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December 28, 2020 Economic Forecast

Pandemic spurs employee-benefits changes

Photo | CNN


Q&A talks with Meg Galistinos, a partner and CT leader at employer consulting firm Mercer.

How has the COVID-19 pandemic impacted employee benefits? What changes or trends should employers think about in 2021?

In many cases, employees have cancelled or postponed elective procedures and preventative care this year due to the pandemic — meaning fewer claims in the short term. Although 2020 cost projections on average are likely to be favorable, employers are bracing for higher cost pressures in 2021 and beyond than in recent years.

Employers can help mitigate future increased health costs by encouraging employees to stay healthy. Digital solutions are a huge trend in this area, as Mercer’s National Survey of Employer Sponsored Health Plans shows: over a quarter of employer respondents (27%) are adding digital tools such as telemedicine to their benefits mix.

Virtual care is here to stay, so employers are looking for ways to incorporate virtual care into their overall employee-benefits strategy.

Additionally, employers should consider adding new benefits offerings to support and engage employees. Around one-fifth of respondents (22%) are adding voluntary benefits such as critical illness and supplemental insurance to cover hospital admission. Many (20%) are also improving and enhancing behavioral health resources. More than half of employers (59%) have provided managers with training on how to support employees’ emotional and behavioral health since the onset of the pandemic, or are planning to do so.

Lastly, we see 45% of responding employers permitting flexible schedules to meet employee caregiving responsibilities.

What should CT employers expect in terms of rising healthcare costs in 2021?

Employers in Connecticut are expecting moderate health benefit cost growth of 4.3% in 2021, in line with previous years, according to Mercer’s latest National Survey of Employer-Sponsored Health Plans, which included 1,812 employers with 50 or more employees. Even amid economic uncertainty, only 18% of employers say they will take cost-savings measures in 2021 that shift more healthcare expenses to employees, such as raising deductibles or copays.

To reduce spend in 2021, employers should continue to drive in-network utilization and evaluate high-quality, but narrower provider network options.

Second, use data to understand and monitor what chronic conditions are driving cost in your organization claims, such as diabetes, asthma or heart disease.

Focus attention on care management, revisit site of care strategy, and employee adherence to treatment for ongoing conditions.

Many employers have seen their top lines come under pressure during the COVID-19 pandemic. What are the least harmful ways employers can cut costs without negatively impacting employee retention?

Most employers report a very low loss in productivity from moving to a remote workforce, and employees once reluctant to work from home are doing so more effectively.

This gives employers the opportunity to rethink “the office” and all of the costly amenities that used to come with it. Before leases are renewed, employers should rethink how the office will be used in the future and consider if a reduced footprint is warranted.

What are some strategies employers should use in 2021 to retain and recruit top talent?

The impact of the pandemic has fundamentally changed the way companies recruit, hire and retain talent. Employers need to shift how they source, interview and support the hiring of candidates — while also finding ways to keep top talent engaged and motivated in a virtual environment.

Mercer’s 2020 Global Talent Trends Study reveals that employees whose company is focused on employee health and well-being are four times more likely to be energized.

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