2021 Benefits Planning and COVID-19: Considerations for Employers

We have seen the effects of the COVID-19 pandemic on many things, including 2021 benefits planning. Data from Mercer’s Global Survey #5 confirms that one-fifth of employers said they need to update their employee benefits programs to better meet employee needs. With this in mind, and with the help of our friends at HR360, we’ve outlined some common changes that are being made for the 2021 open enrollment season.

Potential cost increases can impact plan design

Healthcare premium costs have increased steadily over the last several years, with the most recent rate increase around 6 percent. Actuaries at Willis Towers Watson predict up to a 7 percent additional increase in healthcare premiums in 2021 for COVID-related expenses; this applies to both self-funded and fully-insured plans.  There are several factors likely contributing to this year’s cost increase. First, despite many healthcare providers currently waiving fees associated with COVID-19 testing, those costs will likely trickle down to the plan in the future. Fully-insured plans may not see these increases until the new plan year, but self-funded insurers may have already felt them. Second, many patients have postponed elective surgeries in 2020 due to COVID-19, but they may opt to receive care in 2021, which could result in increased claims and costs down the road.

When evaluating plan design changes for 2021, remember that there is no “one-size-fits-all” format when it comes to mitigating COVID-19-related healthcare costs. It’s important to take a look at your organization and your unique circumstances. Revisiting the pros and cons of different funding models – i.e. fully-insured vs. self-funded, is also an important component of plan design, measuring your risk-tolerance against rising costs on an ongoing basis.

Increased telehealth benefit offerings

We’ve previously promoted the benefits of telemedicine use during the COVID-19 pandemic. Telehealth services have increased in utilization during COVID-19 by 4,347% nationally from March 2019 to March 2020, according to FAIR Health. With this in mind, expanded access and the promotion of telehealth services will be a priority for many employers heading into 2021.  

Expansion of employee assistance programs (EAPs) and mental health benefits

Results from a number of employee surveys have found that the COVID-19 pandemic has been one of the most stressful times in their careers. Employees are experiencing a wide-range of stressors as they return to work, from financial hardships to balancing caregiving responsibilities to their own physical and mental well-being. This stress can lead to lower workplace productivity and morale while also increasing an employee’s risk for certain health conditions and absenteeism. To help, employers should consider offering or revamping existing employee assistance programs (EAPs) and/or expanding mental health benefits for 2021.

As you prepare for open enrollment 2021, remember that the team at Rose & Kiernan, Inc. is here to help. We will work with you to help evaluate your organization’s unique circumstances and needs. If you have any more questions about 2021 benefits planning and COVID-19 please contact the Rose & Kiernan, Inc. Employee Benefits Management Group (EBMG) here or by calling (800) 242-4433.

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