Employee Benefit Industry Trends Post Pandemic
Overall Health
- Plan members wish to do more physical activity/eat healthier, but people don’t know where to begin/much easier to take medication because coverage is readily available. Industry needs to provide tactical support for behavior change
- Plan sponsors underestimate members diagnosed with a chronic condition by 40% (67% of employees have one; sponsors estimate only 35%).
COVID
- COVID is causing a backlog in appointments, treatments, etc. so there will be increased claims for mental and physical health conditions. But COVID also fast-forwarded the acceptance of virtual care (40% of members used it through health benefits plan or privately paid service)
- 29% of sponsors with a health benefits plan include a virtual healthcare service; 88% are satisfied with the offering
- Sponsors think that for the next 5 years, the largest impact of COVID will be poor mental health of employees (but this concern is 10% lower than it was in 2021). Sponsors may be underestimating COVID negative impact on chronic illnesses due to delayed tests, diagnoses, treatments, etc.
- 81% of sponsors feel the pandemic will impact the costs of benefits over the next 5 years, up from 77% in 2021; majority of claims coming from mental health issues
- Pandemic didn’t have a large impact on plan sponsors’ efforts outside of the health benefits plan to support employee wellness in the long term, particularly for mental health
- 53% of plan sponsors implemented COVID vaccination policies requiring proof of vaccine/medical exemption; most likely when the workforce is unionized and least likely with 500+ employees
Mental Health
- Depression is the #1 illness concern for employees; 58% of plan sponsors said they have training programs to help managers/employees recognize and respond to signs of depression, up from 48% in 2021
- Mental-health training was more likely among plan sponsors with a flex benefits plan (78% versus 50% with a traditional plan), a unionized workforce (78% versus 48%) or more than 500 employees (77% versus 28% when fewer than 50 employees) and also among those in the public sector (71% versus 53% in the private sector) or in Quebec (71%)
- About 24% of plan sponsors recently increased their maximum level of coverage for mental-health counseling, up from 19% in 2021. An additional 28% indicated they plan to increase their maximum, up from 18% in 2021
- Plan sponsors with more than 500 employees were more likely to have increased their maximum (39% versus 6% for those with fewer than 50 employees), as were those with a unionized workforce (44%) and a flex benefits plan (38%)
- The average annual maximum for mental-health counseling was $2,006, up from $1,294 in 2021
Job Satisfaction and Environment
- 87% of plan sponsors agreed their workplace culture/environment encourages health and wellness, slightly less than 2021
- In the next 3 years, 75% of plan sponsors anticipate dedicating funds/staff outside of the health benefits plan to support employees in at least 1 of the 5 wellness areas (i.e., emotional/mental health; physical fitness; prevention of illness/chronic illness management; social health; financial health). This is increased if the workplace is unionized, 500+ employees, and has a flex plan
- 91% of sponsors agreed they promote and support a diverse and inclusive workplace. 72% have a documented strategy for DEI in the workplace; large employers (500+) were more likely, as are those in the public sector with unionized workforces
- 56% of plan sponsors prefer employees to WFH 41-80% of the time. 38% of members want to WFH almost exclusively, but only 19% of sponsors share this sentiment
- 51% of sponsors anticipate that working will be a hybrid environment (WFH vs. in office)
- 38% of sponsors and 39% of members think employees are most productive at home
- 68% of sponsors are concerned about the impact on attraction + retention if employees are mandated back to the workplace
Benefits Plans
- 62% of sponsors indicated that their health benefits plan didn’t change in 2022. Among those who made changes, the most came from adding a benefit(s) or improving coverage levels (more likely for union, public sector, and 500+ employees)
- 80% of sponsors described the quality of their benefits plan as excellent, up from 74% in 2021; more likely with 500+ employees
- Main purpose of the plan for majority of sponsors was to attract and retain employees
- 83% had at least 1 major concern about their benefits plan; the most being competitiveness
- Flex plans have grown since 2018 but aren't anticipated to accelerate; instead flex components may be added. Plans with the following components
- Healthcare spending account: 48% (36 are considering it; 40% want to but too many barriers)
- Employee assistance program: 42%
- Wellness account: 30% (34 are considering it; 46% want to but too many barriers)
- Virtual healthcare service: 29%
- Optional critical/catastrophic illness insurance: 18%
COVID Pandemic Influence On Benefit Programs in Detail
- Pandemic influenced plan members to focus on programs that balances their mental health and work-life balance in exchange for sustainable performance at work
- Most brokers and consultants are dealing with emerging trends including:
- Tight labour market
- Higher demand for flexible benefits such as wellness programs and HCSA
- Hybrid work model
- Addressing of staff burnout
Supply/Demand Mismatch
- The number one challenge facing employers for 2023 onwards is supply and demand for talent and labour
- Emphasis on retention and acquisition of high-quality talent
- Other key elements for consideration:
- Redefining of employee value proposition (compensation/benefits package)
- Flexible approach to work model
- Career development
- Labour shortage is strongly influencing employers to consider implementing or enhancing their RRSP offerings
- Major focus on mental health and burnout
- Increasing practitioners available to plan members
- Tug of war between employer versus employee with respect to work-from-home privileges
Employee Turnover Analysis
- Cost of replacing a salaried employee:
- An entry-level employee turnover cost is between 30% and 50% of their annual salary to replace.
- A mid-level employee turnover costs 150% and above of their annual salary to replace.
- A high-level or highly specialized employee can cost approximately 4 times their annual salary to replace.
- For example, an entry-level employee earns $20,000 annually. Hiring a replacement would cost $6,000 –$10,000 (single employee only) Most businesses have multiple turnovers within a year, which can result tens of thousands of dollars wasted on the low end
Canada generally ranks higher in turnover rates versus competing developed economies.
- According to research by LinkedIn, Canada ranked as the 4th country with the highest turnover
- It has an average of 16%, which is higher than the worldwide average of 12.8%.
- It also stated that retail, tech, and media sectors are the most volatile in terms of retention of workforce