Are mental health benefits being done right in 2022?
As an industry, have we missed the mark on mental health benefits for employees? This is not a slag on what is offered, and I think this is truly one of the biggest challenges and opportunities in the upcoming years. Let me explain…
I want to discuss a few things on this topic – how big the mental health issue is, the importance to employers, and ideas on how we can do it better. I always look at benefits questions through the frame of small to mid-size business. These are the majority of our clients. Larger employers can do more to deal with issues like these, but smaller firms are limited in many ways.
The first is recognizing that we HAVE mental illness issues. Too many, this will not come as a surprise, and we are all seeing this now with the pandemic burnout. One in five Canadians will experience a mental health problem. So, if you have ten employees, you have two that are probably struggling. For a small company, 20% of your workforce is not at their best, and this is an issue.
From an employer’s perspective, this rise in mental illness comes at a cost. Here are some numbers to put into perspective with how many ways this is going to be a cost concern for employers:
Canadians spend an estimated $950 million per year on psychologists in private practice. About 30% of this is paid out of pocket, while the remainder is paid through employment-based private health insurance plans. If 70% of these costs are run through employers, and mental illness has risen and will continue to rise, then there may be more pressure on employers to cover this.
The economic burden of mental illness in Canada is estimated at approximately $51 billion each year, with $6.3 billion resulting from lost productivity.
A third (34%) of Canadian employers have already seen an increase in disability claims in 2021 compared to 2019.
Mental illness makes up roughly 1/3 of short and long-term disability claims but 70% of workplace disability costs.
Not only are these short-term disability episodes among the costliest types of absenteeism due to their length and the risk of recurrence, but they also have spillover effects on the rest of the workplace. Other colleagues may have to take on additional work to compensate for the absent employee, causing the team to be more stressed and less productive.
For an employer, I hope the priority is to help the employees, but if that is not enough, there is a big business case to have a healthy, happy, productive workforce. So, we have a problem – what next?
This is where it gets challenging from a total rewards perspective and more importantly, for smaller employers that make up the majority of employers in Canada. Many of the products are in place to aid those already struggling with mental health vs preventative care. Do not get me wrong, this is great, and we need to help those struggling with mental illness, but this is a reactionary approach and not a preventative approach. Plus, even these resources are being maxed out, so there is pressure to continually keep adding. What we have now is:
Practitioner Coverage at $500, and this will only realistically cover a few sessions per year.
EAPs are very common. These are not put in place for any type of long-term solution.
Utilization of these is commonly low and priced at that < 20% utilization.
Short & Long-Term Disability. Once they are at this point, it is almost too late, becoming so much of an issue that they can no longer function at work.
A WSA to promote healthy activities – a very new approach, and although a good start, many are not communicated and promoted. Those who are already doing these activities jump on board when the intent is really to target those who are not currently utilizing all the things offered in the WSA.
My thoughts on approaching mental illness in business is that we need to address it all – there is no other option. This is tough to hear from an employer’s standpoint because adding a bit of everything comes at a cost – hard to track ROI’s and confusion from the employee’s perspective. You need a solution or strategy for everyone, regardless of where they are in their mental health journey. Ideally, with a heavy emphasis on preventive care to have the best business outcome, I think there are two possible options:
The goal is not to turn you and your entire team into doctors so you can diagnose people but to make tools accessible to your colleagues. Meet employees with a wide range of tools to help them with their mental health. You need to have one intake for employees so they can enter, discuss their issues and then get them on the appropriate path in the same visit with whatever the modality, be it CBT, type of practitioner (virtual or in person), or acute EAP solutions. Employees do not know what any of the solutions are in a benefits plan, so it must be super simple from the employee’s perspective. Employees know if they have an issue, and they should not be asked to navigate a bunch of complex options. Enter, triage and get them on “A” path intuitively.
Insurance – do what you do best: create insurance products. If you think about it, dealing with the mental illness challenge and the associated employers' financial risk and cost, makes this a candidate for group insurance. You have a one in five statistic, which means not every employee will drive cost to the same extent. But a few will drive financial costs in the form of practitioners, related drug costs, EAP services, telemedicine usage, and inevitable disability claims. The insurance concept could be bundling all or some of these services, PLUS all the preventative things, as a total mental health insurance product. You must include and invest heavily in the preventative products to help before a problem (which has the negative cost consequence) starts. Also, this could offer a level of flexibility to all employees. Those in the preventative phase may use the Wellness Spending Account, cognitive behavioural therapy—helping to build skills to deal with stress—or companies like Headversity (pre-EAP). All have aspects of preventative ways to manage stress and anxiety before needing medical intervention is required. Those requiring intervention may access the EAP features or use the practitioner’s coverage but not to a typical $500 limit. They may see a practitioner 20 times a year, but it may be a great way to manage their mental illness, and as an employer, you want them to spend their benefit dollars in the best way to be productive and happy team members.
For funding, you could assign a total premium that includes all the products. Behind the scenes, you could do different pricing based on utilization since not all employees will use products at the same volumes – so negotiations could be had. Also, you could have plan parameters where it is self-insured, like a deductible and paid by the employer for things like practitioners, then costs after the deductible are filled every year any costs above that are covered through an insurance policy. Like option #1, you need to present the bundle simply and easily for the employee to navigate the available solutions and meet each employee where they are.
At myHSA, we are thinking about mental illness, strategies, and what the future holds. I think this is a huge area to differentiate, as well as a great way to help a lot of people and the ones that matter the most, your employees.
COO & Co-Founder
Resources discussed in the Blog: