BenefitsEngaged Workforce

The Options Imperative

The Great Recession and the health reform bill have radically altered the HR landscape. Get ready.
 

By Thomas R. Giddens
 
 
For many HR decision-makers, the Great Recession has arguably led to the Great Balancing Act—that is, the all-encompassing struggle to balance the needs of the business with the needs of employees. There has perhaps never been a more interesting time to work in the human resources profession than in the aftermath of this recession and at the start of landmark health reform. Here are four benefits trends that most HR executives will need to contend with in 2011.
 
 
Trend 1: The growing complexity of the health insurance market will require improved education of workers and HR practitioners.
There is often a large disparity between HR executives and their employees when it comes to the effectiveness of benefits communications. According to a 2010 Aflac study of employers and employees, 40 percent of HR executives said they believed they were “extremely/very” effective in communications about benefits, whereas 40 percent of employees rated their HR departments “somewhat” effective in communicating about benefits, and another 27 percent said “not very/not at all” effective.
 

Given the growing complexities brought on by health reform, 2011 is an ideal time to begin closing that communications gap. More than half (55 percent) of employees rely on their HR departments to inform them about benefits, and that reliance will only grow in the next year. In a poll conducted by Harris Interactive, HR executives said they feel the pressure to understand health reform, naming understanding that landscape as the second biggest benefits challenge.
 

For example, workers will need guidance about the potential impact the flexible spending account limitations and caps will have on their budgets. Or, large departures from traditional health care plans in favor of health savings plans alongside high deductible health plans, as an example, will require a major education effort.
For many employees, it will be less about what changes are made and more about how those changes are communicated. According to the Aflac study, nearly half of workers (41 percent) said a well-communicated benefits program would make them less likely to leave their jobs—a pretty powerful incentive to close the communication gap.
 
 
Trend 2: Wellness initiatives are especially crucial—if employees use them.
Wellness will be a hot topic for years to come, particularly given the focus it is receiving within health reform. While the new legislation affords many provisions to entice companies to build or enhance their wellness programs, the old challenge of incentivizing workers to take advantage of preventive measures still exists.
 

Many of the HR executives who are tasked with implementing wellness programs within their organizations will be pressured to deliver the much-anticipated cost savings that can be gained from institutionalizing effective preventive health care programing. And the success or failure to meet those goals will likely depend upon the amount of participation, or nonparticipation, on the part of employees. Even the Centers for Disease Control and Prevention (CDC) is offering employers consultation, tools, and methods to help increase program participation.
 

Businesses will need to seek out creative, innovative approaches to boosting worker participation. For example, some companies have leaned on a universal motivator—money. Imagine if employees were paid to go to the doctor for preventive procedures, checkups, or vaccines. An increasing number of HR executives and workers are discovering that some voluntary insurance plans include a wellness benefit that will not only cover the expense of the preventive procedure (i.e., mammograms, vaccines, etc.) but even pay policyholders cash to use it. Other incentive programs might include an awards program based on points earned when achieving a wellness goal.
 

The bottom line is that wellness plans are only as good as the number of workers who use them, which means HR professionals should turn their attention to the incentive component of preventive health care programs.
 

Trend 3: Benefits needs should be addressed based on generational dynamics.
As if HR executives don’t have enough to juggle in 2011, there will be a continued need to manage the new cocktail of company culture—a rich mixture of Traditionalists, Baby Boomers, Generation X, and Generation Y. Although these segments of workers have been labeled many things, the reality is that each generation has its own style of working, its own belief systems, and each abides by different rules and expectations of the workplace. HR professionals will need to develop strategies to keep the workplace cohesive, while meeting the varying needs of each generation.
 

This rings particularly true when it comes to benefits options. The Aflac study found that only four in 10 employers currently tailor their benefits offerings to their employees based on their needs at different levels or life stages. Yet, there are clear nuances when it comes to different generations and their benefits needs. Most importantly, the majority (66 percent) of workers say that they would be more likely to take advantage of a benefits package that is tailored to their personal situations.
 

Consider building benefits packages that specifically address the unique needs of generations. For Baby Boomers and Traditionalists, a package might include heavy retirement savings plans/incentives, health savings plans, or voluntary insurance policies. These plans help protect their assets in case of serious accident or illness during time of need, and are portable, allowing them to retain their insurance coverage long after they stop working. Companies can even consider fringe benefits, such as grandchild care or flex-time/part-time options.
 

For Gen X workers, a recent Aflac study found that for many (38 percent), having enough money to meet their current expenses is a top challenge—more so than any other generation group. In addition, Gen X employees ranked Wages Keeping Pace With Inflation as one of their top two issues of concern today. These consumers are also most likely to be enrolled in, or interested in enrolling in, ancillary benefits. The study found that 73 percent are enrolled in dental insurance and another 52 percent in vision plans. Benefits decision-makers need to consider these unique concerns and priorities for Gen X workforce, building in compensation incentives, bonus structures, and options to purchase voluntary ancillary products, such as dental and vision.
 

When it comes to Gen Y workers, financial planning and retirement savings is another area where different needs and goals will need to be addressed. Many Gen Y workers place a high importance on financial security, yet often are the least likely to be financially prepared. The good news is they have time on their side. Therefore, long-term financial planning tools, money management advice and perks, such as bonuses, work/life balance options and career development paths will be in high demand.
 
 
Trend Four: Benefits programs will become a greater differentiator.
Although the market can still be characterized as an employer’s market, this will begin to shift back to an employee-driven environment, where top talent will be in short supply and high demand. When this happens, and it will, a company’s ability to demonstrate value and goodwill to its workers by offering a benefits package unmatched by competitors will mean the difference in high or low retention rates.
 

Health reform will have an impact. With the establishment of minimum benefits standards and the option to move from employer plans to exchange plans, major medical coverage will likely become more homogenous than it is today. At the same time, HR professionals will be pressed to offer health care benefits options that will soften the impact of the inevitable cost-shifting and rising out-of-pocket costs on its valuable workforce.
 

Employers should consider plans, such as voluntary insurance policies that have no direct cost to the company, but that offer workers choice in additional coverage that best suits their needs. These types of supplemental insurance policies and ancillary benefits offerings will be a greater differentiator than ever before in the battle to attract a talented workforce.
 

Simply put, the more that employers provide options and opportunities for workers to apply for the right amount and type of coverage to meet the needs of them and their families, the more likely their workers will be protected, healthier, and, perhaps, more productive and loyal. 
 
 
Thomas R. Giddens is senior vice president and director of sales at Aflac. “Insurance for Life” was a survey conducted for Aflac by Harris Interactive, September 2010.
 

Tags: Benefits, Engaged Workforce

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