A Mercer survey predicts that employee healthcare costs will rise by 4.4.% per employee in 2021.
Health benefits have come into the spotlight as an employee compensation element since the onset of the COVID-19 pandemic. They have become a driver of not just engagement but also retention. While these benefits were earlier considered an addition to the overall rewards package, COVID-19 has transformed them into the most integral component.
The results from Mercer’s National Survey of Employer-Sponsored Health PlansOpens a new window reveal precisely that. Based on the 1,113 surveys submitted through the end of August, the 2021 health benefit cost is likely to rise by an average of 4.4% per employee.
Also, only 18% of employers who responded to the survey shared that they will take cost-saving measures so that employees bear healthcare expenses. Over half of them, 57%, will not be making any changes to reduce cost in their medical plans in 2021.
Offering employees the right set of benefits, particularly in health, given how it has become the biggest priority for individuals, is essential. The investment in healthcare benefits may need to increase significantly, and they likely will, based on Mercer’s findings.
The New Benefits Companies Are Adding
The survey also found that companies are adding a range of benefits to their healthcare provisions for employees.
- 27% of the respondents – and within this percentage, 37% of those with 5,000 or more employees – are adding or enhancing digital healthcare resources like telemedicine, artificial-intelligence-based symptoms triage, “text a doctor†apps, and virtual office visits with the patient’s primary care doctor.
- 22% plan to add voluntary benefits
- 20% plan to provide behavioral healthcare
- 59% of employers have trained managers on how to handle employees’ emotional/behavioral health or will do so in the future
- 16% of the employers are providing a financial subsidy for in-home childcare
- Only 12% provide a backup childcare benefit
Virtual care and telehealth have been making inroads rapidly during this time, with mental health becoming a serious concern as well.
But while there is an increased awareness about employee mental health, there does not seem to be much awareness about the need to support working parents through specific childcare benefits.
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Balancing Cost and Care
With a growing emphasis on employee care, employers must budget for increased health and wellness benefits. Companies are also struggling with declining revenues due to the pandemic, so balancing how much they can spend on their benefits to provide the best care is essential.
Choice of healthcare vendors
Companies need to select their healthcare vendors in a way that they can provide their employees with a range of benefits. For example, they may consider vendors who can provide virtual healthcare that is not restricted to telemedicine and offers a proactive evaluation of symptoms, flagging health concerns of an employee.
Similarly, for mental health, the service provider should go beyond diagnosis and counseling to solutions such as the need for medication and the use of stress management tools. This makes it easier for employees to access multiple provisions and for companies to keep their costs within their budgets.
Benefits utilization tracking
Benefits is a seemingly complex area for employees to understand. That results in low utilization despite having access to a range of benefits. Companies need to track the utilization regularly and plan their communication around it to ensure that they receive the returns on their benefits investment.
Platforms such as Alight Solutions have launched Alight Benefits Guidance to enhance their benefits counselor services. This supports companies’ efforts to ensure that employees use the benefits they have been provided.
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These steps may help employers manage rising employee healthcare costs to a certain extent. However, it will be interesting to note how companies address the growing cost with – in some cases – declining revenue.