The employee benefits landscape beyond the pandemic

For many, the COVID-19 pandemic caused people to reevaluate their lives, their priorities, and to seek greater balance – and their relationship to their workplace was no exception. We discovered in Inflection Point, our 10^th Annual Workplace Benefits Study, that an employers’ response to COVID-19 has a major impact on how workers feel about their employer and whether they want to continue working there. Workers who say their employer handled COVID-19 well are twice as likely to want to stay at their company for at least 10 years compared to those who say their employer handled it poorly.¹

In our webinar COVID-19: A turning point for employee benefits? we talk about how employers are and should be responding to the need for greater workplace flexibility, improved financial and emotional health, and easier access to benefits through the use of technology. What are the most significant changes to employee benefits thus far, and which of those changes are likely to be permanent?  

Since the COVID-19 outbreak, workforce well-being, and in particular financial wellness and mental health, have accelerated to the top of employers’ priority lists. Nearly half (48 percent)¹ of employers surveyed in Guardian’s 10^th Annual Workplace Benefits Study told Guardian that since the pandemic began their senior leadership is more focused on the well-being of their employees, particularly issues like anxiety, depression, and financial security.

That said, more than half of employers have made no changes at all yet to their benefits programs. Those that have (36 percent) were related to expanding life insurance benefits and additional hospital indemnity plan coverage. These supplemental benefits are likely due to the number of COVID-related deaths and hospitalizations we’ve seen in the past year.

Emotional health suffered greatly, but our resilience as a nation is evident in our research. We’re in a better place today than we were a year ago; emotional, physical, and emotional health ratings have all improved in a range of two to five percentage points for full-time employees. While that’s true for those who are fortunate enough to have full-time jobs with benefits, those who are under-employed or unemployed are still struggling. In fact, the emotional health of the under-employed that was rated at 41 percent being excellent or very good in 2020 (during the height of the pandemic), has dropped to 34 percent in 2021. So not all segments of the US population are equally experiencing this rebound in well-being.

Depression has become the number one cause of disability claims in the US.² By not addressing mental health issues early, it can impact a company’s productivity and medical costs. But historically, we see very low participation in company employee assistance program (EAP) programs (less than four percent). Part of that is the lack of education by employers to make their employees aware of the services that are being made available. But there’s also a stigma around acknowledging and openly discussing the different types of mental wellness and behavioral health issues that we all go through ourselves. Over the past 12 to 18 months, Mike Prestileo, Chief Strategy & Development Officer at Guardian, has seen “a growing willingness by employers to open up that dialogue, eliminate that stigma, and talk openly with their employees and customers about the importance of mental wellness and overall well-being.”

Prestileo also foresees an evolution of what the EAP program can look like: more holistic, full-service mental wellness help being provided both virtually and in person. It can often take days to get an in-person appointment with a provider in the behavioral health sector. Closing that gap by offering on-demand access to providers across a wide range of mental wellness, from addiction to anxiety, will go a long way in the types of services employees are looking for.

Zarifa Brown Reynolds, VP, Head of Small Business Segment at Guardian, says that mental wellness is generation-specific. “Work is a foundational part of how we have acclimated to society, and how we all get along and manage. We spend a lot of time there. And even though prior to COVID we had folks working from home, the vast majority of individuals were showing up to an [office] every day,” she says. “When you think about [recent college graduates] who are new to the workforce who are trying to acclimate to work, and then all of a sudden that is taken away, it leaves a sense of uneasiness.”

Gen Z and young millennial workers were more than two times as likely to say COVID-19 impacted their emotional health than boomers. In fact, younger groups of employees are tending to utilize EAP services in increasing numbers, possibly because there is less of a stigma, and a generational understanding that being well means being well mentally.

In order to cope financially, a vast migration of workers have moved home. “A number of boomers (20 percent) and even Gen Xers (22 percent) have retired early. If you’ve saved a lot of money and lost your job, you might already have your flight path,” Reynolds says. But younger generations haven’t had the chance yet to build up their nest eggs as a time when layoffs were rampant and unemployment was extremely high. What is their path back to urban environments where their company is located? Perhaps this migration is permanent, or perhaps we can expect to see a hybrid. Either way, states Prestileo, without having a traditional immersion period into a workforce, employees aren’t building an affinity with the company. “From an employer’s perspective, this will create challenges with early career attrition. It will affect bench strength and having that next wave of talent come through.”

Time is perhaps the most highly valued benefit in 2021. Giving time as a benefit demonstrates caring, flexibility, and empathy. And paid time is necessary for many working Americans who are caregivers or ill. Six in 10 workers say that employers with paid family and medical leave policies, especially in states with no existing laws, are much more attractive places to work. Workers also say that they’re trying to more effectively balance their work and personal lives, particularly since the pandemic. More than four in 10 workers say that paid time off benefits are a major factor in making a job decision, so paid leave is increasingly important in attracting and retaining talent.

Half of today’s workers would prefer to work 100 percent remotely, and 75 percent would prefer to be working remotely at least a couple of days per week. Zarifa Reynolds shares insights on both the positives and the challenges of remote work and flexible hours: “We know from our research that employees are equally if not more productive at home, depending on the role. So if your workforce is more productive, and potentially happier (especially for those who have long commutes), it’s incumbent on employers to embrace that productivity. The flip side? Many individuals who want that flexibility are the same people who would be training the newer crop of young employees.” So while an employer wants to retain talent and continue the path of productivity, the challenge is addressing the need to develop the pipeline of new talent.

Spending on HR and benefits technology has surged, with a 15 percent increase from 2017 to 2021. Telehealth, for instance, has quickly advanced to the forefront during the pandemic, says Erik Bristow, VP, Strategy & Carrier Relations at ADP®'s Insurance Services division. Prior to the pandemic, telehealth was a nice-to-have. Now, it’s a requirement. “This benefits season,” Bristow explains, “employers are going to be looking at telehealth differently – as to whether their plan offers it or charges for it.”

Additionally, the move to benefits administration has democratized access to online enrollment. Seven in 10 employers say that their leadership is more focused on benefits technology as a result of the pandemic, and half of employers (48 percent) have increased their use of ben tech for use in digital open enrollment.

The workplace and benefits trends that were dramatically accelerated by the pandemic include greater workplace flexibility, improved financial and emotional health, and easier access to benefits through the use of technology. To thrive moving forward, organizations must rethink their employer-employee contract. As the next benefits enrollment season approaches, keep an eye out for ways to address these trends in your workplace policies and platforms.