Gallagher Report Reveals That U.S. Employers Are Offering Flexible Benefits to Capture the Interest of a Diverse Workforce


Versatile medical and voluntary benefits, in addition to compensation, are helping employers retain and attract talent

ROLLING MEADOWS, Ill., Aug. 2, 2022 /PRNewswire/ -- With nearly half of the 4,000+ U.S. employers surveyed experiencing turnover of 15% or more in 2021, retention and attraction are top priorities — and the tool employers are using to address this issue: flexible total rewards. Gallagher's 2022 U.S. Physical & Emotional Wellbeing Report  found that while 78% of employers are increasing salary budgets, up 6 percentage points from last year, they're also recognizing the importance of changing benefits to appeal to a diverse workforce. In fact, the survey found that more than two in five organizations (42%) now offer medical coverage to domestic partners and about half as many (24%) extend this benefit to part-time employees.

"Attracting employees in even the best of times can be challenging. But in today's complex environment, employers who leverage an array of benefits that appeal to a diverse workforce are better positioned to attract the right person for the right job — and keep them," said William F. Ziebell, CEO of Gallagher's Benefits & HR Consulting Division. "A one-size fits all total rewards package is no longer an option. Organizations need to offer competitive compensation and benefits that work for multigenerational employees and match their specific lifestyle requirements."

Traditional Benefits Align with Preferences that Strengthen Cultural Inclusivity 
To meet the diversity of their employees' needs, more employers are expanding health benefit offerings.

  • Nearly half of employers (46%) now cover infertility services or fertility treatments.
  • Fertility medications are the most common (77%), followed by a reproductive endocrinologist or infertility specialist evaluation (69%). Less popular benefits include surgery or intrauterine insemination (43% each) or cryopreservation (23%), which is the process of freezing eggs, sperm or embryos.
  • Applied behavior analysis, a type of interpersonal therapy where a child works one-on-one with a practitioner, is the top elective service employers offered in 2022 (55%), up 4 points compared to the previous year. This indicates an increased awareness of the need for stronger mental health and emotional wellbeing support for employees and dependents.
  • Autism spectrum disorder treatment is covered by 45% of employers, up 3 points from 2021.
  • Bariatric surgery (49%) is up 2 points from the prior year.
  • Gender reassignment surgery (25%) and transgender-inclusive benefits other than surgery (22%) each registered an uptick of 2 points.
  • Gene therapy services (14%) gained 4 points. 

A larger choice of health plans gives employees an opportunity to find a better match for their unique coverage criteria.

  • Among the 77% of employers that offer more than one plan, most provide two (35%) while the rest expand the selection to three (26%) or at least four (16%).
  • Preferred provider organization/point of service plans are the most frequently offered (83%). However, the number of employers that pair a consumer-directed health plan (CDHP) with a health savings account (HSA) continues to rise, now 51%, an increase of 5 points from 2021.
  • A CDHP+HSA is also slowly growing annually as the top choice from an enrollment perspective, up 4 points since 2020. Individual plans usually have a deductible of $2,800 with an out-of-pocket maximum of $4,350. For family plans, the median deductible is $5,400 with an out-of-pocket maximum of $8,000. Typical annual employer contributions to the HSA are $500–$599 for individual plans (23%) and at least $2,000 for family plans (22%).

Competitive pressures in the labor market have caused employers to hesitate when considering plan design changes that pass along cost increases to employees.

  • Half of employers (50%) refrained from making any employee cost-sharing increases in 2022, which is slightly higher than each of the preceding three years.
  • Among those increasing employee costs, health plan premiums were the most common target (44%), outpacing deductibles (13%) and out-of-pocket maximums (11%).
  • The median health plan premium increase was 4%-4.9% at the most recent renewal. However, a notable 25% reported increases of less than 1%. Eighteen percent (18%) had premium increases of 10% or higher.

Voluntary Benefits Also Address Employees' Diverse Needs 
A quarter of employers enhanced the voluntary or supplemental aspects of total rewards to boost recruitment and retention objectives.

  • Accident (67%) and critical illness (61%) insurance consistently rank as top options. Meanwhile nearly half of employers provide permanent life (46%), hospital indemnity (45%) or cancer care (43%) insurance.
  • Employee perks or discount programs are offered by 44% of organizations, legal services by 37%, identity theft protection by 35% and employee purchase programs by 29%.
  • Looking ahead to 2024, traditional healthcare options such as critical illness (16%), long-term care (16%) and hospital indemnity (14%) coverage are slated for additional investment. Thirty-one percent (31%) plan to add pet insurance, a decision that reflects not only increased veterinary care costs but also the importance of pets to their owners.

"The cumulative changes of the past two years, compounded by current concerns around inflation, continue to take a toll on employees' physical and emotional wellbeing," said Ziebell. "Our findings confirm that organizations are evolving their approach to traditional and voluntary benefits to ensure that they strongly support the health needs of their employees. This also helps optimize employee's engagement and performance, maximizes retention and provides organizations with a competitive advantage."

Gallagher's 2022 U.S. Physical & Emotional Wellbeing Report is part of the Workplace Trends Report Series. It's based on data from the 2022 Benefits Strategy & Benchmarking Survey, collected from more than 4,000 employers in the U.S. across a wide variety of industries from December 2021 to March 2022.The report can be found here.

Arthur J. Gallagher & Co. (NYSE:AJG), a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois.  Gallagher provides these services in approximately 130 countries around the world through its owned operations and a network of correspondent brokers and consultants.

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Posted by IRL Staff


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