It’s time to correct traditional social benefits

Traditional benefit sets are woefully outdated, and now is the time for growers to reinvent what that landscape should look like to help their customers achieve better results.

Consider, for example, that health insurance costs have increased by 50% over the past 10 years, while employee contributions have increased by 71% and deductibles have increased by 150%, according to the Kaiser Family Foundation. Government research shows that these increases have had an impact on those who can least afford it: Workers in the bottom quartile in the South have seen their wages drop to as much as $ 2,352 during this period, with cost increases. health insurance to compensate for wage increases.

And now we are in 2021, when Bankrate reports that 58% of Americans don’t have $ 1,000 in the bank. An annual deductible of $ 3,000 for a 27-year-old is hardly a health benefit. Maybe employers shouldn’t measure their benefits by what they provide, but how much do they charge employees to participate?

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Think of it this way: if an employer were to give everyone an automobile as a perk, would they prefer a $ 50,000 Lexus that requires a $ 15,000 contribution, or a free $ 35,000 Ford Taurus? Or better yet, would they rather get $ 35,000 and buy whatever they want?

The current unique nature of today’s programs may not be the best for everyone. A 61-year-old man with heart disease most often has little in common with a 26-year-old triathlete who cannot pay his rent. They don’t drive the same cars, wear the same style of dress, or like the same music – and they certainly don’t need the same perks.

Kaiser found that up to 75% of employer-provided health benefits offered only one type of plan in 2019, while those that offered more than one did so through one. insurer. Imagine if you only had two or three options at one pizzeria in your area. Everyone would complain.

With most 401 (k) plans, employer contributions are provided as a percentage of salary. Yet when it comes to health insurance, employers charge everyone the same. The lowest paid people receive fewer 401 (k) matches due to their lower incomes and actually pay a higher percentage of their salary for health insurance. On average, younger workers are paid less, but incur significantly less health care costs, which means they are subsidizing an older and sicker population.

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But the market recognizes an urgent need to provide more equitable benefits. The federal government has also taken steps to change this paradigm. New laws allow employers to allocate dollars to employees to choose their own health insurance on a pre-tax basis, the first major change in health insurance laws since World War II. In the recent COVID-19 relief bill, employers are allowed to help employees pay off college debt with pre-tax dollars. Emergency funds for employees and loan programs are increasingly common. Amazon offers free college education. Other programs include wellness, nutrition and smoking cessation programs, financial health, bad credit help, and more.

As these new advantages come to market, there are challenges. Your customers don’t have the budget to provide all of these solutions. HR departments that are already short on time do not have the capacity to assess, purchase, communicate and administer such programs. And many programs target only a subset of the population. Meeting the needs of a large employee population is not easy. One positive development is that more and more directors are emerging to help employers deliver these solutions to their employees.

If one of the goals is to provide benefits to attract and retain employees, then employers need to think about the usefulness of their benefit programs for all employees. Former Aetna CEO Mark Bertolini, who has implemented some of the most progressive benefit programs for his employees, said their goal was to help employees be “happy, healthy and economically viable ”. It’s not a bad goal, and one that will likely help employees be more productive.

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While employers have good intentions with their benefits, many programs become less beneficial for most of their workforce. The time to reverse this disturbing trend has arrived. The opportunity to reinvent employee benefits is here. Personalized benefit programs will begin to replace today’s universal programs.

Products and services are available. Technology has made it easier to implement and manage these programs. And new government programs with favorable tax deductions have allowed employers to provide the funds to employees and then opt out. Now your customers just need to unlock the door and let employees step into a whole new world of benefits.


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Richard V. Johnson

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