The move to online work was accompanied by a movement to online delivery of certain employee benefits, including many healthcare services. A shutdown of in-person care led to increased use of telehealth services, and experts in the space suggested telehealth can continue to be an important part of the benefits ecosystem moving forward.
A similar development may be emerging with respect to fitness benefits. ClassPass, a fitness class booking platform with a business-to-business product, pivoted "very quickly" to virtual offerings as certain markets entered lockdown, said Nicole Wolfe, the company's head of corporate programs.
Employees using ClassPass can access online video sessions either by signing up for them in advance or by accessing pre-recorded content on demand. Since the move to virtual delivery, users are trying new types of programs in different markets, Wolfe said. Those based in New York, for example, might take yoga sessions delivered by studios in London. Fitness centers have also helped the company navigate certain public-health closures. When officials in San Francisco prohibited indoor workouts, some providers held outdoor events like bootcamps instead.
One-on-one fitness sessions have increased in popularity since the pandemic began, perhaps due to the fact that group classes are no longer available in many markets, but employers are also using ClassPass benefits as a way to team build, Wolfe said.
Other vendors made a similar transition. Peerfit, which offers an employee-benefit platform for scheduling personalized fitness activities, launched a digital product that made use of existing digital classes and other activities already on its provider network. It also allowed employers to purchase this digital product without the company's traditional brick-and-mortar offering, said Emma Maurer, vice president of enterprise health at Peerfit.
Before the pandemic, Peerfit also emphasized the ability of its platform to bring employees together via shared fitness experiences. That's continued during the pandemic, Maurer said. Streamed classes allow employees to invite their co-workers to join virtually.
"We are seeing our users starting to go back to in-person classes," Maurer said, adding that the number of subscriptions and views of digital content on Peerfit is also down. Providers within the company's network are beginning to reopen, albeit with additional health and safety precautions. "Gyms are taking this health crisis seriously and there are additional precautions that our members need to know about," she said.
COVID-19 hasn't led to significant cuts
Digital offerings might make sense in the current environment as some research suggests a potentially negative outlook for brick-and-mortar fitness centers. For example, a TD Ameritrade survey of U.S. adults found 61% planned to exercise at home instead of paying for the gym. Across the country, reopening gyms and similar locations have struggled to comply with public regulations and mitigate the risks of exercising indoors during a pandemic, NPR reported.
Yet these observations haven't necessarily caused employers to drop fitness benefits. Most large-employer members of the Business Group on Health, roughly 80%, "have no plans to open on-site fitness centers anytime soon," said LuAnn Heinen, vice president of BGH and leader of its Well-being and Workforce Strategy Institute. "Clearly that only reflects the impact of COVID and not the import and the value of fitness programs that employers know employees need and value," she added.
Other Business Group members are either continuing with plans to open such centers in the future or have existing centers open in select locations, Heinen said, and vendors that offer access to digital fitness classes have become popular. "Companies that didn't already have those kinds of options are certainly looking into them," she explained.
Moreover, pushback on virtual fitness classes has been minimal, Heinen said. On a recent benchmarking call of BGH members, one HR representative said they had received some internal pushback on virtual-class usage. For the most part, however, Heinen said she hasn't heard talk of any cuts to fitness benefits from members. "Things may be a little bit on pause and getting recalibrated, but we haven't heard about cuts — I haven't."
This tracks with findings about employers' larger well-being investment during the pandemic. A survey conducted by Willis Towers Watson found the vast majority of employers would not be changing their wellness benefit budgets, said Regina Ihrke, North America well-being leader at the firm.
The two vendors who spoke to HR Dive noted that they were both flexible with their payment options as the pandemic set in. Wolfe said that ClassPass has traditionally moved away from a per-employee-per-month payment model so that employers are paying for workers who actually use the program. "When the pandemic hit, we actually froze all our memberships," Wolfe said. "Now it's really kind of on them to determine when they want to come back on."
"Things may be a little bit on pause and getting recalibrated, but we haven't heard about cuts — I haven't."
Vice President, Leader of Well-being and Workforce Strategy Institute, Business Group on Health
"I think everyone was worried," Maurer said, noting that Peerfit's many public-sector clients faced falling revenues and had difficulty maintaining existing benefits without making adjustments, as did others. The company offered clients the opportunity to freeze their contracts for up to 60 days, keeping the benefit an option for employees if they wanted to buy fitness experiences for themselves. "It was more from a position of compassion [to freeze the contracts] than really anything else."
Peerfit is now seeing interest from clients in ramping up their fitness benefits, Maurer said, adding that employers may be concerned about COVID-19 causing workers to feel isolated. "I think employers are looking for a way to build back their culture, to create a sense of connectivity and togetherness again."
What wellness may look like post-pandemic
Employers who spoke to HR Dive mainly confirmed the importance of wellness benefits moving forward. Ultimate Kronos Group, the company recently formed from the merger of Kronos and Ultimate Software, set up virtual fitness classes for employees and their children over the past few months, and the company plans to hold a competitive company-wide step challenge in October as employees work remote, said Chief People Officer Dave Almeda.
Tess Hamberg, a wellness consultant employed by Aetna who works with engineering consulting firm WSP, said that WSP shifted its wellness strategy to focus on supporting employees during the transition to working from home. WSP had already brought on ClassPass before the pandemic, and the ability to offer virtual access to classes was a component of a broader strategy to better match benefits strategy to the virtual environment.
Those virtual offerings are likely to be a permanent feature of WSP's benefits package moving forward, Hamberg said; "It’s like the cat's out of the bag at this point because we realize that it's an option that's now available to us. COVID really pushed a lot of people to realize we can do all these offerings that we didn't think of before or just never utilized."
Worries about employees' mental health are also likely to continue, Ihrke said, but employers who've spoken to Willis Towers Watson noticed increased engagement on digital communications regarding mental health, even as use of employee assistance programs decreased at some firms.
Those concerns can be addressed by digital offerings, though sources still perceive deficiencies in mental healthcare in the U.S. "COVID, like so many other things, exposed the cracks, the weakness and the needs that we haven't met in our healthcare system," Heinen said. "If [companies] didn't have a full suite of virtual benefits, they certainly have it now."
But wellness isn't one-dimensional. "There is this 'watch out' phase that's now starting to get heightened in not ignoring the physical well-being aspects," Ihrke noted, due to worries that employees are getting less activity and making less healthy decisions. "I think there is concern that, if we ignore that piece too long and just focus [on] mental health, we are going to face more significant issues long-term."
In the meantime, gyms, studios and other businesses are moving to accommodate the virtual trend long-term. "I think it's here to stay," Maurer said. "[Providers] have kind of learned that they needed another way to stay alive … if folks were still fearful of going back to gyms then they would need to offer virtual content."
Article top image credit: Yujin Kim/HR Dive
From wellness to well-being: the evolution of employer health initiatives
What started as yoga classes and smoking cessation programs has evolved into something more holistic and wide-reaching.
By: Pamela DeLoatch
No company wants its employees to be sick. But to encourage workers' overall health, benefits packages may need to include much more than basic healthcare. Employees may function at less than their best due to physical, mental, emotional, social or financial problems. As a result, their performance may suffer — and that takes a toll on overall business.
More than 75% of companies said they offer wellness programs to reduce absenteeism and presenteeism, to offer competitive compensation packages, to reduce healthcare spend and to boost employee morale, according to a survey of more than 540 employers from Optum. Optum's report revealed that, over the last 10 years, employers have used well-being programs to do so increasingly, while their use of such programs for healthcare savings has "changed little over time."
Nearly half of all U.S. worksites offer some type of wellness program, according to a report from the Centers for Disease Control and Prevention. Even as companies continue to offer subsidized gym memberships, initiate weight loss challenges and host stress management activities in hopes of improving employee health, some companies are taking a bigger, more holistic approach.
What started as yoga classes and smoking cessation programs has evolved, Tim State, senior vice president of Associate Health and Well-Being at Humana, told HR Dive. As employers learn more about the science of how humans thrive and other aspects of productivity, organizations can build a better foundation for well-being, he said. "We've moved from a narrow understanding of programs or slices of that picture into something a lot more holistic and fundamental," he said.
Transforming wellness into well-being
Despite the popularity of wellness programs among organizations, many employees report they don't work. This tension may result from a disconnect between employer offerings and overall strategy, State said. For example, an employer may offer a stress management program, but employees' stress will hold steady after its implementation. That may not be the fault of the program. That may result from a toxic environment where employees don't have a sense of teamwork or belonging.
Rather than implement such a program, employers may focus on well-being. Well-being does a much better job of measuring and improving what drives better productivity and health engagement, State said.
At Humana, for example, that understanding incorporates four dimensions: a sense of purpose in one's life and career; health, including, but not limited to physical, emotional and spiritual health; sense of belonging, which includes relationships; and sense of security, which includes personal safety as well as financial security, State said. These aspects provide the foundation for wellbeing, and the company's offerings reinforce the direction.
Humana isn't the only organization that takes a holistic approach to employee wellness. Misty Guinn, director of benefits and wellness at Benefitfocus, told HR Dive that organizations are embracing a total well-being strategy to meet different employee needs. Now that several generations inhabit the workplace at one time, focusing on one specific area of wellness, such as fiscal health, may not benefit all employees, she said.
Focusing on well-being doesn't mean canceling gym memberships or any other wellness initiative, but it does mean making gym memberships the starting point rather than the endpoint in addressing health.
Make the right diagnosis and implement the right treatment
Corporate programs can fail when they don't address employee pain points. That can happen when employers make assumptions about what employees want. "We have to design what our measuring stick is and make sure that we're not just adding a benefit to say, oh, we offer this benefit," Guinn said. "We're adding it so that we're ensuring that it adds value to our employee base, to our organization's culture."
To counter that, Guinn said she launched an annual employee wellbeing survey to find out what is critical to different employees. She was surprised that, for two years in a row, 69% of employees, who had an average age of 38, put saving for retirement as one of their top wellbeing goals, above work-life balance or stress management, she said.
Because of that information, her company started offering financial wellness support, including a financial coach and student loan refinancing. "I think that the first step is to look at all the different data points and most importantly, launch that survey and see where you're going to really engage with people."
Consider what the ultimate change your organization is seeking is, State added. Then, understand what habits or behaviors or inputs are required to make that change. Last, make sure you have strong, stable and reliable ways to measure those things.
The virtuous cycle of well-being
When employers incorporate well-being initiatives into their compensation packages, they do themselves a service. Employees are starting to value their benefits package more than their salary, Guinn said. The ability to customize and personalize those benefits increases employee loyalty. "It's really more about not just offering core benefits," she said.
Creating employee well-being takes commitment to employees and a commitment to a positive climate in organizations, State said. That environment can become a competitive advantage for attracting, retaining, and engaging a thriving workforce, he said.
Although organizations may not have played that role in the past, they are taking more responsibility. State said he sees this as fair. "As an employer where folks spend eight to 10 hours a day on average in America engaged in their work, we're in a great position to influence all of those dimensions," he said. "And what we understand is that at an individual level, those [dimensions] all do work together. They're very integrated within each of us."
Frustrated employers buck status quo, leave insurers for riskier arrangements
"In a nutshell, has it been an easy two to three years? No. But it has to be the way we go because healthcare costs are just going absolutely stupid," the owner of a North Carolina auto group said.
By: Samantha Liss
More employers, fed up with the ever-rising cost of healthcare, are turning to riskier insurance arrangements, swayed by messaging from brokers to ditch the status quo.
For years, large employers opted for self-insured plans as they had enough employees to spread the risk of a potentially high-cost year due to severe illnesses or injuries. Smaller employers tend to pick fully-insured plans in which the insurer takes on the risk and pays claims as they arise throughout the year.
Now there are signs that more employers, even smaller ones, are making the jump to the riskier arrangements, in some cases known as administration services only plans or ASOs.
That includes the owner of an auto group in North Carolina, who cautioned it's not always smooth sailing.
"In a nutshell, has it been an easy two to three years? No. But it has to be the way we go because healthcare costs are just going absolutely stupid," Gerry Wood, owner of Gerry Wood Auto Group, told HR Dive sister publication Healthcare Dive of the transition.
His group has started to see savings, he said. He now has about 135 people on the company plan and they're approaching their fourth renewal. Wood has opted to tailor his plan in a way that pays providers a percentage of Medicare, also known as a reference-based pricing plan. Wood believes it's one tool a self-insured plan can use to help put a clamp on healthcare prices.
Typically, in a fully-insured plan, a health insurance sets up a network promising physicians who opt in access to a pool of insured people. In theory, the larger the pool, the greater pricing concessions an insurer can extract from those physicians, or health systems, who are essentially trading price discounts for access to more potential patients. Physicians agree to set rates in those arrangements.
Still, employers tell Healthcare Dive these plans are a lot of work and require a much more engaged and educated staff when it comes to using their plans.
"You can't be in it a little bit," Wood said. "You're either committed to this form of healthcare payment plan or you're not. If you have a faint heart, stay out of it."
Cigna told Healthcare Dive it has seen an uptick in employers covered by self-insured arrangements among, including smaller employers, and CVS Health also said it has seen an increased interest. Data from the Kaiser Family Foundation also shows a modest increase in the number of employees covered by these plans in the small group market over time.
Still, some experts are concerned about whether employers understand the depth of the financial risks of such arrangements.
'It's worth it.'
Wisconsin-based company Palmer Johnson Power Systems switched to a self-insured arrangement when it had just 70 employees in 2012. The company logged such drastic savings that it took employees on a trip to popular ski town Vail, Colorado, in 2018.
"We basically said that we are going to share our wins," Ashley Matthys, director of human resources for Palmer Johnson, told Healthcare Dive.
However, in 2019, the company experienced a higher claims year and had to increase employee premiums by 10%.
Morgan Creek Capital in North Carolina switched to a self-insured arrangement with about 35 people under the plan and has experienced multiple years of significant savings, CFO Nick Taylor told Healthcare Dive. "It's worth it," he said.
These employers aren't alone. Some of the nation's largest insurers have noted an increase in self-funded arrangements and among smaller employers.
CVS, which reported a nearly 2% bump in members enrolled in self-funded plans from 2018 to 2019, acknowledged a growing interest among small employers for self-insured plans. "We are seeing more employers of all sizes, including more small-sized groups than in the past, evaluating alternative funding vehicles versus traditional full-insured funding products," a spokesman told Healthcare Dive.
Cigna noted an increased customer base for ASO in its 2018 annual filing.
When asked to characterize the types of employers opting for these plans, a Cigna spokesman told Healthcare Dive: "For 2018 — we saw increases across all of our market segments — small, medium, and large employers." There was a 2% increase in the number of members in ASO plans at the end of 2018 compared to the prior year, though that figure remained flat from 2018 to the end of 2019.
Anthem noted a less than 1% rise in self-funded plan membership, or the addition of 131,000 lives at the end of 2019 compared to the prior year.
UnitedHealthcare reported a 4% rise in self-funded membership in 2019 compared to the prior year and said the increase was primarily due to an acquisition.
For insurers, self-funded enrollment tends to dwarf fully-insured enrollment though fully-insured plans can be more profitable.
"Our healthcare products that involve greater potential risk generally tend to be more profitable than administrative services products and those healthcare products where the employer groups assume the underwriting risks," Anthem said in its annual filing.
Concerns over risks, adverse selection
Policy experts are worried these employers are unaware of all the potential financial risks over time. Even though these employers may be seeing relief in the form of lower premiums,it comes at a potentially greater cost to the traditional small group market and employee benefits, experts said.
"Some small employers can benefit from that, but the question is how long?" Linda Blumberg, an economist and fellow at Urban Institute's Health Policy Center, told Healthcare Dive.
To make these plans work — especially for those lacking thousands of employees — employers opt for stop-loss coverage, also known as reinsurance, protecting them from a year of exorbitant medical claims.
Still, many times that stop-loss coverage is not guaranteed indefinitely because it's underwritten, based on the health status of the group.
"If you have a bad year, you could lose your reinsurance or the cost of it could go up enormously and then you're in a situation where maybe you turn around and you start buying fully-insured coverage," Blumberg said. Essentially, it's dumping bad risk into the fully-insured market.
If it turns into a larger trend, then it could create the kind of bifurcated healthcare landscape that existed prior to the Affordable Care Act, Sabrina Corlette, an expert on healthcare policy and a research professor at Georgetown University, told Healthcare Dive.
Healthier groups of employers will migrate to the self-insured arrangements, potentially leaving behind employer groups that are less healthy in the fully-insured market and creating adverse selection.
"Premiums could go up for everyone else," Corlette said.
Plus, these self-insured plans aren't required to provide the essential health benefits the ACA requires, allowing employers leeway to potentially provide skimpier benefits, which could also lead to lower costs.
Also, it potentially exposes employers to significant costs if they lose their reinsurance but high-cost claims continue to come in after the year end, which is common in healthcare particularly if surgery or care was provided in December. Sometimes reinsurance plans can come with a promise to cover these "claims tail" as they're sometimes called, but not all do.
"It's a little bit of buyer beware," Corlette said.
There was a concern that in the wake of the ACA, smaller employers with younger and healthier employees would be tempted to self-fund, according to a 2015 paper from the National Association of Insurance Commissioners.
Prior to the landmark law, there was little authoritative data on what types of employers self-funded, so the ACA requires the U.S. Department of Labor to provide annual reports on self-funded plans. But there is a limitation to the data: It does not include employers with fewer than 100 employees.
Still, some are challenging the assumption that large employers — armed with self-insured plans — are better than traditional insurersat controlling costs.
Drew Altman with the Kaiser Family Foundation debunked that assumption in a recent column analyzing two decades worth of employee premium data.
Over the course of 20 years, from 1999 to 2019, the average annual premiums for families in self-insured plans versus a fully insured plan mirrored one another.
"There hasn't been a meaningful difference for the past 20 years," Altman wrote.
The findings raise questions about whether smaller employers self insuring can bend the cost curve when seemingly large employers have struggled.
The brokers evangelizing self-insured plans
One potential driver of the move toward these plans are brokers spread out across the country trying to convince smaller firms that by taking total control of their healthcare benefits they can cut costs. It's these brokers who are encouraging employers such as Palmer Johnson in Wisconsin and the auto group in North Carolina to reject the status quo.
Disillusioned with the way benefits have been delivered historically, some brokers have turned toward organizations like Health Rosetta, a firm that provides them a blueprint on how to tailor benefits in a way that cut out the middlemen and promote transparency.
These brokers have turned toward public speaking or the internet to evangelize their message. It's through these videos and presentations that they convince some of the employers to adopt these new benefits and work with these brokers.
Instead of taking a commission from insurers, these brokers say they make money taking fees from their clients, which they say is more transparent and better aligns their interests with that of their clients.
Health Rosetta, which has more than 100 certified brokers across the country, was founded by David Chase in 2015. Chase, who helped create patient relationship management company Avado, fervently talks in speeches posted online about how the fixes to healthcare are within grasp and already exist, but also how many have been made to believe that healthcare is too complicated to fix.
Despite the uncertainty brought about by the pandemic, organizations that customize benefits for both workers and workforces will be well-positioned to leverage such offerings in the future, regardless of the problem they aim to solve.
included in this trendline
Why emergency savings are crucial for benefit plans
How to approach open enrollment during a pandemic
What employers are doing for fitness benefits
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