The future of employee benefits
Three trends brokers and employers can expect in 2023 – and what to do about them now
In the past 2 years, employers have been through a rollercoaster of ups and downs. With dramatic shutdowns and layoffs turning into the war for talent, many businesses are using employee benefits to attract and retain the employees they need to succeed in today’s competitive marketplace. But as expenses have risen with inflation and continued supply chain issues, employers are struggling with the most cost-effective and efficient way to provide important employee benefits programs.
As we head into the new year, we are seeing a renewed focus on three key areas affecting employers and benefits brokers: technology, stabilization of the job market, and the gig workforce. Below, we’ve reflected on these areas and what employers and benefit brokers can do to take advantage of the trends.
Technology will be a distinguishing factor
In the coming year, benefits providers will continue to lean on the latest automated digital technologies, including artificial intelligence (AI), to provide a better customer experience for their broker partners, and employer and employee clients. We’ll see a greater variety of technology to ultimately benefit the employee with open enrollment, claims filing, and more. And, as more partnerships form between benefits providers and insurtech firms, we’ll see greater automation of benefits administration as well, from RFP quoting to onboarding and claims processing.
With small- and mid-sized employers starved for time and often without adequate HR support to roll out and manage benefits for their workforce, benefits technology may offer a way to provide the benefits programs needed, with significantly less time and effort spent. Benefits brokers who serve these clients may also find technological advances and benefits administration tools an excellent way to juggle multiple clients with huge amounts of data and still provide fast, efficient, and consistent service with greater accuracy.
Employers must balance their needs as the job market stabilizes
Even as inflation is showing signs of cooling, employers will continue to be affected by the great resignation and quiet quitting. Some, like those in the technology industry, may be forced to lay off employees as expenses catch up with them. That means, tough decisions will mark 2023 for many, as employer balance the need to keep costs down with the need to attract and retain talent and improve their employees’ financial health. According to a new Mercer survey, 84% of large employers expect to enhance benefits to improve attraction and retention.1 But, for small- to mid-sized companies, the answer may not be that simple, as they’ll need to decide where to invest their employee benefits dollars.
One way employers will likely enhance benefits without increasing costs is by rolling out supplemental health benefits, like hospital indemnity insurance. LIMRA recently reported hospital indemnity sales jumped 12% year-over-year in 20222. We expect demand for this benefit will likely increase in 2023. With the continued rise of healthcare costs and the experiences many had with COVID over the past 2 years, I believe American workers understand the importance of having a financial safety net that can supplement what their health insurance might not cover in the event of an unexpected hospital stay.
Multi-generational workforces can also make employer benefits decisions difficult, as not all generations have the same priorities, whether that be mental health benefits, paid time off or savings plans.
Benefits providers will focus more on the gig economy
With small business owners expected to continue feeling the effects of inflation, supply shortages, and a tight job market going into 2023, many will turn to the gig economy to source talent. Benefits providers are expected to improve their reach, thus helping small businesses hire gig talent, by offering benefits through associations and other affinity or specialty groups.
As we look at 2023, we’re seeing many changes that can affect a company’s benefits program, such as technological enhancements, stabilizing of the job market, and a focus on the gig economy. Benefits brokers and employers alike may want to consider these trends in establishing or improving their benefits programs so they can look forward to a successful and profitable new year.
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