by Sherry Olson
In 2018, employee benefits make up approximately one-third of a company’s total compensation costs. To maximize an employer’s return on this investment, it’s critical for HR departments and organizations as a whole to take a strategic approach to designing their benefits packages. This will also make it easier to recruit and retain talent in a candidate-driven market at time when the unemployment rate has declined by approximately 20 percent between 2015 and 2017, and in the last year, 14 states set record lows for unemployment.
A good place to start when looking to inform your approach to benefits planning? In addition to WEX Health’s Clear Insights report, the Society for Human Resource Management (SHRM)’s annual Employee Benefits report should be required reading. Springing from its survey of U.S. employers, it tracks the evolution of benefits offerings including healthcare, wellness, paid leave, retirement savings and planning, work/life and convenience, financial and career, professional and career development, travel and relocation benefits. Below are four key findings we pulled out that are relevant for our WEX Health Partners.
- More Than a Half of Employers Now Offer Employees Health Savings Accounts
Given the increase in the prevalence of organizations offering Consumer-Directed Healthcare Plans (CDHPs) since 2014 (30 percent in 2014 versus 40 percent in 2018), it is not surprising that Health Savings Accounts (HSAs) have also increased in popularity, with more than one-half of employers offering this benefit in 2018 (56 percent), as compared to 45 percent of employers in 2014.
- Popularity of Health Reimbursement Arrangements Remains Steady, While Interest in FSAs Has Declined Slightly
In contrast, the percentage of organizations offering health reimbursement arrangements (HRAs) has remained steady at 17 percent to 20 percent over the past five years; flexible spending accounts (FSAs) have declined from 68 percent in 2014 to 63 percent in 2018.
- PPO Plans Are Still the No. 1 Choice, with Consumer-Directed Healthcare Plans in Second Place
Preferred Provider Organization (PPO) plans continue to be the most popular (84 percent), followed by CDHPs (40 percent), Health Maintenance Organization (HMO) plans (35 percent), high-deductible health care plans not linked to an HSA or an HRA (29 percent), and point of service (POS) plans (17 percent); less than 10 percent of organizations offered other types of healthcare plans.
- The Prevalence of CDHPs Has Been Volatile the Past Five Years But Things Are Looking Up Again
In a 2016 SHRM survey, 28 percent of HR professionals indicated that offering CDHPs was the most successful activity in terms of helping their organization control the costs of healthcare. However, the prevalence of CDHPs has been volatile over the past five years, falling by 11 percentage points between 2015 and 2017 and then increasing 17 percentage points (to 40 percent) between 2017 and 2018.
More than two-thirds of organizations increased their benefit offerings to retain employees in the last year. According to SHRM, “Second to compensation planning, designing a strategic benefits plan is the most important step organizations can take to stay competitive. Once a strategic benefits program is in place, the next step is to ensure effective communication of benefits to both current and potential future employees.”
The WEX Health Cloud platform can help employers personalize communications with their employees and customize data to help employees make the most of their CDHP. Learn more here.
Vice President of Human Resources at WEX Health
Sherry specializes in implementation for human resources policies and practices, benefits, rewards, performance management and HR efficiencies. During her 20-plus years in the corporate world, Sherry has served in HR positions in healthcare, high-technology software development and banking. She holds designations as a SHRM Senior Certified Professional, a Global Professional in Human Resources (GPHR), Senior Professional in Human Resources (SPHR), a certified Discovery Insights Practitioner and career advisor, President-Elect for the Agassiz Valley Human Resources Association (AVHRA) organization.