America's Benefit Specialist October 2023

NOTEWORTHY

Employers are increasingly adapting to align paid leaves with family-focused policies. For example, access to new child or parent bonding paid leave has increased five points from 2022 to 41%. And while just 13% of employers offer paid care giver leave, of those who offer caregiver leave, the majority provide 11-12 weeks (40%). Median health plan premium increases at the most recent renewal were 5.0%–5.9%, up from 4.0%–4.9% in 2022, and nearly four in five employers (78%) believe a moderate or significant rise in healthcare costs is likely this year. Never theless, nearly two in five employers (39%) enhanced their medical benefits in 2023, up six points from 2022. After base salary and variable compensation, medical benefits received the most attention from employers (39%), up six points from 2022. As a result, the use of employee cost sharing and other cost-management tactics is likely to grow. Coverage for infertility, autism or transgender services and other specialty treatments can show support for ranging employee populations. Though most of these benefits don’t stabilize or lower costs, they often align with preferences that strengthen cultural inclusivity. However, their availability was uneven—autism (53%) and fertility services (46%) are offered by nearly half of employers, voluntary pregnancy termina tion by one-third (34%) and gender-reassignment surgery by one-quarter (25%). Challenges remain in managing specialty drugs (e.g., weight loss, gene therapies, biosimilars) and 48% of employ ers don’t know or don’t use tactics to manage their use and costs. Given the accelerating interest in weight-loss drugs specifically, and the high costs associated, employers could quickly absorb expenses that exceed their budget limit and impose other strains on their pharmacy benefit plans. “It is essential to recruitment, retention and the overall wellbeing of employees to serve diverse needs,” said Ziebell. “As such, employers should determine what approaches to coverage and utilization will provide the best results for their employee populations, without driving excessive costs.” SEVENTY-SEVEN PERCENT OF EMPLOYERS REPORT INCREASE IN WORKFORCE MENTAL HEALTH NEEDS Mental-health needs among workforces continued to climb this year, with 77% of large employers reporting an increase and another 16% anticipating one in the future, according to Business Group on Health’s 2024 Large Employer Health Care Strategy Survey. This represents a 33 percentage-point surge over last year, when 44% of employers saw an increase in employee mental-health concerns. The survey also showed that cancer was still the top driver of large companies’ healthcare costs while rising prescription drug costs also proved to be a leading concern. Cancer over

physical, emotional, career and financial. As a result, total rewards investments made in 2023 are likely to be based on their potential to create stronger organizational attachment, according to Gallagher’s 2023 U.S. Physical & Emotional Wellbeing Report. The report examined how employers are adjusting to top trends in employee physical and emotional wellbeing and using these trends to help improve employees’ quality of life at and outside of work. “Today’s workforces consist of multiple generations and people from a variety of backgrounds, and this requires employers to analyze whether their benefit offerings are addressing a wide range of employee needs,” said William Ziebell, CEO of Gallagher’s Benefits & HR Consulting Division. “As organizations continue to focus on recruiting and reten tion as top operational and HR priorities, it’s clear that they’re paying closer attention to important issues, such as flexibility, burnout and inclusive medical coverage.” The Gallagher study, which is the second installment of the 2023 US Workforce Trends Report Series, was conducted from December 2022 to March 2023 and sourced data and insights from more than 4,000 organizations across the U.S. The study presents recent findings on current and emerg ing trends to help employers optimize their investments in employee physical and emotional wellbeing by covering medical, pharmacy and voluntary benefits, as well as ab sence-management strategies. The focus on emotional wellbeing in the workplace contin ues its upward trend with more than seven in 10 employers (74%) increasing the importance of this area in 2023. While prioritization of wellbeing starts at the top, more meaningful interactions take place at the operational level. In fact, since last year, providing mental health training for managers, leaders or HR increased by five points to 22%. Employers are investing in building morale, addressing these concerns through clinical care and designated time off for mental health. Roughly seven in 10 employers (71%) offer clinical care such as virtual or telephonic mental health counseling, and 25% are allowing time off for mental health and burnout (up from three points in 2022). Nearly all employers (96%) offer paid time off to full-time employees, and more than four in five (81%) allow employ ees to carry over days into future years. The ability to help employees meet their work-life integration needs relies on flexible PTO policies. But less than half (47%) include separate vacation, sick or personal days and only five percent offer unlimited PTO. The future of absence management is evolving as employ ers accommodate an aging workforce, mental health chal lenges and changing benefit expectations. As such, employers have developed strategies for administering leaves and disabil ities (49%) or expect to do so in the next two years (15%).

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