How to ensure your company makes the most of its benefits dollars

Record-setting inflation and general economic uncertainty are causing everyone to exercise caution, including employers. Although some experts suggest the "great resignation" has subsided, the number of Americans who quit their jobs actually accelerated in late 2022. People are leaving their jobs in search of things like better pay, more flexible work arrangements, and increased vacation time. 

While employees will be noisy about some issues, other considerations can covertly drive team members to leave their employers. Some of their concerns include better financial support, more equitable access to care, and help with burnout and mental health.

Attraction and retention can be particularly daunting at a time when there are two open positions for every job seeker. As a result, employers are rethinking their benefits to prioritize their workforce's needs and wants. To relieve this financial stress and keep top talent, employers must find creative ways to adjust their benefits offerings, while coping with rising costs and flat or shrinking budgets.

The untapped potential of benefits
By paying attention to what team members find valuable and delivering benefits that meet their needs, HR leaders can leverage their benefits portfolio to attract and retain talent.

To paraphrase a line from the cinematic classic "Field of Dreams," if you build it, they will stay. And if you don't, they'll almost certainly leave. A recent Pew Research Center survey found that 43% of people who quit their jobs in 2021 did so because of inadequate benefits.

But how can employers know they're focusing on the right benefits? And where might they be wasting time and energy?

A survey conducted by the Harris poll for Fortune found that 8 in 10 workers in the U.S. consider a flexible schedule an important factor when considering a new job; 70% said a remote work option was important. Other priorities workers mentioned included retirement contributions, mental health coverage and health and wellness stipends.

While compensation and advancement opportunities are always important in the workplace, employees are increasingly seeking benefits that improve their health and well-being.

What kinds of benefits are employers offering to meet this demand? According to KFF, 83% of all large firms offer at least one program to help workers with smoking cessation, weight loss, and lifestyle or behavioral health changes. Employers are expanding their telemedicine coverage to include new providers. However, employees still face a financial barrier to care as only 27% of those employers eliminated or reduced cost-sharing for employees.  

The average self-funded employer is working with about 16 different health and wellness vendors, with many of them focused on specific health conditions. They have vendors focused on everything from diabetes (e.g., Livongo, Ascensia) and musculoskeletal (e.g., Hinge, Kaia) to cancer (e.g., Transcarent). And then there are others like Omada or Vida that cover multiple chronic conditions alongside diet, weight management, and mental health.

In a benefits space brimming with point solutions, it's a challenge to know which ones are delivering value and which are simply soaking up resources.

Making the most of point solutions
As employers adjust their benefits to better reflect employees' desires, they'll need to first review their current offerings — and make changes as needed. This might involve adding new benefits, removing existing benefits, or adjusting the level of funding for different benefits.

To make sense of the endless point solutions available and craft a benefits offering that meets team members' needs, employers can take these steps:

1. Assess benefits utilization 
Employers can optimize benefits dollars by removing ineffective point solutions with low employee engagement or inadequate claims cost savings. To determine which point solutions have low engagement, HR leaders can conduct surveys or focus groups with employees to ask how often they use benefits — and how satisfied they are with those benefits. Whether these benefits conversations are handled formally or informally, it's important to gather feedback and comments from team members.

Beyond talking with team members, looking at behavioral trends is a good idea. Employers can do this by analyzing utilization rates (i.e., the percentage of employees who use a particular benefit). A low utilization rate could suggest that a benefit either is not needed or does not meet the interests of employees. However, keep in mind that there are circumstances where utilization can be low solely due to a low instance of the health condition the benefit program intends to target, such as programs focused around cancer care.

 By regularly monitoring employee engagement and seeking feedback, employers can better understand which benefits are valued and used by their employees — and which ones might need to be revised or replaced.

2. Eliminate or reallocate redundancies
Employers can create efficiencies by eliminating unnecessary redundancy among point solutions. Many of these redundancies can be spotted by conducting a comprehensive review of all benefits and determining what is necessary and effective (as outlined in my previous point).

This process could include comparing offered benefits to industry benchmarks and best practices or consulting with HR professionals and benefits specialists to identify overlap or duplication in benefits offered. For instance, some companies might have increased adoption of High Deductible Health Plans (and the accompanying Health Savings Accounts) over time and as a consequence, find lower utilization of Flexible Spending Accounts than previously observed. While there is still value in having both an HSA and a Limited FSA, there is likely room to optimize the employer contribution structure for each.

It's important to note that some redundancy in a benefits offering can be beneficial (and even effective). For instance, a cancer-centric point solution might pair well with a holistic health coach program. But identifying redundancies in their point solutions can help employers streamline their benefits offerings and reduce costs.

 3.  Provide financial solutions to help pay for care
Finally, with the historically high inflation we've experienced, it's a good idea for employers and HR leaders to consider the impact out-of-pocket employee expenditures can have on the effectiveness of their benefits program. A health coach might be able to guide an employee with high cholesterol to take their Lipitor as prescribed, for instance. But that won't do a lot of good if the employee doesn't have the co-pay for the prescription at the pharmacy, which ultimately increases the probability of a cardiovascular event and diminishes the value of the point solution.

To combat these adverse effects, employers might consider giving their employees financial tools that make it easier to pay for care. That might mean contributing to Health Savings Accounts or supplying employees with Health Payment Accounts, a new type of financial wellness benefit that gives employees the option to pay for care over time without interest. Both options can help employees afford out-of-pocket healthcare costs, though they vary significantly in terms of the cost to employers and eligibility requirements for employees.

Better benefits build sustainable teams
With employers everywhere struggling to attract and retain employees, it makes perfect sense that so many employers are working hard to overhaul their benefit offerings. Elevated turnover might be a reality, but companies that give their team members compelling reasons to stay are better equipped to succeed. By carefully vetting point solutions and ensuring they're truly meeting the needs of their employees, employers can buck these turnover trends and continue to build successful and sustainable teams.