In today’s tight labor market, organizations need to utilize every advantage to stay competitive. Employee demands are evolving due to advancements in technology, rising healthcare costs, and the growing contingent workforce, all of which add layers of complexity for HR leaders to navigate.
While benefits have always been an essential component of total compensation, personalized benefits solutions can help companies balance the pressure to stand out in the marketplace while simultaneously meeting employee needs and managing costs. As we head into 2020, leaders should keep an eye on the following benefits trends:
Millennials now comprise the largest proportion of the workforce, and Gen Z is joining them in greater numbers every day. These digital natives have been raised with a self-serve, mobile-first, tech-enabled approach to life, and as a result, they expect nearly everything to operate in that same way. HR leaders must approach benefits through a digital-first lens. Just like the banking industry saw a few years ago, the trend of mobile-first and self-service is here, and employers who embrace this approach will be better positioned to attract and retain tomorrow’s best talent.
Employers must develop a strategy for enhancing their benefits delivery by leveraging emerging technologies, which allow employees to have more control over their benefit choices and how they access them. Today, only 9% of employers use data, AI, and virtual assistants to help employees make informed enrollment decisions, but nearly one-third (32%) are planning to add AI and machine learning capabilities in the near-term to meet the desires of younger demographics.
Over the past decade, rising healthcare costs have continued to outpace wages. Traditional group benefits don’t allow employers the flexibility to address cost and ROI effectively, resulting in costs shifting to employees. HR leaders are under pressure to offer in-demand benefits to their employees and help them understand the total value of those offerings, while addressing increased costs at the same time.
Employers should keep in mind that health insurance is not always the top priority for all employees. Younger generations often view the cost of benefits as a tax. Offering a full suite of optional alternatives – like Individual Coverage Health Reimbursement Arrangements (ICHRAs), student loan repayment programs, or paid family leave – allow employees to choose the benefits that provide the highest ROI for the cost.
Adopting a “tax dollar” mindset in combination with new benefit approaches helps ensure that benefits are working for the entire workforce, not just older populations. This flexibility also communicates that the employer is empathetic to employees’ individual wants and needs, which 93% of employees say would make them more likely to stay with their organization.
Additionally, over 80% of employees admit they don’t have a good understanding of their benefits offerings, according to aggregate user data from Businessolver’s benefits recommendation engine. As a result, employees are more likely to choose what seems safest or more familiar as opposed to the benefits that make the most financial sense for their situation. This can lead to over-insuring for employees and potentially higher costs for employers.
Education about the costs of various benefits options is therefore crucial. If employers can provide consistent benefits information throughout the year, employees will be better equipped to make sound financial decisions about their benefits choices and maximize use of their elected benefits. This is especially valuable for Gen Z employees as they transition from their parents’ health insurance to their own at the age of 26.
The US is currently experiencing a national labor shortage, which puts pressure on companies to find alternate workforces. With many organizations turning to part-time, seasonal, contract and gig workers to help fill the gaps, the rapid growth of the contingent workforce has enabled these workers to ask for benefits and other perks that have previously been reserved for full-time employees. Additionally, the California Supreme Court’s Dynamex ruling and the passage of AB 5 have designated many of these workers in California as employees that now qualify for benefits, amplifying the conversation around this issue on a national level as companies struggle to find feasible solutions.
As long as demand for labor remains high and supply remains low, and as healthcare costs continue to rise, contingent or alternative workers will increasingly look to employers for access to benefits as part of their total compensation. Employers will need to explore innovative solutions to stay competitive while managing costs.
For example, recent developments like ICHRAs enable employers to allocate funds toward the cost of coverage that workers purchase in the individual market, empowering workers to customize their plans while controlling costs for employers. Organizations can also provide a robust suite of voluntary benefits so workers can tailor their choices to meet their individual needs. Platforms like MyChoice Market streamline this process for employers by providing a one-stop marketplace for part-time workers to elect and manage benefits.
Attracting and retaining talent will continue to challenge HR leaders throughout 2020. With thoughtful benefits strategies, companies can capitalize on opportunities while mitigating some of the potential risks these trends will generate throughout the year.
