Thought Leadership: Employee Benefits by Crain's Cleveland Business

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Employee benefits

Customizing benefits plans according to talent pool trends The pandemic has redefined workplace norms. Employers large and small are adjusting talent recruitment and retention strategies to adjust for new expectations, such as more flexible work schedules and a holistic approach to employee benefits offerings. Gartner, a global technological research and consulting firm, notes that major post-pandemic work trends include an increase in remote working, more data collection, contingent worker expansion and a rising emphasis on an employer’s need to serve as a social safety net for employees’ physical, mental and financial well-being. Here is a look at some workforce trends and benefit plan considerations that employers should take into account in the current talent climate:

Benefit plan considerations your organization should weigh

he pandemic changed a lot of things for a lot of businesses, and employers have been struggling to reel in high-quality talent ever since. Increasing pay can help, but it isn’t always an option. Fortunately, your benefit plans can also set you apart from the competition. Here are just a few ways you can tweak your benefit programs to help you land new talent and retain existing employees.

REEVALUATE YOUR BENEFIT PROGRAMS

NEW SOLUTIONS Despite a health benefit cost hike in 2021 – particularly among small employers – companies have opted not to pass along the cost burden to employees, according to Mercer’s 2021 National Survey of EmployerSponsored Health Plans. Instead, they focus on supporting employees’ behavioral health, adding virtual health care solutions and seeking new ways to engage employees, whether they are at the office or remote.

CONTINUING EDUCATION INVESTMENTS Organizations that fundamentally value the contributions of each employee embrace the idea that each individual is central to team success.The so-called “Love + Work” organization model views employees as an integration point for stakeholders, and not just one individual of many, according to The Harvard Business Review. Benefits are tailored as investments, such as providing direct payment for college degrees, student loan reimbursements or giving employees discretionary time to pursue their own projects.

IN ALIGNMENT Overall, about 60% of employees are extremely or very satisfied with their current job, according to the Employee Benefit Research Institute’s 2021 Workplace Wellness Survey. Since the COVID-19 pandemic, 31% feel their employers’ efforts to improve their well-being have increased. However, about 60% say efforts have remained the same.

BENEFITS THAT MATTER While health care benefits remain the most desirable, employees have shifted their views on what other benefits also matter, according to Society for Human Resource Management.Their 2020 Employee Benefits report includes a ranking of benefits that respondents consider to be extremely or very important: • 90%: Health care • 83%: Flexible work • 83%: Leave • 76%: Working for a family friendly business • 62%: Wellness • 55%: Retirement

TAKING CARE OF CAREGIVERS That same report found that more employers increased their family focused leave options and paid family leave beyond the requirements of the Family and Medical Leave Act due to the added burdens of caregiving driven by the COVID-19 pandemic. The FMLA includes up to 12 weeks of unpaid leave during a 12-month period for eligible employees. The share of organizations offering paid family leave increased by 7 points, from 23% to 31% in 2020.

SOURCES: Employee Benefit Research Institute, Gartner, Harvard Business Review, Society for Human Resource Management Compiled by Kathy Ames Carr, Crain’s Content Studio - Cleveland

What benefit programs do you offer now? Do these benefit programs appeal to the Workforce of 2022? It’s possible that the programs you offer aren’t as valuable to your employees as they once were. For example, if your business implemented remote or flexible work schedules in 2020 or 2021, your benefits will almost certainly need to change. Replacing a parking and transit benefit program with mental health support or better childcare benefits could be just the change your employees want to see.

GAIN INTEL Gather as much information as you can from peers in your industry and from other local businesses. If you learn where successful companies are spending their money, you can figure out what benefits are most valued. The SHRM Benefits Survey is a great place to start. The results of the 2020 survey show that employers have been changing their benefit plan offerings in recent years, likely in response to COVID-19. For example, 78% of employer respondents said they increased options for their employees to work remotely and 39% expanded childcare benefits. You may want to consider doing the same. But take survey information like this with a grain of salt. Your employees’ desires and expectations should be the driving force behind your benefit plan decisions. Talk to your employees about what perks they value most and focus your energy there.

REEVALUATE THE COMPANY’S BENEFIT STRUCTURE Another way to meet the needs of individual employees is to have a la carte options. Your main benefits (like your health insurance and retirement plan) will likely need to be the same for all employees, but you can offer different add-ons that employees can elect into. For example, if you offered a childcare flexible spending account (FSA), employees with small children can opt in while employees without children can simply not participate. To compile the right types of offerings, get familiar with your employees’ demographics. Average age, income level

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MICHELLE H. BUCKLEY, CPA, AIFA® Vice president, practice leader, Benefit Plan Group mbuckley@meadenmoore.com 216-928-5379 Michelle is a vice president in Meaden & Moore’s Assurance Services Group with over 30 years of public accounting experience serving middle market companies focused on manufacturing, distribution and service industries. Michelle’s primary responsibility is to ensure that each of her clients receive high-quality, timely service. She continually looks for ways to reduce the costs of the engagement while finding ways to add value to the relationship. As a practice leader of the firm’s employee benefits and consulting practice, Michelle has had extensive experience with qualified benefit plan audits, operational reviews, tax issues and the unique complexities of these engagements. She understands the risks to plan sponsors and continuously offers suggestions for improvement to minimize any potential fiduciary liability.

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HEL and family situation can dictate what benefits your employees will value. But don’t just look at your current employee makeup; track how employee demographics have been changing and take those trends into consideration.

IMPROVE COMMUNICATIONS WITH EMPLOYEES Employee turnover is expensive, disrupts the workflow and can negatively impact morale. One way to help reduce employee turnover is to improve communications with your employees, especially when it comes to your benefit plan offerings. You’re likely required to send annual updates to employees about their retirement plan, but how many other times during the year are you reaching out? It’s possible, if not likely, that many of your workers are unaware of the benefits available to them. Remind your workers what benefits they have at their disposal and help them sign up for those programs if they need assistance.

This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.

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Employee benefits Enticing employees with a holistic benefits package Employers who offer robust benefits packages may have the upper hand in attracting and retaining top talent in today’s tight labor market. While good pay, health care and retirement plans remain among the most desirable benefits offerings, employers also are paying more attention to supporting employees’ needs with programs that address physical, mental and financial well-being. Here is a look at some of those offerings:

THE FUTURE IS NOW A large share of the current workforce (82%) expect their workplacedefined contribution retirement plan to be an income stream during retirement. So far, current workers are happy with their workplace retirement savings plans, with more than four in five workers satisfied with their benefits, according to Employee Benefit Research Institute’s 2022 Retirement Confidence Survey.

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ost employers are feeling the squeeze of the tight and transitory labor market. Employers must provide high-quality benefit programs to attract and retain employees, but benefits such as health and disability insurance and 401(k) retirement plans are expected offerings. So how does an employer differentiate to attract and retain a productive workforce? Well-being programs are key. A well-being strategy must become a part of company culture to bring about the best physical, mental and financial health outcomes, as well as create an environment of personal and professional growth.

PHYSICAL HEALTH

HIGH PRIORITIES Boosting access to virtual health care and adding or expanding behavioral health programs rank among the top health program trends of the business environment in 2022, according to Mercer’s National Survey of Employer-Sponsored Health Plans. For several years, virtual health care access helped address a utilization stagnation of about 9%. Utilization jumped to 15% in 2020 and held at 12% during the first half of 2021. Meanwhile, behavioral health benefits ranked among the top-three priorities for employers with 500 or more employees, and the top priority for companies with 20,000 or more employees.

MONEY TALKS Personalized financial counseling, coaching, basic planning and money management tools represent some of the most commonly offered and popular benefits that companies plan to offer in 2022 to support employees’ financial well-being, according to EBRI’s 2021 Financial Wellbeing Employer Survey. Challenges to the implementation of new benefits programs include costs to both the employer and employee, along with data and privacy concerns.

HELP FOR CAREGIVERS The pandemic exacerbated the burdens and stress of working family caregivers. About 66% of caregivers were worried about juggling responsibilities in the next 12 months, according to an AARP “Working Caregivers’ Concerns and Desires in a Post-Pandemic Workplace” survey published in August 2021. More than half of working caregivers said their employers implemented new benefits due to the pandemic, including flexible schedules and remote work opportunities.

REDEFINING THE APPROACH TO EMPLOYEE HEALTH Approximately 80% of employees use few medical services in a year, yet American workers are less healthy than counterparts in other countries, according to a 2021 McKinsey & Co. article titled, “Innovating employee health: time to break the mold?” Incorporating benefits that support preventive health and well-being will help improve employees’ overall health and productivity. The article also suggests that employers should view health as an investment, not an expense.

SOURCES: AARP, Employee Benefit Research Institute, Mercer, McKinsey & Co. Compiled by Kathy Ames Carr, Crain’s Content Studio - Cleveland

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Building benefit packages around employee wellness

Health improvement and wellness programs mitigate health care costs and foster a healthy and happy employee. In order to improve the overall physical health of employees, we must first identify the prevalent problems in a population. These patterns are identified through claims analysis and on-site diagnostic testing. This analysis gives us the data to identify prevalent conditions or trends and then develop programs to treat them. Employers can then implement specialty wellness programs to address specific issues. Some of the most common issues to address today are orthopedic, diabetes and digestive health. Employers must also design programs to encourage engagement with a primary care physician (PCP). A relationship with a PCP is the linchpin to overall better health. Employers should consider creating an incentive for employees to engage their PCP or provide access to a PCP at the worksite. For those with chronic conditions, the PCP can

EMPLOYEES WANT EMPLOYERS TO UNDERSTAND THEIR CHALLENGES AND OFFER TOOLS TO SOLVE THEM. diagnose, treat and coordinate care for better health outcomes and better quality of life. For those without chronic conditions, the PCP can keep them healthy through regular preventive care. Unfortunately, not nearly enough of our population utilizes annual preventive screenings even though these services are 100% covered on health plans.

MENTAL HEALTH Employee Assistance Programs (EAPs) provide support for mental health, personal or workplace relationship problems and childcare and eldercare challenges. The pandemic brought out an unprecedented amount of mental health

DAVID LESZCZ Senior vice president, Corporate Benefits, NFP dave.leszcz@nfp.com 216-264-2725 David is a senior vice president of Corporate Benefits at NFP in Cleveland. NFP is a leading insurance broker and consultant providing specialized property and casualty, corporate benefits, retirement and individual solutions. In his role, David works with companies to help manage the complex process of mitigating health care costs while providing benefits that attract and retain top talent. He has more than two decades of experience in benefits consulting and has worked with companies of all sizes in a large variety of industries throughout his career.

issues and need for support. EAPs went from seldom-used programs to branded, full-service programs that provide employees telephonic, texting or on-site access, allowing them to get support wherever they are. A strong EAP provides a confidential resource to address mental health and personal issues so employees can come to work focused on being productive.

FINANCIAL WELLNESS The majority of Americans live paycheck to paycheck and struggle to manage their finances. Financial wellness tools are a low-cost supplement to an employer-sponsored retirement plan and can help employees manage their overall finances. Additional programs available at low or no cost to the employer are student loan debt management and loan programs that provide employees access to low interest loans that are repaid through payroll deductions — at no risk to the employer.

HEALTHY CULTURE, HAPPY EMPLOYEES Employees want employers to understand their challenges and offer tools to solve them. Physical, mental and financial wellness programs are practical ways to set employees up for success. By building well-being into benefits, employers show that employees are valued on a personal level, bolstering attraction and retention.

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Employee benefits

Employees crave options, benefit variety and reliable coverage It’s no secret that health insurance is a driving factor behind many of the major career decisions that working Americans make every day. Particularly now, in the post-COVID era, the modern workforce is especially health conscious. This adds up to one takeaway: employees expect to be well taken care of by their employers, meaning robust health benefit offerings that treat each policy holder as an individual are an absolute necessity. According to the Society for Human Resource Management (SHRM), 56% of U.S. adults with employer-sponsored insurance plans consider the quality of their health coverage a key factor in deciding whether to remain in their position. Additionally, 46% of respondents said that their health insurance was either the deciding factor or an influence on their decision to take their current job. While group plans that offer “blanket” coverage to entire workforces has long been the standard for employee-provided benefits, a newer, more individualized option has been catching on in the form of individual coverage health reimbursement arrangements (ICHRA).

WHAT IS ICHRA? An ICHRA is an IRS-approved health benefit plan under which employers can reimburse their employees for premiums and other qualifying out-of-pocket expenses. This reimbursement of out-of-pocket employee health care spending is not taxed, allowing employers to control their costs while only requiring employees to pay for medical services they actually use. In fact, in a survey quoted by PeopleKeep.com, almost 70% of respondents said they felt the ICHRA model was more flexible than traditional group health insurance options.

ICHRAs continue to serve many with individualized insurance options

hen I first wrote about the topic of ICHRAs (individual coverage health reimbursement accounts) in a February 2020 issue of Crain’s, I closed with the question; “Is ICHRA a health insurance game changer?” More than two years later, and after analyzing hundreds of cases and enrolling thousands of employees − through the challenges of a pandemic no less − the answer is yes, it has changed the way employers can tailor health insurance for individual employees. ICHRAs, often referred to as the 401(k) of health insurance, first became available on January 1, 2020, through a collaborative regulatory initiative by the Departments of Labor, Treasury, Health and Human Services and the Centers for Medicare and Medicaid Services designed to increase the number of insured individuals through the expanded use of health reimbursement arrangements. In short, the ICHRA regulation allows a company to, on a pre-tax basis, define a monthly contribution for each benefit-eligible employee to select a plan through the individual health insurance marketplace that best fits their needs. We have learned over the past 28 months that ICHRAs can be mutually beneficial to both employers and their employees.

FRANK SPINELLI Managing director, InsureOne Benefits, Inc., an Oswald Company fspinelli@oswaldcompanies.com 330-662-0585 Frank Spinelli is the managing director at InsureOne Benefits, a Unison Risk Advisors company. He has more than 30 years of experience in management and business ownership. Prior to leading InsureOne as of January 2021, Frank led the Affinity Group & Emerging Market book of business at Oswald Companies. In addition to extensive product and carrier knowledge, his benefits expertise has included development of integrated health management strategies comprised of extensive use of consumer driven plans and innovations like the ezICHRA platform.

BENEFITS FOR AN EMPLOYER

PROVIDING EASY ACCESS TO CARE Similarities between ICHRA models and health savings accounts (HSAs) are easy to draw, and indeed the two systems share several benefits. One particularly appealing similarity is how both models make it easier for employees to participate in their employer-provided insurance programs. Creating a reimbursement account typically involves a few steps and little more time commitment than applying for a bank account.

INSURING THE INDIVIDUAL, NOT THE COMPANY It’s clear to the business world that one-size-fits-all health care plans no longer meet employee expectations. Different backgrounds, different lifestyles and other factors can make for sizeable disparities in what individual employees expect from employer-sponsored benefits packages. With an ICHRA, employers can more easily offer employees a chance to choose the health care services and perks that mean the most to them.

ICHRAs are: • Budget friendly – more predictable costs, less volatile than traditional group insurance • Easier to renew – no need to shop, negotiate and select next year’s group health plan • Free of minimum employee participation requirements • Flexible to design – classes can be created based on needs and locations of employee population • Fully compliant with all ACA mandates and can be designed to avoid all risk of ACA penalties The typical annual savings to our clients who have adopted this new method is 15% to 30% compared to group health costs, before renewal increase.

BENEFITS FOR AN EMPLOYEE FLEXIBILITY IS KING Beyond the specific characteristics of ICHRAs, health reimbursement agreements in general have the broad appeal of allowing employers and employees to establish a system in which individual health insurance premiums incurred by the employee can be reimbursed on an as-needed basis. This way, both parties can flexibily meet a variety of individual health needs while keeping costs down and maintaining the tax-favored status of employer health plan contributions.

Sources: Society for Human Resource Management, PeopleKeep, JP Griffin Group, Centers for Medicare & Medicaid services Compiled by Conner Howard, Crain’s Content Studio - Cleveland

ICHRAs allow employees to: • Select a plan that fits their own needs – from deductibles to doctors, employees decide what’s right for them • Select a plan that fits their monthly budget • Continue to benefit from the tax advantages they have through traditional group health insurance • Keep their plan – the individual policy is portable when they retire or change jobs We’ve seen employees contribute an average of 12% less monthly toward their health insurance compared to their

previous traditional group health plan – 31% purchase bronze level plans, 21% purchase silver level plans and 48% purchase gold level plans in the individual marketplace.

WHAT EMPLOYERS SHOULD KNOW While the benefits of an ICHRA are numerous for both employers and employees, ICHRAs aren’t a fit for all organizations. This new method of providing health insurance is a significant change for all involved and it must fit both financially and culturally. Employers need to ensure their ICHRA is established in a compliant way to eliminate any risk of exposure while also adapting to a new way of thinking, as the administration of an ICHRA is quite different from a group health plan. Just like with group health plans, employees need education, communication and assistance to help them adjust to a new and more proactive engagement in the enrollment process. In the final ICHRA regulation, it was estimated that within the next five years, more than 800,000 organizations will offer an ICHRA – insuring more than 11 million employees and dependents. From what we are witnessing, that forecast seems to be on-point. What’s next for ICHRA? Per the projections, we see continued growth and further progress for those who seek to control their health care spend while offering expanded and personalized options to their employees.

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Employee benefits

Crafting appealing plans that address workforce dynamics The pandemic’s disruption of employees’ personal and professional lives has prompted employers to refocus their benefits offerings according to new work-life integration needs while keeping their benefits costs in check. The following trends are among those guiding employers to reframe benefits plans and create a more competitive workforce advantage.

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RISING HEALTH CARE BENEFITS COSTS According to Mercer’s 2021 Annual Survey of Employer-Sponsored Plans, health benefits costs increased 6.3% in 2021. The jump was attributed to higher plan utilization, or “catch-up care,” COVID claims, high-cost drug therapies and inflation of health care. The survey expected a more typical increase of 4.4% in 2022.

SMALL BUSINESSES FEEL THE PAIN

That same survey found that smaller employers experienced the highest cost growth in 2021, with an average increase of 6.3%, followed by a 9.6% increase among employers with 50-500 employees and a 5% increase among employers with 500 or more employees.

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Employers became more concerned about their employees’ financial well-being in 2021. On a 10-point scale, with 10 being the highest, about 34% of employers rated their concern level at a 9 or 10, which edged up one-quarter from previous years, according to Employee Benefit Research Institute’s 2021 Financial Wellbeing Employer Survey. Companies have offered different incentives to help address employee financial stresses brought on by the pandemic, including allowing employees to access third-party emergency funds or short-term loans through payroll deductions.

BENEFITS MATTER A 2021 survey of 9,600 U.S. employers at large and midsize companies revealed that while pay remains the most compelling reason on whether to stay or leave a company, health and retirement benefits matter in career decision-making. In fact, an increasing share of employees surveyed in WTW’s 2022 Global Benefits Attitudes Survey would be willing to pay more for their benefits. About 59% of employees would pay more for better retirement benefits, an increase of 9.3% in 2020, while 46% would forego a pay increase for a more generous plan, an increase of 28% in 2020.

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A DYNAMIC BENEFITS LANDSCAPE U.S. employers are working through decisions of whether to require employees to return to the office or continue to allow for a flexible hybrid model that enables remote and onsite work. The recent surge in gas prices has thrown another wrench into the dilemma; however, this challenge presents employers an opportunity to differentiate themselves with more diversified benefits offerings that help attract and retain employees. Employers that have offered to help with some form of gas price aid have taken a variety of approaches, including permitting flexible work schedules and allowing for telecommuting, according to the Society for Human Resource Management.

SOURCES: Employee Benefit Research Institute, Mercer, Society for Human Resource Management Compiled by Kathy Ames Carr, Crain’s Content Studio - Cleveland

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Aligning incentives for a healthier, cost-effective benefits plan

f there’s one thing that employers and their employees have in common right now, it’s the deep acknowledgement that the only thing constant is change. What else can the universe throw at us? And yet we persist. Thank goodness for all of the innovators, problem-solvers, and creators out there. It’s reassuring to witness the ingenuity and determination to keep living and working in the most connected way possible while doing all we can to stay healthy. Most employers want to give their employees great health care benefits simply because they care. But now, it is also a matter of survival. Attractive benefits are required to recruit and retain A-players in this competitive labor market. But with the cost of employersponsored health benefits higher than ever, this noble objective becomes even more complicated. According to the 2021 Kaiser Family Foundation’s annual report, average annual health insurance premiums are $7,739 for single coverage and $22,221 for family coverage – a 54% increase over the past 10 years. It’s even worse for employees who saw a 71% increase in their premium contributions. As a result, household income has actually declined over the past 10 years. And now we’re seeing the impact of inflation. No wonder employees feel more stressed about their finances. So what can a caring employer do? The key is alignment. When you want to right a turbulent situation, it helps to have everyone rowing in the same direction. When employers and employees are working together to be smarter health care consumers, when employees are less passive and more active, when there is a “why” behind the health plan design and everyone understands it – only then can you start to take control of your health care spend and change the trend. Alignment and control go hand in hand. To allow alignment to happen, you must have a health insurance solution that gives you control. Control requires access to data for insights on claims spending

MICHAEL A. SCHROEDER Founder and president, Roundstone mschroeder@roundstoneinsurance.com 440-617-0333 Since 2005, Michael A. Schroeder has served as president of Roundstone, a health insurance company specializing in self-funded medical group captive solutions. Mike offers more than 25 years of management experience and has a track record of building and leading fast-growing, innovative insurance businesses. He founded Roundstone with a mission of giving small and mid-size businesses a proven strategy for affordable, quality health insurance to attract and retain the best employees. Roundstone’s unique approach delivers high-quality care, mitigates risk, reduces claims volatility, controls costs, and returns savings right back to employers and employees. Roundstone is headquartered in Lakewood.

change. During the peak of the pandemic, for example, many companies that were self-funded were able to easily shift to digital solutions and adjust their plans as they needed. Most importantly, they were able to pocket the unspent premiums from the lower utilization of health care services, whereas those with fixed cost insurance products got nothing in return.

THE BEST WAY TO BEAT THE OVER-COMPLICATED HEALTH CARE SYSTEM IS FOR EMPLOYERS AND EMPLOYEES TO UNITE AS HEALTH PLAN STAKEHOLDERS WITH A MUTUAL DESIRE FOR QUALITY, AFFORDABLE HEALTH CARE FOR ALL.

Alignment and savings also go hand in hand. Employers can implement wellbeing programs and back them up with incentives for employees to participate. Whether it’s a bonus to get a vaccine, a discount on employee contribution for visiting a primary care doctor, bio-metric screenings or rewards for participating in activities like corporate challenges, savings from a healthier lifestyle should benefit both the company and the employee. It’s essential that you link these programs to your “why” and strive to make health and well-being a core value integrated into the workplace culture.

that allow for proactive cost management solutions. Control delivers flexibility in plan design that suits your employee needs, and allows you to be agile and responsive, not stuck with a plan you can’t

The best way to beat the over-complicated and dysfunctional health care system is for employers and employees to unite as health plan stakeholders with a mutual desire for quality, affordable health care for all. Align and win.

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