At Launchways, we pride ourselves on working closely with each individual client to identify their workforce’s unique needs, navigate their business model’s unique challenges, and leverage emerging best practices to help them create employee benefit packages that truly support their workers without breaking the bank.
As we near the end of 2019, we’ve been reflecting on the most common client challenges we saw this year, and we’ve decided to share this list of the Top 11 Employee Benefit Challenges Facing Today’s Businesses.
Here are the most pressing challenges we see assist our clients with on their employee benefits programs:
Rising Healthcare Costs
Doctor visits, prescription drugs, and medical procedures are more expensive than ever before, and it’s difficult to envision that paradigm reversing in the near future. Media coverage surrounding healthcare costs does a good job illustrating the impact on individual patients, but the increased burden on businesses often goes unvoiced.
Every business wants to support their employees’ and their families in times of personal and medical need, but the incredible costs associated with certain long-term courses of treatment is causing some businesses to feel nervous about the financial impact of offering comprehensive coverage.
These tensions reinforce why it’s so important to partner with the right employee benefits broker who you know is working in the best interest of both your employees and your business to deliver maximum benefits value at the lowest possible cost.
Understanding Employee Healthcare Needs
One of the biggest areas of loss in all of human resources is the lack of alignment between employee healthcare needs and the benefits packages offered. If benefits plans are too rich, it can cause undue waste of business resources.
At the same time, however, shortfalls in coverage can be financially and personally devastating to employees. That’s why tailoring your benefit offerings to employee needs is crucial to hitting the sweet spot of comprehensive coverage and well-scaled costs.
Analyzing employee healthcare usage data, available through your carrier, can be extremely useful in this diagnostic work. Only when you know what your employees truly need can you optimize your offerings.
The Affordable Care Act presents different challenges to organizations depending on their scale, with specific regulations based on employee headcount. Many growing or early-stage businesses break into different tiers as they develop, and without proactive management, that can lead to accidental non-compliance.
Knowing the ACA inside and out is a must for any employee benefits specialist, and it’s also important to allocate co-planning time between HR and finance to discuss how employee benefits programs will need to grow to account for regulations as the business progresses.
If you don’t understand what the ACA demands of your business, engage a compliance partner to help you navigate these complex issues.
The Rising Relevance of Mental Health
Our shared cultural understanding of health and well-being have shifted a great deal in recent years, and simply taking care of employees’ bodies is no longer enough. Mental wellness is just as important to success at work and away from the office as our traditional understanding of physical health and therefore must assume its proper place as a cornerstone of your overall employee benefits strategy.
There are many businesses out there today who are failing to provide their employees with an affordable and accessible framework to get the therapy and medication they need, and businesses are often unaware this gap exists. Across the industry, support for mental health must catch up to awareness.
Due to decades of stigma and denial, even talking about mental health at work can be challenging at first, but in the 2020s, the businesses with the strongest approach to mental health will be the ones with the highest-performing teams.
Overreliance on Narrow Networks
A decade or so ago, benefits were trending toward narrow networks, with the thought being that both patients and their employers could save more money by staying relatively local and working with a tighter healthcare team. In reality, narrow networks provide the most benefit to the professionals who are doing the billing, not the paying, by ensuring a steady patient flow.
Narrow networks can be a nightmare for new employees who have existing relationships with out-of-network doctors or team members who get life-changing diagnoses and want to pursue all options. They also prevent patients from price shopping, which means you and your employees are stuck paying whatever the in-network provider dictates, even if it’s not the best deal.
Legacy narrow network healthcare is an underappreciated obstacle to talent recruitment and retention, especially for organizations targeting a younger or more diverse talent pool.
Offering a Qualified HDHP, but Not an HSA Strategy
High-Deductible Health Plans are always a great option for young or single employees who do not require much coverage, and they also provide tremendous savings for employers. With that said, however, an HDHP can easily fail an employee who has sudden or unexpected medical needs that transform their medical care into a mountain of debt.
If you offer HDHPs, it’s crucial that you protect your employees by extending a Health Savings Account option. Using the HSA, you can help your employees fill in the gaps in their HDHP coverage and limit their out-of-pocket expenses, while still saving money compared to the price of a lower-deductible plan.
As an employer, you must build benefits and incentives for employees who have helped you out by selecting less expensive coverage options, and the HSA is a best practice for returning that value back.
Educating the Workforce on Benefits
As we said earlier, one of the biggest areas of unnecessary spend for many businesses is unused benefits. The root cause of that disuse is often a lack of awareness, either because employees don’t know the benefits exist or they don’t know understand how they would benefit from them.
Additionally, millions of workers who don’t know which benefit package is right for them unwittingly set themselves and their employers up for failure every year. As a proactive business leader, it’s your job to give your team members the knowledge and tools they need to help themselves (and you) when it comes to benefit elections.
Employee education is fundamental to any organization getting benefits right at scale. Finding the right approach requires thinking like a teacher and having a clear vision of what an optimized system will look like.
Out-of-Date Dental and Vision Plans
People used to think dental and vision were “the easy part” of employee benefits, but as technology has improved both fields, new approaches have been innovated and care has gotten more expensive. For many businesses with a legacy approach to benefits, their dental and vision plans are simply out-of-step with the times.
Dental plans need to account for new approaches like implant dentistry and cover a wider range of surgical procedures to make great dentistry accessible to more people. Similarly, vision plans must account for corrective laser procedures, innovative cataract removals, and so on.
Accessibility to dental and vision care greatly impact employees’ and their families’ long-term health and well-being. If your insurance offerings only cover procedures that were common in the ‘90s, you should look at revising your plan.
Benefits Administration and Integration with Payroll & HRIS
As we all know, HR professionals balance an incredible number of responsibilities, both human and administrative. One of the things that makes those day-to-day tasks so frustrating is the lack of integration between the tools they require to do their work.
For example, some HR professionals utilize an HRIS to archive employee data, an HCM for people management, a benefits administration system, and a payroll portal for financial transactions. Without backend integration between these apps and tools, professionals have to do a great deal of repeat data entry, leading to lost productivity and potentially costly transposition errors.
In order to run an efficient HR department that can manage benefits and other concerns in a daily, proactive manner, every organization needs to move towards a single integrated system for employee benefits, payroll, human capital management, and beyond.
Managing Short-Term Disability and FMLA
Disability and Family and Medical Leave provide a crucial safety net for all workers. However, as an employer, you have a variety of obligations and responsibilities when an employee applies for leave.
Too many organizations lack clear procedures for leave application and approval, leaving themselves open to strained relationships with employees and potentially costly lawsuits. The more proactive you can be in laying out policy for giving employees the family or recovery time they need while maintaining internal productivity, the better a support you can be for your team members and your organization as a whole.
Each business should have a clear approach to the leave application process, transparent approval criteria, and an established re-entry plan for employees when their leave is over.
Finding Alternative Funding Strategies
As our first ten challenges have illustrated, providing strong employee benefits is increasingly about flexibility and scale. The best programs are the ones tailored to the specific needs of your employees with maximum value and accessibility in mind.
With that said, it can be tough to achieve that bespoke feel with a traditional fully-funded health insurance program. The total freedom of self-funding might not be possible for all businesses, but there are a variety of new and innovative ways you can connect with alternative funding to build something more personalized.
If you’re intrigued about changing your funding model to create a more open-ended, employee-centric approach to healthcare, talk to your leadership team and benefits broker about exploring new possibilities.