Employee Benefits Trends for 2023: What Are the Future Trends?
- Employee Benefits
6 min. Read
Last Updated: 12/20/2022
Table of Contents
For many workers, 2022 has been a year defined by opportunity and anxiety. The Great Resignation saw many employees leave their current employer in search of better opportunities elsewhere. At the same time, rising costs of living, especially in healthcare, has workers struggling to balance their work and home responsibilities. Through all this turmoil, the desire to work from home, sparked from the pandemic, remains a high priority for many employees due to its role in helping them achieve improved overall well-being.
Employers are faced with a balancing act. They want to attract and retain top workers by keeping pace with employee benefits trends. The 2022 Paychex Pulse of HR Survey reported that organizations have increased the benefits they are offering by an average of 22% compared to the year before the COVID-19 pandemic. At the same time, inflation demands that businesses assess and invest their benefit dollars carefully and get creative with meeting employee needs.
As we move into the new year, employers should familiarize themselves with employee benefits industry trends to guide their decision-making. Reviewing the emerging trends in employee benefits and responding with meaningful action can go a long way to keeping your employees happier, healthier, more productive, and loyal to your business.
What To Know About Employee Benefits Trends 2023
- Improving Healthcare Affordability
- Whole Body Health and Well-Being
- Remote/Hybrid Work Environments
- Personalized Benefits
- Family-Friendly Benefits
- Savings and Retirement
- Diversity, Equity, and Inclusion
Improving Healthcare Affordability
Of all the employee benefits trends, health benefits that improve healthcare affordability has become a staple. It's a simple concept. A healthy workforce is the foundation of productivity, creativity, and a positive work culture. Yet, the rising cost of healthcare along with finding time to get treatment during a relentless, demanding work schedule can be an obstacle for workers to seek the care they need, when they need it. Today's deferred care translates into increased claims down the road. And it's not just about treating a condition. Access to preventative care is equally important. Employers who actively make health care more affordable and accessible are sending the message that they care about their workers as people. There's another consideration. Employers who aren't offering health insurance are in the minority. Health insurance is the number one benefit offered with as many as 72% of businesses saying they offer health insurance, according to the Pulse of HR Survey.
There are several strategies that employers can use to improve healthcare affordability. In addition to a robust healthcare plan and virtual health care, providing employee health benefit accounts can maximize opportunities for employees to save on their healthcare expenses. Health benefit accounts also provide cost savings to you by helping you reduce your tax bill and control healthcare costs today and into the future.
Mental Health and Well-Being
Related to improving healthcare affordability is providing benefits that encourage improved mental health and well-being. Mental health in the workplace is an interconnected issue and is inextricably linked to physical health. According to the Centers for Disease Control (CDC), depression increases the risk for many physical health problems, especially chronic conditions like diabetes, heart disease, and stroke. The CDC also points out that the presence of chronic conditions can increase the risk of mental illness. It becomes an escalating feedback loop with dire consequences for those who are caught in it.
Even before the pandemic, employee mental health benefits trends were gaining traction. Since then, Paychex surveyed more than 1,000 workers to find out how the pandemic has affected their mental health at work. Around 51% of respondents said their mental health had worsened during the pandemic. Around one-third reported struggling to achieve their typical level of productivity due to their current state of mental health. As we move into the pandemic's prolonged aftermath, recruitment, retention, and productivity success will likely favor those employers who provide mental health benefits.
One of the current trends in employee benefits is providing services that encourage healthful behaviors such as good sleep hygiene, regular physical movement, smoking cessation, and addiction treatments. These types of benefits can go a long way in helping improve an employee's mental health and empowering them to live a happier, more fulfilling life. When workers are more emotionally, socially, and financially fit, they will be more engaged at work and contribute to an energetic, positive work environment that excels in creativity, problem-solving, and a can-do spirit. Consider offering support resources such as employee assistance programs (EAPs), comprehensive biometrics and lifestyle education programs, online resources, behavioral health education programs, and suicide awareness training for managers.
It's worth noting that mental health benefits are particularly important to Gen Z workers. A 2022 Paychex survey reveals that when asked to rank benefits (aside from higher pay), more Gen Z respondents cited mental health benefits as the top benefit that would make them stay at a company long-term.
Remote/Hybrid Work Environments
Another way employees are seeking to improve their overall health and well-being is through finding a better balance between their work and home life. The pandemic has shifted how employees show up for work and these remote or hybrid work environments continue to help them find the balance they desire.
The degree to which you support hybrid or remote work arrangements for your workers may play an important role in your ability to retain employees. In a 2022 Paychex survey, in partnership with Executive Networks, employee respondents reported that job stability and performing meaningful work were the two most important reasons for continuing to stay at their current companies. However, the type of work arrangement and even generation also play a role. According to the survey, 46% of Baby Boomers, 38% of Gen X, 31% of Millennials, and 24% of Gen Z said that flexibility in work hours and scheduling would make them more likely to stay long-term at their organization.
Implementing a remote or hybrid workplace benefits employers, too. When executed thoughtfully and successfully, you can gain access to a larger talent pool when it's time to recruit new employees, expect higher levels of productivity from employees, and save money in everything from overhead costs to fewer sick days.
Depending on your workforce, a one-size-fits-all benefits package may not yield the value for your employees that you are hoping to provide. As employees place higher priority on benefits (aside from pay), they will gravitate to those employers who are actively seeking ways to meet their needs. Personalized benefits is one way to give your employees a choice in constructing a customized benefits package.
One strategy might be to offer an array of voluntary benefits, which are goods or services that are either fully or partially paid for by the employee, but at a group discounted rate made available by the employer. Examples typically include ancillary benefits that fall outside of traditional benefits packages such as ID theft protection, financial counseling, healthy lifestyle programs, public transportation passes, and supplemental insurance packages such as life, cancer, and even pet coverage. Employers then provide a monthly or annual expense allowance that employees use to offset their costs for these voluntary benefits. You can even set up a reimbursement plan to help with medical expenses, remote work costs, or other perks that support your workers.
Between daycare, healthcare, and enrichment programs, the costs of raising a child or caring for an elderly dependent represent a huge financial burden. Add to this the reality that many parents are working full-time, and the result is workers who are burned out, stressed out, and exhausted. Employers are recognizing that expanding family-friendly benefits beyond what is required by federal law is an important trend that safeguards the physical and mental health of their workers.
Paid parental leave, paid adoption leave, and surrogacy benefits are ways employers are extending family-friendly benefits. A dependent care flexible spending account (DCFSA) can help ease the burden of daycare or other ancillary care costs. Specialized benefits that support women's reproductive health in everything from family planning to high-risk pregnancies to menopause is also gaining traction.
Savings and Retirement
Monetary concerns continue to headline employee benefits trends of 2023. Financial security, or lack of it, certainly contributed to the anxiety many Americans experienced during the pandemic and its continued ripple effect through the economy. As a result, prioritizing financial goals to improve financial wellness continues to receive much-needed attention from workers and their employers. It's a serious issue.
Financial wellness programs can play an important role in employee retention strategies, according to a September 2021 report by the Society for Human Resource Management (SHRM) and Morgan Stanley. Helping build savings for emergency funds, debt repayment, and retirement are critical elements to a competitive financial wellness program.
Diversity, Equity, and Inclusion (DEI) Efforts
While not a direct benefit in the traditional sense, today's diverse workforce will naturally gravitate to those organizations that are taking thoughtful actions toward creating an inclusive and equitable work environment. And why wouldn't they? A company that prioritizes DEI provides a work environment that feels safe for sharing ideas and expressing creativity along with a greater opportunity to gain access to training, mentorship, and upward career growth.
Establishing a work structure that organizes itself around DEI is beneficial. Employers who fail to recognize DEI as one of the future trends in employee benefits risk losing talented new hires who could bring valuable and much-needed alternative perspectives and ideas to the business. There are tangible steps you can take within your business to demonstrate your commitment to DEI practices. These include vetting your recruitment and hiring strategies, providing DEI training classes for management, and providing holidays, benefits, and acknowledgments that support different sexual orientations, religious and cultural backgrounds, and marginalized communities.
Offer Your Employees the Benefits They Want in 2023
As employers struggle to hire and retain employees, a strong and strategic benefits package can play a key role in your business's success and help set you apart from the competition. Staying abreast of new trends in employee benefits ensures you're investing in benefits that your employees will find useful in improving their personal and professional lives. As a trusted HR provider, Paychex can help you put together an ideal package as well as provide ongoing, easy-to-use support that benefits you, your employees, and your business.