Even with the economic downturn, uncertainty and high unemployment resulting from the COVID-19 pandemic, employers still need to look strategically at employee health care benefits to retain and attract talent.
|This story is based on a MiBiz Small Business Health Insurance webinar. Watch the webinar here.|
That’s one of the observations panelists made in a recent webinar MiBiz hosted on health insurance.
In a tumultuous year filled with disruption, many employers are reluctant to introduce more by changing employee health benefits, panelists said.
“I think any employer who thinks now’s our chance to hack and whack are very short-sighted,” said Shannon Enders, the managing partner at Lakeshore Employee Benefits in Norton Shores. He is seeing few employers interested in making benefit changes with upcoming policy renewals.
“We’re seeing customer after customer say, ‘Nope, don’t even bring us anything. There’s no way we’re making changes,’” Enders said. “They’re hunkered down in large part for their employees’ peace of mind.”
Health benefits can account for one-third of total employee compensation costs, said David Smith, vice president of compensation services at The Employers’ Association in Grand Rapids.
Employers still need to look at health benefits strategically as part of the overall compensation package they offer employees, he said.
“It’s more than just health care, but health care is a critical component in attracting and retaining talent right now,” Smith said during the webinar. “It’s really critical because we have to attract and retain the best talent if we’re going to remain sustainable in West Michigan and competitive.”
As open renewal approaches for 2021 and the COVID-19 pandemic drags on, Smith as well said he expects few employers to alter their benefits for next year “unless there is a huge difference in coverage costs.”
Making major changes in benefits or switching insurance carriers would only add stress for employees in an already stressful time, he said.
“It seems to be pretty status quo from those we have talked to,” Smith said. “West Michigan has had a lot of change already. COVID has caused it. People aren’t changing just for the sake of change. For small changes or small differences, employers are looking to keep their employees as happy as they can.”
In the tight labor market that prevailed in recent years prior to the unemployment spike during the pandemic, many employers had been considering or adding benefits on top of their health insurance, such as vision, dental, short- and long-term disability coverage and even insurance for pets, Smith said.
Many more employers of late also are benchmarking their benefits to see how they compare against market norms and trends, said Drew VanDyk, a partner at Olivier-VanDyk Insurance Agency Inc. in Wyoming. Those companies want to know “where we are sitting to remain competitive to retain employees,” VanDyk said.
“I have been seeing a lot of companies that are starting to benchmark their benefits. What they’re doing is taking a look at it and going, ‘How do I compare with other companies?’ We’ve been seeing a lot of companies do that,” he said. “It’s just a good overall 30,000-foot view of: ‘Where are we sitting and what we should be offering?’”
An annual survey by The Employers’ Association shows health coverage this year cost employers an average $1,500 per month per employee for a family plan, and about $1,100 for a two-person plan, Smith said. An individual health plan cost about $500 per month, he said.
Employees on average now pay 30-35 percent of the monthly premium for health coverage, Smith said. Employees enrolled in an individual plan pay 20-25 percent of the cost, he said.
This year continued a period of rate stability for employers. Fourth quarter policy renewals for small employers have come with rate adjustment typically in the single digits, VanDyk said. Policy renewals for larger employers have been “kind of all over the place, depending on experience” in an employer’s medical claims, he said.
“If you end up with a lot of employees going to the doctor because they had a heart attack or a medical issue, that’s going to affect your experience and what you end up seeing in rates,” VanDyk said.
His agency is also seeing more employers in the market considering self-funding their health benefits, or going to what’s known as level funding that’s “kind of that hybrid” between self-funded and fully insured coverage.
For 2021, the Washington, D.C.-based Business Group on Health this month said large employers can expect the cost of health coverage to increase 5 percent, even after adjustments in benefits to manage costs. The expected increase for 2021 is slightly higher than what large employers have experienced the last few years, according to the company’s annual survey results.
Statewide, proposed 2021 rate adjustments by the 16 health insurers that write policies for small employers in Michigan with two to 49 employees averaged a 1.5 percent increase, according to a rate summary issued by the Michigan Department of Insurance and Financial Services.
The small group market across Michigan covers nearly 425,000 people.
Grand Rapids-based Priority Health, with nearly 57,000 people enrolled in small group policies, proposed an average 2.6-percent increase.
Blue Cross Blue Shield of Michigan, which has more than 193,000 people covered in the small group market, proposed an average rate increase of 0.9 percent, and HMO subsidiary Blue Care Network, with more than 105,000 members, proposed an average 1.9-percent increase.
In the individual health insurance market that covers nearly 323,000 people, 11 participating insurers proposed rate adjustments that average an increase of 1.4 percent statewide.
Priority Health proposed to trim individual policy rates by a slight statewide average of 0.1 percent.
Blue Cross Blue Shield, with about 47,000 individual policyholders, proposed a 1.7-percent average increase. HMO subsidiary Blue Care Network, at more than 135,000 individual members statewide, filed a rate increase of 2.5 percent for individual policies, according to the state’s summary.