As we enter summer, brokers are beginning their busy season. They are preparing to guide their clients through benefit planning for next year and beyond. But amid unprecedented uncertainty, this benefit planning season is unlike any other. Preparing for pivots with flexible benefits is key.
Despite tomorrow’s unknowns, taking a strategic approach in benefit planning can protect an organization’s workforce and its bottom line. Simply put, it pays to keep employees happy. Turnover, costs employers both money and time, and up to a third of employers see average annual FTE turnover of 15% or more.[i] Voluntary turnover, costs US employers $536 billion a year, according to the Bureau of Labor Statistics.[ii]
Amidst turnover concerns, employers are also confronting the realities of mental health and its effect on the workplace. Stress, uncertainty and social isolation during the COVID-19 crisis have driven up rates of employee stress. Prior to the crisis, 40% of employees struggled with stress and burnout related to an “always-on” workplace culture, a recent MetLife survey found.[iii] Since the crisis, two-thirds report feeling more stressed amid ongoing uncertainty, work/life struggles and financial concerns.[iv]
Flexible benefits will be brokers’ most important tool and employers’ most valuable asset when facing these serious business challenges. Savvy brokers and employers will be prepared with innovative, supplemental benefits solutions for a diverse workforce to help address the impact of these challenges.
Here are three ways employers might need or want to pivot, and how flexible benefits can help.
Pivot #1: Cutbacks and changes with flexible benefits
The pandemic and its economic impact have forced many employers to consider making difficult choices when it comes to protecting revenue and the bottom line, including cost-cutting and cost-containment in benefit planning. As a result, they may elect to make primary healthcare plan changes not previously considered, such as cut-backs, plan consolidation or the elimination of richer plans entirely.
While they offer some cost-savings potential, these changes can introduce harsh realities for employers and employees. New coverage gaps can increase already-elevated out-of-pocket healthcare expenses for employees at a time when benefits continue to be a high priority for them: 80% of employees would prefer a new benefit to a pay raise[v] and 85% consider vision and dental benefits “important” during open enrollment.[vi]
Supplemental insurance plans can not only provide the flexibility to fill in gaps left by adjustments to the primary plan, they can also be used to restore services or to layer on benefits such as vision, dental and well-being to soften the impact of primary plan changes. With coverage defined and determined by the employer, these plans can be a strategic way to protect a diverse workforce beyond the executive suite, such as hourly workers, skilled laborers, technologists, nurses, physicians, financial services professionals and other in-demand positions.
Pivot #2: Address workplace burnout, stress and mental health
This year’s public health and economic crises have pushed emotional distress and mental health concerns into the spotlight for employers. As research noted earlier suggests, uncertainty and isolation are fueling stress and increasing the risk of workplace burnout for employees at all levels.
Mental health and its connection to well-being, though, pre-dates and will extend beyond this period. One in five adults will experience a diagnosable mental illness during any given year. Of these, half won’t receive treatment.[vii] Mental health is fundamental to employee well-being, and employee well-being is closely connected to productivity and the bottom line.
Supplemental solutions for a diverse workforce are a way to introduce and/or strengthen existing mental health support services for employees—at all levels. Traditional employer assistance programs (EAPs), often fall short when it comes to effective and accessible mental health solutions. Now, brokers can come prepared with an innovative solution that combines coverage and support in the form of WellPak with Guide, one of ArmadaCare’s newest plans focused on employee behavioral health and well-being. This plan offers employers flexible benefits, prescription and wellness care coverage, and embedded mental and behavioral health services, needed to best help their employees.
Pivot #3: Reduce the risk of turnover
The labor market may have changed but retaining the right talent will continue to be a key concern for employers. It is easy to see why: Replacing a key employee can cost a company twice the employee’s annual salary.[viii] Standout performers are especially critical to the bottom line, delivering 400% more in productivity than their average-performing counterparts—so it’s clear that losing even a few high performers can damage a company’s reopening and recovery efforts.
While employers are seeking to control benefit costs, they also need to focus on the benefits-retention connection. According to recent research, 60% of employees consider health insurance extremely important when deciding whether to stay with a company or take a new job.[ix] And just one in five employees is satisfied with the cost of their current health insurance plan and the expenses it doesn’t cover.[x]
Supplemental solutions can be effective in balancing budget considerations with a benefits strategy that mitigates the risk of turnover and its associated costs. Flexible plans that can layer over the primary plan, offer relief for out-of-pocket healthcare expenses. These plans can be offered to select employees or employee classes at all levels of the workforce and give employers new options to incentivize and reward. These benefits can also be financially efficient* alternatives to boost overall compensation packages for employees as determined by the employer. They can replace one-and-done bonuses with lasting reminders of employer appreciation.
Looking to prepare for these anticipated benefit pivots and more? ArmadaCare offers a wide range of supplemental insurance plans designed to address the limitations of primary healthcare coverage with solutions tailored to the needs of select employee classes at all levels of the workforce. [Learn more] about these solutions and the flexibility they can deliver in benefit planning.
*This is not local, state or federal tax advice as each person and company is unique. It is recommended that you seek the independent counsel of a professional tax adviser.
[i] 2019 Gallagher Benefits Strategy and Benchmarking Survey
[ii] BLS, 2018
[iii] MetLife US Employee Benefit Trend Study, 2020
[v] AICPA, 2018
[vi] United HealthCare Survey, 2018
[vii] American Psychiatric Association Foundation Center for Workplace Mental Health, 2020
[viii] Thompson’s Global Employee Benefits Watch, 2018
[ix] EBRI Health and Workplace Benefits Survey, 2018