Freedom of choice in employee benefits

Events over the past year have not only shifted where and how we work but also caused employers and employees alike to rethink the importance and relevance of employee benefits. Employers may expect lower premiums for employee medical insurance but that lower-than-average medical trend rate would correct once deferred or elective medical treatments are sought and lifestyle changes lead to new health risks. As the physical and mental impacts of the COVID-19 pandemic continue to reveal themselves, employees are increasingly looking for employee benefits that go beyond medical to cover “wellcare” – rather than just sick care. In addition, employees are looking for opportunities to personalize the benefits offered to them. Taking these forces and factors into account, HR practitioners must be thinking about their employee benefits offering and how they can meet the needs of current and future employees.

The importance of choice

Traditionally, most organizations have tended to “prescribe” benefits packages for their employees on a company-wide compulsory basis. Benefit levels are decided by referencing market or industry norms. Save for differing local or regional practices, this one-size-all approach is often the norm across organizations. However, progressive employers have started to see the benefit of letting employees select their own benefits – particularly as employee expectations are often influenced by the well-publicized behavior of the global tech giants in offering employees a more holistic approach to their health and well-being. COVID-19 is also further driving the move towards a more flexible approach to employee benefits by highlighting many changes in preferences and lifestyle choices, as well as the whole context of workplace culture and practices. This has therefore further spurred companies to realize that defined-benefit solutions may not be the answer to keeping employees feeling well-protected and taken care of. 

When considering what benefits are truly relevant and useful, an employee may take into account aspects like their family structure, work hours, place of work, their current and expected future state of health, their stage of life, as well as other societal and cultural factors. With so many factors in play, the traditional concept of having medical coverage as the main employee benefit will just not resonate with many employees. For those naturally blessed with good physical health, they are unlikely to take advantage of the medical coverage provided by their employer and, while that’s good news for the employer on several levels, it’s not great for those employees.

As a society, we are becoming more aware that prevention is better than cure. Employee welfare, stress and disease prevention, and wellness have increased in importance alongside the requirement for sick care. With stress, pressures, and disruptions being more prevalent during COVID-19, mental health has become a key area of focus for employers and employees alike. It is also worth noting that fitness and wellness activities have become a way of staying away from requiring medical care and a key driver of physical and mental well-being. Delving further into this, wouldn’t it be better if employees are enabled and encouraged by their organization and benefits to stay fit and healthy, as compared to only supporting them financially if they fall sick? This change in mindset may then lead to fewer medical claims, which will in turn make premiums for medical insurance more sustainable. As such, companies should start prioritizing "wellcare" and preventive care over sick care, build resilience and create more flexible benefits offerings for those employees who may prefer to have more solutions around mental health, wellness, and physical health and fitness.

The level of employee benefits choice that is offered may also be a factor that will attract and retain talent within a company. The act of giving choice when it comes to employee benefits shows that the company truly cares about the overall well-being of prospective talent. This point is further highlighted with senior hires, where a significant portion of them will have specific needs and the freedom to customize their benefits will be an edge for the company looking to recruit and retain them. Richard Branson neatly summed it up by noting that “if you take care of your employees, they will take care of your clients”. By giving a choice to employees in determining their benefits, it shows that the organization cares. 

Harnessing technology for employee benefits

With most employees now selecting benefits online through a system or portal, technology is needed to facilitate a seamless user experience on the benefits platform and also play a starring role in making customizable solutions a possibility. For employers, there are several ways of doing this depending on their size and their offering and many larger companies may have their own platform where they can bring the benefits together, alongside offers from partners. For smaller businesses, it might make sense to bring in a white-labeled platform that allows them to customize it to their business and their offering, alongside a corporate membership concept for various partners.

Regardless of the platform or option being used, employees need to be able to clearly evaluate the available solutions and weigh the pros and cons of the various choices to make the most informed decision. Technology can facilitate decision support and promote healthy behavior with data analytics, machine learning, and artificial learning now a part of our everyday lives. 

Besides acting as a key element to providing better information and facilitating choice for employees, technology also plays an important role in ensuring employee engagement is not compromised by COVID-19. We are familiar with how communications technology has bridged the gap in employee engagement during COVID-19, where the majority of the workforce has adopted a hybrid model and this also applies to employee benefits where employee engagement is the key enabler of feedback for the company, as well as the insurer providing the solutions. 

In the ideal scenario, a company has its finger on the pulse of employee needs and if circumstances and market conditions have changed, that may then warrant an improvisation or change of their benefits. When face-to-face scenarios aren’t possible, technology will provide the medium for such feedback and conversation to take place. Technology, therefore, needs to be utilized creatively to enhance the richness of conversations in organizations, which will then spur further improvements of employee benefits through a robust feedback channel. In essence, both technology and information can now work in tandem faster than ever before, enabling innovative and tailored solutions to be part of the equation for employee benefits.

The world of employee benefits has been gradually changing over the last few years, but like many aspects of corporate life, the pace of change has been accelerated by the impact of COVID-19. For employers, employee benefits is now one area where they can demonstrate that they are committed to a more holistic approach to their employees’ well-being. Employees are after all consumers, well accustomed to demanding and having personalization and choice. HR practitioners who can leverage this can help their organizations drive change in employee benefits, moving from sick care to "wellcare" and giving the freedom of choice, all of which will ultimately help to set their organization apart in the war for talent.