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Noteworthy: Brave New Benefits Landscape

February 7, 2017

Much remains unclear about how the Trump administration and GOP-controlled Congress may reshape not only health care in America, but also other employee benefits, including paid leave and child care. What is increasingly clear is that employer-provided benefits are most definitely being shaped by a younger demographic of workers, with the trajectory toward greater flexibility and choice. While work motivations for millennials and new college graduates go beyond compensation and benefits, to include a culture of social responsibility and opportunities for continuous development, employer-provided benefits still play a primary role in employee recruitment and retention.

Room to innovate. The 2016 Aflac WorkForces Report, which examines employee benefits and attitudes, suggests that employers that fail to update and leverage their benefits programs as a recruitment and retention strategy do so at their own peril. Among the findings of the report, which includes a separate employee overview and employer overview, are these:

  • One-third (33 percent) of employees say they are only somewhat satisfied by the employee benefits they currently have, and more than half (60 percent) think there is growing need for voluntary benefits such as accident insurance and critical illness coverage to ease the rise in medical services costs.
  • More than one-half (60 percent) suggest they would be at least somewhat likely to swap better benefits in exchange for slightly lower compensation, and 42 percent suggest an improved benefits package is something employers could provide that would keep employees on board in their current roles, while one-fifth (16 percent) said they had left or turned down a job based on the employer-provided benefits.

The role of choice and technology. According to a recent Willis Towers Watson press release, employers that want to boost attraction and retention of younger talent have a new mission in 2017, and that is to offer greater choice in their benefits programs and to make better use of technology in the design and delivery of benefits offerings to improve employee experience. 

The release suggests that more employers are moving away from a one-size-fits-all benefits approach toward “consumer-style workforce segmentation” in decisions about how to modify or expand benefits to meet a variety of worker needs. With regard to health and well-being benefits specifically, this includes the rise in high-deductible health plans, which are often paired with health savings accounts, but it may also include niche offerings like expanded coverage for autism spectrum disorders or for treatments and procedures related to gender identity disorders.

Voluntary benefits are also likely to expand in 2017 to appeal to the needs of a multigenerational workforce, with the addition of things like identity theft protection, student loan repayment programs, and legal assistance in addition to more traditional options such as vision, dental, and life and disability insurance.

Another big factor pushing employers to modernize benefits is emerging technologies that allow employees to take more direct control over personalizing and managing benefits decisions using cost calculators and other decision-support tools, portals, and mobile apps. Likewise, employers will continue to try to leverage social media to drive employee networking and discussion, with aims to further employee engagement.

According to the release, another likely trend in 2017 and beyond is that, as employers continue to expand concepts of employee well-being to encompass social, financial, mental, and emotional health, more employers are likely to turn to private benefit exchanges as a means to help them streamline and address the complexity of offering such highly personalized benefits.

Personalized, customizable benefits. In fact, according to a new benefits trends study by MetLife, The Millennial Benefits Perspective, nearly one-half (46 percent) of employers with high percentages of millennials (greater than 50 percent of total employee population) plan to allow employees to enroll for benefits through an exchange within the next three years. This survey, which in part explores the differences between younger millennials (21 to 24 years old) and older millennials (25 to 34 years old), assesses the benefits-related changes being made by employers with a high millennial presence, medium millennial presence (representing 25 to 50 percent of employee population), and low millennial presence (less than 25 percent).

Specifically, millennials are looking for options that appeal to them, and employers are taking notice. According to the report, 54 percent of employers with a high-millennial presence are providing a broad menu of non-medical benefits, versus only 41 percent of employers with a low-millennial presence. Likewise, 50 percent of employers with a high-millennial presence plan to further boost benefits offerings within the next three years, versus only 34 percent of employers with a low-millennial presence. As to the nature of these benefits, the report indicates that employers must take a closer look not only at differences between millennials and Generation X employees, for instance, but also between younger and older millennials. All this suggests that employers will need to spend quite a bit more time and energy in the coming years tuning in to the specific points of engagement between employees and their benefits to achieve the best mix of benefits for all.