The Employee Benefits Market Outlook examines critical employee benefits topics and trends, delivering insights into the market and forecasting where the industry may be headed in 2023 and beyond. Before addressing future trends, it’s critical to understand the central themes from 2022 that laid the groundwork for this year. To that end, the Market Outlook provides a snapshot of important benefits trends from 2022. The Market Outlook then discusses critical topics and trends for 2023, including implementing effective mitigation strategies to combat rising healthcare costs, bracing for a recession, prioritizing holistic employee well-being, bolstering voluntary benefits offerings to meet employee needs, and more.
In 2022, many employers were poised to regain their footing as the effects of the COVID-19 pandemic began to wane. Unfortunately, the year presented employers with many new and complex challenges, including record-high inflation, un- precedented numbers of job openings and the employee quits, an economic downturn, and wide-ranging regulatory changes. These challenges will likely have a considerable impact on organizations in 2023.
Preparing for and building an organization that can weather a potential recession is critical for a successful 2023. Employers will need to ensure their organizations are adequately prepared for an economic downturn; this includes taking proactive steps to limit recession-related ramifications and maintain financial stability. Although employers can’t prevent a recession from impacting their organizations, their strategies can significantly impact their short- and long-term futures.
Employers also face the difficult task of addressing rising healthcare costs while keeping employee benefits coverage affordable. Organizational budgets are expected to be limited, so organizations must find ways to balance their spending. Successfully striking this balance will be essential to managing costs in 2023. Bolstering voluntary benefits will effectively allow employers to expand their benefits offerings without raising prices. Benefits such as accident and critical illness insurance enable employers to meet their workers’ unique needs and help employees maximize their benefits dollars. As part of a complete cost management strategy, employers must contend with inflation and anticipated regulatory changes, such as a new overtime rule and pay transparency laws.
Talent shortages and retention issues that plagued organizations in 2022 are expected to continue in 2023. Last year, employees had greater leverage and higher expectations regarding job satisfaction, compensation, employee benefits, and flexibility; due to the projected economic downturn, employers are expected to regain some of their diminished leverage in 2023. For example, employers are expected to reclaim the edge in the return-to-work battle, with an increasing number of employers compelling employees to return to the office in 2023. Nevertheless, employers must remain competitive for talent acquisition and retention, including finding creative solutions to balance employee desires with organizational priorities.
Many employers are shifting to a holistic approach to employee well-being to address workers’ physical and mental health concerns. The holistic approach will become increasingly important in retaining employees in 2023 as employees confront financial difficulties, exacerbating existing physical and mental health issues in the workplace. Trending holistic strategies include:
- Focusing on work-life balance.
- Preventing burnout.
- Utilizing economic benefits to reduce inflation’s impact.
The renewed focus on reproductive health benefits that occurred last year is also likely to continue in 2023. There remains a lot of uncertainty in this area since the U.S. Supreme Court’s ruling ended the federal constitutional right to abortion, leading to a patchwork of state laws regulating access to abortion. Employers will need to continue to assess options for providing reproductive health benefits and how such choices may impact employee attraction and retention.
The impacts of the pandemic may have started to wane in 2022, but challenges stemming from the pandemic continue to impact the workplace. Understanding and responding to these challenges will be essential for employers’ success in 2023 and beyond. Employers must find creative solutions to control healthcare costs, balance attraction and retention efforts, and ensure employee health and well-being while responding to an economic downturn. As you consider the information presented in the Market Outlook, evaluate which trends you may be susceptible to this year. Then reach out to us to discuss the next steps and request valuable resources to help assess potential solutions and meet 2023’s challenges. Together, we can rise to the challenges and identify opportunities presented in 2023.