Plan Sponsors Add Benefits to Blunt Inflation’s Sting

To retain and attract employees in a tight labor market, corporations are implementing initiatives to control health care costs and trying to unburden their workers, whose finances have been stressed by inflation, according to the “Goldman Sachs Ayco 2023 Benefits & Compensation Trends in Corporate America Report.”

“The persistence of higher-than-expected inflation has created significant financial challenges for the U.S. workforce,” Kathy Barber, vice president and head of corporate benefits and compensation at Goldman Sachs Ayco, said in a press release with the findings. “Forward-thinking companies want to help their employees navigate these challenges, leading many to enhance the suite of benefits they offer.”

The average health benefit cost per employee in 2023 was projected to increase 7.4%, according to the “2023 Segal Health Plan Cost Trend Survey Report.”

Whereas plan sponsor “changes to medical plan carriers isn’t something we see often,” the report stated, 10% of sponsors shopped across medical plan carriers in hopes of finding better rates; 40% of companies absorbed cost increases to the average health benefit per employee for 2023; and 5% of employers working with Ayco increased contributions to workers’ health savings accounts.

More than three in 10 companies (32%) offer a high-deductible health plan with at least two other types of medical plans; 16% of companies offer only an HDHP; and 73% of companies offer a combination of a traditional plan and an HDHP, the research found.  

High-deductible health plans—in which workers typically pay a lower monthly premium but a higher deductible—can be paired with health savings accounts as an additional benefit for employees. Account holders contributing to an HSA experience triple tax advantages, can invest the deposits for growth, get medical expenses reimbursed and can use the funds accumulated to pay for qualified health expenses in retirement.

Additionally, 87% of employers are contributing more than $500 to employees’ HSAs to help lessen inflationary burdens, and 22% are switching to matching formulas and/or adding wellness incentives for these contributions, helping to encourage employees to save more and drive greater utilization of HSAs, the report found.

“By actively addressing premiums, and providing additional voluntary benefits focused on helping employees control costs, employers can create positive, real-time, bottom-line impacts,” said Barber.

Several of the key themes uncovered in the report include:

• Child and elder care assistance benefits are the fastest growing programs at Goldman Sachs Ayco’s corporate clients, up 177% in the last three years, with 55% now offering them;
• Pet insurance has surged 120% over three years; and
• Access to fertility, adoption and surrogacy benefits is rising, with 60% of companies—compared to 40% in 2022— currently offering adoption and surrogacy reimbursements, most commonly up to $10,000.

Among common voluntary and ancillary benefits, mental health benefits were the most commonly offered, provided by 95% of employers, the research showed, up from 90% in 2022. Department of Labor regulations require mental health benefits parity.

“While mental health has been a top benefit offering for many years, it was not talked about all that much,” Barber states. “In the last enrollment season, it was very encouraging to find more companies featuring these benefits in their enrollment guides. It has become a priority as more companies explore how to incorporate mental health initiatives into their corporate cultures.”

Companies have increased voluntary benefits for employees as a competitive differentiator, according to Ayco.

After mental health, the most common voluntary and ancillary benefits offered by Ayco clients are:

• Group legal plan, 73%;
• Personal accident insurance, 69%;
• Critical illness insurance, 68%;
• Identity theft protection, 62%; and
• Pet insurance, 58%

The Goldman Sachs Ayco report was based on a May 2023 analysis of compensation and benefit offerings at 400 U.S. companies at which Goldman Sachs Ayco Personal Financial Management provides corporate-sponsored financial counseling.