Employers Turn to Innovative Strategies to Limit Health Care Costs

Employers Turn to Innovative Strategies to Limit Health Care Costs

As the average total health benefit cost per employee increased 3.0% in 2019 to reach more than $13,046, following a rise of 3.6% in 2018, health benefit cost management remains imperative for companies, the results of an annual survey conducted by human resources consultancy Mercer indicated.

The survey findings were based on a national probability sample of public and private employers completed by 2,558 employers in the summer of 2019. According to researchers, although 2019 marks the eighth consecutive year of health benefit cost growth in the low single digits, and employers expect costs to rise at a similar pace next year, cost increases continue to outpace overall inflation.

When asked about their priorities for the next five years, 42% of the large and midsize employers (500+ employees) surveyed identified addressing healthcare affordability for low-paid employees as an important strategy. The survey found that in 2019, most large and midsize employers did not hold down premium costs by requiring members to pay more out-of-pocket for health services. For example, researchers noted, the average individual deductible in a preferred provider organization (PPO) grew just $10 in 2019, to $992. However, the survey also showed that the average deductible increased by more than $250 among small employers (10-499 employees).

The findings further indicated that in 2019 some larger employers that had offered a high-deductible plan with a health savings account (HSA) as the only medical plan changed strategies and added a traditional PPO or health maintenance organization (HMO) as an option. But the survey also found that enrollment in high-deductible account-based plans has been rising steadily, to 36% of all covered employees in 2019, up from 33% in 2018, 23% in 2014, and just 9% in 2009.

Researchers observed that as employers search for cost management strategies that do not shift cost to employees, many are turning to innovative tech-enabled programs that help employees manage chronic conditions or other health needs, such as musculoskeletal conditions, infertility, and insomnia. The survey indicated that in 2019, 58% of all large and midsize employers, and 78% of employers with 20,000 or more employees, offer one or more such targeted health solutions. The survey also found evidence of the growth in telemedicine, with 88% of large and midsize employers offering a telemedicine program to their members in 2019, up from 80% in 2018, and only 18% in 2014.

Moreover, the survey indicated that spending on all prescription drugs increased 5.5% in 2019 among large and midsize employers, down from 6.5% in 2018 and 8.0% in 2015. Researchers noted, however, that spending on specialty drugs rose 10.5% in 2019, down only slightly from 11.9% in 2018. The results also showed that 52% of all large and midsize employers and 78% of employers with 20,000 or more employees now steer employees to a specialty pharmacy that typically provides enhanced care management.

Employee Benefit Packages Show Signs Of Stability Despite Cost Pressures

Employee Benefit Packages Show Signs Of Stability Despite Cost Pressures

U.S. employers have largely maintained the status quo in terms of their benefit offerings in 2019, but they are also looking for opportunities to make changes to their benefit programs that lower costs while still enabling them to attract and retain talent in a competitive labor market, according to the findings of a survey published by professional services provider PwC in June 2019.

The “Health and Well-being Touchstone Survey,” which was completed in spring 2019, asked U.S. employers and employees for their views on the current and projected status of their rewards programs. The results indicated that employers expect medical costs to increase 6.5%, or 4.2% after plan changes, from 2018 to 2019. According to researchers, this trend is consistent with the actual increase of 6.2% from 2017 to 2018.

The survey also showed that employers are still seeking to reduce their long-term retirement benefit liabilities, with the shift away from defined benefit plans and toward defined contribution plans continuing. Specifically, the survey found that just 20% of employers offer a defined benefit plan; and that of those, 37% have frozen entry to these plans for new participants, up from 29% in 2018.

While 82% of the employers surveyed said they believe their current plans and practices provide the framework necessary for retirement readiness, less than half indicated that they think that their employees will be ready to retire when they want to. The findings also revealed that the prevalence of retiree medical benefits is continuing to decline, with less than one-third of employers reporting that they provide any kind of stipend, subsidy, or coverage for retiree health costs.

The survey results further suggested that employers are increasingly recognizing the importance of managing employee stress, burnout, and other mental health issues, with the share of employers saying they offer stress management programs rising sharply from 40% in 2018 to 61% in 2019. Researchers pointed out, however, that many of these employers are not incorporating their stress management programs into their overall wellness and well-being programs.

Moreover, the survey asked both employers and employees what they consider to be the most important benefit offerings or employer attributes that would attract and retain employees. A comparison of the responses showed that there is a disconnect between the views of employers and employees. For example, 86% of employees, but just 49% of employers, said they think flexibility and work/life balance options are likely to attract talent; while 74% of employees, but only 18% of employers, said they believe inclusion and diversity are important.

The survey also examined the flexibility, time off, and work/life balance benefits offered by employers. The surveyed employers reported offering full-time employees an average of 10.8 annual holidays, 9.1 paid sick leave days, and 12 paid vacation days. Around 60% of employers said they provide parental leave, with maternity leave being slightly more common than paternity leave. The work/life benefits offered most frequently by employers were found to include mothers’ rooms (89%), walking or stand-up desks (80%), free parking (78%), and on-site gym and/or fitness classes (59%).

Employees Who Feel Their Work Has Purpose Are More Engaged

Employees Who Feel Their Work Has Purpose Are More Engaged

Growing shares of younger workers in particular say they are open to leaving an employer when they don’t feel engaged and excited at work, or doubt that their work has a broader social impact, according the findings of a study published by employee engagement platform provider WeSpire.

The report, “State of Employee Engagement,” released on March 7, included data from an annual survey of more than 1,700 full-time U.S. employees. The survey found that 62% of respondents indicated that they are actively looking for or are open to new opportunities, up four percentage points from last year’s survey. Researchers pointed out that this trend is most pronounced among younger workers, with 68% of millennial and Generation Z respondents saying they are actively searching for a job or are open to new opportunities.

In addition, the survey showed that the vast majority of employees care about the social impact of their workplace, with 88% saying they prefer to work at a company that is making a positive impact. The results also indicated that employees were nearly 50% more likely to recommend their employer as a good place to work if they reported feeling that the mission or purpose of their company makes their work important.

The report further noted that while wellbeing and rewards remain the most commonly offered engagement programs, the percentage of employers who provide diversity & inclusion programs rose to 37% in the latest survey, up from 29% the previous year. Researchers commented that this was the biggest increase in any program, indicating that employers are recognizing they need to do more to ensure a culture of inclusivity.

The study also found that in the last three years, the percentage of organizations offering sustainability programs has steadily decreased by around five percentage points per year, dropping to just 13% in 2018. However, the survey showed that millennial employees are more likely than older employees to say they want their employer to offer a sustainability program (23% vs. 18%).

When asked about frequency of recognition, 17% of the employees surveyed gave a rating of one or below on a scale of 0-10, and only 47% gave a rating higher than a five. Researchers observed that if a net promoter type score on recognition were calculated, these survey results would reflect a -38 score.

From Benefit Trends Newsletter, Volume 62, Issue 4

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2019 Liberty Publishing, Inc. All rights reserved.

Employees Call for More User-Friendly Workplace Technology

Employees Call for More User-Friendly Workplace Technology

The vast majority of employees consider the technology they use at work to be less powerful and less intelligent than their personal technology, and want their employer’s processes to be more user-friendly, according to the findings of a global study released on January 22 by The Workplace Institute at software provider Kronos.

The results of the analysis of the impact existing and emerging technologies have on the employee experience are based on data from a survey of 2,807 workers employed in a variety of industries in eight countries (Australia, Canada, France, Germany, Mexico, New Zealand, the U.K., and the U.S.) that was conducted between November 2017 and January 2018.

The survey found that workplace technology frequently fails to meet employee expectations, with nearly half of employees (48%) surveyed worldwide indicating they wish their workplace technology performed just like their personal technology, and only 18% saying they do not want their workplace technology and personal technology to function similarly. The results also showed less than one-quarter of the employees surveyed in Germany (24%), the U.S. (22%), Canada (20%), France (16%), Australia and New Zealand (13%), the U.K. (13%), and Mexico (8%) consider their workplace technology to be more user-friendly than their personal technology.

For example, among the U.S. respondents 51% of employees in the financial sector said they find shopping on Amazon easier than asking their manager to take off a sick day; 53% of contract and field service workers said they consider it easier to talk to personal digital assistants like Alexa, Cortana, and Siri than to their manager; and just under half (43%) of logistics and transportation workers indicated that they find it easier to book a ride through Lyft or Uber than to find out how many vacation days they have left.

The results further indicated than more than one-third of the employees surveyed worldwide (35%) believe their job is harder than it should be because of outdated processes and legacy technology. This attitude was most commonly expressed by respondents in Mexico (45%), France (43%), and the U.K. (40%). Across industry sectors in the U.S., respondents in state and local government (55%), public safety (53%), and finance (43%) were especially likely to say that outdated processes and technology make their job more difficult. Moreover, just 25% of employees surveyed worldwide disagreed with the notion that their workplace technology makes common activities more complicated by adding extra or unnecessary steps.

Not surprisingly, the survey found that in the U.S., younger workers are less accepting than older employees of inefficient workplace technology: while just 20% of boomers said they think outdated processes and technology make their job harder than it should be, this view was much more common among Gen Xers (34%), older millennials (38%), younger millennials (40%), and Generation Z (39%).

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2019 Liberty Publishing, Inc. All rights reserved.

Employers Enhance Well-Being Benefits to Attract and Retain Talent

Employers Enhance Well-Being Benefits to Attract and Retain Talent

As the competition for talent intensifies, employers are stepping up their efforts to recruit, retain, and engage employees by adding or improving benefit programs that address their physical, emotional, professional, and financial well-being, according to the results of an annual survey conducted by Gallagher Benefit Services, Inc.

In the survey, 4,241 employers across the U.S. were asked between January and April 2018 about their benefits and compensation practices and strategies. Attracting and retaining talent was cited as the top operational priority by 60% of the employers surveyed in 2018, up two percentage points from 2017; while just 37% of respondents indicated that controlling benefit costs was their top operational priority, down six percentage points from 2017.

The survey also showed that employers are optimistic about their future business performance, with 95% saying they anticipate having stable or increased revenue growth through 2020, and 59% reporting that they anticipate having a higher headcount through 2020.

According to researchers, the survey findings suggest that employers are increasingly taking a holistic view of employee well-being, and are developing strategies that both engage and appeal to their employees. For example, they noted, 55% of respondents in 2018 said they provide access to telemedicine, up sharply from just 24% of respondents surveyed in 2016; and another 14% anticipate adopting telemedicine by 2020.

The survey also found that significant shares of employers are improving their health care benefits, with 22% of respondents indicating that they offer employees three medical insurance plans, and 13% reporting that they offer four or more options. The survey also found that the share of respondents who said they made health savings accounts (HSAs) available to employees rose to 24% in 2018, up two points from 2017.

However, the findings further showed that employers are looking for ways to reduce medical expenses by, for example, offering preventive care benefits such as flu shots, tobacco cessation programs, health risk assessments, and biometric screenings. Moreover, the share of respondents who indicated that they offer disease management programs designed to help employees with chronic conditions better control their health outcomes increased to 38% in 2018, up nine points from 2017; and another 17% said they plan to start offering these programs by 2020.

The survey also found that the share of employers who rated their health benefits as competitive within their industry or region increased in 2018 to 74%, up from 71% in 2017; but that employees’ satisfaction levels with their health options did not change. Researchers speculated that the expense of family health coverage might explain this pattern, as a much smaller percentage of respondents said they believe their family health coverage is affordable (53%) than said they think their individual coverage is affordable (81%).

Researchers observed that as employers are recognizing that financial stressors can negatively affect productivity in organizations, they are increasingly providing financial well-being programs that prepare employees to make better saving and spending decisions. In 2018, 62% of respondents reported offering employees access to financial advisors, and 47% indicated they provide financial literacy education. In addition, 43% of 2018 respondents reported that they are taking steps to measure employee retirement readiness, compared to just 33%
in 2016.

The survey results also indicated that employers are offering a broad range of benefits that go beyond health and retirement plans. For example, 46% of the employers surveyed in 2018 said they provide tuition assistance, up from 42% in 2017. Moreover, 82% of respondents said they offer their employees the opportunity to connect with the charitable causes they champion through volunteering.

 

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2019 Liberty Publishing, Inc. All rights reserved.

Employee Retention is Higher When Managers Have Emotional Intelligence

Employee Retention is Higher When Managers Have Emotional Intelligence

Employees who work with managers with high levels of emotional intelligence (EQ) are less likely to want to leave their organization than employees who rate their leaders as having low EQ, according to a recent study by a researcher at the University of Dallas.

Published on August 30 in the SSRN Electronic Journal, “Emotional Intelligence: Helping Managers ‘Turn Over’ a New Leaf in Leadership Behaviors,” was written by Emmanuel Dalavai, a doctor of business administration. Dalavai observed that because the costs of organizational turnover are high, scholars and practitioners often look for ways to reduce employees’ turnover intentions, in part by promoting EQ in managers.

To investigate the question of whether leader emotional intelligence influences employee turnover intentions, the study examined leaders and followers at a health care institution based in the southwestern U.S., focusing on the followers’ perceptions of their managers’ leadership behaviors. The study sample consisted of 71 hospital administrators, clinicians, and other employees. The researchers tested four hypotheses of employees’ perceptions of the EQ of their leaders on their turnover intentions using two scales: Trait EQ and the TIS-6, or the shortened form of the Turnover Intentions scale.

Overall, the results indicated that higher levels of leader EQ had an inverse effect on follower turnover intentions, and thus reduced followers’ inclinations to leave their organization. Specifically, the findings of the analysis confirmed the first hypothesis, showing that the leader’s ability to exercise self-control by pulling back on negative behaviors had a residual impact on followers’ desire to leave the organization. The second hypothesis on the effect of a leader’s well-being was also confirmed, thus demonstrating that leaders’ ability to take care of themselves mentally and physically had a direct influence on followers’ likelihood of leaving.

The third hypothesis regarding the importance of the leader’s sociability was also supported by the data, indicating that leaders’ ability to apply networking skills and to influence the feelings of employees affected followers’ turnover intentions. Finally, the fourth hypothesis on the level of a leader’s “emotionality” was confirmed, thus showing that the followers of leaders who can communicate their feelings to their followers and are empathetic to others’ perspectives were less likely to report a desire to leave.

Dalavai concluded by offering several suggestions for how companies and human resources departments might apply these findings to tackle engagement issues and turnover rates. For example, he said, organizations should consider adopting altruistic models of leadership, like servant leadership approaches, rather than relying on the traditional transformational and charismatic leadership models. He also recommended that companies’ HR departments invest more concentrated resources in human capital investment, such as soft skills training that includes EQ-based programs.

From Benefit Trends Newsletter, Volume 61, Issue 12

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.