I like influencers who are not afraid to predict what the future holds—it can be fun to converse about and debate. I wanted to take a stab at some potentially big changes that may come to fruition in the next year or two. COVID is an inflection point, potentially being the event that triggers changes in the benefits world. The three things I have noticed in 2021 that will affect 2022 are below.
Huge LTD Challenges.
The LTD benefits issue is presenting problems for benefits plans. Bringing the mental health conversation to the surface, and with COVID being very hard on many Canadians, we are seeing a challenging LTD situation. We know renewals reveal that insurers are losing a lot of money with this coverage, and liabilities are huge for the insurer since the common expectation is coverage will last until age 65. Even for small groups, I wonder if the conversation around LTD will start to change. Low interest rates are another reason for these high renewals; insurers cannot make money holding premiums and this also adds to losses if claims are high.
With most plans, the premiums are paid by the employee, so the increases are sent to the employee to bear. Do these employees value this benefit so much they will take the increase? With inflation, taxes are not going down, so are the employees in a financial position to take on these costs? I could see a switch to a taxable benefits structure so the employer can help pay for rising premiums—creating a shift. Or, will the length of benefits start to be discussed?
Five-year benefit payouts, for example, Employees are rarely with one employer their whole career. Does the employer start to shift from a less paternalistic one to offer the benefits geared towards a more fluid workforce? My call – it will start with smaller groups being less demanding for an age 65 benefit plan since it will be simply unaffordable and risky for the insurer if the group is small. Or, these will be taxable, so the employer can at least help with the premiums. Maybe even so far as having disability coverage for only injury or illness—just because they cannot afford to cover the other types of reasons the employee could go on disability.
Work from home
I may be in the minority, but I think a WFH will not be the model of the future, with many returning to a traditional office structure as the option continues to open back up. Will employers be more comfortable with employees that may not have butts in the seats from 9-5 every day? Of course. That has impacted and made it more normal of an option to allow some flexibility. But in the case of giving up offices completely, I do not think this will be the way, here is why: Zoom and Teams still suck! We have been doing this for two years, and every meeting begins with someone saying, "your mic is off", "Can you let Joe in", "you're breaking up", "Dan is frozen!”, and “Did they not get the link”…etc. Also, it's a terrible form of communication when there are people in the office, and some are on zoom. The in-office people converse with cadence, and it's hard for those on zoom to get involved as they would normally. It is just not a normal way of communication.
Culture and speed to be creative. If you are at all a collaborative organization you need to have easy access to each other to think, create, and make quick decisions. This is hard with Slack and Zoom. You cannot just start a conversation at a whim and make decisions quickly.
Training new staff. This is so much easier in person. I would feel bad for anyone new entering an industry or business that has no in-person options. Much of the things you learn when you are new is asking questions as you see it. Or you see how someone in a senior position conducts themselves around the office. You also get a better sense of culture and operations by reading the social cues from others in person.
Personalization of Benefits
The biggest and best challenge in the benefits industry. Group insurance, by concept, is counterintuitive, but evident this is a need and desire of organizations. Five generations in the workforce and different employee needs—depending on their health, family status, and financial situation—results in vastly different needs from their benefits plan. Insurance needs non-claimers to pay for premiums so that those who make claims have enough funds to cover them. Well, if you only sell insurance to groups, then you are limited to your capability to offer any flexibility—since it breaks this simple model.
I have noticed a faster shift and almost a realization around self-insurance for non-catastrophic risk because of covid. I think people were going there anyway, but COVID has sped this up. Dental insurance has lower limits in coverage, so there is no true insurance offering, so insurers are just financing reoccurring dental costs and recouping cost-plus profits (TLR) through premiums and renewals.
Also, you could argue that vision and many of the paramedical coverages operate in the same way—and this, in my opinion, is why people like me are drawn to the Defined Contribution model. If you ensure the catastrophic risks—self-insure the rest—you can add a level of flexibility to meet employees' needs, allowing the employee the insurance coverage needed with the flexibility to allocate funds to things they need or want. It can even go beyond traditional insurance products. There are so many ways to do this, and for many, Health Spending Accounts are the most common starting point.
I am so excited about the future as a whole and for us at myHSA as we participate in shaping the benefits industry. I am so thankful for the advisors that support us, along with our amazing staff, making the dream come alive.
Steve McEwan
COO & Co-Founder
myHSA