What challenges, trends and opportunities are shaping the future of employer-sponsored health care? In this article, we explore ongoing issues and popular perks for 2024 and highlight key areas in which employers can get creative to cut costs and enhance employee retention this year.
Key Challenge: Rising Health Care & Pharmacy Costs
One of the greatest challenges that employers will continue to face this year is rising health care and pharmacy costs. According to several industry surveys and reports, health care costs are anticipated to grow between 6% and 8.5% in 2024, the largest increase in more than a decade. As a result, employer-sponsored health care plans may cost more than $15,000 per employee.
Pharmacy costs are also predicted to continue to impact employers significantly. The rising median prices of new pharmaceuticals as well as the high prices of drugs already on the market are driving up employers’ pharmacy costs. In addition, the U.S. Food and Drug Administration (FDA) has been approving a greater number of high-cost drugs, such as weight loss drugs and competitive gene therapies, which is causing drug price inflation.
As employers prioritize cost containment in their benefits strategies for 2024, it’s also important to take emerging trends into consideration to ensure employees’ shifting needs are being met.
According to industry data, employers are budgeting for an average salary increase of 4% in 2024. Research conducted by Zywave found that half of employers plan on raising employee compensation to win over new workers, while even more (53%) are planning on improving compensation to better retain employees.
The Great Gloom
Employers will face significant employee engagement challenges, referred to as the “Great Gloom.” Employee happiness has decreased for three years through June 2023, and this trend is likely to continue in 2024. The reasons employees are dissatisfied can vary by industry; however, savvy employers across industries will prioritize improving employee engagement and avoiding the negative impacts of this trend.
Click here to learn more about the factors contributing to the Great Gloom.
Rise of Specialty Drugs
Employers’ health plans have increasingly been pressured by rising prices of new specialty drugs and existing ones, and pharmacy costs are not expected to slow down in 2024. Two specific specialty drug trends are propelling the increase of specialty drug spending — weight loss drugs, such as GLP-1 drugs, and new competitive gene therapies (CGTs) are receiving accelerated approvals and growing in utilization.
This year, more employers are expected to expand their employee benefits offerings. Employee-paid voluntary benefits are growing in popularity, as they allow employers to offer more perks without raising health care costs. In addition, student loan debt relief and fertility and family-building benefits are becoming increasingly more widespread.
While these ongoing challenges and emerging trends may pose difficulties for employers, they also present opportunities to think outside the box and empower employees to become more informed health care consumers.
Health plan design is an area in which employers should embrace the opportunity to get creative to positively impact employee satisfaction and retention. Whether that involves filling gaps in current offerings to make them more inclusive or expanding employee assistance programs (EAPs) and adding virtual care options, there are a variety of ways in which employers can think outside the box without significantly impacting health care costs.
Another area of opportunity for employers in 2024 is benefits education and employee communication. Many employees are looking for ways to stretch their hard-earned dollars further, and employers can step in to provide that much-needed guidance.
Click here to learn how CBIZ can help transform your employee communications strategy.
As new trends and challenges emerge in 2024, so do new opportunities for employers to maximize their benefits ROI and enhance employee engagement. Organizations that adapt accordingly will stand out in today’s competitive market and position themselves for sustained success. Looking for more guidance on how to do just that? Connect with CBIZ Employee Benefits today.