How COVID-19 is Changing Employers' Ancillary Benefits Offerings

By BKS Employee Benefits Advisors

cup of prescription pills dental tools and glasses symbolize ancillary benefits

The coronavirus pandemic has impacted businesses and their employees in so many tangible ways, from the surge in unemployment amid closures and lockdowns to the dramatic shift to remote work. Many workers face financial hardships and the struggle to balance today’s new normal and an unknown future. As a result, companies are re-evaluating their entire benefits program, with a major focus on extending or enhancing ancillary benefits to accommodate the needs and concerns their employees face.

Employers Responding to Greater Need and Interest in Ancillary Benefits

Employee benefits programs have been an instrumental component of an employee’s compensation package to attract and retain skilled and talented workers. Over the years, as the job market landscape has become increasingly competitive, ancillary benefits have evolved to include many options. Voluntary worksite benefits often include company wellness programs (weight-loss and smoking cessation plans and discounted gym memberships, for example); additional coverage options such as Group Life, Long-Term Care, and Critical Illness; and financial planning assistance.

According to Northwestern Mutual’s 2020 Planning & Progress Study, while most Americans are optimistic about future economic recovery, at the same time, they are concerned about addressing their near-term financial needs. The study reveals the following:

  • 19% have dipped into personal savings or emergency funds
  • 13% have borrowed money from family or friends
  • 9% have dipped into their retirement savings (401(k), IRA, etc.)

In addition, 26% of U.S. adults have taken advantage of payment-deferral plans, including those for mortgages (8%), rent (8%), credit card bills (8%), utilities (7%), student loans (6%), and auto loans (5%).

At the same time, a July poll by Kaiser Family Foundation indicated 53% of Americans find their mental health has been negatively impacted due to worry and stress. The stress has impacted their work and disrupted education and childcare systems on which many rely.

In the wake of the coronavirus, companies are once again re-examining their voluntary benefits to determine what type of services and coverages would make a meaningful difference in their employees’ lives. Some of the changes and additions that companies are considering include the following enhancements to their benefit offerings.

Emphasizing/Bolstering Health Coverage

Most voluntary benefits provide workers with an opportunity to add to and customize their program with employee paid Group Life, Group Disability, Vision, and other products. Often, employees don’t focus on these benefits, as they are more concerned with their Health insurance during open enrollment. Companies are now reinforcing the need for employees to evaluate available voluntary benefit options, including those for Critical Illness, Hospital Indemnity, and other coverages that have come to the forefront due to the pandemic. Employees may also want to look at enhancing their Life and Disability coverages. It’s important to note that voluntary benefits can be purchased year-round, not only during open enrollment.

Expanding Telemedicine Programs

During the lockdown and ongoing social-distancing requirements, millions of Americans are seeking care by connecting with a doctor virtually. Telemedicine has not only contributed to helping contain the virus but many people have now also experienced the benefits of receiving faster diagnoses and treatments, increased efficiency of care and reduced patient stress. The use of telemedicine is expected to continue, and we will see a rise of employers offering this as part of the overall employee benefits package.

Enhancing Emotional and Mental Health Services

Companies are stepping up to help employees deal with feelings of isolation, anxiety and depression amid the pandemic with mental health services through employee assistance programs (EAPs), discounts on mental health apps (such as Daylight, a website that helps users navigate stress and worry; Sleepio, an app that offers self-help tools to improve sleep; and Headspace, a mindfulness and meditation app for managing stress and sleep), access to on-line well-being coaches, and other virtual service options such as online yoga classes. Some companies are also reducing the health insurance co-pay charge for therapy visits. And because of the emotional benefits associated with charitable giving, some employers are bolstering their employee-giving campaigns, and offering increased matching percentages to employee contributions.

Providing Financial Wellness Benefits

Even before the pandemic, companies were looking to expand upon their financial wellness benefits, realizing that financial wellbeing is critical to promoting job satisfaction, loyalty, productivity, and engagement. In the wake of the virus, the focus on financial wellness has intensified as businesses search for additional ways to help employees cope with the income shortfall many now face. These can include providing instant pay benefits, payroll advances, low-interest installment loans, and automated, payroll-deducted savings accounts that assist employees with unexpected expenses without incurring high-cost debt. Other services include adding student loan guidance and refinancing as we as student loan repayment programs. Some organizations are now offering programs where employees can trade current PTO benefits, and the employer, in turn, makes an annual payment to the employee’s student loan debt (i.e., 5 vacation days= $1,500 annual contribution). Many employees do not anticipate taking regular vacations due to travel restrictions, so this may be an attractive benefit for employees to utilize PTO they may lose by helping to pay down unwanted student loan debt.

Assistance with Childcare

Childcare is one of the most significant expenses families face. With remote learning or limited in-person classes in many parts of the country, some employers are providing financial assistance to help offset the costs involved in childcare. Other companies are looking into programs that give the children help with remote learning, including homework and after-school activities while parents work from home or outside the home.

Other Potential Benefits

Companies are also providing greater work-schedule flexibility to employees, mindful of the need for work-life balance with so many working from home, and the potential for burnout. In addition, some organizations are offering additional paid time off (PTO) to help employees manage changes that have impacted them and their families, such as remote schooling for children, while others are expanding paid family leave options.

Addressing the Greater Need for Ancillary Benefits

Companies can help employees manage their emotional and financial well-being with a suite of voluntary benefits solutions that are in sync with the reality of their employees’ lives and situations. BKS Partners is available to help you examine your current employee benefits program to reflect your employees’ evolving needs in today’s environment.

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