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Hello, everyone, and welcome to the Beneficial Workplace podcast where we have data-driven conversations about health and benefit offerings in the workplace. I'm your host, Emily Ferreira. I work in employer health benefit research at Mercer with a focus on our flagship survey, the National Survey of Employer Sponsored Health Plans.

And here, with us today, to go into the findings of our most recent 2024 national survey is someone who's been working on the survey since its inception and whose team I've been on close to 10 years now, and that is Beth Umland, Director of Research for Mercer's Health and Benefits practice. Beth, welcome back to the Beneficial Workplace.

Hi, Emily. Happy to be back on the pod.

Happy to talk to you again here. I know we had the initial podcast, you and I, to talk over previous survey findings. So I'm happy to have you here to talk about our 2024 survey. And for all of you out there who are faithful fans of the pod, you may have heard my recent discussion with our Chief Health Actuary, Sunit Patel, to get his take on the cost increase out of this recent survey and what's behind the higher trend numbers that we've been seeing.

And for that reason, cost is not going to be the main focus of our conversation today. But I think that's still where we need to start in order to provide context for the rest of the results.

Oh yes, totally agree with that. Because what's happening with cost, along with general economic conditions and the labor market, those are all going to influence employer benefit strategies and thus the survey results. So here's the short version of what's been happening with cost according to our survey.

For about 10 years, starting in 2013, employers were able to keep annual increases in the per-employee cost of health benefits to about 3%, on average, just slightly above inflation. And then the pandemic hit, followed by that big spike in general inflation in 2022. So the following year, in 2023, as provider contracts were renewed and were reflecting higher wages in the health care industry and just higher medical supply costs, that drove up health care prices in general.

And employers reported about a 5% cost increase that year. And that's what we saw this year as well. And employers are expecting an increase even closer to 6% next year. So after years of increases of about 3%, we're in a period of increases around 5% or higher. So of course, now general inflation is back down to pre-pandemic levels. So we've got hope, anyway, that the health benefit cost trend will also cool.

That hope part didn't sound too confident.

Well, yes, because, of course, there are always other factors that are driving up costs. And I'll mention two big ones. First of all is just health system consolidation, which can definitely drive up costs in markets where there is now less competition than there was before because two big systems have merged.

And then, prescription drugs have been driving overall health benefit spending for years now. And recently, we've been seeing higher utilization of GLP-1 drugs, which are quite expensive and then the introduction of new gene and cell therapies, which can generate huge claims. Those claims are rare, but they can certainly have a big impact on any given employer's cost in any given year.

And both of those factors may be contributing to the wide variation that we saw in the employer experience this year, specifically around cost increases. Because when you go behind that average cost increase of about 5%, we had a fourth of large employers that reported either no increase or even a decrease, and another fourth had cost increases that were greater than 10%, going from 2023 into '24. But overall, as you said, cost growth is clearly up. So what are employers doing about it, according to our recent survey results?

Well, I think one of the real interesting findings this year was that, despite this significant cost growth, the survey found that many employers actually enhanced key benefits to support employees and their families in 2024. And they certainly are also moving to address cost growth. But where, in the past, the surefire way to cut costs would be to shift costs to employees with higher deductibles and other cost-sharing provisions.

Today, the strategies that are gaining traction don't shift cost, reflecting employers' concerns about their employees' ability to afford health care.

So how about we start with those areas where employers have enhanced benefits. And one data point that everyone was looking for this year was the percentage of employers that are covering GLP-1 medications.

Oh, that is for sure. I got so many requests for that data point long before we had it. But let's just let me start with a quick backstory. So while nearly all health plans cover GLP-1 for diabetes, that's drugs like Ozempic, that is not the case for obesity treatment.

The FDA has recently approved some GLP-1 medications specifically for obesity, like Wegovy, like Zepbound. But these drugs are really expensive. And we've been seeing headlines that some organizations that actually did cover them had been dropping coverage due to the cost.

So the big question this year was, would coverage contract in 2024? But in fact, it expanded. Not by a lot. Overall, among all large employers-- and we define those as having 500 or more employees. The percentage of employers covering obesity treatment drugs rose from 41% to 44%.

But when you look at the largest employers, those with 20,000 or more employees who we see as kind of the trend-setters, the increase was much sharper. Nearly 2/3, 64% of employers of that size now offer coverage. And that's up significantly from just 56% last year.

And while adding coverage is clearly an enhancement, given that GLP-1s like Wegovy are in such high demand, there may also be a cost angle. If this trend reflects the hope that GLP-1 medications will turn the tide on the obesity epidemic and positively impact those downstream medical costs.

Yes, yes. And that's kind of a theme running through this year's results. Managing spending on GLP-1 is clearly a concern. And we've seen that nearly all employers that cover obesity medications now have put authorization requirements in place to ensure that they're being used by the members who will benefit the most.

But you're right. If GLP-1s deliver the kind of significant health improvements that everybody hopes they will, that's really a win-win in terms of meeting employee demand and also saving money downstream on medical costs. And that's what employers are hoping for with another investment that they've been making in specialized support for employees dealing with cancer.

So the survey showed that they're offering a range of services and resources, from campaigns to promote prevention and early detection, to case management and centers of excellence, to ensure employees get high quality care, to caregiver resources and workplace support programs. So 2/3 of large employers now provide at least one of these resources, with a fifth of the largest employers saying that they've got a robust cancer strategy in place and another 24% saying they're developing one.

And some other enhancements that we saw that appear to be part of an ongoing effort to close gaps and make benefits more inclusive, which is important for those employers that want to be an employer of choice, thinking specifically about family-forming benefits. And it's an area where we saw growth, again, here in 2024.

In Vitro Fertilization, or IVF, is now covered by 47% of all large employers, up from 45% last year. And among those largest employers, those trendsetters, 70% cover IVF, up from 62%. And even elective egg freezing and elective sperm freezing are each covered by about a fifth of all large employers. And most employers that are offering fertility benefits, which is about 2/3, say that they are intended to be inclusive.

That's right. And even with fertility benefits, there's still the possibility that savings from better outcomes might offset the cost of adding coverage. Last year, 26% of large employers provided fertility treatment programs that use best practices to increase the chance of success and reduce risks like multiple births, which are definitely more likely when people without coverage seek treatment on their own.

And fertility coverage is definitely an area where we've seen employers continue to enhance benefits despite the possibility of higher costs. But if we want to switch gears from where they're making enhancements to strategies that employers are pursuing strictly to manage cost, what did we see this year?

Yeah, well, with the recent acceleration in health benefit cost growth, cost management is definitely at the top of employers' list of priorities. But what we're seeing is that concerns about health care affordability are leading more of them to pursue strategies that really take into account their employees' differing financial and medical circumstances. And one approach is to add lower-cost medical plan choices.

So this year, 65% of large employers offered three or more choices to employees at their largest worksite. That's up from 60% last year. And the largest employers are now providing an average of five options, up from four last year. But where, in the past, the lower-cost options that employers might add were high-deductible plans. That's what's changing.

In fact, one of the very interesting findings this year was that enrollment in high-deductible HSA plans actually declined for the first time ever. I mean, just by one point, but still, that's a change in trend that underscores that these high-deductible plans just are not right for everyone. If you're a low earner or you have significant medical issues, or especially if both are true, then that high deductible can really be a barrier to getting care.

Yeah. It's really interesting that we saw HSA enrollment experience that decline, a slight decline, but still a decline this year. But one medical option that we saw that's starting to gain some traction is the Exclusive Provider Organization, or EPO, which uses a closed provider network to save money, similar to an HMO. But EPOs typically don't have that gatekeeper feature to access specialist care. And in 2024, 12% of all large employers and 29% of the largest employers now offer that EPO option.

Yes, and what's really interesting is, when we looked into those plans, what we saw was that the EPOs cost less, on average, than the PPOs did, even though a third of the EPOs do not require any deductible at all. And that's rare among PPO plans, and it's not even permitted with HSA-eligible plans. So it's maybe not that surprising that we're seeing now 5% of all covered US employees are enrolled in an EPO. That's still a small number, but we'll keep our eye on it. And I wouldn't be surprised to see it grow.

And what do you attribute that lower cost to? Is it just the closed network?

Well, that's definitely a big part of it. But many of the EPO plans, especially those that are offered by the largest employers, actually 40% of those, incorporate a high-performance provider network in which providers are selected based on quality and cost metrics. So by steering employees to providers of demonstrated quality and cost efficiency, cost savings can result from less waste, from better outcomes. And that's a win for both employees and the plan sponsor.

Yeah. And the survey this year, we saw that employers we're also providing specialized health navigation or advocacy services to steer employees to this type of higher-quality, cost-efficient care.

Yes, exactly. In fact, it's nearly half now of all large employers have either contracted a specialized vendor or purchased enhanced services from the health plan to provide assistance to members beyond standard customer service. And often, what they're doing is helping to steer members who have serious medical issues to the provider that is going to provide them the best care.

Beth, we went into a lot today on the survey. But I think it's important that we recognize that these findings-- in light of the higher cost trend that we saw this year. Because even with the cost trending up and predicted to do next year, employers are still enhancing benefits where they provide real value. For example, the family-forming benefits, specialized support for employees dealing with cancer, and they're taking into account affordability concerns while trying to manage costs. In some ways, that may be offering more plan choice or offering different plan choices like EPOs.

And while you and I covered a lot of ground here today, we'll be going into more depth on other topics and trends from the 2024 survey throughout the year, so stay tuned for that. Thanks again, Beth, for being here to talk about the 2024 national survey results with us. And thank you all out there for listening.

The Beneficial Workplace is a production of Mercer's US Health News blog. Our producer is Andrew Morrison. And if you're interested in hearing more about our surveys, please subscribe, and be sure to check out Mercer US Health News for all the recent benefit news. Thanks for joining us here at the Beneficial Workplace.

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Hello, everyone, and welcome to The Beneficial Workplace Podcast where we have data-driven conversations about health and benefit offerings in the workplace. I'm your host, Emily Ferreira. I work in employer health benefit research at Mercer, with a focus on our flagship survey, the national survey of employer sponsored health plans.

We recently wrapped up our 2024 absence and disability management survey. And to dive into the results I'll be speaking with Rich Furstenberg, a Senior Partner in Mercer's life absence and disability specialty practice. Rich, welcome to the beneficial workplace.

Thanks for having me.

Thanks for being here. I know it's been a long time coming for us to talk about the 2024 results since our last survey was back in 2021, but I want to start off with some of the big top stories from this year's survey. One of those being paid parental leave, which is now offered by 73% of employers, up from 61% in that previous survey in 2021. And that was up from 41% in the previous 2018 ADM survey.

So I've been doing this a long time. We can go back even further than that. In the first time we even asked about paid parental leave was back in our 2015 survey. And at that time, just 25% of employers told us that they offered paid parental leave. So let's think about that for just a moment.

In a little less than 10 years, we've gone from a climate where just one in four employers were offering paid parental leave to a world where one in four employers are not offering paid parental leave. So, yeah, that's pretty rapid growth in the prevalence of paid parental leave.

And I should probably emphasize that when we're talking about paid parental leave in our survey, we're very careful to make sure that when people respond that they do offer that benefit, that it's specifically about time off for bonding with a new child. So for [INAUDIBLE] that would start when their disability leave ends. So that's an important distinction that we're really honing in on that bonding leave.

The other thing I would just add is while we've seen rapid growth in the prevalence of paid parental leave, one of the interesting things that we're observing in this year's survey is that we are seeing signs that perhaps that prevalence is starting to plateau as the rate of growth in the percentage of employers offering parental leave it started to slow down.

And behind that I suspect there are still industries, for example, manufacturing or retail where profit margins may be low, employee turnover may be particularly high, where paid parental leave may never become a particularly common benefit.

So I'm not sure if we're quite at the feeling for the prevalence of parental leave, but I suspect we're probably getting pretty close. But even if they grow-- if we hit the peak or close to that peak, we're also seeing employers modify their policies to recognize that there's a lot of different types of ways people become a parent. Could be through adoption, through surrogacy, and developing leave policies for those life events as well.

We did see increase in prevalence for adoption leave in our recent surveys. That's at now at 67% of employers. And for foster care, we saw that leave at 43% of employers are offering that. And we asked for the first time this year about surrogacy leave, and a third of employers now provide that. So employers are definitely trying to make their offerings more inclusive.

I think that's right. Employers definitely, we talk to them in the client work we do. Employers do recognize that families come in all shapes, sizes and forms and are taking a more inclusive approach to how they design their leave policies overall.

The other thing I think that's also interesting that we're observing is beyond bonding with the new child, which a lot of employers require, they take that in one big chunk of time. As we talk about these more inclusive leave policies, it's often-- those policies are often, often offered on an intermittent basis.

So employers are more likely to require that parental leave be taken in one chunk of time, but if it's paid time off to care for a sick family member-- an event that's much more unpredictable, where intermittent usage is the norm-- we typically see that leave offered on an intermittent basis. So in addition to being more inclusive roles, the employer is looking to be more flexible within the benefits that they offer.

And that point about being more flexible, I think that's a good segway to another one of our key findings this year, which is the significant growth that we saw in unlimited or flexible PTO. It's now offered to at least some employees by a third of employers, which is up from 20% in our previous survey results.

Yeah. What I found most interesting in the survey results we got this year was that, historically, a lot of folks thought of unlimited PTO as something that we offered only to executives or maybe just to salaried employees. But the biggest increase we're seeing is the increase in the percentage of employers offering to all employees. So you can't really say it's just for executives or salaried employees anymore.

It's also important that, I think, people who are considering unlimited PTO, there is this perception out there that unlimited PTO means no PTO. And then once employers put that policy and that the usage of PTO significantly plummets, based on their sponsoring employers that we talked to who have implemented unlimited PTO in our survey, nearly 80% tell us that employers are taking about the same amount of time they took under unlimited PTO that they did when the employer had a more traditional paid time off plan.

Now, when we work with employers who are actually implementing unlimited PTO, we always remind them that of that statistic. But also remind them that could be a result of muscle memory and employers remembering what they had under the accrual policy and taking roughly the same amount of time under an unlimited policy. It's really important for employers to recognize that as they move forward, that muscle memory will inevitably fade. You'll have new hires that weren't here at the employer-- in the-- under the old accrual schedule.

So it's important for employers to promote these policies not just when they launch them, but to educate managers and employees, provide guidelines on an ongoing basis, not just when they are launched, in order to prevent slippage and leading potentially to a reduction in the amount of paid time off that employees are taking.

Yeah, we didn't have the frequency of how often employers are providing guidance, but we did see that just over half of employers provide guidelines for flexible or unlimited PTO to managers and employees. But that still leaves a fair amount that are not providing those guidelines.

Yeah. And having guidelines is great but those guidelines have to be communicated, educated, socialized, have managers and leaders, demonstrate and lead by taking time off, creating a safe space that people feel like others-- more junior relation can take paid time off.

I also suspect that we're nowhere near the feeling of how common unlimited or flexible PTO can be. Inevitably, the line between when employees are and are not working continues to blur. So I would expect to see future increases in the prevalence of unlimited PTO. And I don't think it's unlikely that employers will go back to an accrual schedule, it's all kind of consistent with that general theme we're hearing from employers of embracing flexibility in how employees expect their leave policies to operate.

Yeah, because at the same time it looks like there's also some movement to ensure that employees take time off rather than just relying on them to decide to take that time off. Since when it's up to them, the survey shows that less than half of employees take all of their available vacation or PTO days.

And this year we saw employers increase the number of official company holidays. The average ticked up by a day from nine to 10, which is most likely due to the recognition of Juneteenth which 41% of employers now offer as a paid holiday.

And that's a really interesting point about Juneteenth. In the past, we've had clients ask us when employers have added Juneteenth and when it came to our common holiday, did employers add it or did replace another holiday? With the prevalence increasing to where it's at now, along with the increase in the total number of holidays employers are offering, I think it's a safe bet to conclude that most employers are simply adding it to their fifth holiday schedule.

They didn't swap it out for another holiday or they didn't take away a personal holiday. And I think that's really important for companies really need to walk the walk on observance of a holiday like Juneteenth or Martin Luther King day. Certainly, employers could tell their employees, look, if you think Juneteenth, or any other day, that's important to you is really important, just take a personal day or take some other sort of PTO to observe it.

But when a company observes a day like Juneteenth as a holiday, it says something about what the company does value, and if they're not observing it, what they don't think is necessarily important. And that applies for all leads. And it's not just your holiday schedule. If an employer shines a light on something in their lead policies, it becomes more important.

There's a difference between suggesting and encouraging employees to use their PTO, for example, to volunteer in their communities versus having a separate and distinct volunteer lead policy, which, by the way, that has more survey respondents now offer.

So, yeah, I think whether we're talking holidays or other life events, those which a company observes in their lead policies and shine a spotlight on it, it's a way for the company to demonstrate what an important part of their culture and what you think is really important and what you think is more discretionary.

And another area where we're seeing employers offer more leave and more leave that employees pretty much have to take is shut down days. And while it's not the majority of employers, we saw 16% are now offering these company shutdown days for employees to refresh and recharge or, in some cases, in some industries maybe for seasonal reasons. And when those shutdown days are offered, the average days offered was five. So there are some employers that are taking that approach in terms of offering those shutdown days.

Yeah. I think this is a topic that we heard a bit more of it during COVID, but we still hear some employers who are worried about burnout. I mean, arguably fixed holidays are a form of shutdown days and shorter chunks of time, but whether it's a fixed holiday or a shutdown period, that's a time off when employees can really disconnect from work and not worry that they're missing a meeting or they feel the obligation to check email because others are working while they're not.

Shutdown days are an extended version of that. And there's something that we certainly see some expansion. It's similar to the conversation we had about Juneteenth and the connection between what the company values. And its lead policies and shut down days really speak to what the company thinks is important about ensuring employees have enough time, not just time off, but time off to truly disconnect because they're not the only ones taking it off if it's taken under discretionary pay, time off policy.

And, Rich, we talk about parental leave, unlimited PTO and holidays, and those are the more popular and publicized leave benefits. But behind the scenes is the administration of lead programs. And that's where we're seeing employers that are continuing to find challenges. Our data showed a modest increase in FMLA outsourcing overall, but the growth has certainly slowed, which suggests that outsourcing leave may have plateaued.

But while FMLA and outsourcing of other leaves may-- we have seen it plateauing, more employers are saying that they're seeing an increase in the resources used to handle state and locally mandated paid leave over the past five years. So if managing leave is more complicated and more and more state and local regulations have been enacted, why do you think more employers aren't outsourcing the administration of these leaves?

So it's, certainly, an interesting conflict there, isn't there? So I think employers say they need help, but the survey results suggest that the pace of outsourcing has, in fact, slowed down. And I think there's a few reasons for that.

And, fundamentally, you have to recognize that outsourcing, disciplined administration has its limits for employers who do outsource their lead admin. There are still key steps in the administrative process that employers continue to own. So, for example, most large employers who outsource disability benefits have their vendor provide what we call advice to pay guidance.

So the vendor will tell an employee what paying employee is out on leave, but it's still the employer is the one who actually pays the employee the benefit. Which means the employer is the one that has to deal with overpayments and underpayments. And that's just an example. And to paraphrase Michael Corleone in the Godfather part three, employers who outsource their leads think they're out, but they keep getting pulled back in.

Well, spoiler alert, Rich.

So, you know, second-- the other point I would make is, as you noted, the number of state mandates that often will run concurrent with employer sponsored policies has increased. At the same time, the prevalence of many of those employer sponsored leave continues to increase, whether you're talking parental leave or caregiver or adoption and bereavement leave.

All that adds up to employers needing lots and lots of support from vendors who are not always equipped to meet all of the employer needs, at least not at the level that employers are demanding. So one thing that's given rise to is non-traditional vendors who are entering into this space.

Concierge vendors who wrap around display or leave administrator. Vendors who provide software services, an employer who want to bring leave admin back in-house. Oversight for complicated disability cases or clinical oversight, to make it easier for an employer to bring the leave administration back in-house as opposed to going the fully outsourced type solution.

Another interesting thought that we had looking at the survey results is for lots of benefit trends, we often see larger employers set the pace and later on, smaller employers will follow that lead. What the survey results tell us from this most recent go round, the one segment of employers where the prevalence of outsourcing has actually declined-- and it wasn't a huge decline but it was still a slight decline-- is for employers with 5,000 or more employees.

So if that's an indication that larger employers are changing course, what does that mean for smaller employers? On the other hand, large employers have more resources to provide this sort of lead administration in-house, smaller employers usually have fewer resources to devote to leave, so they may struggle to bring the leaves back in-house. So how vendors respond to meeting employer needs, large and small, is certainly something to keep an eye out on.

When it comes to the state and local leaves specifically-- and those we've seen over the years-- there seem to be more and more, and especially more even city specific leaves. This was cited as one of the top concerns by 68% of employers. So how do you see employers in the field tackling these leaves, the state and local leaves currently?

These are just levels that we're talking about. These state and local leaves, they fall into a few different categories. First, there's the state mandates for disability, medical leave, and paid family leave like New York, California, Washington State, Massachusetts, and a couple states like Maryland, Delaware that are revving up to implement their laws.

Then there are state and local laws that require employers to offer paid sick leave, or, as they've seen in certain jurisdictions like Chicago, paid leave for any reason. So that's not necessarily a state mandate of a new leave but employers have to offer paid sick leave in certain amount of time and a certain accrual rates. That's certainly another challenge.

And then we also have a wide range of leave mandates. Some are paid, some are unpaid. They range from state and local versions of FMLA to time off for victims of crime or stalking or sexual assault or time off to vote, which I'm sure we'll hear about in the upcoming presidential campaign.

So all of those mandates are the types of issues that employers are trying to deal with. And as those leaves expand, especially for multi-state employers, figuring out how you have a single policy for all your employees becomes more and more complicated. That rapid expansion in these mandates is why 2/3 of respondents told us that they'd had to increase the resources they have to devote to managing these leaves.

And in the absence of any sort of federal mandate, which I think is still pretty far out on the horizon, there's a problem that's likely to get worse before it gets any better. So if you're a multi-state employer trying to comply with a wide range of often conflicting mandates and trying to do that within a single national policy, that's why we're seeing employers having to devote more resources.

Not just meeting the basic compliance requirements, but figuring out how to navigate through all of these mandates and still have something of a unified policy for all employees. We also often find that employers are totally fine until they're not. An employer in a state like Maryland may be fine until Maryland's paid family medical leave comes into effect. Now they've got administrative challenges or compliance challenges they didn't have before.

So they think they've got their quality control, and then a new mandate comes along and it literally the straw that breaks the camel's back. And that forced them to revisit their design, their administration strategy, and the level of resources that they need to devote to meet the compliance requirements of these mandates.

And given the results of the survey and what we've been talking about in terms of leaves offered and administration of leave and the challenges that come along with it and what you're seeing with clients in the field, where do you see the trends moving in the leave and absence space, broadly?

So I make a few points. We talked about this before, certainly, employers are trying to make their leave policies more inclusive, making their policies align with the company's values and recognizing the needs of an increasingly diverse workforce. So that's, certainly, probably one of the things that we've learned from the survey as well as with the work we've done with clients.

The second is, well, paid parental leave has become the norm. It may have plateaued. It'll be interesting to see if we do see future growth. If so, is it going to come from those employers and industries that have traditionally lagged behind in offering parental leave?

The third, the point we were just talking about, I think employers are going to continue to struggle with figure out how to navigate through the dizzying array of state and local leave mandates. And I think that could cause a lot of employers to revisit their approach to leave an institution. That may mean changing vendors, considering non-traditional vendors, or potentially revisiting some of what they outsourced and pulling that back either to an insource or co-source sort of model.

And then the last point, as you mentioned, Emily, when we first started talking, this is the first time we've done a survey since 2021. And the reason for that is usually the leave world doesn't change that quickly. But, certainly, with some of the results we're seeing, trends in the leave space are changing much more quickly than they have in the past, particularly around topics like parental leave and unlimited PTO.

So I think one of the takeaways for employers is benchmarking your plans more frequently to make sure that you're in line with where you want to be and in line with your peers. It's probably something employers have to think about doing a little bit more frequently than they've done in the past.

And, to your point about before walking the walk, it's not just employers benchmarking against their peers, but making sure that what they consider important is front and center. And that they're, I think-- using your words-- shining a light on it and making it policy.

So thank you so much, Rich, for being here to talk to us about the latest results of our ADM survey and trends to come. And thank you all out there for listening. The Beneficial Workplace is a production of Mercer's US Health News blog. Our producer is Andrew Morrison. If you're interested in hearing more about our surveys, please subscribe and be sure to check out Mercer US Health News for all the recent benefit news. Thanks for joining us here at the beneficial workplace.

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Hello, everyone. And welcome to The Beneficial Workplace podcast, where we have data-driven conversations about health and benefit offerings in the workplace. I'm your host, Emily Ferreira. I work in Employer Health Benefit Research at Mercer, with a focus on our flagship survey, the National Survey of Employer-Sponsored Health Plans.

Today, we're going to talk about voluntary benefits. What are the benefits being offered? How do they appeal to varying segments of the employer population? And what are the best ways for employers to communicate these benefits and get employees to take advantage of them? And to help us better understand these benefits, I'll be speaking with Jen Dacre, voluntary benefits practice leader at Mercer. Jen, welcome to The Beneficial Workplace.

Thank you, Emily, so excited to be here. Voluntary benefits are obviously near and dear to my heart, so I am looking forward to this discussion today.

And happy to have you here and talking about voluntary benefits. And I think when most people hear that term, there's a baseline of benefits that come to mind, your supplemental health insurance benefits, like hospital indemnity plans, cancer and critical illness. But there's also benefits, like pet insurance, student loan financing and repayment plans, that are further down the line. And our survey data is actually seeing increases in prevalence in all of these benefits. But what steps are employers taking to expand their voluntary benefits offerings?

Yeah. Well, you're absolutely correct in what those baseline offerings are. And we will still see employers continue to offer those traditional supplemental health benefits. However, when we think about it, there are five active generations in the workforce today, and there is a growing emphasis on meeting the diverse needs of all of those employees across different life stages and within the spectrum of diversity.

Gen Z adults are now entering the workforce. And by 2030, they will make up nearly one third of global's work globally. And this generation is larger and more diverse than we have previously seen in any other generation. In fact, approximately 1 in 6 Gen Z-ers identify as LBGTQIA+, and almost half identify as racially and culturally diverse.

And while Gen Z may be less focused on those traditional baseline voluntary benefits, their interests are lying in areas such as mental health support, financial wellness, you mentioned student loan and tuition reimbursement programs, cyber and identity theft protection services, health equity, and reproductive health.

I know there's a lot of attention on Gen Z up there. And it makes sense, they're becoming more prevalent in the workforce. But speaking for the elder millennials and the other generations out there, what are they seeing in terms of their interests in voluntary benefits?

Yeah. You know, other generations are still showing interest in those traditional voluntary benefits, but we are seeing some nuance and generational preferences. So as an elder millennial myself, I can definitely relate to millennials having a higher interest in child care services and family-forming benefits. We are also seeing Gen Xers seek more caregiving supports and retirement readiness benefits. And baby boomers are prioritizing their pending retirements and long-term care benefits.

And I do want to state, these are just trends and overall general trends. Individuals within each of these generations are going to have different interests, backgrounds, and perspectives. So there's a logical assumption that different people are going to want different things from their benefits. But there are concerns that we see run across all generations and demographic, physical health, mental health, financial wellness, and social connectivity.

And how would an employer go about making sure their voluntary benefits are diverse? So aside from just offering every program under the sun, what can they do to make sure their offerings are meeting their employees' varying needs?

You know, I think that the goal of a voluntary benefits program should ultimately be to provide flexibility and choice. This empowers employees to create a benefits package that suits their unique needs. And when I think about forward-thinking employers, they're recognizing this need to modernize traditional supplemental health benefits.

Imagine being able to add fertility coverage to a critical illness plan. And not only that, but adding in a definition of fertility that's inclusive and supportive of same sex and single parents. It's really about breaking down barriers and ensuring that everyone has access to the support they need.

And we're also seeing this in hospital indemnity plans, with them expanding coverage to include mental health and substance abuse supports. This means that employees can receive that care that they need. And not just in treatment settings, which is what we had seen in the past, but also increasingly through outpatient services as well. It's really about that comprehensive approach to well-being that truly addresses the whole person.

It's really interesting that they're adding on these benefits to those voluntary coverages. And it's not just enhancing those top line or base line benefits. Our survey is showing growth in those other specific benefits, like we're talking legal aid, ID theft, pet insurance. Are these types of benefits seeing enhancements as well?

Yes, absolutely. Actually, legal coverage has undergone some remarkable transformation. And it's now going beyond those basics of will prep services and estate planning support that we typically hear about in those legal meetings, to covering assistance with important life events. So think about help from domestic partnership agreements to providing support for surrogacy preparation and adoption services, gender identifier changes, even hospital visitation authorizations.

And interestingly enough, we're now seeing a coordination between legal plans and identity theft and cyber benefit solutions. And then to take it a step further, we're seeing more inclusive pet programs. So expanding coverage beyond the typical cat and dog to cover more exotic type pets. Think lizards, bunnies, birds, really trying to expand that inclusive benefit beyond the employee to their family, including their pets.

I'm going to run out and get an iguana and make sure he's covered.

For sure.

It seems like it's a net positive to just expand these options. But I would think there might be some confusion between what's covered under employees' primary medical plan and what's covered through their voluntary benefit elections, especially with some of these expanded coverages that might not be immediately apparent to employees.

Yeah. And really, that's where I think employer communication is critical. A recent survey actually asked 800 full-time employees, would you like to see information about your benefits throughout the year and how those plans can help you with major issues you may be facing? Issues like student debt, data breaches, financial protection, and even life changes like menopause support. And an astounding 81% of those employees said yes.

But what we also found in that survey was despite that interest, a whopping 2/3 of employees admitted they don't fully understand how their benefits work in the first place. And I think this really reveals a critical gap in employees' awareness of that value and relevance of their benefits in their daily lives.

You know, I think in my space, we often see benefits communications really focused and funneled into those weeks just before an annual enrollment. But I think we need to expand that thought. And employers don't need to be limiting themselves to just that time frame. And we need to be looking at utilizing the entire year to periodically educate employees about their benefits and how they can address prominent issues at the moment.

And communications style differ from person to person and even throughout generations. And so we're also seeing employers being encouraged to utilize multiple delivery methods and content formats to reach employees with different learning styles and even in different work environments. So think in-person support, text messaging, QR codes, instant messaging, with ever increasing popularity amongst Gen Z, through social media. Employees are really craving that year-round omnichannel communication. And it directly impacts how valued they feel.

It would appear that some employers have at least gotten that message about the communications because we have seen an uptick in employees enrolling in their voluntary benefits coverage. Our 2023 national survey showed that among large employers that offer voluntary benefits, they reported that 45% of eligible employees, on average, enrolled in one or more of their voluntary benefit plans. And that's up from 36% in 2022, so a sizable increase from one year to the next.

That's a really great point and something I love hearing. And I think in addition to employee population-- or excuse me, participation, it's really important for employers to work with vendors that are providing robust utilization reporting for their voluntary benefits programs.

And the reason I say that is this reporting is really critical in demonstrating the value that these programs are offering and ensuring that employees are not only filing claims. So again, hitting on that employee awareness of their benefit offerings, but also seeing the benefits of the programs that they're enrolled in.

And this information can also be used to guide future benefit decisions, making these programs even more effective and significant for employees. By leveraging utilization and claims reporting, employers can understand how their voluntary benefit programs are being used, or even if they're being used, and start to make data-driven decisions on how to optimize those offerings in the future.

And Jen, if we're looking ahead, are there specific coverages that you've seen that are gaining more traction or more interest from employers in this space?

Yes. So long-term care and caregiving benefits are experiencing significant growth. And I'll give you a little background there. So currently, family caregivers make up nearly a quarter of the workforce. And we're also seeing 10,000 adults in the US reach age 65 every single day. So we can only anticipate that the number of employees who are caregivers is going to increase. And it's projected that increase will be by about 25% in the next 10 years.

And when you say caregiving, we're not just talking about people caring for children. We're also talking about employees that are dealing with elder care. Right?

Yes, that's absolutely correct. And you may have heard this term, the sandwich generation. And we're seeing this generation grow within our workforce. So the sandwich generation are individuals, not only caregiving for children in the home, but potentially caring for parents and/or grandparents as well, giving way to potentially the club sandwich generation. So caregiving is really crucial in addressing organizational issues such as diversity, equity, inclusion and belonging, and mental health care initiatives.

We're also seeing some negative impacts to productivity and presenteeism in the workforce. Unfortunately, the burdens of caregiving disproportionately affect minority groups. Women make up a majority of caregivers, and over half of them are people of color. So the impact of caregiving on mental health is evident.