To attract and retain talent in a tight labor market while helping employees address ever-climbing healthcare and other costs, U.S. employers are pursuing innovative ways to improve their comprehensive employee benefit plans with additional wellness benefits, according to the Goldman Sachs Ayco 2023 Benefits & Compensation Trends in Corporate America Report.
Following open enrollment last year, Goldman Sachs Ayco analyzed the benefits offered at 400 companies where it provides corporate-sponsored financial counseling. The most common themes that emerged for 2023 are: inflation-driven cost control; and diverse and equitable benefits for retention and recruiting. These trends build on findings from the 2022 analysis, which showed a focus on expanding mental and financial health benefits; adding a diverse mix of voluntary benefit programs; and expanding family planning and caregiver benefits.
View the Goldman Sachs Ayco 2023 Report
Among Goldman Sachs Ayco’s corporate partners reviewed, 10% switched plan carriers to get better rates, 40% absorbed cost increases instead of passing them on to employees and 5% even managed to lower employee insurance premiums despite high inflation.
Additionally, 87% are contributing more than $500 to employee health savings accounts (HSAs) to help ease inflationary burdens, and 22% are also 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 persistence of higher-than-expected inflation has created significant financial challenges for the U.S. workforce,” said Kathy Barber, Vice President and Head of Corporate Benefits & Compensation at Goldman Sachs Ayco. “Forward-thinking companies want to help their employees navigate these challenges, leading many to enhance the suite of benefits they offer. By actively addressing premiums, and providing additional voluntary benefits focused on helping employees control costs, employers can create positive, real-time, bottom-line impacts.”
“It is a powerful statement that shows companies understand and appreciate their employees.”
Many Companies Reimagining and Growing Voluntary Benefits as Competitive Differentiators
Child and elder care assistance benefits are the top growing programs at Goldman Sachs Ayco’s corporate partners, up 177% in the last three years, with 55% now offering them. Pet insurance has surged 120% over three years. Access to fertility, adoption, and surrogacy benefits is rising, with 60% of companies (40% in 2022) offering adoption and surrogacy reimbursements, most commonly up to $10,000.
The six most common voluntary and ancillary benefits reportedly offered are:
- Mental health – 95%
- Group legal plan – 73%
- Personal accident insurance – 69%
- Critical illness insurance – 68%
- Identity theft protection – 62%
- Pet insurance – 58%
Mental health benefits increased from 90% in 2022.
“While mental health has been a top benefit offering for many years, it was not talked about all that much,” Ms. Barber said. “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.”
“It can also be money well spent: mental health benefits can help improve employee productivity, reduce sick time and decrease health insurance costs.”
Beyond traditional, limited Employee Assistance Programs, many companies offer virtual and on-demand services, self-help apps, community forums to connect on mental health concerns, and manager training to open constructive dialogues with employees on their well-being.
The report also shows that many companies are beginning to offer supplemental, specialty medical programs. These are designed to help employees more effectively manage the rising cost of healthcare, including cancer diagnosis and treatments, degenerative disease management, muscular skeletal support, and diabetes treatment.
Some companies also are providing new services and resources such as telemedicine, nurse advice lines, advice for minimizing expenses, and price transparency tools.
“To support the needs and desires of the increasingly diverse U.S. workforce, one-size-fits-all approaches will no longer work, if they ever did,” said Lauren Uranker, Managing Director and Head of Corporate Relationship Management at Goldman Sachs Ayco. “Supporting the physical, mental and financial well-being of employees is leading more and more employers to offer holistic programs of personalized, voluntary and ancillary benefits that can meaningfully improve the lives of their employees and improve satisfaction and retention.”
Employers Report Expanding Several Other Benefits Programs
Lifestyle Spending Accounts (LSAs), also known as lifestyle benefit programs or wellness spending accounts, are another emerging trend. These after-tax accounts allow employers to reimburse employees for defined types of expenses while giving employees flexibility to leverage support for the benefits and expenses most important to them.
Some examples of LSAs corporate partners now offer include: $800 reimbursement accounts for over 50 expenses (including gym memberships, student loan repayment, ID theft protection, tax preparation, and care for loved ones or pets); $2,000 annually for voluntary benefit plans (premiums for group life, supplemental health or property & casualty insurance, and group legal coverage); and $2,000 annually for wellness-specific items (gym memberships, nutrition and weight management programs, and mental and behavioral health support).
Paid leave programs (beyond vacation), caregiver and parental leaves, and sabbaticals are also evolving as companies seek to make changes permanent to policies that emerged from the pandemic.
“Innovative, enlightened companies want to show employees they support them in all aspects of their lives, from personal mental health to caring for multiple family generations,” Ms. Barber said. “Every employee will not use these benefits, but they can be a great help to those who do and provide a welcome sense of security to others by just knowing they are available if needed.”
Of the 150 companies where Goldman Sachs Ayco analyzed data on paid time off (PTO), half reported offering PTO that accrues based on years of service, and 15% have shifted to PTO bank systems that combine vacation days, sick time, personal time, and flexible holidays into one pool. The analysis also found that 10% of companies are increasing their use of unlimited PTO.
The option to convert unused PTO to cash, 401k or HSA contributions, student loan payments, charitable contributions, and even donating it to other employees is also growing – 23% of companies now offer vacation buy/sell programs, up to five days (40 hours) being most common.
“Employers must consider work-life balance when offering PTO conversions,” Ms. Uranker said.
A growing number of companies are offering paid time off to care for family members, recognizing that employees may face life obligations that take them away from work. The most common parental leave period is 12 weeks, with care for other family members commonly paid for six weeks. The survey also found that 15% of companies offer employee sabbaticals, about half in the tech sector, the most common length being four weeks.
Qualification for NQDC Continues to Grow
The survey further showed that 74% of companies offer a Non-Qualified Deferral Compensation (NQDC) plan as part of executive compensation. Of these, 64% limit eligibility to senior management. But companies are expanding eligibility requirements: 35% of companies base qualifications on compensation instead of title, up from 25% two years ago.
