The year 2020 has shaped up to be one of the most challenging times for human resources professionals in small and midsize businesses. The COVID-19 pandemic continues to impact the way we do business as well as how we support the changing needs of our workforce. From layoffs and furloughs to seismic shifts in where work is done and what it means to maintain a safe workplace continue to present challenges for business owners and HR professionals.
As we approach open enrollment season, both employers and employees are taking a closer look at workplace benefits offerings in light of COVID-19. Further, benefits experts and industry analysts have issued predictions about 2021 healthcare costs. In a survey conducted earlier this year, 4 in 10 employers said the COVID-19 pandemic has affected their view of the importance of benefits. And 25% of employers said COVID-19 has made them more interested in making changes to their company’s insurance benefit programs within the next 18 months.
Learn how COVID-19 has impacted healthcare costs in 2020 and how experts believe it will affect healthcare spending in 2021. Consider how the pandemic has affected the needs of your employees and how adding or expanding voluntary benefits programs can help. As you continue your 2021 benefit planning, get these three tips for working with a benefits broker to optimize benefits while controlling costs.
COVID-19’s impact on healthcare costs in 2020
According to a recent report by Willis Towers Watson, it’s likely that 2020 will be the first time that national health care expenditure will be lower than the preceding year due to many people forgoing or deferring elective care. Despite the unexpected and increasing costs of coronavirus testing and treatment, those costs have been more than offset by significant reductions in healthcare utilization across other service categories.
Even though many employers are experiencing short-term gains in terms of health plan spending, employers need to be ready for changes in 2021. In fact, many experts predict an increase in demand for delayed procedures and continuing COVD-19-related care to “drive health care costs higher next year”.
Where health care costs could increase in 2021
A June 2020 survey conducted by benefits consulting firm Mercer found that nearly half of employers are still considering the possibility of adjusting benefits for 2021. Mercer predicts a 2021 employer health care cost growth of about 4.4%. According to the survey, some of the most common changes companies are considering include:
Adding or expanding virtual or telehealth programs (32%)
Enhancing mental health support including employee assistance programs or additional services (25%)
Share more costs with employees (20%)
Adding or expanding voluntary benefits to fill gaps in employee needs (16.5%)
Improving management of high-cost claims, such as specialty pharmacy (13.5%)
In its own report, consulting firm PricewaterhouseCoopers predicts that healthcare costs will rise by 4-10% in 2021 due to COVID-19. Specifically, PwC identifies the following as healthcare cost inflators—increased mental health utilization and new specialty drugs and expanding indications for those treatments.
The reports from Mercer, PwC, and Willis Towers Watson all agree that despite the drop in healthcare spending during the first half of 2020, employers can expect spending to increase for 2021 as the demand for care returns.
How benefits brokers can help HR optimize benefits, control costs
Employers can implement a number of strategies to make the most of their employee benefit program investment. To optimize your 2021 benefits portfolio, it’s important to maximize workforce needs and outcomes against your budget. For example, many employers had already begun to expand access to mental healthcare prior to COVID-19—as the pandemic continues, it will be important to continue to prioritize access to mental healthcare. How can HR deliver on this priority and ensure the business is providing access to the best care at a reasonable price?
Many short-staffed and overwhelmed HR departments are increasingly seeking the help of small group employee benefits brokers to optimize return on investment. Brokers can act as an extension of your department to help you choose the offerings that best meet the needs of your workforce.
As the costs of health insurance and other benefits continue to increase every year, 66% of brokers say that employers rely on them to control healthcare costs and make cost-conscious choices. Additionally, HR staff can leverage other services that brokers provide to enhance communication about benefits, increase participation, and educate employees about care options including voluntary benefits.
3 tips for working with benefits brokers
There’s no question employers are facing numerous challenges, including the impact of COVID-19 on how and where employees work, employee wellbeing and mental health, and future healthcare costs. To optimize benefits and control costs, here are some tips to get the most out of your relationship with your small group employee benefits broker and improve your open enrollment process:
1. Ask for guidance, seek expertise. Think of your broker as an extension of your workforce. As a valued consultant, leverage your broker’s knowledge and expertise about benefit trends, compliance, and building a benefits package that best meets the needs of your workforce.
2. Enhance communications, utilize a variety of channels. Benefit communications are more important now than ever before. More employees are working remotely which means that most open enrollment
communication will be delivered electronically. Seek assistance from your broker to create and deliver effective communications like videos or webinars to fully explain each benefit offering and guide employees to make the best choices for themselves and their eligible dependents.
3. Expand offering of voluntary benefits. Many employers are planning to add or expand voluntary benefits offerings to help employees through these difficult times. Your broker can help you identify gaps in your existing portfolio and make suggestions about voluntary options such as critical illness coverage. However, be sure to talk to your broker about the best ways to educate employees about the offered coverage so employees aren’t caught off guard by the fine print.
Take care of your workforce
Benefits selection, open enrollment, and compliance management are time-consuming tasks—but they’re also critical components to ensuring employee wellbeing and business success. Benefits administration tools and help from outsourced benefits brokers help you gain control of information, programs, communication, and costs. Asure provides software and services that help businesses optimize benefits and control costs.