This year’s open enrollment will be like no other. Continuing COVID19 concerns, technology-empowered health care services alternatives, and new legislation will drive novel considerations for 2022. In addition, there are always the standard open enrolment issues of new health care and life insurance premium costs, out-of-pocket maximums, co-payments, and family status changes. Below I will walk you through nine dominant benefit issues for 2022 that, if handled well, will drive your employer brand.
Let’s start with cost increases and COVID19 vaccinations.
No. 1. Increasing Costs. Price Waterhouse Coopers (PwC) predicts that employer medical costs are expected to increase 6.5 percent in 2022, driven by a return of deferred (elective procedures) medical costs when hospitals were full with COVID19 patients in 2021. The recent delta variant surge is once again pushing out deferred medical procedures such as hip replacements, and heart and cancer surgeries, which could further impact 2022 costs and presumably 2023 costs as well. Approximately 15 percent of Americans with health care coverage deferred procedures in 2021.
Other factors driving costs increases include the continued rise of mental health and substance abuse treatment and America’s worsening health during the pandemic with less exercise, poor nutrition, and increases in smoking and substance use. Many employers are thinking through strategies to improve participation in wellness programs to control these costs.
Drug spending is only expected to increase. Employers are covering an increase in these costs, according to PwC. On average, insurance covers a larger share of retail prescription drug spending than a decade ago, while consumers’ share has leveled off in recent years.
Passing costs on to employees is always a tough decision and affects the workforce’s morale and turnover. Some employers are working to put more transparency in their systems and are encouraging employees to shop around before having procedures performed. Legislation is requiring transparency, too, which will be discussed below. Others are looking at setting limits to the cost of their hospital reimbursements. According to a study by the RAND Corporation, if employers set limits on what hospitals charge to reduce costs from anywhere to as low as 100 percent to as high as 150 percent of what Medicare pays, hospital spending could be reduced annually by $61.9 billion to $236.6 billion, respectively, according to the report. That change would create a 1.7% to 6.5% reduction in national health spending.
If the decision to pass on costs is made, how will that be done? Higher premiums? Deductibles? Higher costs for lab tests and doctor’s visits? In a tight labor market, the savings from passing on health care costs to employees need to be weighed against the genuine high cost of employee turnover (which includes the difficulty of finding and recruiting replacements).
No. 2. Requiring COVID19 Vaccinations or Charging Employees Higher Health Care Premiums if They Do Not Get Vaccinate. The FDA’s full approval of Pfizer’s COVID19 vaccine has increased the willingness of employers to require the COVID19 vaccines of workers and contractors who go to work sites. Before the full approval, some employers hesitated to mandate the vaccine due to legal concerns. Some workers also pointed to the emergency approval status of the three US vaccines as a reason not to get vaccinated and may be more willing to get a vaccine now.
Over the summer, more employers begin to require the COVID19 vaccine. And that trend appears to be picking up now. Research from law firm Littler Mendelson showed that the number of employers that are currently mandating vaccines or planning to roll out some form of requirement has more than doubled from less than 10 percent of survey respondents in January to about 21 percent in August.
Other employers are thinking about raising health care premiums on those who do not get vaccinated (and presumably booster shots), as employers have done for employees who smoke cigarettes or do not participate in wellness programs to get blood work and health screenings. Delta Airlines announced in August that they will charge workers who refuse to get the COVID19 vaccine $200 per month. The average Delta employee hospitalized for COVID-19 has cost the company $50,000, CEO Ed Bastian said in a memo to employees released by the airline.
The Biden administration is encouraging employers to mandate the COVID19 vaccine. The US Equal Employment Opportunity Commission has said that employers can mandate the vaccinations for employees who enter the workplace without violating anti-discrimination laws provided they consider medical, religious, and disability-related objections and explore reasonable accommodations.
Employers who require the COVID19 vaccine still need to accommodate those who have a religious, medical, or disability related exemption and discuss a reasonable accommodation. With each request for an exception, the employer must determine if the unvaccinated employee can perform the essential functions of the job effectively and without posting a direct threat to anyone in the workplace. An accommodation may include COVID19 testing weekly or twice a week, remote work, change in the physical workspace, or change in location. Employers considering mandating the vaccine need to be transparent in their communications with employees and change their policies to reflect these changes. Employers must also keep vaccination information confidential according to the ADA.
The EEOC has also advised that employers may offer incentives for employees to be vaccinated, as long as the incentives are not coercive. Because vaccinations require employees to answer pre-vaccination disability-related screening questions, a very large incentive could make employees feel pressured to disclose protected medical information. Many employers have offered financial incentives to become vaccinated from $100 to $600.
Now there are some legislative considerations
No. 3. COVID19 coverage mandates. According to Mercer, many unique issues need to be considered for 2022, leading to an extraordinary number of employee questions. Number one on Mercer’s list are COVID-19 considerations for group health plans that will likely continue into 2022. When strategizing for 2022, employers should review the continuing coverage mandates, federal and state agencies’ various COVID-19 relief plans, and 2021 communications to advise participants about pandemic-related covered benefits and relief for certain group health plan deadlines. Some employers may want to continue specific benefit enhancements beyond the required coverage period, while others may wish to revert to pre-pandemic terms. In either case, communications with plan participants and plan documentation are essential. Opportunities to expand telehealth, employee assistance programs (EAPs), and on-site clinics may continue into 2022. Congress is working to make some temporary relief for telehealth programs permanent.
No. 4. Transparency. Another issue, according to Mercer, is transparency for group health plans. Employers should prepare to comply with final transparency in coverage rules for group health plans, along with several new transparency requirements under the 2021 Consolidated Appropriations Act (CAA), effective for plan years beginning on or after Jan. 1, 2022. Regulators plan to issue additional guidance on the CAA’s transparency requirements, but plan sponsors must make good-faith efforts to comply in the interim. Remember to review the price disclosures that hospitals are making public in 2021 to comply with the final hospital transparency regulation.
No. 5. Surprise Billings. A federal law prohibiting surprise bills for certain services takes effect for providers (including air ambulances) and facilities on Jan. 1, 2022, and for group health plan years and individual or group health insurance policies beginning on or after that date. The No Surprises Act, adopted as part of the 2021 CAA, builds on parts of the ACA by creating comprehensive patient protections against surprise medical bills. A recently released interim final rule (Part I) provides employers and plan sponsors some compliance guidance, although additional regulations are expected later this year and in 2022. Employers should review the new law and rules and confer with third-party administrators and carriers to prepare plans for compliance. Mercer advises plan administrators will need to adapt claims administration processes to comply with tight time frames, apply new cost-sharing and provider-payment procedures, and provide new disclosures in plan documents and explanations of benefits, among other requirements.
And technology is coming to the rescue in a number of different ways.
No. 6. Remote Health Care. COVID19 safety concerns have significantly increased the use of technology to provide care outside of the doctor’s office, which has lowered health care costs. According to PwC, 77 percent of clinicians said that new, non-traditional care venues, including retail clinics, concierge medicine services (house calls), and on-demand telehealth, either are maintaining or improving patient health options. This trend has also lowered emergency room use, (outside of COVID19 patients) which reduces costs.
No. 7 Cyber Security. The costs associated with data breaches and ransomware attacks can be material, hindering an organization’s ability to operate, according to PwC. While cyber-attacks remain a big threat, determining how much to invest in mitigating that threat is not always simple. Forty-eight percent of health industries executives said that they are increasing their cyber budgets in 2021 (PwC’s 2021 Global Digital Trust Insights survey, Fall 2020). Companies also are using automation technologies to identify and respond to security events. Twenty percent of health industry executives surveyed by PwC said they were already seeing benefits from using artificial intelligence in cyber defense.
No. 8. HR Chatbots. Open enrollment questions are expected to soar this year due to all the changes. Why not put in place reliable digital technology that provides accurate answers to employees in a convenient and friendly manner? There are HR chatbots with a library of questions and answers to choose from and can accurately answer the high-volume questions asked during open enrollment. Some also enable sending pre-scheduled reminders to employees to make decisions. These chatbots save HR staff hours of answering questions, provide employees reliable answers 24/7 from anywhere, and also are the type of solution young workers expect.
Finally, No. 9. Hybrid Working and Remote Work. Hybrid working and remote work have been the No. 1 non-cost benefit employees have wanted for years. Now that COVID19 has proven that it works, employees don’t want to return to the office five days a week (about half say they would quit if forced to return). Employers, on the other hand, realize they are enjoying a 22 percent (on average) improvement in productivity, more loyal employees, and the potential to save real estate costs. Studies show that hybrid workers can better manage work-life balance and stress, lowering health care costs. If you aren’t considering making hybrid work permanent for your work culture and employer brand, I strongly suggest you do, and be on the right side of history.
COVID19 has left an indelible mark on health care, creating a long list of considerations for 2022. Whatever choices companies make must improve the value of the organization’s brand in the eyes of the workforce.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting, managing partner of InnovationOne, and Sales Advisor to MeBeBot. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.