As the COVID-19 pandemic worsened in 2020, businesses everywhere faced tough decisions regarding furloughs and layoffs, and an unprecedented number of employees began working from home. Almost overnight, the workplace changed, and with it, employee preferences and needs for employer-provided benefits changed as well. As we move into 2021, the new socially-distanced workplace is likely to experience more change, as well as new regulations affecting the benefits and services offered by employers.
Here are our predictions for benefits changes to expect as 2021 gets underway:
Remote work will drive digital benefits solutions
Remote work is here to stay, and 2021 will likely see more fully or partially remote work arrangements. According to a PWC survey, 55 percent of employers said they anticipate their office-based employees will be working remotely at least one day a week even after the pandemic has passed. As more employees spend more time working from home, there will be a greater need to offer a completely virtual benefits experience—for open enrollment, COBRA administration, and day-to-day benefits management.
Nontraditional benefits will become more common
As employee needs and family dynamics continue to evolve, employees are likely to seek more voluntary benefits to support their physical and mental health. According to a Voya Financial survey, 71 percent of employees plan to spend more time reviewing voluntary benefit options due to COVID-19 than they did during the last enrollment period. Expect the following benefits to gain more traction in 2021:
- Childcare and eldercare – Caregiving benefits will appeal to employees with children at home during all or part of the school week, as well as those with elderly family members who need more assistance during the COVID-19 pandemic.
- Telemedicine - As employees seek physical and mental wellness in uncertain times, virtual health appointments and counseling will grow as a viable alternative to in-person care. In a Business Group on Health survey, 52 percent of organizations said they plan to offer more virtual care benefit options to employees in 2021.
- Pet benefits – To combat loneliness, pet adoptions soared in 2020 due to the pandemic. But with more furry feet at home, employees may take advantage of benefits to help them manage the costs. One survey found that 47 percent of dog owners (and 41 percent of cat owners) said having a pet is more expensive than they thought it would be.
Employee assistance programs will grow in popularity
Employee assistance programs (EAPs) have been around for some time, with traditionally low utilization rates—below 10 percent, according to a recent SHRM report. However, with the challenges posed by COVID-19 and the impact on employee physical and mental health, EAP programs are likely to become more valued by employees going forward. Two employee surveys conducted by The Hartford in March and June 2020 found that the percentage of employees expressing interest in EAP programs rose from 38 percent to 56 percent, a trend that may continue as employees seek new resources and support during challenging times.
Employee benefits and services will become more personalized
2021 is likely to bring a renewed focus on benefits and services geared toward unique individual needs and family situations. Though employees will still value the options offered through traditional benefits programs, they will likely take advantage of benefits programs offering increased flexibility and customization. A Willis Towers Watson study found that 42 percent of employees would even trade part of their pay for more expansive benefits. Researchers in the study noted that employees “…want choice and personalization and are looking to their employers to provide tools to ensure they make good decisions on issues that are often quite complex.”
Some of the personalized benefits and services likely to become more common in 2021 include:
- AI-powered decision support tools to optimize employee benefits selection
- Stipends or allowances that employees can use to make purchases such as home office equipment and services, health and wellness aids, and home meal delivery
- More a-la-carte benefits selection options during open enrollment
Health insurance premiums will rise moderately
Premiums will rise slightly in 2021, with predictions ranging from a 4 percent to 10 percent increase over 2020 premiums. Employers facing premium increases will need to consider the optimal mix of benefits to offer employees based on premium costs and whether to adjust the employer contribution.
To manage the rising cost of benefits, it will be essential to take advantage of solutions designed to reduce overpayments and underpayments of premiums, as well as any carrier invoice errors that can drive costs up even further. Employers can take steps to ensure each benefit dollar is spent wisely by employing tools such as Benefits Reconciliation.
Federal and state benefits regulations will change
In response to COVID-19, several laws were passed in 2020 to support American workers, including supplemental unemployment insurance and expanded paid leave benefits offered through the Families First Coronavirus Response Act (FFCRA).
With a new President-elect and new laws passed in several states during the 2020 general election, employers can expect the following regulatory changes throughout 2021:
- New COVID-19 Vaccination Requirements. Based on new guidance from the Equal Employment Opportunity Commission (EEOC), employers will be able to require employees to receive a COVID-19 vaccination without violating the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA).
- The Affordable Care Act (ACA). The cost-share limit may increase. Another increase may require some employers to lower the pricing of certain benefit plans to avoid ACA non-compliance penalties.
- State Family and Medical Leave Benefits. New laws in states such as Connecticut and Massachusetts will provide more family and medical leave benefits to employees.
2021 Predictions From Around the Country
We asked leaders from various industries to share their thoughts on what's coming in 2021. Here are some of the *submissions:
"2021 will be all about mental health and supporting your employees’ wellbeing. Going remote and especially in the midst of a pandemic can be challenging, so support them through the journey. " Adam Hempenstall, Founder and CEO of BetterProposals.io
"Scheduling flexibility is downright necessary for many working parents and employees sharing their work from home space. Also, flexible or expanded PTO programs will be popular in 2021. Matt Erhard, Managing Partner at Summit Search Group.
"With financial stress rising, today’s workers are looking for greater financial guidance. With more employers expanding their financial wellness offerings, if you are not focusing on it, you’re behind the curve." Brian Hamilton, Senior Vice President of Smart Dollar.
"Fun & Useful Virtual Workplace Social Events. The more people are working and living at home 24x7, the more they will need breaks and opportunities for human connection with their co-workers through virtual events like happy hours, virtual entertainment, cooking, fitness, or meditation classes. " Sammy Courtright, Co-Founder / Chief Brand Officer of Ten Spot.
"Childcare assistance will hit the spotlight in 2021. Numbers of employers will up their game to aid parents in performing their tasks and responsibilities at home. It could be an onsite daycare, fun virtual activities to keep kids busy at home, and tutoring sessions" Aaron Simmons, Founder of Test Prep Genie
"Office perks will come back with a creative twist. New remote-conducive perks might include anything from more days off and exercise stipends, to unprecedented flexibility (companies hiring outside of normal geos), to innovative hiring and training practices such as virtually experiencing a job before you’ve even signed an offer letter." Derek Belch, CEO of Strivr
"In 2021 and beyond, we foresee the focus on personal comfort, such as reimbursing furniture, laptops & devices and Wi-Fi, so that their employees could create comfortable workspaces at home; diversification of benefits with an extra-personal approach that’ll consider factors like age, gender, and lifestyle; limitless #WFH, as companies continue the adoption of work from home lifestyle." Christian Vetter, CEO and Co-Founder of HRForecast.
While 2020 was quite a roller-coaster ride, 2021 is sure to provide many new challenges and opportunities. As you evaluate your benefits plans in the coming year, consider how these predictions can help you anticipate employees’ needs and support your workforce through comprehensive and competitive benefits offerings.
*Submissions were edited for concision and clarity.