Eight Benefit Trends (from SHRM, PayChex, Forbes and Mercer)

1. GLP-1 Drug Coverage Decisions

GLP-1 drugs such as Ozempic and Wegovy, which are used to treat type 2 diabetes, drew attention as a weight loss tool in 2023 and quickly became in demand among employees. As a result, employers began considering whether to cover them for that purpose. That conversation will only intensify in 2024, experts said.

Some evidence points to more employers covering the medications: An October survey of 500 employers by health care firm Accolade found that 43 percent of employers plan to cover GLP-1 drugs in 2024—nearly double the share of employers that covered them last fall.

The anticipated spike is likely the result of high interest among employees, as well as potential boons to employers in terms of healthier workers. Providing access to the medications could also be a recruitment and retention tool, said Dr. James Wantuck, associate chief medical officer at Accolade.

Prescription drugs remained a cost driver for employers in 2022, with cost for prescription drugs rising 6.8%, or nearly twice as fast as overall health benefit costs. This is largely due to growth in cost for specialty drugs, such as those used to treat complex medical conditions like cancer and autoimmune disorders. Large employers reported that spending on specialty drugs rose by nearly 10% in 2022, and still higher increases are expected as more breakthrough gene and cellular therapies enter the market, with the FDA estimating that by 2025 it will be approving 10 to 20 gene and cell therapy products per year.

The off-label use of Ozempic and similar drugs for weight loss has become something of a cultural phenomenon. With growing awareness of this in the general population, many plan sponsors are taking some action to manage off-label use — 40% of all large employers, and 52% of those with 5,000 or more employees.

One reason some employers have hesitated to manage these GLP-1 drugs more aggressively is the potential impact on rebates from the drug manufacturer. Additionally, they have been concerned with patient disruption if all claims were to require prior authorization. But as vendors have introduced more “smart” prior authorization options, which allow patients to bypass the prior authorization if their history illustrates they are truly diabetic (and with less impact on rebates for the class), employers may now feel more comfortable with higher levels of management

2. More Financial Health Offerings

That means financial health will become a bigger priority for employers in 2024, experts predict.

Business leaders increasingly understand the importance employees place on their professional development and ability to grow within an organization. This may be especially true for Gen Z, the only generational group growing within the small business employment sector, which is often looking for ways to take their skills to the next level, according to a 2023 special report from Paychex.

To better meet the needs and expectations of all your employees and remain competitive, reskilling your employees for a new role or upskilling your employees to help them perform better can be especially meaningful. This could include offering learning and development opportunities, job rotations, job expansions, and peer coaching. Employees who feel that their company is interested in their personal growth and development may feel more inclined to stay. Having a clear vision for their professional development can also facilitate a deeper purpose when it comes to working and staying committed to their job.

Employee benefits trends that help workers address monetary concerns will continue to be popular in 2024. Financial security, or a lack thereof, certainly contributed to the anxiety many Americans experienced during the pandemic. Since then, inflation rates and ongoing uncertainty around a recession have continued to burden those struggling financially. As a result, prioritizing financial goals to improve financial wellness continues to receive much-needed attention from workers and their employers.

Retirement plans with a company match, student loan and debt repayment programs, and financial wellness resources that can help employees work toward financial security may be attractive for employees, regardless of age or financial situation.

Our data on professional development opportunities highlight similar preferences among all generational cohorts. Topping the list is access to learning management systems, emphasizing the shift towards a preference for digital learning environments.

Next on the list? Company-wide training from various departments, which underlines the importance of interdepartmental knowledge sharing. Stipends for continued learning, performance reviews and manager training also rank high, spotlighting the value employees place on both individual growth and effective leadership.

Employers are providing other forms of support to address financial wellness. Free or subsidized meals at work are offered by 21%, and employer-provided or subsidized transportation (such as a commuter card is provided by 18%; both of these benefits may also serve to encourage employees to work onsite. At the same time, employers are also assisting those working remotely by subsidizing phone and/or internet costs (21%) or providing a stipend for setting up and maintaining a home office (19%.)

Student loans can be a major financial burden, and 12% of employers will contribute to loan repayment, while 14% provide refinancing assistance.

A small but growing number of employers are offering “lifestyle accounts” to help employees to afford non- essential — but life-enhancing — pursuits such as hobbies, well-being activities, or adventure; 13% of employers now offer a lifestyle account, up slightly from 12% last year.

3. Mental Health Focus

Mental health has been a big focus of organizations for the past few years, and that will likely continue in the coming year. In fact, it may be a bigger emphasis due to rising rates of employee burnout and the looming presidential election, which may lead to greater employee angst and stress.

Expect organizations to increasingly tout available resources for employees, as well as consider new benefit offerings such as mental health days and mental health apps.

Employee well-being is no longer just a buzzword: It’s a tangible metric with significant implications on productivity and retention. Our data underscores the importance workers place on mental health resources, with 62% of employees identifying access to these resources as being key to their overall job satisfaction.

Workers’ emotional landscape provides further support for this sentiment, emphasizing the need for organizational focus on responsive mental health initiatives:

• 34% feel underappreciated
• 36% experience stress
• 26% grapple with anxiety
• 20% report burnout

The consensus is clear across most cohorts: Insurance coverage for mental health services is the most important mental health benefit. The exception? Baby Boomers, who place a higher value on having dedicated office spaces reserved for mental health processing.

Another interesting generational insight from our data: Wellness reimbursements and mental health workshops follow close on the heels of insurance coverage to round out Gen Z’s top three list of mental health resources—placing a spotlight on this youngest cohort’s proactive approach to mental well-being.

These days, employee benefits geared toward health and well-being go well beyond a health insurance plan. Consider that as many as 2 in 5 employees are experiencing some combination of mental health concerns, performance issues, and stress. Findings from the Centers for Disease Control (CDC) link depression to an increased risk for many physical health problems, especially chronic conditions like diabetes, heart disease, and stroke. The CDC also points out that the presence of such conditions can increase the risk of mental illness. It becomes an escalating feedback loop with dire consequences for those caught in it.

The interconnectedness between physical health, mental well-being, and even financial wellness provides an opportunity for employers to offer total health benefits that foster an emotionally, socially, and financially fit workforce. It also makes sense from a hiring and recruiting perspective since 60% of employees recently surveyed by Paychex said that mental health benefits will factor into selecting their next job. This may be particularly true among Generation Z workers, who cited mental health benefits as the top benefit (other than higher pay) that would make them stay at a company long-term, according to a 2022 Paychex survey.

One of the current trends in employee benefits is providing health insurance plans paired with services that encourage healthful behaviors such as good sleep hygiene, regular physical movement, smoking cessation, and addiction treatments. These benefits can go a long way in helping improve an employee’s mental health and empowering them to live a happier, more fulfilling life.

Consider also offering support resources such as employee assistance programs (EAPs), comprehensive biometrics and lifestyle education programs, online resources, behavioral health education programs, and suicide awareness training for managers.

US employers are well aware of the mental health challenges affecting their workers as we emerge from the long crisis of the pandemic into an uncertain economy, high inflation, escalating climate events, social discord at home and war in Europe. The level of job-related stress, depression/anxiety, and financial stress among workers are each considered a concern or serious concern by a majority of employers.

About a third of employers say alcohol use is a concern or serious concern, and opioid or other substance use disorders are a concern or serious concern for about a fourth.

The survey found that many employers have recently assessed or plan to assess the mental health needs of their unique populations. A quarter of employers are conducting employee surveys or hosting focus groups to gather this type of information. While some employers may use internal HR resources for this type of information gathering, others use a more formal process and engage an outside resource to facilitate it.

About a fourth learn about mental health needs on health assessments.

Importantly, 44% are conducting claims analyses to better understand what services employees are using, how they’re using them, and for what reasons. This type of analysis can both provide an indication of the behavioral health issues in the population and identify gaps in benefit utilization across different employee segments, helping to inform future strategy.

4. Controlling Health Care Costs

Organizations are bracing for higher health care costs in 2024.

Employers may take different approaches to do so, from offering integrated wellness programs and telemedicine options to requiring prior authorization.

Some will investigate value-based care by rolling out centers of excellence or additional network tiers. Some will try reference-based pricing, while others will implement stricter controls on prescription drugs. There is no one right answer, and each year seems to bring a new potential solution.

A healthy workforce is the foundation of productivity, creativity, and a positive work culture. Yet the rising cost of healthcare, along with finding time to get treatment during a demanding work schedule, can be an obstacle for employees to seek the care they need. The problem is that care deferred to a later date can mean increased claims down the road. And it’s not just about treating a condition. Access to preventative care is equally important. Employers who actively make health care more affordable and accessible are sending the message that they care about their employees as people.

There are several strategies that employers can use to improve healthcare affordability. In addition to a robust healthcare plan, providing employee health benefit accounts can maximize opportunities for employees to save on their healthcare expenses. Health benefit accounts also offer cost savings to you by helping you reduce your tax bill and controlling healthcare costs today and into the future.

One survey asked about three ways to boost healthcare affordability. One is by lowering the cost of coverage to help employees keep more of their paychecks. Some employers (15%) are offering free employee-only coverage in at least one medical plan, up from 11% in last year’s survey. Others are tying the paycheck deduction to income levels. The use of salary-based contributions rose just slightly from 17% to 18% among all large employers, but from 29% to 34% of employers with 20,000 or more employees (this finding is from the National Survey of Employer- Sponsored Health Plans 2022).

Another way to address affordability is to ease financial barriers to seeking care. High deductibles can be hard for those with little savings or chronic health conditions. Well over a third of employers offer a plan with little cost sharing when care is needed, such as a co-pay based plan.

Finally, to make a high-deductible plan more manageable, some employers are providing larger HSA contributions to employees who earn less.

5. Personalized Benefits

Depending on your workforce, a one-size-fits-all benefits package may not yield the value for your employees that you are hoping to provide. As employees place higher priority on benefits (aside from pay), they will gravitate to those employers who are actively seeking ways to meet their needs. Personalized benefits are one way to give your employees a choice in constructing a customized benefits package. When employees can pick and customize benefits according to their needs, it may encourage participation in benefits plans and offer a better return on their benefits investment.

What do personalized benefits look like? They could be an array of voluntary benefits, which are goods or services that are either fully or partially paid for by the employee but at a group discounted rate made available by the employer. Examples typically include ancillary benefits outside traditional benefits, such as ID theft protection, financial counseling, healthy lifestyle programs, public transportation passes, and supplemental insurance packages such as life, cancer, and pet coverage. Employers then may provide a monthly or annual expense allowance that employees use to offset their costs for these voluntary benefits. You can even set up a reimbursement plan to help with medical expenses, remote work costs, or other perks that support your employees.

This means a market for ICHRAs and QSEHRAs.

6. Support for Onsite, Hybrid, and Flex Work Environments

While the pandemic shifted many employees to remote work, many employees have now returned to the office either partially or fully. The degree to which you support workers’ full-time return to the office, hybrid setup, or flex schedule may play an important role in your ability to retain employees. For example, consistently enforcing policies for both onsite and offsite employees can help your workforce get on board with these policies. Offering flexible work schedules, job sharing, or abbreviated work hours to onsite employees can also be an attractive benefit.

Employers may also want to think about ways to improve employees’ physical in-office spaces. The work environment can play an important role in employee well-being and, consequently, overall performance and happiness. A comfortable physical work environment, designated areas for collaborative work, and access to a quiet workspace are just a few ways to help employees remain focused and engaged when they return to the office.

Unlimited or untracked PTO — a vacation or PTO policy without a fixed annual accrual or allowance — has seen wider adoption over the past few years. Prior to the pandemic, while many employers may have considered unlimited PTO, actual implementations were relatively rare. But the need for options and flexibility during the pandemic, as well as greater focus on liabilities for accrued but unused PTO, seems to have inspired a number of employers to try this approach. Of the employers responding to the survey, about a fourth — 27% — offer unlimited PTO to at least some employees, although only 6% offer it to all employees. It seems that this policy is continuing to slowly gain traction even in the post-pandemic era: In Mercer’s 2021 Absence and Disability Management Survey, 22% of large employer respondents offered unlimited PTO to some employees, which was an increase from 15% in 2018.

In the 2021 survey, the majority of employers with unlimited PTO policies (72% ) reported that the amount of time off employees took was the same as it was under their prior accrued policy. It will be interesting to see how that statistic changes in the future. When employers adopt unlimited PTO for the first time, there is some “muscle memory” that leads employees to take a similar amount of time off after implementation as they did before. But as employers move further away from implementation and new hires make up a larger portion of the population, that muscle memory fades. To ensure proper usage of unlimited PTO, employers need to invest in tools and training to set expectations, including providing general guidelines for how much paid time off employees are expected to take. One innovative strategy to prevent time-off usage from dropping too much is to actually provide cash incentives to employees when they take a vacation under the unlimited PTO policy (e.g., a $500 cash bonus after the employee takes a full week off).

7. Family-Friendly Benefits

Between daycare, healthcare, and enrichment programs, raising a child or caring for an elderly dependent represents a substantial financial burden. Add to this the reality that many parents are working full-time, resulting in employees who are burned out, stressed out, and exhausted. Employers are recognizing that expanding family-friendly benefits beyond what is required by federal law is a significant trend that helps safeguard their employees’ physical and mental health.

Employers can extend family-friendly benefits through paid parental leave, paid adoption leave, and surrogacy benefits. A dependent care flexible spending account (DCFSA) can help ease the burden of daycare or other ancillary care costs. Specialized benefits that support women’s reproductive health, which can range from family planning and high-risk pregnancies to infertility treatment and menopause, are also gaining traction in the employee benefits space.

The pandemic heightened our awareness of the difficulties employees face when they juggle work and caregiving responsibilities. But support for caregiving is a chronic rather than an acute need. Employers can help support caregivers for the long-term with flexibility at work (flexing when and how work gets done) and flexibility from work (leave and time-off policies). Another meaningful way to show support is with caregiving benefits such as subsidized care or resources. Among very large employers (those with 5,000 or more employees), 37% provide access to backup childcare services, 16% help subsidize childcare and 10% provide onsite childcare.

While we’ve seen a clear trend towards adding parental leave, it’s less common for employers to provide caregiving support which means this is an opportunity for employers to differentiate their offerings. Caregiver support can be especially valuable to less-advantaged segments of the workforce, and can support efforts to broaden an organization’s diversity, equity and inclusion strategy. Where once employers may have been concerned about providing “special treatment” for caregivers, today leading employers see enhanced support for caregivers as key to recruiting and retaining the talent they need.

8. Diversity, Equity, and Inclusion (DEI)

While perhaps not a direct benefit in the traditional sense, today’s diverse workforce may naturally gravitate to those organizations that are taking thoughtful actions toward creating an inclusive and equitable work environment. A company that prioritizes DEI initiatives, looks to foster a work environment that feels safe for sharing ideas and expressing creativity, along with a more significant opportunity to gain access to training, mentorship, and upward career growth.

Employers who fail to recognize DEI as one of the trends in employee benefits may risk losing talented new hires who could bring valuable and much-needed alternative perspectives and ideas to the business. The 2023 Paychex Pulse of HR Survey found this true for employees across generations. HR leaders surveyed said they are responding in the following ways:

• To attract Gen Z, companies with 100 to 499 employees say they focus on communicating their commitment to diversity.
• To attract Millennials, businesses with 100 to 499 employees say they focus on communicating pay equity, while those with 500 or more employees say they focus on speaking about their inclusion efforts.
• To attract Gen X, companies with 500 or more employees say they focus on communicating about their inclusion efforts, pay equity, and pay increases.

There are tangible steps you can take within your business to demonstrate your commitment to DEI practices. These might include vetting your recruitment and hiring strategies, providing DEI training classes for management, and providing holidays, benefits, and acknowledgments that support different sexual orientations, religious and cultural backgrounds, and marginalized communities.

An important aspect of job satisfaction and trust revolves around initiatives that workers believe their employers genuinely prioritize. Our survey data reveals that a people-first culture and work-life balance emerge as the top initiatives employees across all generations perceive their workplaces are genuinely committed to.

There are generational nuances, though: For example, Gen Z views pay equity as a priority for their employers, while Millennials report a stronger workplace emphasis on diversity, equity and inclusion (DEI) programs.

Across the board, however, team recognition programs appear to hold the least weight, with employees in all cohorts agreeing that this initiative receives the least commitment from their employers.

Survey results suggest that employers are focused on health equity and ensuring that benefit programs help support larger DEI goals. Over three- fourths of employers are currently taking action to build a more equitable benefit program. About a fourth are collecting information on race, gender identity, or other demographics to facilitate equity analyses. Two-fifths provide advanced search functions that allow members to identify health providers they will feel comfortable with — an important step in addressing health disparities for racial and ethnic groups. Providing multilingual benefit communications is key to ensuring all employees understand and can access benefit offerings.

About two-fifths of employers have taken steps to provide equitable family- building benefits that support all kinds of families. These might include covering fertility treatment without requiring that a woman meet the clinical definition of infertile, or helping to cover surrogacy expenses.

Also of note is that 23% of employers now provide coverage for doulas, midwives, birthing centers or other alternatives. While all women can take advantage of this expanded coverage, these birthing alternatives are seen as a way to improve maternal outcomes for Black women, who have much higher maternal mortality rates than white women.