5 Employee Benefit Trends to Watch in 2016
By Susan Johnston Taylor
Open enrollment has already begun at many employers, so you may have already noticed changes to your health plan or other employee benefits. Here's a look at what to expect on this front heading into 2016 – and what it means for your wallet.
Evren Esen, director of survey programs at SHRM, says she's seen an increase in health and lifestyle coaching, smoking cessation programs and incentives or bonuses for employees who participate in fitness programs or complete health assessments. Interestingly, 11 percent of respondents in the SHRM survey even offered on-site massage therapy, which ties in with overall health and wellness. "A lot of employers are finding that wellness programs are helping not only to encourage their employees to be healthier, which impacts healthcare costs," Esen says, "but create a sense of community within their organizations."
Employers who already offer wellness programs are getting more sophisticated in those offerings. Jim Winkler, chief innovation officer for health care at Aon Hewitt, a human resources, consulting and benefits firm, says he's seeing a movement away from what he calls "wellness 101." The focus used to be "give everybody a pedometer and let's make sure we do education about eating five servings of fruits and vegetables," he says. Now, he explains, it's "a much more holistic program focused on well-being, which includes emotional and financial."
2. Financial fitness. Financial health can contribute to emotional and physical health, so a growing number of employers now provide resources to help employees manage and invest their money. This can take the form of online resources, one-on-one financial advising, seminars on saving for retirement or paying for college and more. In fact, Aon's 2015 Hot Topics in Retirement report found that 93 percent of 250 employers surveyed said they are very or moderately likely to expand their focus beyond retirement to other aspects of financial wellness.
"Employers are seeing that having people who are more financially literate should help them reduce their stress and help them become better, healthier employees," says Rob Austin, director of retirement research at Aon Hewitt. "[They want to] make sure people don't spend their time on the job dealing with creditors."
3. High-deductible health plans. Employers face higher health care costs, and many are shifting these expenses onto employees in the form of surcharges for insuring a spouse who has access to insurance through his or her own employer and higher deductibles. The Kaiser Family Foundation's 2015 Employer Health Benefits Survey found that the average deductible amount for workers in plans with deductibles has nearly doubled the past decade, increasing from $584 in 2006 to $1,318 this year.
One way for employees with eligible high-deductible health plans to cover out-of-pockets costs is to pay for medical expenses with a health savings account (or HSA for short). For calendar year 2016, the IRS defines high-deductible health plans as plans with an annual deductible of $1,300 for individual coverage or $2,600 for family coverage. The annual contribution HSA limit for 2016 is $3,350 for individuals or $6,750 for those with family coverage.
HSAs help employees "[pull] back the covers and [let] people see the costs of health care, but it's a great way to save for retirement too," points out Brooke Lanier, director of benefit services for PrimePay, a third-party benefits administration company based in West Chester, Pennsylvania. The money you put in an HSA does not need to be used the same year of your contribution and, after age 65, you can withdraw funds tax-free for nonmedical expenses subject to ordinary income tax. Earnings and interest on HSAs are not taxed.
4. More transparency around retirement account fees. New rules around investment fee disclosures mean that fees you pay on your 401(k) or other retirement accounts may be more visible than in the past. "We're seeing many more employers charging administration fees as a flat dollar amount, where it used to be a percentage of your assets," Austin says. You may not have noticed the fee in the past but don't panic now it's more visible. "You're probably paying a lot less now than you were," Austin says.
5. Greater automation and integration of benefits. Some employers who used to handle paperwork by hand are moving toward online systems that automate the process. "Clients want to automate delivery of information to us for enrollments, terminations or from their carrier for claims processing," Lanier says. "By integrating that with your [insurance] carrier, you don't have to remember to file that claim to get reimbursed." While it helps employers reduce administrative headaches, it's also good news for employees, because it potentially means faster and easier reimbursements.
Winkler has also observed how benefits programs that once existed in separate silos are now moving under the same umbrella. "Employers are increasingly understanding the connectivity between health benefits," he says. "Absence management programs, safety management programs, all those things are increasingly interconnected. You may see a wellness program that's focused on reducing worker's compensation claims, which is a space we've traditionally kept separate."
Automation also applies to retirement enrollment in some cases. "Right now we see more than half of [employer-sponsored retirement savings] plans have automatic enrollment," Austin says. "In the past, [the starting contribution] might have been [a] 3 percent rate, but now it's coming in at a 6 percent rate." Default contribution amounts tend to stick, so starting higher means employees will save more money over time, Austin points out. Some employers offer automatic escalation, so that your 6 percent contribution might increase to 8 or 10 percent over time. If yours doesn't offer this, it may be time to revisit your plan to see if you can contribute even more, especially if you've received a raise.