Quick look: Rising costs and changing employee benefit needs mean SMB employers should develop their 2022 benefit plans carefully. Here are some of the top trends and changes we see coming in the new year.
As we move into a new year, unemployment continues to drop and demand for top-tier workers remains high. Small- and medium-sized businesses (SMBs) are under pressure to compete against bigger businesses offering higher salaries. Therefore, SMB leaders must budget and plan carefully to attract and retain quality employees.
Here are some of the key topics and important changes affecting SMB employers in the year ahead.
To look at what’s on the horizon for 2022 healthcare premiums, we should turn the clock back to 2020. COVID-19 interrupted healthcare across the board as providers cleared all non-emergency procedures from their schedules to make way for pandemic-related cases. Most of those procedures were shifted to 2021 and beyond. Similarly, many people postponed preventative care or early treatment throughout 2020, causing what were initially small issues to evolve into more serious conditions.
This postponement of care has caused procedural costs to rise significantly over the last year. For healthcare as a whole, these costs may not yet be higher than collected premiums, but the true cost is still yet unknown.
As employees and medical providers play catch-up, there is the potential for renewal rates to increase in 2022. The jump in benefit premiums will likely be higher than in years past. Brokers should be ready to address questions regarding premium hikes and prepare price comparisons for SMBs wanting to shop plans.
SMB leaders must take these higher premiums into account when establishing 2022 budgets. Partnering with a professional employer organization (PEO) could be a smart move—the collective bargaining power of PEO companies enables SMBs to achieve lower premiums than could be obtained under a small group plan.
More demand for mental health benefits
Stress management has always been an issue for American workers, but since 2020, mental health has assumed more importance. Sweeping social unrest, COVID-related upheaval, and the worry of the unknown are taking a toll on employees.
Per Gallup’s State of the Global Workplace report, Some 57% of U.S. and Canadian workers feel stress on a daily basis, an increase of eight percentage points from the previous year. According to SilverCloud Health’s 2021 Employee Mental Health and Wellbeing Checkup, about two-thirds of employees show clinically measurable symptoms of anxiety or depression.
Company leaders recognize the need to help staff members manage stress, with 39% of employers expanding their health plans to include mental health benefits since the start of the pandemic. We expect this attention to mental health to continue, with SMB employers seeking ways to provide more support to their teams.
Many SMBs are launching Employee Assistance Programs (EAPs) to help staff members. EAP services connect member employees to professional service providers for confidential counseling for work or personal matters. These services are often outsourced to third parties and usually come at no additional cost to employees.
Brokers can assist SMB leaders by researching mental health offerings under their clients’ existing health plans or researching EAP options that fit within the business’ budget.
Childcare benefits on the rise
Since the start of the pandemic, virtual school and the shift to remote work have shined a spotlight on workers’ dependency on quality childcare. A recent study by the Harvard Business Review found that close to 20% of working parents left work or reduced working hours throughout the COVID-19 pandemic solely because they lacked childcare, an issue impacting women at higher rates than men.
The link between childcare and productivity means lack of childcare isn’t just a personal issue—it affects businesses, too. At SMBs, every employee’s individual contribution often carries more weight, so falling productivity levels can have a serious and swift impact. Therefore, it is in the best interest of a business to support workers’ childcare needs. We expect more companies to incorporate some element of childcare assistance into their benefit packages in the coming year.
SMBs can support workers with children in many ways, including childcare subsidies, on-site or local child supervision, flexible work schedules, or adjusting paid time-off (PTO) policies to specifically call out family leave.
Ancillary disability plans
With maternity/paternity leave issues garnering national headlines, workers are paying closer attention to family medical leave and other disability protections covered by the law.
Paid family leave mandates vary by state, which can get tricky for employers. New York and New Jersey workers receive twelve weeks of paid leave at 67% and 85% of an employee’s average weekly wage respectively (maximums apply). In states like Pennsylvania, workers are subject to federal Family and Medical Leave Act (FMLA) requirements, but no state-specific laws are in place.
Many SMBs are offering the option for workers to contribute to critical illness insurance and/or supplemental long- and short-term disability plans to provide more robust coverage in case of pregnancy or planned/unplanned medical events. Employers are turning to PEO companies for help drafting compliant leave policies and developing new disability benefit offerings.
Student loan reimbursement and tuition assistance
Many of today’s younger employees are focused less on saving for retirement and more on alleviating themselves of financial burdens still carried from higher education. Around 46% of millennial workers say student loans are significantly impacting their ability to meet their financial goals. Helping employees offset student loan debt or contributing to professional skills development through tuition reimbursement are two ways today’s employers are investing in staff.
A provision in the 2020 CARES Act (extended to 2025) allows for employers to make up to $5,250 in student loan payments in a year for an employee, tax-free. Employers receive a payroll tax exclusion and employees are not required to pay taxes on that amount. Employers who choose to take advantage of this financial incentive not only help employees pay down debt but also demonstrate a commitment to their staff’s education.
In 2021, Amazon announced it would cover 100% of tuition costs for its U.S. employees, a move echoed by major employers like Target and Walmart. Big corporations may be able to offer full coverage for workers, but many SMBs are also offering some level of tuition assistance, a trend we see continuing through 2022 and beyond.
Helping staff develop skills to put to immediate use or as a means of furthering their careers demonstrates a business’ commitment to supporting workers’ long-term professional journeys. Pledges like these are another way smaller employers can appeal to workers in a competitive market.
PEO companies help SMB employers stand out
SMB employers are facing an uphill battle as competition stays tight for top-tier employees. However, smaller employers can garner more attention by offering Fortune-500-level benefits on par with bigger employers. PEO companies enable SMBs to achieve better group pricing on insurance and deliver new ideas and innovative solutions for HR management.
Businesses will need to pay close attention to their benefit offerings in the coming year. However, working closely with brokers or partnering with HR experts at a PEO company helps SMB employers upgrade benefits to attract more interest as the new year unfolds.
Turn to HR experts for insight and advice on up-and-coming benefits to bring in the best workers. Contact ExtensisHR today.