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There’s never been a more exciting time to be in the employee benefits industry. Big changes are being driven by regulation, changing employee needs, and the economy. Our six predictions for 2016 highlight what we see on the horizon in terms of forward-thinking benefits design and communication.
1. More focus on benefits
The changing health care landscape has put benefits under the magnifying glass since the Affordable Care Act passed in 2010. But other forces will keep benefits in the spotlight in 2016 and beyond.
The employee-employer relationship is being redefined. As traditional ideas about work evolve, employees want more from their companies. In particular, younger workers want to know that their employer genuinely cares for them. And, all workers are seeking a greater sense of purpose.
A key way for companies to demonstrate they care is through the health, financial, and time away benefits, as well as the extra perks they offer employees. That’s why “Focus on delivering benefits that fit” was one of the leadership lessons of 2015 in a recent Forbes article. Our client, Intuit Benefits Manager Sarah Lecuna, is quoted in the piece, and she offers this insight: “We think about: How do we make our employees’ lives easier, or better, or both? That means we offer programs that enable them to be present while they’re at work. We want them to bring their whole selves to work, and not have to worry about things we can solve for them.”
Benefits connect deeply with employees’ desire for a sense of purpose at work. But what defines purpose? A desire for self-expression, working for a company you can be proud of, the ability to make an impact, and opportunities for continued learning and growth are some examples of ways employees feel that sense of purpose. Community-building wellness programs, onsite amenities, time off (for yourself and to volunteer), and benefits tools and resources that help employees focus their energy on work (not figuring out their health plan) all elevate and reinforce purpose-focused work.
The plus side: With low wage growth expected for 2016, emphasizing the value of benefits is the smart move to keep top talent. Smart companies will allocate more resources—people and budget—to connecting benefits to the employee value proposition.
The downside: Most benefits teams are resource strapped and will be asked to do more with less.
2. One size fits one
Driven by the growing diversification of the workforce—in age, income, family situation, and needs—benefits programs will become more niche, allowing employees to engage with programs perfectly tailored to them. A recent college graduate doesn’t have the same health and financial needs as an employee nearing retirement. But they do share one thing: Both need to find and use programs that resonate with them.
Wellness programs will evolve from one-size-fits-all programs, with a heavy emphasis on biometric screenings and health assessments, to a mix of programs and rewards so employees can “choose their own” adventure. Instead of dictating one path, wellness programs will begin to allow employees to choose a health concern to focus on—sleep, stress, weight, etc.—then lay down a path for them to earn the reward. For example, if sleep is the issue, actions to earn the reward could be: keep a sleep log; engage with a sleep app; and talk to a counselor about sleep habits and how to improve them once a quarter.
This follows key principles of bespoke—or made-to-order—design, originally taken from the fashion world. Elements to experiment with include the programs themselves, price points for rewards, reward options, time to completion, and activities to complete. However, we know too many choices can be overwhelming and will be a barrier to action. Balancing choice and simplicity will be the key to making programs a success.
The plus side: Employees will value programs more—and be more likely to participate—when you give them programs and incentives that match with their own priorities and goals. And, because you’ll be pulling on intrinsic motivation, you’ll be able to spend less on incentives to get the same level of participation.
The downside: Increasingly savvy vendors and technology will do their best to automate administration, but the challenge of vendor coordination and ongoing communication will continue to tax benefits teams.
3. Benefits meet product marketing
More focus on benefits to meet the needs of a diverse workforce will set the bar higher and higher for benefits teams. Benefits teams will view their programs through the lens of a product marketer to stay competitive and relevant.
Benefits cannot provide a significant return on investment—or create good health and financial outcomes—unless employees actually use them. As employers shift their focus to offering new programs that employees want and need, they will need to become more sophisticated with design and marketing.
Employers will start to treat employees like consumers and benefits communication like product marketing. Savvy employers (we are lucky to have many of them as clients) already do this. We’ll see more user research, more segmentation, more targeting, and more opportunities for opt-in marketing. After all, employers have data at their fingertips that marketers would kill for—a huge advantage when creating programs that solve employee and business challenges.
Keep in mind, employees across all demographics already trust and want employers’ help with health and finances. A 2015 study by TIAA-CREF found that 81% of workers trust financial information provided by employers. Building on this foundation of trust will put employers in a position to truly help solve some of their employees’ most stressful and important challenges. We should see that foundation of trust—and the opportunity to create good outcomes—as a calling. There is no one else who has more access, more influence, and more ability to create positive health and financial outcomes for Americans.
The plus side: Using data and marketing strategies means better programs, better engagement, and better outcomes.
The downside: Most employers don’t currently invest enough in communications and will have a hard time allocating the budget and resources needed to make this change. For companies just starting, investing in a benefits website outside of the firewall and year-round communications will be the first steps.
4. Health care will continue to be sexy—and messy
Health care has seen an explosion of apps and companies tackling a wide breadth of topics, from electronic health records and price transparency tools to services that bring the doctor into your home and genomics. Venture capitalists continue to invest massive dollars in these players, many of whom see employers as a fast way to monetize their products. Increased vendor participation and employer attendance at conferences such as Health 2.0 (the 2015 fall conference was the largest event to date) underscore the demand, interest, and opportunity.
Employers are already integrating these services into their offerings, as the on-demand economy makes its way to health care. Telemedicine, such as American Well and Doctor on Demand, are growing quickly as a convenient service at a lower price point than an in-person doctor visit. Previously taboo subjects such as sleep and mental health have become less intimidating with consumer-focused technology, such as Sleepio (for sleep) and Spire (for mindfulness). Many of these will be integrated into wellness programs.
Bringing health care into the office will become more and more popular as employees look for convenience services at work. Onsite biometric screenings and flu shots were a good start, but we’ll also see increased demand for onsite and nearby health clinics to meet this demand.
The plus side: These products and resources are creating real results!
The downside: Employers will be overwhelmed by the number of health companies vying for their benefits budget. Overpromising their product’s ROI and underestimating implementation complexity will continue to be commonplace for startups. But those who properly integrate with existing systems and the employee experience while carefully complying with regulations will be successful—helping improve health and elevate the value of benefits.
5. Financial wellness comes to the forefront
Employers recognize the reality that for many—if not most—employees, financial stress carries more of a burden than physical ailments. Many Americans live paycheck to paycheck; most have little to no retirement savings; and there’s still a perception that gaining basic financial knowledge is “too hard.” Because financial instability and stress touch all aspects of work and life, including productivity—almost one third of employees report missing work due to financial stress—employers are getting into the financial wellness game.
The plus side: We’ll start to see more defined financial wellness programs as the topic takes a front seat in smart employers’ playbooks. Popular areas of focus include loan consolidation, credit monitoring, automated savings, debt counseling, and more.
The downside: And, just as with the health space, new companies and old providers repositioning themselves as “financial wellness” companies will overwhelm employers with niche programs and big promises.
6. We will (slowly) give up on the idea of consumer health care
While employers continue to push high-deductible health plans, Americans’ health care confidence and health care literacy is not keeping up. As an issue brief from the Employee Benefit Research Institute states, “There is strong evidence workers simply lack the ability to navigate the complex and technical nature of health care.” Other data back that up: Aflac finds that 54% of employees don’t want more control over their health insurance options because those decisions are too daunting.
The promise of high-deductible or “consumer-directed” plans was that the smart and savvy consumer of health care (your employees) would make better decisions and help push market-based pricing. That hasn’t happened, and employees continue to be overwhelmed. This contributes to unnecessary care; in fact, research at Dartmouth College found that up to 30% of health care in the U.S. is unnecessary.
Leading talent-focused employers are already seeing the limitations of this model and will push the “directed consumer” model to the forefront. This means employers will put in place services and resources that will take the stress of decision making out of employees’ hands. We’ll see high-deductible plans paired with high-touch concierge services to bring that personal guidance to health care shopping. And, we will see some employers abandon the high-deductible plan altogether, instead looking to Centers of Excellence, high-touch care models and high-performance provider networks to get their cost savings.
The price transparency players, such as Castlight and Clear Cost, will continue to play a prominent role. And, concierge services such as Accolade and Health Advocate will take off, because they provide a one-on-one experience that employees crave. The work of industry leaders like PBGH and startups such as Carrum Health will bring the Centers of Excellence model to more employers.
The plus side: Real progress and perhaps better financial results for individuals and companies. Employees want—and need—more guidance in their health care decisions. They will soon get it!
The downside: As an industry, we don’t shift very fast. While early adopters are well into this strategy, it will take a long time for others to catch up. In the meantime, they will continue to see the unintended consequences of high-deductible plans.
So, what won’t change?
Communications will still be a differentiator when it comes to employee benefits. We know that effective communication is the difference between benefits that are used, appreciated, and valued—and those that are not. However, most companies will continue to underinvest and focus on compliance instead of employee engagement in their communications efforts. Those who do communications the right way will see a competitive advantage and a long-term impact—in hiring, engagement, and productivity.
Thinking about how to get the most from your benefits strategy in 2016? We’d love to help you take your communications to the next level. Contact us to set up a time to chat.