A new study has found three out of four U.S. workers would accept a job with a slightly lower salary if it offered better health care and medical coverage.

The main driver in workers prioritizing benefits is the rapidly rising cost of group health insurance premiums and out-of-pocket costs, according to the study by Voya Financial.

Besides looking for better health coverage, there’s growing interest among employees for voluntary benefits that can buffer health care costs, like critical illness, accident and dental and vision insurance.

As we approach open enrollment season for policies incepting at the start of the year, the study findings provide food for thought as you try to balance your benefit offerings with employee salaries.

The general theme of the poll was that health insurance and out-of-pocket costs like copays, coinsurance and deductibles are having a real effect on many workers’ finances, and in particular, their ability to save for retirement.

Consider the following:

• 72% of workers surveyed strongly or somewhat agreed they would take a job with a slightly lower salary for better health care and medical coverage, including lower premiums and out-of-pocket costs.
• 51% said that high health care costs were having a major or significant impact on their ability to save for retirement.
• 51% said they would be more likely to stay with their current employer if it provided access to a health savings account (HSA).
• 51% said they would be more likely to stay with their employer if it provided access to voluntary benefit offerings, and
• 54% said they would be more likely to stay with their employer if it provided access to mental health benefits and resources.

The above bullet points have one theme in common: reducing the employees’ premium and out-of-pocket outlays.

The takeaway

As open enrollment approaches, consider holding information sessions to help your staff understand the true value the benefits you offer can provide.

Voya Financial found that 75% of workers surveyed strongly or somewhat agreed they were interested in receiving support to maximize their workplace benefits dollars across their:

• Health insurance,
• HSAs,
• Voluntary benefits, and
• Retirement savings.

For example, “Many individuals may not realize that voluntary benefits can help lessen the financial impact of a covered event such as an illness or accident and can potentially reduce the need to tap into a retirement account for any out-of-pocket medical or other expenses,” said Christin Kuretich, vice president of supplemental products at Voya Financial.

With that in mind, offering benefits like critical illness or accident insurance can provide a safety net in case of one of these events hits one of your staff. 

To better explain benefits to your staff, providing training, individual guidance and literature that explains how best to maximize their benefits. Importantly, employees are increasingly interested in digital tools (like apps or websites) that can provide tools and advice to help them make decisions related to health care, workplace benefits and retirement.

Finally, HSAs can also reduce an employee’s total costs and also help lower their taxable income. HSAs are accounts to which workers contribute with pre-tax funds and then reimburse themselves for out-of-pocket medical costs. Those funds are also not taxed.

As they wrestle with providing attractive but affordable health care benefits for employees, employers are trying a variety of strategies. A recent report from insurance brokerage Gallagher shows businesses are balancing workers’ physical and emotional health against ever-rising costs.

There are many cost drivers in health care and insurers and employers are in a fine balancing act of trying to keep a lid on costs and also keeping their employees happy. And while firms are leaving no stone unturned in their quest for reducing costs, some are also adding new services employees are keen on.

Here’s what the report found:

Offering more plans

To combat rising costs, many employers (80%) offer more than one health plan. A growing share of employers offer high-deductible health plans (HDHPs) and health savings accounts (HSAs) to employees. The percentage of companies offering such plans has increased five consecutive years and is now at 56%. At the same time, 24% of employers report more employees choosing HDHPs than the other offered plans.

Employers and employees contribute to the HSAs. When employers contribute, they provide about $500 or more for single coverage and $2,000 or more for family coverage.

Weight-loss drugs

Weight-loss drugs such as Ozempic and Wegovy are growing in popularity. However, these drugs (known as GLP-1s) are expensive, and employers are trying to manage the effects of those costs.

Slightly more than half of employers surveyed include weight management in their benefits programs, but they attach strings to the use of weight-loss medications. This may include:

• Step therapy, which entails trying other, less expensive yet proven pharmaceuticals and health and fitness regimens first.
• Prior authorization before approving their use.
• Eligibility requirements. Around one-fifth of employers set eligibility requirements that include a combination of minimum body mass index and comorbid conditions. They do not pay for the drugs for otherwise healthy employees looking to drop a few pounds.

Plan eligibility and scope

Despite rising costs, some employers are expanding eligibility for and the scope of their health care plans.

The Gallagher report shows a small increase in the share of employers offering coverage to employees’ domestic partners and to part-time employees, though these remain the minority.

Some are also offering more specialty coverages. For example, more than half cover hearing aids and behavior analysis for employees’ children with autism. A small but growing fraction (17%) cover gene therapy.

Almost half of employers cover some form of treatment for infertility, including drugs, specialist evaluations, in vitro fertilization and other fertilization procedures. However, controversies surrounding some of these procedures have led to a patchwork of state mandates and restrictions. This has made providing these benefits more complex for companies.

Mental health and leave

More employers are paying attention to their employees’ mental and emotional states in addition to physical wellness. Most are concerned about staff suffering from burnout and stress.

However, they also believe their managers are not able to recognize the signs. More than a fifth now offer training to managers and human resources staff on identifying warning signs and referring employees for help, and that share has grown in the past two years.

Finally, more firms are offering family-focused leave policies. This recognizes the growing emphasis employees place on work-life balance amid tight labor markets.

Almost 90% offer paid bereavement leave (outside vacation leave,) while almost half provide paid time off to bond with a new child, and 15% provide it for taking care of ill or disabled family members.

The takeaway

Employers are faced with two difficult realities. The workforce is aging, meaning that retirements will shrink the pool of available skilled workers. At the same time, health care costs are ever-increasing.

To meet both these challenges, employers are using the strategies detailed above, as well as other approaches. Some combination of them will help you compete in the war for talent while protecting your bottom line.