How corporations are tackling rising healthcare costs and financial strain caused by inflation
Amidst a tight labour market, businesses are taking proactive measures to manage healthcare expenses and alleviate financial pressure on employees, a new report from Goldman Sachs Ayco reveals. The ‘2023 Benefits & Compensation Trends in Corporate America’ report highlights the strategies adopted by companies to address these challenges.
“The persistence of higher-than-expected inflation has created significant financial challenges for the U.S. workforce,” said Kathy Barber, vice-president and head of corporate benefits and compensation at Goldman Sachs Ayco, as quoted in PLANSPONSOR. “Forward-thinking companies want to help their employees navigate these challenges, leading many to enhance the suite of benefits they offer.”
One significant finding is the projected 7.4% increase in average health benefit costs per employee in 2023, a detail highlighted in the 2023 Segal Health Plan Cost Trend Survey Report.
While shifts in medical plan carriers “isn’t something we see often”, the report notes that 10% of plan sponsors actively sought better rates by exploring alternative medical plan carriers. Additionally, 40% of companies absorbed the heightened costs associated with average health benefits per employee for 2023.
The report underscores the popularity of high-deductible health plans (HDHPs), with 32% of companies offering HDHPs alongside other medical plans. Conversely, 16% exclusively provide HDHPs, while 73% combine traditional plans with HDHPs.
Complementary to HDHPs, health savings accounts offer employees triple tax benefits, investment opportunities, and flexibility in covering medical expenses. Eighty-seven percent of employers demonstrated support by contributing over $500 to employees' HSAs to help offset inflationary challenges. Twenty-two percent adopted matching formulas and wellness incentives to promote greater utilization of HSAs.
“By actively addressing premiums, and providing additional voluntary benefits focused on helping employees control costs, employers can create positive, real-time, bottom-line impacts,” Barber said.
The report also found emerging benefit trends:
1. Child and elder care assistance programs surged by 177% over three years, with 55% of companies now offering them.
2. Pet insurance witnessed a 120% increase in popularity.
3. Access to fertility, adoption, and surrogacy benefits expanded, with 60% of companies providing adoption and surrogacy reimbursements, often up to $10,000.
Mental health benefits saw widespread adoption, provided by 95% of employers, an increase from 90% in 2022, in adherence to Department of Labor regulations.
“While mental health has been a top benefit offering for many years, it was not talked about all that much,” Barber said. “In the last enrollment season, it was very encouraging to find more companies featuring these benefits in their enrollment guides. It has become a priority as more companies explore how to incorporate mental health initiatives into their corporate cultures.”
Goldman Sachs Ayco reports that voluntary benefits, like mental health support, are being used as competitive differentiators by companies. Following mental health services, common voluntary and ancillary benefits offered by Goldman Sachs Ayco clients include group legal plans (73%), personal accident insurance (69%), critical illness insurance (68%), identity theft protection (62%), and pet insurance (58%).
