This past year has been a particularly good year on many fronts. The economy is roaring, unemployment is low, and businesses are investing in themselves. With all the good news comes greater productivity and the need to hire more employees. That means the labor market is tighter now than it has been in decades. It is a good problem to have, but a problem, nonetheless.
Under these conditions, healthcare coverage and other benefits become critically important in both recruiting and retention. Companies that cannot compete on benefits are at a decided disadvantage. How is your company doing? Below are some things you need to know about healthcare and benefits for 2020.
Insurance Rates Are Going Up
At this point in the game, you should already know what your insurance rates are going to be for 2020. What you might not know is how they compare to rates across the country. Needless to say that the cost of health insurance is going up again this year. The good news is that 2020 price hikes, as a percentage, are not as high as in past years.
Data from the Society of Human Resources Management (SHRM) suggests a median increase of about 6% for health insurance benefits in 2020. A typical large employer paying the median $14,642 per employee in 2019 will see that cost increase to $15,375 in 2020. That same data shows that large employers are prepared to cover up to 70% of the total cost of health insurance for their employees in the coming year.
Companies unable to afford standard health insurance do have some options. For example, a consumer directed health plan (CDHP) combined with a health savings account (HSA) can meet employer obligations without costing nearly as much. Employers can manage costs by employing strategies like telemedicine and establishing in-house primary care clinics.
Employees Want Unlimited PTO
One of the more popular benefits heading into 2020 is unlimited paid time off (PTO). An unlimited PTO policy essentially allows employees to come and go as they please – within reason – as long as they accomplish all their work and do so to company standards. Combining unlimited PTO with flexible scheduling gives employees maximum freedom.
According to a survey conducted by MetLife, some 72% of U.S. employees want unlimited PTO. Granted, it is not a good strategy for every industry. Hotels and restaurants could not offer the benefit and still survive because scheduling must be tightly controlled to serve customer needs. But for industries where it works, interest is rising.
A Lack of Understanding
Perhaps the most important component of this update is the fact that many employees don't fully understand their benefits. This is troubling in as much as companies try to give their workers the kinds of benefits they want. If those workers do not understand their benefits, how can they take maximum advantage of them?
Data from Maestro Health indicates that 35% of employees with health insurance either know nothing about it or don't fully understand it. Furthermore, 33% do not understand their own medical bills. It is assumed that this lack of understanding extends to 401(k) plans, health savings accounts, and other cash benefits employees qualify for.
As we head into 2020, our advice for employers is to take the time to educate employees about all their benefits. Take the time to sit down with them in order to explain things in detail. If there are any questions, provide thorough but understandable answers. As always, do not hesitate to contact us if you need help with payroll or benefits administration. We are the payroll specialists.