The new year is almost here, but we’re already getting a taste of what we can expect in the benefits space for 2024. From employers bearing the cost to the rise of voluntary benefits, employers must do much more to meet employee demand while differentiating themselves to attract new workers.
Here are four benefits and compensation trends you need to know for 2024.
Employers are taking on more of the benefits cost
More than half (57%) of workers said that finances were the top source of stress in their lives, with inflation the biggest challenge. That said, employers try not to burden their employees with any more costs and instead take on any benefits cost increases.
As the average health benefit cost per employee rose by 7.4% in 2023, companies are implementing several initiatives to control their costs. These initiatives include shopping for different medical plans to find better rates, absorbing premium increases, eliminating HSA contributions, and reducing or eliminating the requirement to complete wellness activities to earn them.
They are also offering multiple healthcare plan types to offer employees flexibility—employees can select the plan that provides the right amount of coverage at the right cost based on their personal and family situation. 32% of companies offer an HDHP with at least two other types of medical plans, and 73% of companies offer a combination of a traditional plan (PPO) and HDHP.
Lastly, employers are encouraging employees to improve HSA use and understanding. While 87% of employers contribute a fixed amount to their employee’s HSA, more companies offer a company match or a wellness incentive to encourage employees to allocate their savings toward healthcare needs and focus on preventive healthcare to reduce premiums. In 2023, almost 5% of companies increased their HSA contribution amounts to help offset increases in medical premiums.
Benefits companies are adding additional benefits and resources to help employees control costs, including offering supplemental specialty medical programs, expanding resources to help employees find the right provider based on quality and control, and financial wellness resources.
Companies are adding more voluntary and ancillary benefits to boost compensation packages
Voluntary benefits have steadily grown in popularity in the last decade as a tool for employers to differentiate themselves and their benefits packages. The pandemic, war for talent, and high inflation continue to drive demand for these benefits. Employees are attracted to these benefits for their ability to help them protect against the unexpected, reduce expenses, and promote overall well-being.
There are a few categories of voluntary benefits that have seen the highest growth over the last three years:
- Child and elder care assistance (177% growth)
- Pet insurance (120% growth)
- Critical illness (120% growth)
- Hospital indemnity (152% growth)
One emerging benefit trend to note is lifestyle spending accounts (LSAs). An LSA is a spending account employees use for wellness-specific benefits funded by employers. They allow employees to reimburse employees for various wellness expenses and give them the flexibility to leverage employer support for benefits and expenses that are the most important to them.
Burnout, work-life balance, personal finance, and other added stressors have given way to perhaps the most prevalent ancillary benefit: mental health support. Most employees—81%—agree that employers have a responsibility to help them manage their mental health. Over 95% of companies offer mental health assistance through an Employee Assistance Program (EAP) and/or independent resources. Companies also leverage app-based mental health support, focused workshops, and resource groups to offer their employees a way to get instant support without waiting for an in-person appointment.
Caregiving and family planning benefits are no longer a “nice to have”
The need for family planning and caregiving benefits has grown substantially in recent years. Employers have responded to this increase in demand and have increased their offerings in these areas for their employees:
- 55% now offer help with finding reliable, trustworthy care and/or access to subsidized backup or emergency care. These caregivers include sitters, nannies, tutors, elder-care resources, and college coaches.
- 52% now offer dedicated fertility benefits, increasing the coverage provided under existing medical plans and/or adding dedicated fertility benefits.
- 60% now offer adoption surrogacy reimbursements, the most common being $10,000. Companies have also started to provide a combined lifetime maximum extending to adoption, surrogacy, and infertility coverage, as high as $75,000.
Paid leave policies that go beyond just PTO
Companies are taking paid time off (PTO) to address mental health and caregiver needs.
While the traditional caregiving leave program has been maternity leave, more companies are expanding their leave programs to differentiate themselves and attract employees. These types of leave include:
- Parental leave. Companies are shifting their policies to be more inclusive and gender-neutral, extending to birth parents, adoptive, surrogate or foster parents, and spouses of parents.
- Sabbatical leave. Companies offer sabbatical breaks to tenured employees to encourage time away to recharge and explore new personal or professional opportunities.
- Caregiving leave. Caregiving leave has become increasingly popular for employees who balance their job and family while caring for a loved one.
- Bereavement leave. Companies offer bereavement leave to mourn the loss of loved ones, some even providing bereavement for pregnancy loss.
Additionally, several PTO trends are emerging, such as PTO purchase programs, PTO conversion programs, and unlimited PTO:
- PTO purchase programs. These programs allow employees to buy and sell their vacation days for compensation.
- Unlimited PTO. Though a cost-saving initiative for employers, unlimited PTO has some drawbacks for employees, such as taking less time off, leading to poor work-life balance.
- PTO conversions. Companies allow their employees to convert vacation time to cash, 401(k) contributions, student loan payments, charitable contributions, and more. According to a 2021 EBRI workplace wellness study, 25% of employees said a PTO conversion plan would be the most valuable improvement to their employer’s benefits program.
Differentiate your benefits to attract and retain employees
As employees are increasingly depending on their employers for benefits, it’s up to employers to provide valuable benefits. Differentiated benefits can help your organization attract and retain talent by catering to your employees’ needs. Request a demo of PTO Exchange today to learn how to implement a PTO conversion program.