2021 Benefits Planning and COVID-19

As the COVID-19 pandemic continues to wage on, its effects on benefits planning for next year are being felt—especially as open enrollment season approaches. According to Mercer's Global Survey #5, 20% of employers surveyed said updating benefits programs to better meet employee needs was an HR area in which companies are seeing an increased need for support.

In addition to considering plan design changes, employers are having to evaluate and adjust their benefits packages for 2021. Some of the most common changes being made for the 2021 enrollment season are outlined in this article.

Potential Costs Increases and Plan Design

Employers and benefits experts are bracing for cost increases headed into 2021. Health care premium costs have increased at a steady rate over the past few years, with the most recent average increase being around 6%. Actuaries at Willis Towers Watson predict up to a 7% increase in health care premiums in 2021 for both self-funded and fully insured employers.

Despite many health care providers waiving fees associated with COVID-19 testing right now, those costs will likely trickle down in the long run. While fully insured employers may not experience cost increases until the new plan year, self-insured employers may have already felt cost increases due to COVID-19. In addition, many patients are postponing elective surgeries and procedures this year due to COVID-19, but may opt to receive care in 2021, which would result in increased claims and costs.

As such, organizations may need to evaluate plan design changes heading into the 2021 enrollment season. No plan design is guaranteed to shelter employers during the coronavirus pandemic—it comes down to unique circumstances.

For instance, some self-funded employers may be covering significantly more costs now than what they’re used to. These organizations may consider going fully insured to make more predictable payments.

On the other hand, some fully insured groups may feel restricted by their locked-in premiums or may predict much higher costs in 2021, so self-funding could appeal to them.

Some organizations may wish to restructure even further, using reference-based pricing or other plan designs aimed at shifting costs away from the employer.

There is no one-size-fits-all plan design when it comes to mitigating COVID-19-related costs. Employers will need to evaluate their unique circumstances and consider whether they need to shift some of their cost-sharing burden with a new plan design.

Telehealth Benefits

Telehealth is the practice of communicating electronically with a physician, typically via telephone or video chat. The medium has risen in popularity over the past few years, but the coronavirus pandemic has proven just how viable it can be. Many insurers are already covering telehealth under their plans, and it’s a safe bet that others will do the same.

During the pandemic, telehealth services have seen a significant increase in utilization. According to a survey from FAIR Health, there was a 4,347% increase nationally in telehealth utilization from March 2019 to March 2020. As the pandemic has progressed, many providers and hospitals are encouraging patients to utilize telehealth services instead of coming to the office or hospital for non-life-threatening care.

Heading into 2021, expanded access to and coverage for telehealth services will be a priority for employees. Employers should evaluate their current offerings and consider adding or expanding this benefit.

Mental Health Benefits

According to a survey from mental health provider Ginger, nearly 7 in 10 employees cited the COVID-19 pandemic as the most stressful time in their careers.

As employees return to work, many are experiencing financial hardship, balancing new caregiving responsibilities, managing concerns over their physical well-being, and maintaining their mental well-being and health. During these uncertain times, employees are understandably experiencing significant stress, which can lead to lower productivity and morale, and increase their risk for health conditions, absenteeism and higher health care costs.

To help employees navigate these times and ease their return to work, employers should consider offering or revamping an existing employee assistance program (EAP) and expanding mental health resources for the next benefits plan year.

In addition to expanding EAPs, some other mental health resources to offer may include covering telemental health services and providing access to mental health professionals or apps.

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Combined HR Services provides practical human resources information and guidance based upon our experience in the industry and our experience with our clients.  Combined HR Services are not intended to be a substitute for professional advice.  Combined HR Services are designed to provide general information to human resources and/or business professionals regarding human resources situations commonly encountered.  Given the changing nature of federal, state and local legislation and the changing nature of court decisions, Combined HR Services cannot and will not guarantee that the information is completely current or accurate.  Combined HR Services do not include or constitute legal, business, international, regulatory, insurance, tax or financial advice.