Alegeus Perspectives: Predicting the State of Benefits in 2023

We consulted with our product and market experts to determine the top five trends that will drive the healthcare and benefits space in 2023. Our top five trends include:

• The year of relief
• Using data for a better experience
• Two worlds of benefits
• More personalized, needs-based offerings
• A new generation of storytellers

Read insights into each topic below:

The year of relief
If we had to pick one word to describe the most pervasive benefit trend for 2023, it would be “relief.” We haven’t fully reckoned with the pandemic’s transformative impact on work and life, and the relationship between the two. Workers are burned out. Their finances are stretched by inflation. Families may have been impacted (or will be impacted) by downsizing. Remote workers are feeling disconnected from company cultures. Workers returning to the office are adjusting to half-full spaces. Benefits alone won’t solve these problems but they’re being seen more and more as a source of relief – which means that the nature and types of benefits being offered are expanding.

People just entering the workforce might want student loan debt relief but also opportunities for real connection with coworkers. Sandwich Generation workers might favor a break or financial help with child- and eldercare. Remote workers might just really want a better workspace. Employers stand to gain by adopting benefits solutions that meet their employees where they actually are.

Using data for a better experience
There’s still plenty of room for improvement on marrying modern consumer experience lessons like ease of use and elegant design with brass-tacks needs like knowing which health plan is the best fit and which other benefits – healthcare payment cards like HSAs and FSAs, traditional voluntary benefits, and emerging lifestyle benefits – also make sense. The more we can use data and experience to get people to the right decisions for the least amount of effort, and then stay with them throughout the year to continue guiding them to the right decisions, the better it is for everyone. We don’t need tutors to educate us, we need digital sherpas to guide us.

Most people tend to pick the health insurance offerings they had the previous year, or whatever they can afford. The best thing for administrators to do is show employers and the brokers who make decisions how and why HSAs and FSAs are both good for the goose and good for the gander.

Healthcare expenses are one of the most pervasive issues of our time. Americans are increasingly burdened by medical debt. Employers can and should help because it can also reduce their own benefits costs. Administrators need to ensure that brokers and employers don’t see consumer-driven payment accounts as another checkbox on a benefits program menu but rather as important to the health plans they’re paired with as, say, in-network doctors and specialists or prescription drug coverage.

Two worlds of benefits
There will soon be two “worlds” of benefits – in-person and online. It’s abundantly clear that “hybrid” is the prevailing model for most of the white-collar working world, but many company benefits programs and perks have yet to catch up. Benefits may still align with an office mentality – for example, health plans that are good for those close to corporate headquarters but not great for workers in other states or regions. Employers may have more leverage than they’ve had for a while with the economic downturn preventing employees from looking for another job. However, once the economy comes back, the companies that abuse their leverage could be in for another round of the Great Resignation.

We’ve shifted a great deal of burden away from employers regarding benefits for remote workers, e.g. work-issue mobile phones have been replaced by VPNs and authenticators on personal phones. Likewise, companies are starting to feel the benefit of greatly reducing their facilities budgets. Rather than taking all that money as additional operating margin, companies should take the opportunity to show a real commitment to their remote workforces in both ensuring consistency of the basics (Wi-Fi, computer and peripherals, mobile phone discounts) and other, more personalized needs (desks, lamps, coworking membership stipends, food stipends). Lifestyle accounts make this kind of personalized responsiveness possible. Employers just need to commit to it.

Companies that are committed to the happiness and well-being of their workforce, no matter where they are located, should seize this moment of transformation. By truly addressing their employees’ needs in personalized ways, these companies will reap the results of higher satisfaction and appreciation.

More personalized, needs-based benefits
We’re going to see refinement of mental health benefits into offerings that are much better at producing engagement and measurable results while maintaining employee privacy. Likewise, many other personalized, needs-based benefits will likely start being offered through benefits marketplaces, with employers providing employees with a defined contribution amount to spend on the benefits they find most useful.

This means that someone could spend company-provided money on therapy and college entrance exam help for their teenaged son, while their coworker could get a new printer for their home office and an HSA contribution to help pay for an elective surgery they put off during the pandemic. Both are provided essentially via the same employer benefits program, but both empower us to be individuals and get our individual needs addressed.

Understanding lifestyle benefits can be confusing because the term has become a catch-all for anything that’s viewed as 1) more personalized to individual and situational needs, and 2) NOT traditional, underwritten insurance products. Traditional voluntary benefits are being rebranded “lifestyle” but they’re still pretty monolithic. It can be hard to find the central narrative when looking at dozens of disparate products.

However, that’s the strength of lifestyle benefits as well. Some may see the broad diversity as “trying to be everything to everyone.” Rather, we should view the products themselves as the base units of a much-needed update to our benefits delivery model. Instead of being all things to all people, lifestyle benefits can and should be the right thing to the right person at the right time, scaled across entire organizations. We have the data and experience tools to make it work. Now we just need to focus on putting them together for the benefit of all American workers.

Employers also need to ensure they are leveling up employee salaries to meet inflationary cost increases. Beyond that, employers can use lifestyle spending accounts (LSAs) to tailor grocery benefits to match their employee populations. For administrators, this could mean providing employers with guidance on curation – say, recommending hyperlocal employers limit the LSA’s spending to a single supermarket or supermarket chain. For companies with more dispersed employee populations, they could expand to whole categories of retailers, like grocery stores and restaurants, but still design the plan to fit the company’s goals.

Lifestyle accounts can be very targeted, or they can be more generalized. The trick for administrators and the brokers/consultants they serve is to spend the right amount of discovery time finding out what pain points employers want to address with their employees, and then building out plans that suit those needs, tracking the engagement and satisfaction of their employee participants, and refining the programs over time to be even better.

Additionally, women’s reproductive health has been an afterthought for far too long. Recent societal events have necessitated that employers take action. And employers should not just think of these kinds of benefits as “perks,” but almost as new forms of gap coverage for half or more of their workforce.

Are benefits administrators the next generation of storytellers?
Benefits administrators are being asked more and more to be data storytellers. They’re expected to use new analytical tools to help create more personalized, efficient and effective benefits programs, and then they are expected to go pitch them to their employees. That’s a really tall order that requires both a different kind of benefits administrator and a company commitment to supporting those roles. In 2023, it will be integral to provide proper training for benefits administrators and adapt new role requirements during the hiring process.

By leaning into technology and embracing the potential of personalized benefits, administrators can position themselves as trusted advisors and keen leaders. Employers want, need, and will increasingly adopt lifestyle benefits that address their employees’ needs. These will be cash- or stipend-based and delivered through retail-like marketplaces or curated plans that enable employees to feel more seen and appreciated. Employers will also be able to better track how well they are providing employees with relief. And in a time where relief will continue to be highly coveted, those who champion it will come out ahead.