3 Best Practices to Recession-Proof Your Benefits Package
In the midst of an economic downturn, wise employers are taking steps to build sustainability into their employee benefits offering. Here are three practices that small to midsize employers should start now to maintain the value of their total rewards through a recession.
As the markets flash red and industries brace for a recession, business leaders are increasingly expected to do more with less — especially at small to midsize employers. So it makes sense that employers want to get every last drop of value out of their benefits, while crossing their fingers that their offering can survive the crunch.
If you want to create an effective benefits package in the midst of a downturn, you’ll need to take a step back and assess your offering with a discerning eye. You guessed it: it’s time to talk benefits sustainability.
Watch the event recording here, and read on for key takeaways.
Now’s the time to prioritize sustainability in your benefits offering.
When it comes to benefits, sustainability means that your offering can support your employees’ needs and your employer’s bottom line, even in the event of an economic downturn.
Even if we didn’t happen to be on the verge of recession, sustainability should always be a consideration for any thoughtful benefits strategy. That’s because the costs of benefits are constantly ticking higher, especially for SMBs.
In 2021, small to midsize employers saw an average healthcare renewal increase of 9.6%. Meanwhile, large employers saw an average 5% increase.
Those increases will add up — and may get even steeper. That’s largely due to rising national healthcare costs, which are projected to grow 5.1% each year.
And since 49% of Americans get health insurance through their jobs, we can expect that employers will foot the bill for a huge chunk of those costs. Here are three steps to make sure your employer isn’t on the hook for unsustainable increases.
1. Take a step back and assess the ROI of your benefits.
We’ll be honest: It can be hard to demonstrate the ROI of benefits. A great offering’s impact will be woven throughout your culture, employee engagement, and day-to-day operations — and those impacts aren’t always easily quantifiable.
But the reality is that benefits ROI is only going to become more important. HR teams will need to discern what’s working, and cut what’s not.
Our biggest piece of advice? Start by doing a full diagnostic assessment of all your benefits, perks, and wellness programs’ longterm costs and impacts. Ideally, this assessment should cover year-over-year utilization data, cost increases, and employee sentiment. Your broker can (and should) be a key partner in this process, providing essential context and highlighting potential paths forward.
“A big thing we don't see HR teams doing enough is taking a multi-year view on their total rewards budget and their total rewards impact,” Brandon recommends. “The insurance industry in all of their infinite business wisdom has gotten the employer community on this annualized basis of thinking… And they have forced this modality of not thinking longterm about how much you're spending on healthcare.”
Taking a step back gives you the vantage point you need to identify trends — and that opens doors to cost savings strategies you may have previously overlooked.
2. Say goodbye to “one-size-fits-all” benefits.
“Over the last four or five years,” Brandon explained, “the diversity of the average employer that we serve has exploded… Those employee pools have different needs in terms of their actual benefits.”
If employers want to provide effective support for all employees, they simply have to let go of the traditional one-size-fits-all approach to benefits.
As Brandon predicts, “The entire benefits ecosystem and employer sponsored healthcare ecosystem is going to shift from one-size-fits-all benefits to personalized benefits.”
If your company can only swing for a limited selection of benefits, make sure that those offerings can flex to meet a range of needs. Several ancillary benefits vendors (like Forma, Wellable, and Benepass) offer programs that allow for individual personalization; as Brandon explains, “Employee A could do fertility, employee B could focus on gym membership, employee C could do pet insurance.”
Another low-cost idea: consider offering wellness stipends. By giving employees a regular payment of $50-100 monthly, they’ll have the flexibility to purchase whatever works for them — be it fitness classes, daily vitamins, or meditation app subscriptions.
3. Build equity into your benefits offering.
An excellent benefits offering makes life easier for your employees, both on and off the clock. So it makes sense that an excellent benefits offering is also easy to use, regardless of the employee’s background or ability.
In Barbra’s words, that starts with asking, “Are we creating programs that give everybody the equal kind of experience?”
For this, Brandon recommends turning focus to your core health benefits. Even the most flexible, thoughtfully designed health plan won’t perfectly solve every need — but the way you build your plan can help reduce barriers to accessibility.
For instance, employer-funded health savings accounts can break down cost barriers. Telemedicine and virtual primary care options make care more accessible regardless of geography or time constraints.
Still, keep in mind that a sustainable benefits offering isn’t built in a day.
And that’s kind of the point. In Brandon’s words, “A lot of times, it’s a multi-year journey to get to the broader savings.”
Plan to circle back to regularly review your benefits ROI and effectiveness with your broker as a partner. We recommend doing a full benefit assessment at least once a year.
Prepare to be in this for the long haul — because if you want your employer’s goals to go the distance, your benefits should be in for the ride as well.
Need a partner for your benefits assessment? The Nava team can help. It’s free and easy on your end – get started here.