Crossgrove Blog

Group Benefits Trends in 2023

Wed, Dec 14, 2022 5:00 PM GMT

More than two-thirds (67 per cent) of U.S. employees say concerns about a recession are impacting their mental health, according to a new survey by Principal Financial Group.

The survey, which polled 500 employers and 200 employees, found this percentage increased among millennials (79 per cent) and generation Z (76 per cent).

Nearly three-quarters of employees (74 per cent) and employers (70 per cent) said they believe it’s somewhat or very likely a recession will happen in the next six months.

The survey also noted that, ahead of a looming recession, employers are choosing to reduce operational expenses or raise prices instead of cutting employee salaries and benefits.

Nearly two-thirds (64 per cent) of small- and medium-sized employers said they won’t reduce wages compared to 49 per cent of large employers. Indeed, nearly two-thirds (63 per cent) of all employees reported a salary increase within the past year. Similarly, 57 per cent of SMEs and 45 per cent of large employers said they won’t reduce employee benefits.

Amid a global competition for talent, employers need to consider all aspects of their rewards package to ensure they’re attracting and retaining the best people.

Healthcare benefits are an important weapon for Canadian employers’ arsenal in the talent war next year. Insurance Business spoke to top executives in the benefits space about what’s on their radar for 2023.

Top trends in group benefits for 2023

Mental health

Mental health issues have been pushing their way to the front of Canadians’ collective consciousness even before the pandemic. Greater awareness and less stigma around the topic have helped lower barriers to access to mental healthcare. More Canadians now consider depression and anxiety to be disabilities after two years of dealing with the stress and upheaval of COVID-19.

As a result, there’s been a significantly greater buy-in on mental health benefits that before, according to Faizal Mitha, chief sales and innovation officer for Hub International’s Employee Benefits division in Canada.

“We’ve seen a lot of incorporation of digital mental health platforms. Companies that were laggards in adding employee assistance programs are truly moving forward with that,” said Mitha.

Psychology benefits in the paramedical side are seeing further uptake, as employers increased the annual maximums to allow employees more long-term care.

“The rule of thumb is that it takes between 10 to 12 sessions with a psychologist to achieve a tangible outcome with a mental health challenge. Most plan sponsors today still only have coverage for three to four sessions,” Mitha said. “There's a gap there and the public sector can’t fill it, so that's where employers have been investing quite a bit.”

Digitization of health

Digital health platforms will a focus on wellness have also caught on. Mitha said employers were making greater investments on lifestyle and health spending accounts as part of their benefits package.

“The digitization of health care is helping to provide plan members with greater innovation, choice, and access. Virtual care options like online or text therapy, health portals and medication management apps, etc. help people navigate and manage their own health and care,” said David Adams, senior vice president of insurance business at Medavie Blue Cross.

The pandemic accelerated the use of telehealth and virtual care services by necessity. As cities locked down and hospitals became inundated with COVID-19 patients, people were forced to seek medical help online. But Canadians aren’t turning back from the ease, convenience, and flexibility of virtual healthcare, according to JP Girard, executive vice president and head of insurance at Green Shield Canada.

“In 2018, there was about a 3% uptake on virtual care services in Canada. Fast forward to March 2020, and the rate has shot up to 60%, and it continues to rise,” Girard told Insurance Business. “The convenience of virtual care is now becoming the expectation. It’s getting tremendous traction.”

Flexibility and optionality

Flexible benefit plans are a great way for employers to cater to employees’ diverse health and wellness needs while keeping costs down. These arrangements can include private health and dental insurance, life insurance, gym memberships, childcare vouchers, and other concessions.

“Flexibility and optionality in benefit plans are two big trends that empower employees to decide when and how they contribute to their wellbeing and spend their benefits dollars,” said Adams. “It’s about the ability to access a variety of services in different ways, and the ability to add coverage to plans in case of unexpected health events.”

Adding flexibility to benefit packages also enables employers to personalize their offerings and distinguish themselves in the labour market.

“Health and lifestyle spending accounts shift employers from offering a ‘one-size-fits-all’ package to recognizing that employees are diverse and at different stages of their lives. They have different family or individual needs. How can we help them leverage their spend towards benefits that are meaningful to them?” said Mitha.

Preventative care

“An estimated 60% of all plan members, those covered by group insurance, have a chronic condition,” said Girard. “And that was exasperated by the pandemic, people’s inability to access to care, long wait times, and so on. It’s started to put pressure on the employers who can see that their employees are getting sicker.”

Chronic diseases like diabetes, heart disease, and arthritis can have serious consequences on employee health, which can impact workplace productivity and benefits plan costs in the long term. Preventive care benefits such as annual health screenings, routine vaccinations, flu shots, and cholesterol tests are becoming increasingly popular with employers.

“Employee wellness is the goal, and prevention and early intervention are trends that focus on supporting individuals while they remain at work, through community investment, education, wellness resources, programs and services and employee assistance programs,” Adams said

In March 2020, Bill Gosling Outsourcing’s benefits plan was facing unsustainable costs, as well as a deficit due to incoming premium increases.

The coronavirus pandemic, which was declared at the same time, presented an opportunity for the organization to make significant changes. “During the pandemic, people were housebound, so they weren’t going to the dentist and incurring as many drug claims,” says Janice Neshevich (right in photo), director of human resources at Bill Gosling.

“We saw this as an opportunity to make bold changes . . . and to revisit additional benefits like our [employee assistance program] because there were a lot of issues surrounding mental health and well-being.”

Kim Siddall, vice-president of enterprise consulting for the West at People Corporation, agrees. “Employers need to make sure their mission, vision and values are still aligned with the design of their benefits plan and what it’s intended to do.”

Deep dive

In addition to facing high benefits plan premiums and low engagement, Bill Gosling found its plan wasn’t helping to attract or retain employees, especially in a high turnover industry. With the help of its consultant, the company worked quickly to revamp the plan, with the changes fully implemented by Aug. 1, 2020.

The project started with a survey of the organization’s global leadership, which helped the HR team understand the lifecycle of employees. It also used an online objective-setting tool to identify any alignments and gaps in the plan. Within a week of starting the project, the organization was able to use these clear objectives to quickly move the process forward.

“When a company reaches such a position, it’s time to take a deep dive into everything benefits related, from plan design to systems capability, and analyzing what’s working, what can be improved and how to align everything so we make the right changes to overcome the deficit and meet employee needs,” says Clara Iacob (left in photo), benefits specialist at Bill Gosling.

By the numbers

• 62% of Canadian plan sponsors said their health benefits plan didn’t change in 2022.

• 30% of plan sponsors that did make changes added a benefit(s) or improved coverage levels.

• 7% of plan sponsors removed a benefit(s) or reduced coverage levels.

Source: 2022 Benefits Canada Healthcare Survey

The organization’s new plan is available to all full-time employees, regardless of their benefits eligibility, which previously included different waiting periods, she adds. This included bringing back mental-health care through the EAP, which was cut back during the previous benefits renewal; introducing a virtual doctor program; and providing employees with access to preferred rates on personal insurance products.

In order to align with employees’ growing desire for flexibility and easy access, Bill Gosling also partnered with a virtual pharmacy to provide online access to drug coverage at a 15 per cent lower cost than retail. It also made changes to its plan to focus on medically essential coverages, adjusted life insurance coverage to reflect the demographics of the company and maintained its highly valued vision and dental coverages.

Between March and October 2020, Bill Gosling eliminated its benefits plan deficit and the cost of the plan decreased by nine per cent upon renewal in August 2020. It also began to run a financial surplus that was used to further enhance benefits on Aug. 1, 2022. For example, the company improved its dental plan, adding major dental to certain benefits groups, and increased coverage for eye exams. It also used the surplus to cover most of the premium rate increases for the employer and employees.

“We wanted to make sure our employees were impacted in a positive way,” says Neshevich. “The deficit was substantial and it was over the course of a few years of not making the right decisions, not increasing premiums when we should have and we learned a very valuable lesson.”

With many employees experiencing high levels of stress and mental-health issues during the pandemic, Bill Gosling is continuing to build on and promote resources like the EAP, she notes. “We’ve actually seen some increases in our utilization reports. [Our benefits team] is very good at joining team huddles, promoting what we have in place and encouraging people to utilize those services. It’s at no cost to the employee and we’ve had a lot of positive feedback.”

Iacob also stresses the importance of educating employees about the mental-health resources that are included in a company’s benefits plan. “We make sure to continue educating employees on what these programs have to offer and to how to use them. We encourage them to reach out to [our team] if they have any questions or if they need any guidance. Building this relationship and continuously educating them on these tools is very beneficial for employees and for the company.”

For any employers deciding whether to make changes to their benefits plans, Siddall suggests they consider a few key aspects, including the areas in which they want to provide more coverage. Another consideration is whether they want to remove obstacles to access by increasing the number of eligible providers under their plan, she adds.

Employers could also look at adding another layer of programming that provides preferential pricing or digital solutions to diagnostics, similar to what Bill Gosling did by adding a virtual doctor program, says Siddall. “It really depends on your own circumstances as a plan sponsor and what the goals are for your plan.”


Reference: Insurance Business Mag, Benefits Canada