‘War for talent’ means mixed bag for benefits

Home delivery of food and snacks to replace workplace cafeterias. Health club memberships and “lifestyle” stipends. Doulas for pregnant workers and breast milk services for new mothers.

Those are some of the perks employers are offering as open enrollment season gets underway for workers with job-based health benefits. Most employers let workers choose or change benefits once a year, typically for several weeks in the fall.

But while workers may see more perks, they also may find that their health plans offer narrower doctor networks and emphasize lesscostly telehealth care as employers seek to rein in health care costs without making workers pay more out of pocket.

Behind the trends are two major changes: a shift to remote work and a challenging labor market. So employers are enhancing some offerings while also limiting big health premium increases and higher copayments that might sour employees and give them a reason to seek jobs elsewhere.

“There is a war for talent,” said James Bernstein, a partner at benefits consultant Mercer.

Many employers expect their overall medical and pharmacy costs to rise by about 5% next year, after a smaller increase last year, according to recent separate surveys by Mercer and another benefits consultant, Willis Towers Watson. As more people get vaccinated for COVID-19 and life gradually returns to normal, workers are expected to seek medical care that they had postponed during the pandemic, pushing up costs.

Some employers are also preparing for more workers with serious health issues, like latestage cancer diagnoses because of delayed screenings, and longterm mental health and substance abuse issues set off by the pandemic, according to a survey of large employers conducted this summer by the nonprofit Business Group on Health.

But employers won’t necessarily pass along all of their higher costs to workers, said Julie Stone, managing director of health and benefits at Willis Towers Watson.

“Employers are very concerned about losing workers,” she said.

Moderate, “low single-digit” premium increases seem likely, she said, although specifics will vary by employer. Sunit Patel, Mercer’s chief actuary for health and benefits, said employees could expect “mid-single-digit” increases, on average, in their premiums.

Among the largest employers — those with 20,000 or more on the payroll — about a third said they would reduce the share of health premiums shouldered by workers, while 17% said they would increase it, Mercer found. (Mercer surveyed more than 1,700 public and private employers over the summer.)

More than half of Americans younger than 65 had health coverage through an employer in 2020, according to the Kaiser Family Foundation.

Families with job-based health insurance contributed an average of $5,600 toward the cost of health coverage last year, with employers paying more than $15,000, according to the Kaiser Family Foundation. The foundation expects to release its report on 2021 costs in November.

Given all the moving parts, employers are taking different tacks to manage costs next year.

Nearly a third said they would consider narrowing the network of doctors and other providers available to patients, Willis Towers found. (It surveyed 378 employers of varying size, representing almost 6 million workers, in June and July.) A quarter of employers said they charged extra for covering a working spouse, if additional coverage was available through the spouse’s employer, and 9% said they were planning to add such “spousal surcharges” in the next year or two.

And in a trend to make care more affordable for lower-wage workers, some employers may vary their contributions to employee health care premiums, based on the employees’ jobs and their level of pay. Employers may contribute less to higher-paid workers’ health premiums, shifting more cost to them, and contribute more to lower-paid workers, to help them pay for the care they need. About a fourth of employers do this now, and 8% more are planning on doing it in coming years, Willis Towers found.

Employers see mental health as a top priority, said Bernstein of Mercer, and are responding by increasing the number of covered therapy visits, and offering digital tools to increase access to providers. Online services like Ginger, for example, let workers schedule remote visits quickly and offer exercises to reduce anxiety.

Other offerings, like coverage for doulas — experienced helpers who provide support throughout childbirth, and are associated with lower birth complications — are part of a broader effort to provide better prenatal care to people of color and low-income communities, said Ellen Kelsay, president and chief executive of the Business Group on Health. (Black women have much higher rates of maternal and infant death.)

“Employers are really focused on that from an equity perspective,” she said.