Inside the rapidly changing world of employee benefits

With engagement on the downswing even as the end of 2024’s first half nears, nontraditional employee benefits emerged as an area of opportunity for employers, HR Dive’s 2024 Identity of HR survey found.

The most popular of these options, remote and hybrid work programs, were cited by more than half of the 490 respondents as part of their talent strategies last year. That finding comes amid a seeming normalization of hybrid work for jobs that can be done at least partly remotely. According to Gallup data, 54% of full-time U.S. remote-capable jobs were hybrid jobs in February 2024.

Other programs addressing areas such as mental health, educational attainment and commuting also saw an uptake alongside traditional, core benefits like health insurance, retirement plans and bonuses.

The push for nontraditional benefits may speak, in part, to employers’ need to address employee well-being, which has stagnated globally, said Diana Scott, leader of The Conference Board’s U.S. human capital center. An April report from the organization found that 62% of U.S. workers said their well-being is the same or worse than it was six months ago — a warning sign given 84% said they saw employers as at least partially responsible for their well-being.

Flexibility: The most valuable benefit?

As The Conference Board dove deeper into the factors that influence well-being, it found that support for flexibility at work is one of “the most useful among a wide array of options,” Scott said. That’s because it can help employees feel in control of their work and personal lives while improving retention.

For office-based work specifically, hybrid work has become “the way it has to be if you want to optimize effectiveness and enjoyment of work,” said Debbie Lovich, managing director and senior partner at Boston Consulting Group. “I almost view it as not a benefit,” she continued. “It’s almost like it’s just the right thing to do.”

Data from WFH Research showed that, between December 2023 and March 2024, hybrid work was the most common work arrangement for employees who could work from home. Only 35% of such employees were working fully on-site.

But even for those whose jobs demand that they be on-site, employers have options, Lovich said, such as flexible shift scheduling. Other forms of flexibility include sabbaticals and mental health time off, Scott said.

These offerings require implementation efforts from all corners of an organization rather than the compensation and benefits department alone, according to Sander Domaszewicz, senior principal and national practice leader for consumerism at Mercer. To encourage flexibility, organizations have to spend time “getting into how the work is done” and ensuring managers create the right work environment, he said.

Employers have several considerations to make to ensure managers are prepared to lead dispersed teams, from choosing communication platforms to setting norms around in-office time and deciding how and when teams collaborate. “Very often, when employees are comfortable with hybrid options, it’s because leaders are comfortable managing hybrid teams,” Scott said.

Addressing budgetary concerns

Modern employee benefits strategy aims to find offerings that are highly valued by employees, said Domaszewicz, which is why employers have taken a chance on more niche perks like on-site electric vehicle charging and college coaching benefits for dependents.

Sometimes, the financial return on investment of a given benefit is not always as clear as the cultural return on investment, he added. But employers also do not necessarily need to spend big in order to add benefits employees find meaningful.

“You can offer the benefit in a voluntary way, as a partially paid program or raffle it away,” Domaszewicz said. “You don’t necessarily have to buy everything on paper in order to offer a benefit.”

Feedback leads to better benefits

To that end, employers could approach benefits program design differently by leaning into the idea of treating employees like customers, said Lovich. “When [employers] serve customers, they do deep discovery to understand their needs,” she said. “Yet, when it comes to employees, we treat them all the same.”

Sophisticated organizations take time to better understand employee needs across diverse segments, tailoring benefits offerings in turn. Whether an employer has a large LGBTQ+ population, a large caregiver population or other demographic group, it may require different forms of individual benefits to develop a better program.

Lovich gave the example of one manufacturing industry client with a largely immigrant workforce that struggled to tailor its health benefits. For this population, in which employees were often caregivers for cousins and other extended family members, Lovich said the client adopted a “household health benefits” model.

HR should keep constant communication with employees about benefits to ensure they feel valued and supported, Verlinda DiMarino, VP and head of benefits at Liberty Mutual, said in an email. Liberty makes use of surveys, benchmarking tools and data to understand what resources are most meaningful, she added.

“Our evaluation may indicate that a benefit is redundant or ineffective, and we will streamline that program to reinvest in new offerings,” DiMarino said. “This allows employees to feel like their insight matters and that we’re meeting their direct needs.”

Communication also ensures awareness of helpful offerings, and employers should confirm that managers are exposed to benefits early on, Domaszewicz said. Managers can be “champions” for specific benefits that they have found personally helpful, he added, which could help their teams understand the value of those benefits and feel comfortable using them.

At the end of the day, HR cannot bear all of the responsibility for ensuring that benefits, traditional or nontraditional, deliver expected value, according to Lovich. Executives, managers, vendor partners, employee-led groups and other stakeholders all play a part.

“Satisfying employees shouldn’t all be on HR’s shoulders,” she said.

Employers plan to maintain their current health benefits in 2025, a recent Mercer survey of nearly 700 organizations found. This is despite the per-employee cost of benefits rising about 5.2% in 2023 and 2024, after nearly a decade of 3% annual cost growth. 

Additionally, employers plan to increase their support for or consider certain specialized coverage, Mercer found. Coverage for reproductive health needs is growing, the firm said, and employers are increasingly interested in covering weight-loss medications. 

Employers are split on how to cover rising costs. While 45% said it’s very likely or likely they will shift rising costs onto workers, 47% said it was not very or not at all likely. Many plan to offer or are considering alternative strategies like high-performance networks or enhanced clinical case management, Mercer said.

The rising cost of healthcare benefits is nothing new for HR to contend with, though the pace has climbed in recent years. Mercer attributed this in part to medical inflation.

“It took about a year for the spike in general inflation in 2022 to be felt in health plans as provider contracts came up for renewal and health systems and other providers negotiated higher reimbursement rates to offset higher wages and medical supply costs,” the firm wrote in its report on the findings.  

Rising prescription drug cost, which leapt 8.6% in 2023, is another contributing factor. Mercer said this rise was in part due to the rising use of glucagon-like peptide 1 (GLP-1) drugs for diabetes and obesity, which the firm said costs an estimated $1,000 per person per month. Employers do not generally seem deterred by the cost, however; most that currently cover such drugs said they’d continue to do so and close to a third of those not currently covering them said they are considering it. 

Overall, Mercer’s report showed employers are generally aware of financial strain on workers and looking to avoid adding to it if possible. Mercer found in another survey that about two-thirds of large employers said “improving healthcare affordability” would be a health plan priority over the next few years, and employers have been working to achieve that goal through strategies like offering no/low deductible healthcare plans, making larger HSA contributions and offering telemedicine to employees not eligible for the medical plan.

Some employers also said their financial benefits extended to other areas, like providing a financial wellness program, subsidizing utilities and meals for remote workers, and subsidizing transportation costs.

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By Workpartners

How keeping employees engaged could lower your absence management costs

You have data. Lots of data. Data on employee leave. On disability. On workers’ comp claims. This data tells a story—but is it the whole story? Is it even a true story?

Unless you are integrating ALL of your benefits data, you’ll never get the complete picture of your absence management program. You won’t know how to pick out those employees who need help. And, most importantly, you won’t discover how to increase employee engagement in the services that provide the greatest assistance.

Leveraging integrated data is the best way to optimize your absence management program, improve employee health, and lower your benefit costs. Workpartners can show you how.

Why your employees might not be engaged

Employees who are dealing with health or wellness issues may feel overwhelmed. They may be ill, struggling from mental health issues, or caring for a loved one. These employees may not understand their benefits or have the time to learn what help is available. If they’re on leave, they may feel disconnected from work and less likely to engage with their manager or HR.

Ways to improve employee engagement

Integrating your benefit data will give you more opportunities to identify those employees with the highest benefit usage. All benefits are considered, not just absence, medical, or pharmacy. Analyzing your integrated data can reveal insights that help you boost employee engagement.

For example: Short-term disability (STD) claimants typically make up 5 to 8 percent of an employee population. However, they are responsible for 30 to 50 percent of total group health spend. An employer who proactively engages with those on STD can identify other problems these employees may have and direct them to beneficial services.

“Engagement” involves more than calling an employee on the telephone. It requires a coordinated effort among your absence management, benefit management, employee assistance, and health management programs to ensure your employees are getting the physical and behavioral health support they need. When you have integrated data and an employee engages with one benefit program, you can connect that employee to ALL the programs that can help them.

Workpartners® has a 35 percent engagement rate when we contact an employee by telephone. However, an integrated referral from service the employee is already using has an engagement rate of nearly 54 percent. That’s close to the engagement rate of employees calling in for information (61 percent). In short: Integrated referrals can be powerful.

Workpartners integrated data solution using employee data

When you implement solutions based on integrated data, you get results. We began working with a client and compared the mean benefits costs and lost workdays between employees we engaged with through integrated referrals and those we did not. After six months, the results were clear: There was a net difference of $1,748 in benefit spending and 3.8 fewer lost days at work.

Offering employee assistance services to those who were out on leave led to a savings of $1,071 in absenteeism and presenteeism. Employees who were on disability had a 79.3 percent engagement rate with our advocacy services (compared to just 16.6 percent among passive referrals.) When we offered help to women who were going on maternity leave, we saw a 65.5 percent engagement rate. That’s compared to just 30.9 percent for those seeking help on their own.

These examples show how that we’re able to turn integrated data analysis into action—action that leads to increased employee engagement, improved health and wellness, and lower benefit spending.

To learn more about how Workpartners can help you optimize your absence management programs through better employee engagement, start a conversation with us.

More than half of employers said they plan to address the impact of social determinants of health — social and economic conditions that affect a person’s ability to be healthy — on personal well-being in the next three to five years, according to the results of a survey conducted by Business Group on Health and Fidelity Investments. 

Of the 160 employer respondents, more than three-quarters reported providing family-forming benefits and reproductive support in 2024, and 86% of employers said they planned to offer the benefit next year, per BGH. 

Roughly 6 in 10 employers said their well-being strategy is consistent globally, and 18% plan to develop one soon. The challenge, according to 70% of respondents, was that employee needs are not universal in each country where they operate.

Employers increasingly have been turning to well-being and other nontraditional benefits to attract and retain workers, including benefits that address the social determinants of health, such as financial literacy programs and housing assistance. 

The 2023-2024 Aflac WorkForces Report found that 66% of employees are less likely to look for a new job if they feel like their company supports their well-being. 

“Addressing social determinants of health may soon be a key aspect of well-being design,” Ellen Kelsay, president and CEO of Business Group on Health, said in a statement. “By supporting initiatives that reduce employee cost-sharing or provide child care support and flexibility, for instance, employers enable individuals and their families to boost their overall well-being and achieve other positive outcomes.” 

Some employers are tackling what are known as the social determinants of work: the factors that affect how an employee can show up in a healthy way at work. That can look like caregiving or child care benefits, therapy services or transportation assistance. 

These types of nontraditional benefits are an area of opportunity for employers, according to HR Dive’s 2024 Identity of HR survey. More than half of respondents said remote and hybrid work programs were part of their talent strategies last year. Other benefits that saw an uptake included programs addressing mental health, educational attainment and commuting.

Nearly half of U.S. workers surveyed say they lack the benefits they need at work, according to the results of a survey by Perceptyx, an employee experience company. Of the 1,500 full-time employees surveyed, 59% said they had “benefits envy” of friends’ and family members’ healthcare coverage.

When it comes to benefits equity, the survey found that medical, maternity and mental health are the “magic trifecta,” Emily Killham, senior director of people analytics, research and insights at Perceptyx, said. “When employees have access to all three, women and men feel equally that their needs are met.”

Yet 53% of those surveyed said they don’t have mental health coverage, 51% don’t have maternity leave, and 25% don’t have any medical benefits, per the results.

Men were 1.5 times more likely than women to say their benefits met their needs, the survey found. 

“Despite major strides, workplace benefits are still not aligned with women’s needs,” Killham said. “To attract and retain female employees, employers should make sure their benefits package is serving the workforce they have today — and want to have tomorrow.”

Those women who reported having the magic trifecta of benefits said they were more engaged in their work, more productive, performing better quality work and less likely to search for a job with better benefits, the survey found. 

Incomplete benefits packages can “rob” workplaces of women’s talent, according to survey results published in summer 2023 by the British Standards Institute. Women surveyed said they would be more likely to be able to remain in the workforce if they had better support for maternity and their return to work, perimenopause or menopause and flexibility on when and where they work, per the survey.

America’s mental health crisis has squarely entered our national consciousness. The silver lining of the pandemic’s devastation is a recognition that what we were doing before was not sufficient.

For American employers, it underscored the need to accelerate investments in mental health in the workplace.

If you work for a large employer, you’re likely to have more support than you did just a few years ago. A survey of companies late last year found that, within the last three years, 94% of companies reported strengthening mental health coverage, expanding ways to get support, or putting in new workplace programs for mental health and wellness.

Recognizing that good mental health is good for workers and for business alike, employers are devoting significant resources to address the issue. But we’re far from meeting the need. Too many are finding it still too hard to access care. There are structural challenges that will continue to hamper progress if we don’t address them.

Modernizing our mental healthcare system will require action in three critical areas: breaking down barriers to telehealth and virtual care; significantly expanding the mental health workforce, in the short-and long-term; and integrating mental health and physical healthcare.   

Although the pandemic worsened the mental health crisis, at first creating new barriers to care and raising levels of stress and anxiety for millions of Americans, it paradoxically pushed us toward one solution to addressing the bigger crisis.

Telehealth rapidly expanded for both physical and mental health services. In March 2020, Congress and the federal government made significant changes to the rules and regulations that governed telehealth. That flexibility supported providers who faced an influx of patients and allowed patients more flexibility to access care.

When these policy changes took effect, more providers were allowed to offer telehealth, including from their homes. They could conduct telehealth visits across state lines. They could use more platforms, and providers didn’t need a preexisting relationship with patients. Patients didn’t need to go to an in-person visit ahead of being eligible for telehealth appointments. Today, 72% of large companies report having recently expanded telehealth networks or options for their workforce.

The pandemic rules are still in effect, and both patients and providers continue to benefit from them. This is especially true in rural areas, where distances between providers and the patients they serve are greater.

However, these telehealth rules are set to expire at the end of this year. Unless Congress acts to extend them, many Americans could have more difficulty accessing mental and behavioral health. Congress should take care to ensure this route to care remains available. 

Telehealth, including audio-only, has the potential to meaningfully increase the number of people who can get the help they need, and maintaining flexibility for the federal rules governing the practice is essential.

Still, access will continue to be constrained until we increase the supply of mental health service providers. A fundamental component of the crisis is the mismatch between the number of professionals qualified to help patients, and the number of patients in need of providers. Nearly three years into the pandemic, 60% of psychiatrists still reported that they did not have any availability for new patients.

Troublingly, even as demand for care has been increasing, the number of providers could soon decrease. Over 60% of psychiatrists were at least 55 years or older in 2021, meaning that many current providers could soon be aging out of the workforce. Both today and in the long-run, we will never fully solve this challenge if we don’t have enough professionals to fill the need.

This requires training additional providers, including non-clinical behavioral health providers and primary care providers. In the short-term, we must provide flexibility for licensed health workers like nurse practitioners and social workers, to practice at the top of their license, while additional community services fill in gaps in care.

This additional training, especially for primary care providers, can also address a third challenge facing mental health care in America: integrating mental and physical healthcare. Mental, behavioral and physical health are complex and often connected with one another. Having providers capable of addressing all three, especially in cases where they are connected, can improve patient outcomes.

Integrating mental health and physical healthcare can allow earlier detection of mental health issues, allowing them to be addressed earlier. In addition to improving patient outcomes, addressing mental health conditions early, before they could become emergencies, can lower costs for consumers. This can also help reduce stigma associated with mental healthcare. Stigma remains a barrier for patients in need of mental health services. Eliminating that stigma is another major challenge for breaking down barriers to care.

Right now, the system is failing too many people. We have the tools to change that. We have the capability to address America’s mental health crisis, but policymakers must act. Congress must reauthorize telehealth extensions. Leaders in Washington can engage efforts to build America’s mental and behavioral health workforce and support new steps to integrate care for mental, behavioral and physical health.

Mental and behavioral health have a major impact on the lives of nearly every American. This year, Congress should act to strengthen America’s mental health care system.

Sixty-four percent of employees responding to a Bank of America survey said they wanted a four-day workweek, making it the top desired benefit in addition to their current slate of offerings — but only 42% of responding employers said they’d like to offer one. 

Bank of America found that workers are overall feeling more confident, with 47% rating themselves “financially well,” compared to 42% in 2023. But they remain concerned about inflation and the cost of living. Workers also cited better compensation as the top factor that could lure them away from their current jobs.

The financial firm also found gaps in workers’ experiences: Men said they were more financially secure, more confident in their retirement savings and more amenable to in-office work. But slightly more women said they felt better about their career outlook. Bank of America surveyed 955 employees and 804 employers for its report.

What employees say they most value seems to fluctuate with trends in the economy and culture. While inflation has cooled somewhat from its historic peak in 2022, workers are still feeling the impact. More than half of U.S. adults told The Harris Poll and the American Staffing Association in January that their paychecks were still not keeping up with inflation, and nearly 4 in 10 said they were in an even more stressful situation than the year before. 

While Bank of America found feelings of financial wellness appear to be trending upward, the numbers still aren’t stellar, with fewer than half of workers reporting their financial wellness was good or excellent. Slightly over half of men reported high financial well-being, while women lagged behind at 36%. 

But employers shouldn’t worry too much about employees leaving for new jobs; Bank of America also found 70% of workers plan to stay at their company for the next year, reflecting a trend that some are calling “the big stay.” 

What may be more surprising is why employees said they’d stay — a good work/life balance topped the list, with 60% saying they’d stay for this reason, compared to 53% for compensation — as well as the additional benefit employees say they most want: a four-day workweek. The numbers suggest that while good compensation is a baseline need, employees deeply value their personal time and, beyond a certain point, may be unwilling to trade it for more money. 

The push for a four-day workweek has gained steam in recent years. Last August, three-quarters of respondents to a Resume Builder survey said they’d switch jobs for a four-day workweek and 1 in 3 said they’d take a pay cut. The benefit is still exceedingly rare, however; an Indeed analysis found that while more job postings mention four-day workweeks, that number only rose from 0.1% in September 2019 to 0.3% in September 2023. 

Most U.S. workers in a Harris Poll survey from April said they were satisfied with their employer’s paid time off and vacation policies — and yet, 3 in 4 said they did not use the maximum PTO permitted by their employers.

The survey of 1,170 respondents found that 60% had more than 10 paid days off per year while 7% had unlimited PTO. According to Harris Poll, a third of those with unlimited PTO said that this equaled more than 30 days off per year. Pressure to be available and responsive as well as heavy workloads were the top reasons for not taking more time off.

Even when they did take time off, 60% of respondents said they struggled to fully disconnect from work; 86% said they would check emails from their boss and 56% took work-related calls during time off. Nearly half said they felt guilty about taking time off in the first place.

This issue has resurfaced on a seemingly annual basis. For instance, a 2023 Eagle Hill Consulting survey found that more than one-third of employees had not taken a vacation in over a year. A large number of employees in that survey, 27%, also said they checked work email and messages even when they did take time off.

While workers have many reasons for not taking time off, heavy workloads have become one of the most common. Like Harris Poll, both Eagle Hill Consulting’s survey and a separate 2023 survey by the International Foundation for Employee Benefit Plans found that heavy workloads factored prominently in unused time off, including paid time off. IFEBP found that 52% of employees with access to unlimited, or open, PTO cited workloads as a reason for not using the benefit.

The process of taking PTO is also complicated by the advent of flexible work as hybrid and remote workers may feel even more guilty about taking time off. Other research by HR platform BambooHR found that even though PTO requests by employees have increased by some measures, approvals may not be keeping pace.

A majority of employees in a 2022 Visier survey said they stayed connected to work while on vacation, mostly so they would not fall behind on their work or because it gave them peace of mind. But working on vacation also posed a retention issue for employers, according to Visier. Workers who told the firm they were “very connected” to work during time off were 36% more likely to quit, it found.

Sources including Eagle Hill Consulting have previously advised HR departments to encourage managers to lead by example when it comes to taking time off. Relatedly, the Harris Poll survey found that 76% of workers said they wished their workplace cultures “placed a stronger emphasis on the value of taking regular breaks and utilizing [PTO].”

Glucagon-like peptide-1, or GLP-1, medications garnered widespread public attention within the past year, but many employer-sponsored health plans have so far held off from covering them, speakers on a Marsh McLennan Agency webinar said.

Last year, the Food and Drug Administration approved Zepbound as a medication for weight loss. Another drug, Wegovy, previously had been approved for this purpose in 2021 and last month gained approval for use to reduce the risk of heart attack, stroke or death in people with cardiovascular disease.

GLP-1 drugs have shown several benefits, according to Heidi Orstad, regional clinical consultant with MMA’s planning and analytics for total health division. When taken as written, patients have been able to lose weight and realize cardiometabolic health advantages.

But research has shown that these benefits may subside when patients stop taking the drugs, even when patients receive lifestyle and wellness education, she said. 

That is something to note given at least one 2023 analysis found that most patients taking drugs like Wegovy had stopped taking the drug within a year, Reuters reported. Orstad said some of this trend is due to the high cost share patients must pay for GLP-1 drugs, but side effects such as gastrointestinal discomfort also contribute.

“It’s important to follow the science and what’s been published about these medications,” Orstad added.

Most MMA clients are taking a “wait and see” approach and opting to see how the market for GLP-1 drugs changes over time, said Malissa Moss, also a regional clinical consultant for MMA’s planning and analytics for total health division. Employers may be uncertain as to how many plan enrollees are interested in the drugs for weight-loss purposes, she said.

Those factors are all top-of-mind for employers given rising prescription drug costs. MMA has estimated that if current prescription costs trends continue, employers could see their expenses in this area grow to be larger than the inpatient, outpatient and physician and professional services categories of healthcare combined, said Rick Kelly, pharmacy practice leader at the firm.

Kelly said employer-sponsored plans could minimize their exposure to GLP-1 weight loss prescription costs by setting eligibility criteria such as requiring participation in holistic weight loss programs, higher body mass index requirements for those taking GLP-1 drugs and higher cost-sharing for plan participants

But those not covering GLP-1 drugs for weight loss risk exposure to situations in which plan participants seek to use the drugs off-label, he added. The medications can be used to treat Type 2 diabetes, and pharmacy benefit managers may have relatively lax prior authorization standards for GLP-1 drugs in the Type 2 diabetic context, Kelly said.

“It’s really important that there’s an independent assessment of, what is the proper authorization assessment for the PBM to make sure they’re really only allowing the Type 2 diabetics to get that medication,” he added.

Plan participants may still seek alternative access to GLP-1 treatments outside of the employer-sponsored plan context. For example, Moss said she has seen an uptick in venues such as spas and health clinics that advertise semaglutide treatments. That is concerning, Moss added, because patients who choose this route may not be monitored by their primary care providers, who know about medical conditions that could lead to adverse side effects.