What to Expect in VB as a Pandemic-Weary Workforce Faces New Realities
BY MIKE WILBERT
The COVID-19 pandemic disrupted our lives and our workplaces over the past year. As more Americans receive the COVID-19 vaccine, the pandemic will wind down. But much of what changed in our world won’t go back to normal. Rather, it will be our “new normal.”
All of us have had to master Zoom skills. Employees have adapted to working remotely, learned how to juggle the needs of the kids and the dog while getting their job done as well, and figured out ways to connect with co-workers. Employers have realized that remote work can be productive and that work teams don’t have to be sitting around a conference table to accomplish goals.
The employee benefits landscape has changed as well. Employees have different priorities as a result of the pandemic and their perspective on benefit choices has shifted, focusing for the most part around financial well-being. They are dealing with new economic realities at home after a spouse was laid off, unexpected expenses derailed their budgets or any number of challenges arose in an unprecedented year. For employers, this means that benefits previously thought of as “nice to have” are now a “must have” in the benefits package.
Voluntary benefits have always been about offering more flexibility and more resources—things employees need now more than ever. During the pandemic, as employers have seen their employees struggling and sought out ways to help them cope, voluntary benefits have shined. Virtual care, mental health services, critical illness coverage, childcare and financial well-being are among the needs and priorities for employees as they deal with pandemic reality.
Last fall in the midst of the pandemic, Purchasing Power conducted an informal survey of 93 HR professionals to assess the impact that both COVID-19 and financial stress is having in their workforces. The survey asked about the financial challenges their employees were facing. Employers reported the following circumstances:
- 81% said employees had a spouse or partner laid off or furloughed during the pandemic, so money is tighter than ever
- 49% said employees had family or household members who contracted COVID-19 and there were unexpected medical expenses involved
- 48% said employees had college-age children return home from school, 34% said employees had extended family members out of work who needed financial support.
THE VALUE OF VOLUNTARY BENEFITS
Because they can address many of the specific needs that employees have as they continue to struggle with and overcome pandemic challenges, voluntary benefits have taken on a significantly more important role now.
In recent years voluntary benefits have seen more popularity as the products themselves have become more diversified and appealing to the multiple generations in the workplace. But then, voluntary benefits have always been a win-win for employers and employees. For employers they are an excellent recruiting and retention tool while employees see voluntary benefits as an opportunity to choose benefits that they need or want.
The impact of COVID-19 on employees’ lives and their finances really put the spotlight on the value of voluntary benefits, which have given employers a way to meet the shifting needs and priorities of their workforce during this critical time.
It will be no different this year. Employers will continue to seek ways to expand the voluntary benefit offerings in their employee benefit packages. It’s a way to provide more customized options to meet workforce needs, whether targeting traditional voluntary benefits or non-traditional ones for lifestyle, personal wellness and financial health.
In recent years voluntary benefits have seen more popularity as the products themselves have become more diversified and appealing to the multiple generations in the workplace.
What should we expect to see in the voluntary benefit industry this year?
1. A growth spurt for the voluntary benefits industry.
Over the past decade, voluntary benefit sales have grown at a compounded annual growth rate of 5% a year, as employer-paid benefits declined, according to a Moody’s Investors Report last October.
In the voluntary benefits space, traditional insurance-related products such as supplemental life insurance, disability income, and dental account for over 60% of total 2019 sales. However, non-traditional voluntary benefits, like pet insurance, elder care, and student loan services programs have gained traction, particularly with younger buyers, who prefer the increased choice and customizable options.
Look for a jump in the growth rate this year as employers expand their offerings and as employees are choosing voluntary benefit options as a ‘go-to’ to help them face financial challenges as a result of COVID-19.
2. All voluntary benefits that address employees’ financial well-being will likely take top billing.
One critical piece of pandemic disruption that employers can’t overlook is their employees’ financial situation. For many employees, COVID-19 certainly drew attention to their fragile financial condition. In a September 2020 Harris Poll, 84% of Americans reported that the COVID-19 outbreak was causing stress on their personal finances. And 39% said they will feel “very/somewhat worried” about their financial situation 12 months from now.
As a result of the impact the pandemic is having on their finances, a SoFi survey found that 50% of people feel it is more important now that employers offer financial wellness benefits. When asked what their employer could do to have the most significant impact on their personal financial situation, they said, “make a contribution to my rainy-day fund/emergency savings account.”
As employees continue to look for ways to stretch their paycheck and recover from the financial hardship of the pandemic, voluntary benefits like employee purchase programs, bill payment programs, medical deductible financing, financial counseling and student loan repayment benefit programs will get more attention (and participation). It’s also likely we will see more financial wellness and well-being products introduced this year.
3. Even more customization of benefits will be of interest to employees.
Being able to pick and choose benefits that are important to them has always been the attraction of voluntary benefits for employees. Because of the pandemic, many voluntary benefits will stand out as options for these times. We’ll see employees paying more attention to benefits that they might not otherwise have found as important or needed pre-pandemic, such as pet insurance, identity theft protection, legal insurance and employee purchase programs.
With more people working from home, an increase in pet adoptions is making pet insurance a highly requested voluntary benefit. Because cash and credit are not always readily available, the ability to purchase home office and exercise equipment or needed appliances through the convenient payroll deduction system of an employee purchase program can be an invaluable benefit. As a result of the pandemic, we can also expect more interest in critical illness insurance and mental health benefits. A recent Mercer survey revealed that 22% of employers are enhancing voluntary benefits like critical illness insurance and 20% are adding or improving behavioral healthcare benefits.
4. Employees will continue to look more closely at voluntary benefits available to them.
The pandemic has forced many employees to look for resources and assistance they may never have thought about previously. Pre-pandemic, when open enrollment time rolled around and the entire employee benefits package needed review, it was often easy for employees to ignore or overlook some benefits.
Kiplinger’s Consumer News Service reported that for the last enrollment season, nearly 7 in 10 employees (71%) planned to spend more time reviewing their voluntary benefits as a result of COVID-19 than they did for 2020 and more than half (53%) planned to make changes to their benefits coverages.
Now that employees have begun to pay more attention to voluntary benefits, we’ll see that trend continue. Additionally, we’ll see employers scheduling more off-cycle benefit enrollments, especially for new voluntary benefits, in order to provide employees additional options that help with parts of their lives affected by the pandemic.
This year, voluntary benefits will become an even more personal choice for employees as they continue to navigate the effect the pandemic has had on their financial situation. Being able to pick and choose products that will meet their individual needs is going to be a lifeline for many who are still recovering.
MIKE WILBERT is chief revenue officer at Purchasing Power, a voluntary benefit provider. He has 30 years of experience in the insurance and voluntary benefits industry.