In this era of full employment, employee benefits remain a powerful tool for employers to reach out to attract new recruits and retain their current workforce, and more of them are delving into new and innovative benefits.
Those are the findings of the annual employee benefits survey conducted by the Society for Human Resource Management (SHRM). Researchers found that companies also are conducting extensive research on their specific employee demographic to put together unique benefits packages that resonate with their employees’ needs and stages of life.
“The talent market is tight. Wage growth has begun to occur, but employers wary of economic uncertainty remain cautious about increasing wage and salary compensation, and some choose to diversify benefits offerings in lieu of paying higher wages,” the SHRM report notes.
“Finding the right combination of benefits that appeals to a multigenerational workforce can be a challenge,” admits Alex Alonso, chief knowledge officer for SHRM. “But if you know a good portion of your workforce are Baby Boomers with aging parents, you might choose to beef up your caregiving benefits and flexible scheduling policies. On the other hand, if you have a young demographic, offering benefits like student loan repayment could be the way to go.”
Company-provided student loan repayment benefits have risen from 4% in 2018 to 8% this year. SHRM says this benefit category is expected to gain additional traction if Congress passes pending federal legislation that is designed to encourage it. More than half (56%) of employers also offer tuition assistance to employees. These are more examples of how employers are choosing to tailor benefits to target different age cohorts.
Employers recognize that many workers are concerned about their financial futures, and provide services to help employees with financial decision-making. Nearly all organizations offer some kind of retirement plan, but 93% offer traditional 401(k) plans, a slight increase over the last five years, and 74% of employers match employee 401(k) contributions at some level. Traditional defined-benefit retirement plans, already uncommon in 2015, have continued to decline over the last five years.
Employers were more likely to increase offerings in all benefits categories than to decrease offerings. No more than 3% of organizations decreased benefits in any category. Health-related and wellness benefits saw the greatest increases across the employers surveyed, with 20% of employers indicating they boosted offerings in those areas.
Health Insurance Conundrum
Health insurance, one of the more traditional benefits, is becoming more expensive, driving employers to diversify into other benefit areas. “Healthcare costs are eating up a good portion of employer benefits budgets, so employers aren’t choosing to make many new changes,” Alonso explains. “It’s really about incorporating the higher healthcare costs and doing what you can with the rest of your benefits budget to meet employees’ needs.”
According to the Kaiser Family Foundation, average family health insurance premiums have increased twice as fast as workers’ earnings and three times as fast as inflation since 2008.
SHRM says organizations continue to look for ways to control healthcare costs, with 85% offering a Preferred Provider Organization (PPO) insurance plan, while High Deductible Health plans (HDHPs) linked with health savings accounts (HSAs) and health reimbursement arrangements (HRAs) continue their growth, rising by 10%. More than half (59%) of organizations report at least one HDHP offering.
Health savings accounts, which can only be offered along with a HDHP, are available in 56% of organizations surveyed. Healthcare flexible spending accounts remain popular, offered by 68% of employers this year, although company-provided dependent care flexible spending accounts have declined 8% since last year.
When it comes to innovation, telemedicine and telehealth increased by 10% within the past year. In addition, telemedicine benefits have increased from 23% in 2016 to 72% this year.
Specific services and procedures (such as bariatric surgery and forms of alternative medicine) are becoming more widely covered by insurance plans, but as organizations look to control healthcare costs, these benefits may see future declines, according to SHRM.
It’s a different story for wellness benefits, which are on the rise. Programs focused on particular health conditions (24%) or health screening (31%) have seen declines as insurers have moved into this space. However, benefits like quiet rooms (21%) and fitness activities (30%) have seen increases.
Standing desks in particular continue to rise in popularity with 60% of employers offering them, compared to just 25% just five years ago.
Focus on Families
Family-friendly benefits also are increasing in popularity. A quarter of organizations allow parents to bring children to work in an emergency. Other childcare benefits are uncommon, and show little change over the past five years, including childcare referral service and subsidized or nonsubsidized childcare centers and programs.
Worksite lactation/mother’s rooms are offered by 51% of employers, up 16% from 2015. The number of employers offering family leave above the time required by the federal Family and Medical Leave Act has increased by 6%. While paid leave for new fathers has gone up only slightly since 2018, it has seen a steady rise over the past five years (up 14%) and is now within 4% of paid leave for new mothers, the most common type of paid leave for new parents.
Elder care benefits have become slightly more common over the last five years, but are still relatively rare, SHRM reports. The most common elder-care benefit—referral service—is available at only 10% of the organizations reporting.
Supplemental insurance offerings remain stable. The vast majority of employers (83%) offer accidental death and dismemberment insurance, 71% offer long-term disability, 61% short-term disability and 27% accident insurance.
Flexible working benefits continue to rise in popularity, and as a result telecommuting of all types is increasing, as are most types of flexible scheduling. Telecommuting on a part-time basis is now offered by 42% of employers.
“Employees in different life stages may want and need different benefits. While employers cannot afford to offer the best of every benefit, they can ill afford to under-invest in the benefits that are most important to their employees,” SHRM observes.
“The diversity of available benefits shows that organizations understand that they must be creative in allocating resources toward those benefits that have the greatest impact on each employee and complementing high-cost benefits with low-cost offerings that appeal to employees with a variety of needs.”
