Benefits Pro: HR teams: Prepare for the realities we expect to see in 2024
By Kim Buckey
Employees’ needs— and how organizations attempt to balance those needs against corporate budgets— have continued to evolve. Most recently, rising inflation, a tight labor market, hybrid work arrangements, and a broader focus on all aspects of employee wellbeing, have altered the benefits packages that employers have offered in recent years in an effort to maintain their ability to compete for and retain talent.
2024 will be no different.
This upcoming year will see new plans, programs and point solutions in the marketplace to support employers seeking to manage increasing health care costs. We’ll also see new tools and programs to help both employers and employees gain insight into how to best leverage those programs to meet their needs without breaking the bank.
HR teams should prepare for the following realities we expect to see in 2024:
1. Rising premiums and expenditures
It should be no surprise to employers that health care costs are continuing to rise. In 2024, the cost of job-based health care coverage is expected to increase at its fastest pace in years as inflation continues and new therapies and technologies, skyrocketing drug costs, provider consolidation and workforce shortages drive costs upwards. Further, an aging population is resulting in increased health care utilization. While most employers will likely try to absorb these costs, a recent KFF Employer Health Benefits Survey found that almost 25% of employers expect to increase employee contributions in the next year or two. Other employers are likely to take steps such as increasing deductibles and/or copays, reducing coinsurance, or offering less expensive plan options after years of stepping away from increased cost-sharing.
More employers are likely to add services such as enrollment support— to help employees choose the most cost-effective plans for their families— and advocacy specialists, and clinical advocates to help employees understand their plans, shop for more cost-effective care, and identify and resolve claims and billing errors once care is received. By helping employees save money before, while and after they receive care, employers will recognize cost savings as well.
2. Expanded voluntary benefits options and point solutions
With inflationary pressures and tightening budgets, employers continue to expand their voluntary benefits portfolio while adding targeted point solutions to address specific pain points.
According to Optavise’s 2023 Broker Report, The 2023 Benefits Broker: Rising Healthcare Costs and Increasing Competition, 64% of brokers saw an increase in clients adding voluntary benefits, which is up from 58% in 2021.The top three “most added” benefits in 2023 included accident (71%), critical illness (68%), and hospital indemnity insurance (39%).Interest in disability and life insurance nearly doubled and tripled, respectively, from last year, highlighting an increased desire for income protection programs that can improve financial security for employees and their families.
Long-term care coverage has the potential to grow in popularity in 2024, given broader availability, more appropriate pricing, and an aging population. HR leaders should also anticipate increased interest in woman-centered benefits, such as expanded access to family-forming services and programs supporting women as they progress through menopause. Integrating sought-after voluntary benefits like these into a benefits portfolio not only addresses the rising demand from employees but also enhances the potential for employees to effectively utilize and derive value from these offerings.
3. Beefing up health care benefits strategy
Although having an overarching benefits strategy in place may seem like a no-brainer to employers, more employers will start to make use of newly available data to refine those strategies. Transparency data from network hospitals may drive carrier negotiations, while an analysis of inhouse claims data may spark discussions around new plan offerings, point solutions and targeted communications. A thorough review of participant utilization of existing programs will identify what programs employees value most, and opportunities to promote under-utilized yet valuable offerings. Grounding benefit decisions in hard data and organizational benchmarks will help employers avoid next year’s trendy solutions that may not be a good fit for that employer. As trends continue to come and go, more employers will recognize in 2024 that consistency and stability are a more effective approach amidst the swiftly changing landscape of trends and the rising cost of care for employees and their families.
4. Establishing consistent communication with employees
A benefits plan is only as good as the employees who use it— making communication key for employers in 2024 (and in any year). Without establishing a thorough and year-round plan for benefits communication, plan participants may miss out on important offerings and services.
When done well, a robust communications plan can educate employees about their coverages and how to choose and use them, boost engagement in targeted programs, and help reduce employer and employee costs. A year-round communication plan leveraging multiple channels to provide generic and targeted messaging can help employees maximize the benefits that support their ongoing satisfaction, wellbeing, and productivity.