Planning for 2024: Employers will Enhance Benefits, Avoid Cost-Shifting 

While health benefit cost per employee has been rising by about 3% annually for the past decade, this year employers are projecting a sharper increase of 5.4% as inflation drives up healthcare prices. Given the outlook for faster cost growth, we might expect employers to start to pull back on health benefit offerings. However, based on results from Mercer’s Survey on Health and Benefit Strategies for 2024, fielded in February and March of this year, that doesn’t seem to be the case. With the labor market still tight in many industry sectors, nearly two-thirds of large employers (those with 500 or more employees) say they are planning to make enhancements to their health and well-being offerings in 2024 to support attraction and retention and better meet employee needs. Over a fourth have made enhancements within the past two years.

But with budget pressures mounting, employers looking to enhance benefits will need to do it carefully – not by adding bells and whistles, but by looking for opportunities to add value. That might mean filling gaps in current offerings with more inclusive benefits. It might mean revisiting time-off policies to give employees more flexibility. It definitely means paying close attention when employees say they need better support for their mental health, a message that is coming through loud and clear in surveys of workers.

The new survey also asked employers if they expect to make health plan design changes in 2024 that would shift more cost to employees through higher deductibles, copays, or out-of-pocket limits. While about half may raise cost-sharing amounts somewhat, only 3% say that they will shift enough cost through plan design changes to lower their projected cost increase, and 45% will not increase cost-sharing at all.

With significant cost-shifting off the table for most employers, they will have to get creative to meet the challenge of offering benefits that employees want and need, and healthcare they can afford, while also managing cost growth. In upcoming posts, I’ll share survey results that look at specific strategies employers are pursuing.

The Mercer Survey on Employer Health & Benefit Strategies for 2024 was designed to discover how employers will prepare for rising health care costs while continuing to adapt benefit strategies for 2024 to improve attraction and retention and better meet the needs of the whole workforce. The survey was conducted from February 14 through March 10, 2023. The results in this post are based on 512 organizations with 500 or more employees. In total 721 organizations participated, from all industries and sizes (fewer than 500 employees: 29%; 500-4,999 employees: 45%; 5,000 or more employees: 26%).