2024 Benefits Trends: What Employers Need to Know
As the COVID-19 pandemic recedes into the rearview mirror, employers are shifting their focus to new challenges in the benefits space. With medical costs projected to rise 8.9% in 2024, many companies will need to make difficult decisions about their health and welfare offerings. They’ll also face growing pressure to support employees’ financial, physical and mental well-being.
Controlling Runaway Health Care Costs
Experts predict healthcare costs will increase at nearly double the rate of inflation this year. Driving this spike are general medical inflation, demand for expensive new gene therapies, and weight loss drugs like Wegovy. As employers absorb most premium hikes to avoid passing costs to workers, managing expenses will be critical.
Potential cost-control solutions run the gamut from integrated wellness initiatives to utilization management. Telemedicine, centers of excellence, and prescription controls may also help rein in spending. With no one-size-fits-all approach, experts recommend that employers evaluate options to find the right balance of cost and care.
The GLP-1 Decision
GLP-1 medications like Ozempic and Wegovy showed up on employers’ radar screens last year as weight loss aids. Now, companies are evaluating whether to cover these pricey injections, given intense employee interest.
In an October survey, the share of employers planning GLP-1 coverage nearly doubled from the previous fall to 43%. The upside for workers’ health and corporate costs from losing weight may justify the investment. Such coverage could also boost recruitment, retention, and enrollment numbers.
Of employers already funding GLP-1 drugs in 2023, most saw increased satisfaction along with a jump in plan participation. As more people learn about the treatments, demand will likely continue rising.
Financial Stress Fuels Benefits Growth
Despite cooling inflation, many consumers report depleted pandemic savings and mounting debt. Employers are responding with more financial health offerings like debt repayment programs, rainy day funds, and student loan assistance.
Industry experts note that such benefits provide outsized value, satisfying employees’ immediate financial needs. With long-term security guardrails like emergency savings also in place, workers can better focus on retirement.
New provisions under the landmark SECURE Act 2.0 will further spur interest in financial wellness. As the policy’s specifics crystallize, employers can leverage its flexibility for workers’ benefit.
Pay Raises to Meet or Top Inflation
U.S. inflation is forecast to moderate to 2.8% in 2024, but employers aren’t taking any chances. Compensation budgets are ticking up 3.8-4% on average to stay competitive amid a tight labor market. Businesses also want to acknowledge employees’ financial strain after years of lacking wage growth.
Despite robust pay increases, worker buying power still trails pre-pandemic levels. Employers would be wise to monitor market data and make additional base pay or one-time adjustments as needed. Otherwise, top talent may continue jumping ship for higher salaries elsewhere.
Mental Health Benefits to Tackle Burnout and Anxiety
Experts warn this year’s trends of worker burnout and election stress will drive more demand for mental and emotional health support. As political tensions and uncertainty around hot-button issues grow, conflict could also plague workplaces.
Employers should consider promoting and expanding behavioral resources like meditation apps, online therapy, and manager training. Additional paid time off for mental well-being may supplement offerings. With proactive steps, to address anxiety and prevent toxicity, organizations can curtail turnover and absenteeism.
Hawaii and Illinois Forge Ahead on Pay Transparency
While most states lacked traction on pay equity legislation in 2023, both Hawaii and Illinois passed far-reaching transparency requirements. Their salary disclosure laws take effect in 2024 and 2025, respectively.
Experts forecast more states will propose mandating employers share pay scale data with candidates and employees. Some regulations may even demand regular updates on workers’ positioning within those bands. Although compliance poses challenges, transparency can strengthen retention when done thoughtfully.
Forward-looking companies would do well to review their compensation frameworks in advance. Identifying and addressing hot spots proactively could pay dividends down the road.
Pensions Poised to Make Comeback?
In a move that shook up the employee benefits world, in late 2023, IBM announced that it would unfreeze pensions and terminate 401(k) matching contributions. Industry watchers now expect other major employers to follow suit.
IBM’s decision reflects a growing push to improve retirement readiness after COVID-19 thwarted many workers’ saving and investing plans. Although rare in the private sector, pensions offer guaranteed lifetime income that shields employees from market swings. They also require significantly less financial planning than defined contribution plans.
As consultants have more conversations with employers on the topic, 2024 or 2025 may usher in a pension resurgence. Even companies that don’t take that step will likely reassess retirement offerings.
For more employee benefits resources and industry insights, contact INSURICA today.
Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.
