By Michael Barone

A word to the wise for 2018: Don’t get too comfortable with the policies and benefits packages that have served you well in the past. Big changes are afoot on the employee side…and provider side, too. You don’t want to get left behind.

On the employee side, you’ve been hearing for some time now about the challenge of engaging a multi-generational workforce. But it’s time to think beyond the Millennials, as the first wave of Generation Z employees (born after 1995) now enters the workforce. They have a whole new set of expectations and values that are forcing employers to re-evaluate how they recruit, retain and, especially, engage their people. Start working on your battle plan in 2018 (and beyond) to avoid becoming a casualty of the increasing battle for talent. 

A second group of trends for 2018 relates to the overall benefits environment. It’s still marked by an unrelenting focus on cost management. In line with that, considerable attention is being paid to the healthcare delivery system itself and outcomes being achieved. There’s even a “back to the future” aura to some of these developments as capitation re-emerges as a payment strategy and incentive. 

What can you expect on both of these fronts? Consider some of the most important trends that are evolving that you should consider in your strategic benefits planning.

Gen Zs are forcing workplace reinvention – from benefits to recruiting

The surge of Gen Zs in the workplace has numerous implications given the influences that have shaped them, how they expect to be treated and managed and how they respond if they don’t think their employer is measuring up. The increasingly tight labor market only raises the stakes.

It’s a function of their upbringing in a hyper-connected world. According to Pew Research, only 14 percent of U.S. adults had Internet access in 1995, but that exploded to 87 percent by 2014. Small wonder that for the Zs, it’s the always-on and available tech-enabled connections to networks of people and information that rule. It’s how Zs learn and solve problems and it influences their expectations. 

Here’s what it all means for your workplace and how you will need to compete for talent moving forward.  

  • Legacy benefits and old attitudes need replacing now
    The Zs aren’t merely connected. They share aggressively. Studies show that if their experiences – with a brand or a product or an employer – are negative, the majority are happy to tell everybody about it online, including on Glass Door, a fast growing site that reviews millions of employers. That makes it important to foster a positive culture and work environment, and provide the types of benefits that will attract them, keep them happy and ideally inspire them to spread the word. 

    To that end, take a long, hard look at your employee benefits: Too many employers still offer legacy employee packages that have changed little in the last two decades. Will they be good enough to woo the Zs and keep them satisfied? In fact, the Zs are motivated by the total deal, not just financial compensation. They want unique benefits that are personalized for them right down to the individual level. 

    Think about the 22-year-old who’s working in an urban setting, maybe with a pet at home, doesn’t have a lot of time to shop and is saddled with student loans. What are the priorities? A plan offering them vision, life or disability insurance? Or a benefits package that provides a personal concierge and maybe dog walker, student loan repayment and an identity theft program, too? Best of class employers will offer up a robust mix of traditional and non-traditional benefits that cater to the individual employee’s lifestyle needs. 

  • Think about VR and gamification as critical tools in the battle for Gen Z talent
    Even as the Zs mature, there’s a trend toward a blending of personal and work lives as outside influences bleed into the workplace. When it comes to virtual reality, this generation of digital natives is enthusiastic over its potential use in the workplace.  

    There’s been a 250 percent jump in VR companies since 2012 and the technology’s significance is for more than promoting productivity by connecting people in different locations for virtual meetings. It’s also a good recruiting tool, a way of letting prospective hires “experience” your environment so they are better able to tell before they take a job if it’s right for them. 

    Gamification is another Z activity that’s bleeding into business and affecting recruitment and hiring. Picture Silicon Valley’s “code-offs,” where prospective developers compete during a set time period to find the best solution to a specific design challenge. The winner gets the job. It certainly makes resume screening seem obsolete by comparison.

It’s all about quality (and costs, too) as health care delivery shifts

It’s hard to escape the issue. The Henry J. Kaiser Family Foundation reports that average family benefits premiums have climbed 20 percent since 2011 to $18,142. Those benefits are hugely important to employees, 90 percent of whom count them as being as important as their salary. HUB International’s 2017 Benefits Barometer  showed that 81 percent of the survey’s respondents consider benefits cost management one of their top three priorities. Half also stated an objective of helping employees make better benefits decisions. These are considerations that are combining to continue to shape the benefits environment in 2018. Among the most notable trends:

  • Insurers (employees, too) look to reward quality over quantity
    Insurers are moving away from paying healthcare providers on a volume basis to more sharply focus on quality outcomes instead. Consumers are demanding higher quality care, in part because they are paying more out of pocket.   Alignment between carrier and employee interests will shift the industry away from “fee-for-service” to bring quality and cost incentives together. It’s reshaping the delivery system, with high performance networks an evolving strategy. The focus on value-based care and quality (and more cost-effective) outcomes reflects a growing trend to emphasize the whole patient, rather than one-off payments for individual services. 

  • Back to the future with capitation (and other incentives)
    Pay for performance is not so common in healthcare, but payers are pushing the concept in the quest to align quality and costs. It takes incentives for this to fully evolve, and to that end, insurers are starting to move into bundled payments and bonuses to push the transition forward. It’s also reviving the practice of capitation, which lost favor in the late 1990s as a strategy to effectively ration care. Today’s version of this incentive, however, is geared to better manage care under a broader health management infrastructure where providers are paid a set per-employee fee to manage the overall health of the employee population.

  • Countering employee inertia in benefits decision-making
    The quality of employees’ decision-making when it comes time to renew their benefits packages is an ongoing concern. A recent AFLAC study found that that 83 percent of employees spend less than an hour reviewing their options and 92 simply re-up for the previous year’s package. It’s leading a drive for the creation of better decision support tools that give employees a more compelling picture of their benefits choices and tradeoffs (including the financial implications). Inertia is a powerful force that can keep people from investigating the nuances of their benefits and how different products may combine most effectively to meet their particular circumstances.  Any tool that counters that inertia will help employees make more informed decisions about benefits. 

As we advance into 2018, employers will be challenged to effectively manage an increasingly diverse base of workers and for creating benefits strategies that engage them – as cost effectively as possible. HUB International’s experts are ready to step in with guidance.