Employee Benefits continues to be an increasingly complex area, with costs rising from multiple directions and recruitment and retention strategies dynamically shifting.
In 2023, organizations will need to have sound strategies to balance costs with employees’ needs and expectations.
Economic worries will continue to fuel cost sensitivity
Employer benefits costs are impacted by rising medical plan costs, higher short- and long-term disability rates due to extended COVID-related illness and recovery periods, and inflation. While some industries are seeing layoffs, many continue to experience talent shortages. This, along with needing to prioritize employee wellbeing coming out of the pandemic, means employers cannot shift costs to their employees as they may have done in pre-pandemic years.
Rising pharmacy costs from multiple pressure points
New technologies and treatments have accelerated the expense associated with specialty medications. A strong pipeline of new specialty drugs coupled with the emergence of effective gene-specific therapies has further hastened a rise in costs which can be meteoric for some life-saving genetic treatments.
A lesser-known pharmacy pressure point is existing drugs with greatly expanded uses backed by newer clinical evidence. Rather than the usual suspects of specialty medications alone, these higher-cost brand medications for chronic diseases are also making waves.
For example, newer FDA-approved drugs developed to treat type 2 diabetes are poised to dominate a second major health condition: obesity. This opens the door for greater prescriber use for many more patients. As well, patient demand for these drugs has exploded with heavy influence from manufacturer strategic marketing, social media, and investigative television shows.
This trend presents challenges such as:
- Increased off-label use outside the intended treatment population
- Impacts through the spillover trend in diabetes for employers (plan sponsors) who do not elect weight-loss coverage under their pharmacy benefit
Changing recruitment and retention dynamics critical to consider
Employers are facing another year of uncertainty and complexity while also having to manage the threat of a recession. These headwinds continue to complicate matters for the most seasoned executives and their ability to plan for and meet operational and growth targets, let alone thrive. And, even with some industries and organizations engaging in sweeping layoffs, competition for top staff and executive talent remains a concern for organizations.
Competitive pay and a comprehensive employee benefits program have long been recruitment and retention drivers. Employees are now seeking a more personalized employment experience. In the modern, diverse workplace, one-size-fits-all benefits are not enough.
Strategic employers continue to expand beyond traditional benefits such as medical, dental, vision, life insurance, disability coverage, and retirement programs to offer benefits that support the employee’s overall quality of life. These benefits range from flexible work arrangements to mental, physical, and financial wellbeing programs, to paid volunteer time off, and more.