2022 Employee Benefits Market Outlook Executive Summary
March 11, 2022
The challenges of the past few years have been unprecedented, and they have changed the way that employees think about the workplace, benefits, and their careers. Employers are still facing an uncertain future due to the COVID-19 pandemic, rising healthcare costs, and the “Great Resignation”, with no end in sight.
Understanding these challenges is essential for keeping your business prepared and profitable. Read on to learn more about what factors influenced the employee benefits market in 2021, and what you can expect in 2022.
Please note: This is a high-level executive summary. A full copy of the report is available by clicking here: 2022 Employee Benefits Market Outlook .
The Challenges of 2021 Remain
It’s impossible to look forward to the future without understanding the past. In many ways, the unique, but interconnected, trends of 2021 will help you as a business owner make sense of the current state of affairs as each of these influences will have a major impact on the trends expected throughout 2022.
The COVID-19 Pandemic:
As we saw in 2020, the pandemic remained the most significant market disruption in 2021. The pandemic never considerably improved in 2021, and while vaccination rates are increasing and return to work is beginning in some areas but with a changed focus, COVID-19 cases continued to trend upwards, and the economic uncertainty caused by the pandemic continues.
In early 2021, economists predicted returning to the workforce in droves – but that never happened. Instead, at the end of 2021 there were still over 6 million unemployed Americans, and countless job opening that hadn’t been filled. It was all due to a fundamental change in how workers viewed their labor and the value of employee benefits, especially in the service sector. Employees are holding out for better jobs and more meaningful benefits – and that’s what you as an employer need to grapple with in 2022.
Rising Health Care Costs:
For over a decade, employers have experienced steadily increasing health care costs. While some choose to defer nonemergency health care during the pandemic, 2021 saw individuals return to their normal health care routines, increasing the utilization of care and a resulting cost increase. Once again, you, as an employer, faced with major cost increases, were forced to reconcile limited budgets with employees demanding more value than ever from their benefit offerings.
Looking Forward to 2022
COVID-19 Isn’t Going Anywhere:
The COVID-19 pandemic is showing no signs of slowing down in 2022. The ripple effects of the pandemic will continue to be a catalyst for many of the workplace trends we expect to see in 2022.
Give Employees the Flexibility They Want & Need:
Thanks to the shift in workplace norms employers experienced during the pandemic, the one-size-fits-all model that many employers have used for employees just isn’t going to cut it anymore. Employees want more from their jobs – and they’re willing to change jobs to find it. According to a SHRM (Society of Human Resource Management) survey, 36% of employees are willing to change jobs for better benefits.
If employers want to attract, hire, and retain the employees that are invested in helping their company grow, they need to meet their employees in the middle. And that means offering a workplace and benefits package that is holistic, flexible, and can meet the needs of each individual employee. Employees want jobs and benefits that will have a meaningful impact on their quality of life, and means employers need to think beyond the basic benefit offerings that they have provided in the past. In addition to basic benefits, employees are looking for expanded PTO, flexible leave options, remote & hybrid work options, expanded mental health services, student loan relief and virtual open enrollment and easily accessible & simplified benefit education to name a few.
Protect the Bottom Line:
While keeping employees happy is going to be key in 2022, employers still have to consider how they can protect their bottom line while health care costs continue to rise.
One option to consider is switching to an alternative health plan model, such as individual coverage health reimbursement arrangements, reference-based pricing or level-funding. All these options have been available for some time but they have been successfully scaled so that they are available now to a greater number of employers, especially those with under 250 employees.
At the same time, keeping employees educated on how to make the smartest health care decisions can also have a large impact. By ensuring that employees understand how their health plans and prescription coverages work, employees will make smarter usage decisions, which will lead to lower costs for both you, the employer, and your employees. After all, it’s in everyone’s best interest to work together.
Ready to learn more?
2022 will be a year full of challenges, thanks in large part to the pandemic and its wide-reaching consequences. It will also be a year of opportunity. After nearly two years of a pandemic, it may be tempting for employers to sit on their hands and wait for a return to normalcy. But successful organizations will be those that prepare for and embrace the new normal.
In 2022, employers will need to think creatively about how they can accommodate employee desires while also controlling costs and ensuring worker safety from COVID-19. While this may seem daunting, organizations that rise to the occasion will be well positioned for future growth and stability.
Reach out to Mike Young at MY-Employee Benefits to discuss these trends in more detail and request additional resources on these and other important workplace topics that will position you as an employer of choice in this new environment. He can be reached at 714.716.4060 or mike@my-EBP.com .