Employee Health & Benefits 2020 and Beyond

Generational differences, technology, mental health and more trends to watch

January 16, 2020

Designing a cross-generational approach for a fast-evolving workforce

For more than a decade, the employee population in the U.S. has been growing more and more diverse. Cultural diversity. Gender diversity. And significant diversity in age.

Each age group within a company represents a particular reason for you to cultivate their talents:

  • Baby boomers (born 1944-1964) have accumulated valuable knowledge and skills that will need to somehow be retained or replicated — while balancing the considerations that come with a looming retirement
  • Generation X (born 1965-1979) currently accounts for more than 50 percent of all leadership roles, according to a 2018 Global Leadership Forecast survey
  • Generation Y/Millennials (born 1980-1994) now makes up the majority of the workforce and
  • Generation Z (born 1995 and after) is close behind.

Each of these age groups have different needs because of where they are in their lives as well as their unique attitudes towards benefits. There are, in fact, points of intersection — health care, for example — but even those commonalities may have differences that need to be addressed.

Historically low unemployment, the tendency of younger employees to switch jobs to align with their lifestyle and the need to maintain acquired knowledge and skills of older employees has created an intense battle to attract — and retain — good talent. So, there has never been a more appropriate time to diversify your benefit offerings to ensure they complement each demographic of your employee population.

In other words, employers simply can’t afford to take a cookie cutter approach to benefits.

Give the right employees the right choices — and they’ll choose to stay

What do different generations require from their benefits packages? What will entice them to stay with you? Here are just a few generational definitions and the core offerings they currently gravitate towards.

Generation Y (millennials)
A common notion is that millennials don't simply work for a paycheck; they want a job that provides purpose. Work must have meaning. Compensation is important — and must be considered fair — but they're motivated more by mission.

This doesn’t mean that they are merely seeking traditional “job satisfaction”, which essentially means you don’t hate what you do for a living. They expect — and will lobby for —opportunities to learn and grow.

To a millennial, their job is often their life. And the benefits they desire reflect specific characteristics, including:

  • Working remotely
  • Flexible hours
  • Improved work/life balance
  • Finding creative ways to help with student loan repayment
  • Good, reasonably-priced and accessible health care. (Many millennials prefer to shop for their own health insurance and, unlike their older colleagues, are more than willing to shop for health care services based on reviews and the best prices.)

Generation Z
When you think of this generation, think Millennials — but even more so. They value many of the same benefits and perks, and definitely value a culture that allows them to contribute. Any training and development programs and resources are likely to appeal to these workers, and they are attracted to employers that place a high value on corporate citizenship.

Both of these younger generations seek outlets to help with finances
Student loan debt is a serious burden for many graduates. Eight in 10 workers with student loans say they would value working for a firm that provides extra dollars for student loan debt repayment, according to a CNBC report. Yet the SHRM 2018 Employee Benefits survey reports that only four percent of organizations offer any kind of student loan repayment assistance as a benefit.

Financial fitness programs are likely to be of help to both Gen Y and Gen Z, but that help must be realistic. Urging them to save for retirement is not likely to resonate when they are carrying tens of thousands of dollars in student debt. But helping them navigate ways to migrate their loans or find ways to reduce their burden are likely to be incredibly appealing. Examples include:

  • Financial guidance on consolidating debt
  • Help with managing regular expenses
  • Online services to evaluate and select loan-repayment options
  • Paying off loans using automatic payroll deductions

Generation X

This generation is often associated with the philosophy of “work to live, not live to work.” But they also possess a “work hard, play hard” attitude and value independence more so than their older or younger counterparts. Aside from a good salary, this “sandwich generation” is liable to be caring for both children and aging parents and they want a flexible workplace that includes:

  • Working remotely
  • Flexible hours
  • Significant paid vacation
  • Paid time off — sick time, child care, and elder care
  • Equitable pay
  • Generous bonuses
  • 401k plan with matching benefits
  • Financial stability
  • Company advancement

Baby Boomers
Given their age and career stage, the top benefits priorities for the Baby Boomer generation are, not surprisingly, health care and finances.

  • Medical
  • Dental and vision
  • Life insurance
  • 401(k) with employer match
  • Flexible Spending Accounts (FSAs)
  • Health Savings Accounts (HSAs)
  • Dependent Care FSA
  • Flexible work schedule
  • Telecommuting options

What is surprising is that student loan assistance is also important to this segment. Boomers have the second highest average student loan debt (nearly $35,000), which can be attributed to carrying the burden of tuition loans for their children or the lingering debt for themselves after having returned to school while they were working.

Making health care healthier for everyone

At the end of the day, health care is still generally recognized as the most valued employee benefit. As we mentioned before, each generation has slightly different requirements, but they all strive for excellent, affordable health care. The 2020 election has the potential to play a huge role in what happens to the health care system and coverage, but there are good moves you can make right now that can help every employee.

• “Reinvest” in Health Savings Accounts – Possibly the most under-utilized part of any benefits program, HSAs offer a unique triple tax advantage for employees to help pay for out-of-pocket needs.

• Vacation incentives – According to a report in the Harvard Business Review, helping employees clear schedules, reassign tasks, pre-pay for trips and then literally insist that they take vacations has shown a lot of promise in getting them to recharge and relax.

•  Paid leave – Maternity/paternity time off; time to care for aging parents; dealing with childcare; and time to recharge the internal batteries. Everybody wants it; the trick is figuring out how to utilize and manage it.

One way to manage paid time off

A growing number of employers are switching to paid-time-off (PTO) “banks” that lump sick leave and vacation time into one pool. Mercer’s annual Survey on Absence and Disability Management found that 63 percent of employers used them as recently as 2015.

The benefits can be attractive: 54 percent of employers that implemented a combined PTO program said unscheduled absences dropped by up to 10 percent when they started the new policy, according to an Alexander Hamilton Institute survey. Four percent realized a 20 percent drop in those absences. And a combined policy means less tracking for HR and less need for employees to prove they’re ill in order to take a sick day. 

Adding technology to the mix

Technology can obviously help with the management of employee benefits but there are options available that can improve health care outcomes and contain costs; provide better career development opportunities; and even make engagement and communication easier and more successful.

Mobile technology has affected almost every aspect of modern life, even mental health.

You can recommend or install apps specifically geared towards recognizing and improving mental health issues. Many of these apps employ techniques of cognitive behavior therapy to help treat mental health issues.

Technology allows employees to improve mental health on their own time and where they feel the most comfortable. These applications focus on preventative care, which can be highly valuable for mental health.

In addition, the fast-evolving “wearable” technology segments are helping incent employers to improve wellness offerings by helping to make tracking health behaviors easier and more accurate.

At the same time, telemedicine, virtual care visits and sophisticated educational tools help to increase access to medical care by lowering the number of traditional doctor visits while maintaining a high quality of care.

The need to address mental health

Depression alone costs U.S. businesses more than $44 billion every year in lost productivity. So, addressing mental health in your employee population isn’t just the right thing to do, it’s good for business.

Adding Employee Assistance Program services that address mental health; resilience training; stress management programs; flex time; paid time off; social engagement programs; and even leadership training to help managers recognize and deal with mental health issues can deliver significant benefits to the company while appealing to the cross-generational needs of all employees.

Use voluntary benefits to customize your offerings

Employers benefit more than ever by having an incredibly diverse and growing number of robust benefits that can be offered to their employees. Some of the voluntary benefits that have notably gained traction across all generations include:

Long-term care insurance covers the cost of care for a chronic medical condition, disability, or long-term disorder. Additionally, it pays the costs of a nursing home, assisted living, in-home care, physical or occupational therapy, or help with day-to-day activities not covered by Medicare.

Pet insurance. This used to draw chuckles but it has proven to have real value for a lot of employees. According to the American Pets Products Association (APPA), pet owners spend more than $15 billion on veterinary care each year and every six seconds a pet owner is confronted by a bill of $3,000 or more.

Student loan repayment programs pay back a portion of an employee’s student loan debt on a monthly or annual basis — especially attractive for younger employees but often very important even to baby boomers who are carrying their children’s school debt.

Financial education and counseling is more important than ever, with employees feeling more and more stressed because of money issues. Financial education provides the knowledge and ability to reach self-sufficiency and financial counseling lets employees discuss debt and credit with a trained financial professional.

ID theft protection defends employees from financial fraud and stolen identity.

Legal insurance protects employees from the time, stress, and financial pressure that can occur due to unexpected legal issues.

To learn more, contact your Marsh & McLennan Agency representative

Your employee health and benefits program faces increasing costs, changes in offerings, the uncertainties of health care reform, and differences in what employees want and need — driven by generational, societal, gender, and cultural issues. How can employers — especially smaller ones — deal with these challenges? 

Your MMA team can help you design employee communications, leverage existing benefits to the fullest, find creative ideas to satisfy multiple employee segments, assess employee needs using tailored employee surveys and offer benefits benchmarking to ensure you have the right balance of benefits to meet the evolving needs of your employee populations.