For more than a decade, employers have been searching for ways to reduce the ever-escalating cost of employee health insurance, while still offering a strong benefits package. By partnering with nontraditional brokers, many employers were making headway; some even began to spend less while offering more-comprehensive benefits. Then came the pandemic, and all bets were off.
COVID-19 pushed two major workforce trends into high gear: remote working and telemedicine. But it also added a new level of uncertainty to workforce management which, employers say, will be reflected in their benefits strategies for 2021 and beyond.
Additionally, the explosion of remote working, which is now here to stay, has undercut the efficacy of cost-containment investments such as on-site clinics, on-site wellness programs, local provider networks, and other investments requiring high utilization in order to pay off. When and if those investments will realize their anticipated ROI is now questionable.
Regardless of whether employers have made on-site/near-site investments or built up a local network, 2021 will be an especially challenging benefits year for many. Any brick-and-mortar health investments could potentially be offset by reduced office space requirements. But other disruptions caused by the massive shift to remote employees have plan sponsors in a quandary about how to prepare for the coming year.
As employers adjust systems and health plans to a rapidly expanding remote workforce, they can also expect changes on the benefits front, including:
- * Experiments in plan design
- * Increased voluntary options
- * Further adoption of telehealth solutions
- * More sponsors offering multiple plans
- * More individual plan customization
- * Greater scrutiny of additional covered lives
- * More co-sharing on drug costs
- * Emphasis on consumerism and health literacy
- * More creative virtual enrollment and feedback tools connecting plan members to HR
All these options are available now, yet none are guaranteed to make the health care spend predictable in the near term. That’s why many employers are engaged in cost-cutting across the board.
The 2020 Benefits Strategy Benchmarking Survey, a Gartner poll of executives, found that many companies are freezing compensation, eliminating bonuses and generally reducing workforce numbers, in part to avoid gutting the benefits plan. But benefits will have to contribute their share to the overall reduction.
“Total rewards have been swept up by a tidal wave of change in 2020 and, like many other aspects of running a business, their future looks different. There’s a good chance that benefits will be shaped more strongly by innovative design, and health care will be driven by value-based care, cost-sharing and consumerism,” the executive summary said.
Gartner predicts an uptick in voluntary benefits; greatly expanded well-being options designed to help employees cope with the isolation of remote work; and increased reliance on telemedicine to ensure employees are using preventative care components of the health plan.
“Tighter management of population health gaps and more specialized support from third-party vendors are also realistic,” the survey says. “Adjusting leave policies, adding voluntary or life insurance options, and emphasizing well-being benefits will continue to give employers the latitude to more easily update total rewards for a custom fit with shifting workforce preferences.”
In other words, employers are battening down the hatches as they wait to see how the post-pandemic world will take shape.
Bridging the distance
Those who invested in on-site and near-site strategies were all about making sure employees had access to preventative health services where the costs were known. The strategy also served another function, providing convenience for employees and encouraging them to take better control of their health.
But remote workers may find themselves working far from the health facilities they once frequented, and distanced from human resources personnel who previously could quickly answer questions about the plan.
Charisse Vaughn, senior vice president of employee benefits at Holmes Murphy, believes this could lead to a breakdown in effective use of health care services in the plan.
“We believe cost-saving strategies will be even more important as workforces become more remote and dispersed, as it will likely become more burdensome on the individual to understand and know about all the offerings available to manage their health,” she says. “Many times, the barrier to engagement with employees utilizing these solutions has been linked to company culture, communication and even health literacy. It will be imperative that organizations prioritize these areas and ensure they have a plan in place to execute effectively.”
One question plan sponsors are asking brokers is, “How do we include remote workers in our plan if they are out of state?” Benefit advisors say there are several fairly simple solutions to that one, and it’s not a concern that should discourage employers from casting a wide net for talent.
“In most markets, the clients have the ability to select a carrier that has a national network of physicians and hospitals,” says Susan L. Combs, president, Combs & Company in New York. “If they will be hiring remotely, we just make sure that they are utilizing a carrier that gives them the ability to cover the employees at their home location and have great access to care.”
Vaughn agrees, adding that, “An employer currently offering health insurance through a regional insurance company would need to consider alternatives or determine whether the regional carrier has a strategic partner to accommodate multi-state enrollment.”
Charting a new course
The pressure is on the broker to help their clients navigate these uncharted benefits waters. Fortunately, a substantial cadre of advisors have left traditional strategies behind. The post-COVID era will put many of their theories to the test as they position themselves as advisors offering innovative solutions.
Taylor Lindsey, with Employee Benefits Consultants in Arlington, Virginia, sees opportunities in 2021 to create benefits packages that work for both sponsors and plan members. But it won’t happen without a bit of risk-taking.
“Our job is to help employers innovate, evolve, and implement solutions that solve problems they are facing or will face,” he says. “The challenge today is that change is happening quickly and without choice. It can be hard to create change, even when it is positive for both the employer and the employees. It comes down to how to educate and bring the ‘what’s in it for me’ to the end-user quickly. Be consistent and appropriate in your messaging, no matter what is happening.”
Uncertainty is the enemy of the plan sponsor, yet that is what they now face. But, says Lindsey, the forced change environment will be good in the long run for those who step back and adapt as they move forward.
“With great change and disruption comes opportunity, if you use the right lens,” he says. A strong advisor can position their firm to continue to provide value in ways the employers have not envisioned before. One key for brokers will be showing the employer where the money already exists in their current benefits plan to fund the emerging plan designs. “Find the money and reinvest in a new plan to make a great impact on our clients’ organizations,” as Taylor puts it.
Opportunity knocks
One potential bright spot out of COVID disruption is that the rapid adoption of telehealth systems could lead to substantial cost savings for plan sponsors.
“The impact of on-site clinical services and programs is challenged when workers are not on site,” says Den Bishop, president, Holmes Murphy. “While a more dispersed workforce creates challenges for onsite programs, COVID-19 has created a seismic shift in the acceptance of technology-based care. Telephonic, web-based, and app-based clinical programs can provide increased access to care for all employees, without regard to physical work location.”
And better access generally translates into better health, which could ultimately reduce claims over time.
Kyle Williams, chief revenue officer at MeMD in Phoenix, saw a powerful shift toward all virtual health and communications systems in 2020. MeMD provides a wide range of teleservices to employers Williams says telesystems are now firmly embedded in both benefits enrollment and in employee health as a result of the pandemic.
COVID finally unleashed the power of telehealth, another major stride forward for employee health and cost containment. Virtual first care usage increased four-fold during the last year, while brick-and-mortar based health systems are struggling to adapt.
For employers, there are many advantages to telehealth: Their employees no longer have to visit a clinic, where they are exposed to multiple health risks in the waiting room and also lose work time commuting to and from the clinic. Employees can also quickly get feedback from their medical team, which will lead to better personal health decisions.
Virtual therapy also exploded as the isolation of the remote worker began to take its toll. “Mental health counseling and substance abuse counseling are perfect for a video conference,” Williams says. “Right now, people need that kind of support. If you as a broker are not presenting these options to your clients, you are doing them, and their plan members, a huge disservice.”
Will the cost-containment gains of the past few years be lost to the virus? Most brokers say the results will vary from industry to industry and even workplace to workplace. And they point out there will be advantages to the remote worker revolution that may not be seen for several years. Better utilization of telemedicine services, an employee population with higher health literacy, and an overall healthier workforce should pay dividends down the road.
“I think certain industries will adapt and thrive,” Lindsey says.”But they were already heading that way and have a solid footing. They had attracted employees who embraced and desired a remote work environment. But other industries will retreat to some degree. Their headquarters or office gave them the culture or community they desired. The best thing that will come from all of this are the health maintenance skills that employees are learning as they continue to evolve in difficult times.”