Responding to Escalating Healthcare Costs: What Matters Most to Employees

Employers must employ a strategic, data-driven approach to ensure workplace benefits investments are efficient and effectively directed towards what matters the most to employees.

The cost of healthcare coverage continues to rise at alarming rates. Medical costs for employer-sponsored plans are expected to outpace inflation and increase between 6.8% and 7.3% in 2024, according to projections cited in a recent SHRM article. It follows a multi-year trend of increases since 2015.

This year, employers are facing ballooning healthcare benefit costs amid heightened economic uncertainty, tougher business conditions, higher-for-longer interest rates, and strained household budgets.

Employers are grappling with how to respond. They worry about jeopardizing workforce health and wellbeing. Will cost-sharing approaches cause undue burden and make healthcare benefits unaffordable for plan participants? What strategies can help optimize benefit investments for maximum impact?

The following are three priorities for a thoughtful, strategic response:

Take a Segmented, Research-Based Approach to Optimize Benefits Packages

Today’s workforce is increasingly made up of people at different life stages, career stages, and age groups. In a historical first, five different generations—Gen Z, Millennials, Gen X, Baby Boomers and the Silent Generation—are now working together side by side. Healthcare behaviors like the use of preventive care, telehealth or digital health usage vary widely by generation. Single parents will have different healthcare priorities and economic needs compared to employees from dual-income households without children.

Following OneDigital’s 2024 Employee Value Perception Study (OneDigital Study), OneDigital researchers were surprised to discover U.S. employees prioritize a company’s brand or reputation over healthcare benefits when choosing an employer.

This health-benefits demotion as a value-driver was even more pronounced among advanced-level employees with 6-to-12 years of relevant experience. This segment of the workforce relegated health benefits to third place behind a company’s brand/reputation and work-location/schedule flexibility as a value driver influencing their decision to leave or stay with an employer.

As the workforce continues to change and evolve in unexpected and surprising ways, employers must look beyond cookie-cutter, one-size-fits-all approaches to benefits. Employers must take a segmented, research-based approach to build an informed, empathetic understanding of the needs, priorities and values of their increasingly diverse workforce. Research and segmentation are critical first steps toward building a benefits program that can truly impact the health, financial wellbeing, and success of their employees.

Help Employees Understand the Value of Their Benefits

Employers are finding themselves having to allocate more of their budgets to healthcare coverage and employee benefits in an effort to ensure employees have the support they need to stay healthy. Unfortunately, these efforts often go underappreciated by the target beneficiaries.

Employers must find ways to improve healthcare benefit communications.

This includes making sure employees are aware of the types of healthcare services available to them and how to use them. Effective benefits communication should be engaging with the right messaging tailored for each audience segment in the workforce.

Depending on the situation, a mix of digital, face-to-face interactions, email and text should be considered. Complex healthcare benefits should also be explained in ways that are jargon-free and easy to understand.

Employers can also consider using analytics to gather insights for targeted benefits communication.

For example, in the OneDigital Study, researchers discovered that as many as 34% of employees forgo medical treatment or medication because of cost concerns. This increases the risk of workplace absenteeism, higher insurance claims down the road and chronic disease.

At this juncture, it would make sense to consider a communications campaign designed to boost benefits engagement around preventative care.

Provide Broader Support Programs

Finally, employers should recognize that employees struggling with rising cost-of-living expenses will feel the burden of higher medical costs more acutely. Employers must find ways to tailor benefits offerings, such as providing health savings accounts, financial planning, and student debt contributions, if they want to continue to be an essential lifeline for their employees when it comes to their health, success and financial security. Learn more about how to Mind the Value Perception Gap in Benefits to enhance employee satisfaction and maximize the value of your benefits program.

Ready to begin navigating rising healthcare cost complexities with confidence?
 
Check out OneDigital’s 2024 Employee Value Perception Study for insights to help optimize your total workforce spend to improve ROI and enhance your employee experience.