Overview of how group health insurance has become a critical factor for employees when choosing and staying with an employer.
Brief mention of the increase in health care concerns among aging employees.
The Growing Importance of Employer-Provided Health Insurance
Was it the pandemic? Is it older workers taking a hard look at not just the pay but the benefits available to them? There’s no question that the importance of employer-provided health insurance has become increasingly prominent in the workforce in 2024. Many surveys and studies reflect this fact and growing sentiment. Over 180 million Americans , rely on their jobs for health coverage, and 153 million are employees who rely on employers for themselves and their families. Out of 167 million in the labor force, that’s a major percentage of Americans that depend on their employer for health care coverage. This coverage not only offers reliable access to care but also contributes positively to employee satisfaction and retention (AHIP). Smart employers who want a long term sustainable bottom line will consider this factor as important to them as it is to their employees.
Employee Sentiments on Company Healthcare Plans: Recent surveys have revealed that employees highly value their health benefits, with many expressing satisfaction with their employer-provided coverage. For instance, a survey by America’s Health Insurance Plans (AHIP) highlighted that 76% of employees believe their healthcare coverage would protect them during a medical emergencyemergency% are satisfied with their current coverage. But that leaves about one-third who are not impressed with their company’s employee benefits, when it comes to healthcare. Employers need to be aware of this growing trend and do everything can to make sure that doesn’t create a talent acquisition and/or retention issue in their company. Health benefits are particularly appreciated during times of crisis, such as the COVID-19 pandemic, where employer-provided health insurance offeres a sense of security and ease of use (AHIP)
Rising Costs and Employee Concerns: As healthcare costs continue to rise, with the per-employee cost of employer-sponsored health insurance increasing by 5.2% in 2023, employees are increasingly looking at the quality and extent of health coverage when choosing an employer (Mercer) . The Kaiser Family Foundation also found that the average annual premiums for employer-sponsored family health coverage reached $23,968 in 2023, with employees paying a significant portion of these costs (KFF) .
The Impact of Demographics: The aging workforce is particularly concerned about health care as they approach retirement age. Older employees tend to have higher health care needs and look for comprehensive coverage that can support them through various health challenges. This demographic shift is important as the number of older workers in the general working population has been increasing over the years, making health benefits a critical factor in their employment decisions.
Overall, employer-provided health insurance continues to be a crucial factor in job satisfaction and retention, with significant implications for both employers and employees. As the workforce demographics change and healthcare costs rise, the role of employer-provided health insurance is likely to become even more significant. Costs for healthcare coverage went up most for smaller employers. 5.2% increase in 2023 for overall employers but 7.2% for smaller employers. (Mercer study)
Trends in Employee Health Care Priorities Over the Years
Compare current data with past data to illustrate changes in how employees value health care benefits.
Include census data or other authoritative sources to show demographic changes in the workforce, especially the increase in older workers.
Aging Workforce: Concerns and Expectations Regarding Health Care
The impact of an aging workforce on employer health benefits is significant and multifaceted. As the workforce ages, there are clear trends in labor force participation among older individuals. The U.S. Bureau of Labor Statistics has reported a notable increase in labor force participation rates among those aged 55 and older. Specifically, the participation rate for those aged 65–74 rose from 17.7% in 1998 to 27.0% in 2018, with expectations to reach 32.5% by 2028. Similarly, for those aged 75 and older, participation rates increased from 4.7% in 1998 to 8.7% in 2018 and are projected to rise to 12.1% by 2028. This shift reflects a broader demographic trend of an aging population, necessitating adjustments in workplace policies and benefits to accommodate older workers (Oxford Academic) .
Moreover, the aging workforce is becoming increasingly critical to the productivity of the nation, not just because of higher participation rates, but also due to the vast experience and knowledge older workers bring to the workforce. Employers recognize the value of retaining older workers, which often translates into enhanced training programs, flexible work options, and health benefits tailored to employees’ needs. Companies that adapt to these changes can leverage the considerable capabilities of older workers as a competitive advantage (NBER) (Bain) .
As the demographic landscape of the workforce evolves, it’s clear that employer-provided health benefits will need to continue adapting to meet the needs of an aging population, ensuring that health plans are comprehensive and supportive of the challenges older employees might face (Deloitte United States).
Impact of Health Care Benefits on Employee Retention
Studies abound that highlight how improvement in healthcare and other benefits greatly improves employee retention.
In virtually all workplace sizes, keeping employees on board is heavily influenced by the quality of health care benefits offered by employers. For example, a comprehensive study by Deloitte highlights the importance of retaining skilled nurses and notes that even a small improvement in turnover rates can save significant costs annually. How would your company look if they retained the best employees just from providing better healthcare benefits? Deloitte suggests focusing on reducing work intensity and enhancing the work-life value proposition through flexible staffing models and better scheduling technologies (Deloitte United States).
Anecdotal evidence from companies known for their excellent healthcare benefits and high retention rates, further supports the correlation between employee satisfaction with health benefits and retention. For instance, the tech company iIntermedia maintains high retention levels by fostering an engaging and inclusive culture, which includes comprehensive health care benefits alongside various employee programs and flexible work arrangements (HR Daily Advisor) .
Moreover, a study highlighted in Emerald Insight emphasizes the importance of recognition and creating a supportive work culture as crucial motivators for employee retention in healthcare settings. This study noted that both psychological and physical needs satisfaction, including good working conditions and socialization opportunities, are essential for retaining staff (Emerald Insight).
Organizations that manage to effectively blend these elements—strong healthcare benefits, supportive work environments, and flexibility—tend to see higher retention rates. These strategies not only meet the immediate health needs of employees but also support their long-term career and personal life balance, proving crucial in competitive job markets like today’s (Startups.co.uk) .
The Future of Employer-Provided Health Insurance
Understanding and Enhancing Group Health Insurance Offerings
Change is inevitable and in the case of healthcare benefits, that change is moving quite quickly. In today’s rapidly evolving workplace, the strategic enhancement of employer-provided health insurance is not merely a perk but a necessity.
Who’s Keeping Score? Employees Are Keeping Score!
For employers, the right healthcare offering will often be the one item on the scorecard that attracts and keeps valuable performance- oriented employees. Providing robust health benefits is a clear indicator of an employer’s commitment to their workforce’s overall well-being and long-term health. This is particularly vital as employees increasingly expect their benefits to provide not just basic health coverage, but a comprehensive approach that supports their changing health needs over time.
The Labor Force Is Shifting Focus as They Age:
As employees age, they view healthcare benefits through a new lens, focusing more on the long-term impacts, and how these benefits will support them beyond their working years into retirement. Businesses that align their health benefits with these concerns will likely see enhanced productivity, as employees who feel taken care of are more focused and engaged.
Telemedicine: A Convenience Revolution
Telemedicine surged in popularity during the pandemic, revealing its vast potential for convenience and efficiency. For many, the ability to have a quick online consultation with a doctor, instead of undergoing the time-consuming process of visiting a doctor’s office, has been revolutionary. The typical routine of driving, checking in, waiting in multiple stages, and then discussing health issues– for maybe just five to ten minutes– can be frustrating and inefficient. Telemedicine offers a significant improvement, allowing for the same conversations to happen from the comfort of one’s home in a fraction of the time. Employers who make telemedicine readily available are not only catering to employee preferences but are also likely to recuperate some of that time as productive work hours.
Future Trends in Healthcare Benefits as the Workforce Ages
As the workforce continues to age, we are likely to see several important trends in health care benefits:
- Enhanced Focus on Chronic Disease Management: The prevalence of chronic diseases among an aging workforce will drive employers to invest more in health plans that offer comprehensive management programs.
- Increased Emphasis on Mental Health: Mental health services are becoming a crucial part of health benefits, with employers likely to enhance access to mental health professionals and support services.
- Expansion of Telemedicine: The convenience and efficiency of telemedicine, as highlighted during the pandemic, will likely cement its place as a standard feature in health plans.
- Personalization and Flexibility: There will be a greater push towards personalizing health benefits to meet diverse employee needs, particularly as they age. This could include more flexible spending accounts and tailored health coverage options.
- Integration of Health Benefits with Retirement Planning: As employees work later into their life, integrating health insurance with retirement planning will become more common, providing seamless coverage that extends into retirement.
The future of employer-provided health insurance looks to be a blend of adaptability, comprehensive coverage, and deep integration with the overall employment value proposition. Employers who stay ahead of these trends by evolving their offerings will meet the expectations of their workforce, thereby enhancing retention and attracting the best talent.