Creative Benefits Strategies For A Post-Pandemic Open Enrollment

Take advantage of creative opportunities to expand your benefits package

Open enrollment is always an intense and stressful time for HR teams, as well as benefits brokers and TPAs. But as we transition from pandemic to endemic, Covid-19’s impact on the employee benefits landscape is undeniable. 

In this environment, employers and their benefits advisers must do more than put a new facade on existing benefits packages. Companies need creative benefits programs focusing on physical, mental/emotional, and financial well-being to attract and retain employees.

 

The Workplace Has Changed

Covid-19 continues to impact the workplace. American employers are struggling to fill job openings, and the tight labor market is worsening existing problems in the supply chain. In the U.S., between March 2020 and July 2022, workers voluntarily left their jobs more than 106 million times. 

More than 11.2 million job openings exist, but the unemployed ranks number barely 6 million. Many employed people can work multiple jobs, but these numbers highlight the tight labor market.

A Deloitte study from 2021 surveyed Fortune 1000 company leaders about the labor shortage. Among the findings:
 

• 57% of CEOs believed attracting talent was among their most significant challenges
• 35% had already expanded benefits to help increase retention

Since the sudden and unexpected pivot to remote work in March 2020, about 16% of American companies have decided to convert permanently to 100% remote work. By 2025, approximately 36.2 million Americans will work remotely at least part of the time.

Workers Have Changed Even More

The changes in workers may be more dramatic than those in the workplace. Employees now expect more from employers in areas ranging from work location and flexibility to desired benefits. And they have proven that they are willing to change jobs and careers to get what they want.

In fact, among those participating in the Great Resignation’s 2021 wave, 45% said they resigned due to a lack of flexibility in work hours, with 43% citing unsatisfactory health and PTO benefits.

Before the pandemic, the American economy grew steadily, unemployment was low, and socio-political stability was relatively secure. In addition to standard benefits like group health care and PTO, employers offered cool perks like ping-pong tables or in-house gyms to stand out and attract workers. However, these perks have now lost much of their previous appeal.

What Employees Are Looking For

Many employees are unwilling or unable to return to work life as it used to be. According to PricewaterhouseCoopers (PwC), employers must adapt by focusing on retaining employees and rebuilding company culture.

Workers are now more interested in benefits that protect their security and enhance their overall well-being. MetLife’s annual employee benefits report for 2021 focused on how companies need to rethink their responsibilities toward employees. They found that concerns over well-being affect productivity in over half of the workforce. 

During enrollment season 2023, employers must offer workers benefits that protect their security and enhance their overall well-being in three key areas: physical health, mental/emotional health, and financial health. Providing an employee benefits program that recognizes these areas can help employers attract and retain talent in a tight employment market. 

CREATIVE BENEFITS STRATEGIES FOR 2023

Promote Physical Well-Being

Most people experienced unplanned medical expenses during the pandemic. As such, physical well-being benefits are more valued than ever – even among younger employees, who have historically put less value on this area than older age groups. 

Flexible Spending Account (FSA)

Over 30% of employers still do not offer any Flexible Spending Account (FSA). To help with employee physical well-being, provide a full FSA for various healthcare expenses or a Limited Purpose FSA (LPFSA) for just vision and dental care.

Health Reimbursement Arrangement (HRA)

Employers who have not sponsored a group plan in the past or are having difficulty affording one now should consider offering an Individual Coverage Health Reimbursement Arrangement (ICHRA) or Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). Employees can use these accounts to acquire individual healthcare coverage on either the healthcare exchange or the open market. Employers can include reimbursement for out-of-pocket healthcare expenses also if desired.

Health Savings Account (HSA)

Employers can help keep group health insurance costs down by adopting HSA-eligible health plans with higher deductibles and HSAs. In addition, employer contributions encourage employee participation (typically a 5% increase in the employee adoption rate) and spark increases in employee contributions. The average employer contribution is $500-$750 for single coverage, depending on company size.

Lifestyle Spending Account (LSA)

LSAs can contribute to physical well-being by helping employees access products and services such as gym memberships, fitness equipment, weight loss programs and many other options. The employer decides which expenses are eligible and whether to offer employees a debit card to access the funds or have them pay out of pocket and then submit a receipt for reimbursement.

A Note about FSA-HRA-HSA Accounts

In addition to promoting physical well-being, FSA, HRA, and HSA account also promote financial health by helping employees save payroll taxes on the amounts set aside – up to 30-40%, depending on their tax brackets. The sponsoring employer gets a business expense deduction and a reduction in FICA matching taxes.

Nurture Mental/Emotional Well-Being

The desire for mental/emotional health and well-being benefits has also increased. In 2021, the Employee Benefits Research Institute (EBRI) found that half of all employees think mental health wellness programs are more critical than ever. 

Even more striking, one in five employees (20%) said increased assistance with mental health and emotional well-being would be the one most valuable improvement to their employer’s benefits package.

Flexible Spending Account / Health Savings Account (FSA/HSA)

Employers should promote account usage for mental and emotional well-being. Even seasoned account holders may be surprised to learn that counseling therapy (including telehealth), substance abuse treatment programs, and similar assistance sources are eligible expenses.

Health Reimbursement Arrangement (HRA)

If the employer offers an HRA, ensure mental health benefits are among the expenses eligible for reimbursement. If not already included, consider adding a telehealth counseling option to the list of qualified healthcare expenses.

Lifestyle Spending Account (LSA)

LSA accounts can promote mental and emotional well-being by helping employees pay for services such as marital counseling, meditation apps or classes, and life coaching. Weekend getaways, date-night babysitting services and many other activities that can be made available under LSAs also help employees deal with stress, anxiety and burnout.

Encourage Financial Well-Being

The pandemic caused substantial hardship, particularly among gig workers and those in industries that cannot work remotely. As the pandemic has eased, unforeseen financial volatility, inflation and wage stagnation have continued to reduce income and increase debt. 

Health Savings Account (HSA)

Educate your employees about HSA tax benefits and investment features that contribute toward their financial well-being now and in the future.

Student Loan Reimbursement Account (SLRA)

Many employees are burdened by high student loan debt. Employers can help by sponsoring an SLRA. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, employer SLRA payments are not taxable to the employee but remain a business expense write-off for the employer. Through  2025, employers can make up to $5,250 in matching employee student loan debt payments annually. 

Lifestyle Spending Account (LSA)

Have you noticed just how versatile Lifestyle Spending Accounts can be? They help with physical, mental/emotional AND financial well-being. For the latter, employers can set up the LSA to cover financial planning services, budgeting classes, savings apps, will preparation and more.

Emergency Savings Account (ESA)

A recent survey by the Federal Reserve found that about 40% of American adults would struggle to pay an unexpected $400 bill without having to rely on credit.

Employer-sponsored ESAs automatically deduct a small amount from each participating employee’s payroll before it is direct-deposited. The ESA deduction is direct-deposited instead into a separate savings account.

Although ESAs have no tax advantages, many people find that an automatic savings process using money that’s never reached their regular bank account is much easier for them.

Well-Being is the Name of the Game

Employees want employers to help protect their holistic well-being so they can feel safe, protected and prepared across physical, mental/emotional, and financial areas.

Benefits account for just over 31% of an employee’s total compensation package.  Companies can and should leverage their employee benefits programs to attract and retain employees. 

The American Institute of Certified Public Accountants (AICPA) found that 80% of Americans favor benefits over extra salary. Over half of U.S. workers have left jobs after finding better benefits elsewhere.

As you prepare for the 2023 enrollment season, approach your traditional benefits with fresh eyes and take advantage of creative opportunities to expand your benefits package. Doing so can help you overcome many challenges posed by an incredibly tight labor market and set your company apart from others hiring out of the same competitive labor pool. 

Bo Armstrong is a national conference speaker and author of numerous white papers and articles on the health care benefits industry. As DataPath’s Chief Marketing Officer, Bo focuses on identifying emerging market trends within the benefits industry and advocating for customers and their needs within DataPath. Connect Bo Armstrong