2020 has presented HR professionals (not to mention everyone!) with some unique challenges. Many organizations have had to make changes to employee benefits because of COVID-19.
Despite the unknowns around the pandemic as many organizations forge ahead, it’s time to think about coverage decisions for the coming year. Generally, insurers provide health plan costs for the following year in October, which is approaching quickly.
Employers continue to protect the health and well-being of employees while prioritizing business continuity.
Here are 4 tips on choosing employee benefits for 2021:
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Focus on employees’ mental health.
The pandemic has taken a toll on people’s mental health, and organizations are responding accordingly. Many businesses increased mental health support when COVID-19 began. According to a June 2020 survey done by benefits consulting firm Mercer:
- 32% of companies are considering expanded virtual or telehealth programs. This means that employees can get medical advice and even prescriptions over the phone or online from health care professionals.
- 25% are thinking about enhancing mental health support programs for employees.
It’s essential that organizations look at new ways to properly support employees’ mental health—it’s beneficial for them and for your company.
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Consider changing voluntary benefits.
Voluntary benefits are additional benefits that a company may pay part or in whole for employees. This allows employees to enhance their employer’s health care program with things like critical illness coverage, short & long-term disability coverage, long-term elder care and legal services—some organizations even offer pet insurance!
Voluntary benefits work well in today’s multigenerational workforce. As employees in different age groups can choose the most relevant add-ons. This depends on which stage of life they’re in and what’s most important to them and their family.
With America’s Health Insurance Plans predicting that the COVID-19 health care cost will total $56 billion to $556 billion over a two-year period. Employees are looking for changing voluntary benefits around critical illness, hospital stays and care for older family members.
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If you have to cut retirement benefits, take care.
As companies make changes to employee benefits because of COVID-19, some employers are putting a stop to matching employee 401(k) plans. According to this 2020 COVID-19 Benefits Survey, 12% of organizations have taken actions to suspend or reduce matching or nonelective retirement contributions.
If you decide to reduce or eliminate your 401(k) matching program while choosing employee benefits for 2021, educate your employees on changes to the CARES Act. In light of COVID-19, employees now have the flexibility to access retirement assets if they’re experiencing financial difficulty. That means an employee needs a valid COVID-19-related reason for wanting to access retirement funds early.
These changes allow financially strapped employees to take penalty-free withdrawals. And they also give employers more time to meet their pension plan funding obligations.
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Be honest about any hiring, wage or salary freezes.
It’s a fact of life that some organizations are having to make hard decisions around filling job openings and even wage and salary increases. If you’re one of them, it’s critical to communicate these freezes to your employees the right way.
When it comes time to communicate these decisions to your staff:
- Give people a time frame. Do you foresee it being for the next quarter or an entire year? Don’t announce a freeze without giving your staff an idea of how long it could last.
- Be positive. Let your employees know that after careful consideration, this is the decision that you feel is best to prevent layoffs and allow the business to continue operating.
- Explain your reasoning. Whether you’re making changes to employee benefits because of COVID-19 or this is due to slumping sales, let your employees know why you made the decisions you did. Without hearing directly from you, imaginations will fill in the blanks and some may think you are doing this out of greed.
- Determine the best way to communicate, i.e., group meetings either in person or via Zoom. I generally do not recommend an email unless it is a follow-up to face-to-face meetings.
No matter what changes you’re making, remember that transparent communication is always best. And don’t forget about employees on leave or furlough!
Whether you’re changing voluntary benefits or reducing 401(k) matching, this doesn’t have to be a negative experience for you or your staff! Choosing employee benefits for 2021 offers a great opportunity to take a closer look at your business model and identify where your profits and losses are.
This is also the perfect time to work with your leadership team to recalibrate 2020 goals so that they are realistically achievable and best support the long-term health of your business and employees.
Business Leadership, Business Legal Concerns, Team Management