Hawaii Employers Council's annual Employee Benefit Plans in Hawaii Survey offers some telling insights into what employers can expect and should consider as they look ahead to 2022 and the ongoing recruiting and retaining challenges they face.

While it’s too early to know definitively what long-term impacts the pandemic restrictions — including work-from-home, job losses, and work-life balance issues — will have on benefits trends in the coming years, it is becoming clear that employees are focused on their priorities and expectations in their relationship with employers. Early indications are that nationally and in Hawaii, employers are listening.

Cost of Benefits
According to Mercer’s annual National Survey of Employer-Sponsored Health Plans 2020, total health benefit cost rose 3.4% on average in 2020, which comes to $13,674 per employee for businesses with 50 or more employees. Large employers, those with 500 or more employees, reported an increase of just 1.9%, their lowest since 1997, likely attributed to deferred healthcare due to the pandemic.

In Hawaii, employers’ benefits/payroll cost ratio has been between 36.7%-38.5% since 2009, with 2021 falling below the 2015 average (38.1%) to 38%.

Nationally, attention is turning to the benefits of tele-health – not widely used before the pandemic – for both managing costs and easing access to health care. Mainland employers are also looking to greater tele-health options, narrower networks/higher quality, centers of excellence, and concierge services to both manage costs and offer more enticing plans to employees.

Employees’ Priorities and Benefits Offered
Willis Towers Watsons’ (WTW) 2020 Global Benefits Attitudes Survey (released January 26, 2021) made it clear that the pandemic has brought focus to employees’ priorities, and they are looking to their employers for help in saving for retirement, balancing work/life issues, and getting the most value from their package of benefits. “The pandemic and its economic impact have strengthened Americans’ desire for greater financial security as well as flexibility, and many are looking to their employers for help,” said WTW senior economist Steve Nyce. “At the same time, benefit costs have become a sensitive issue. Employees are paying more for benefits, which in turn is squeezing their take-home pay and need to find ways to lower or stabilize the costs.”

In Hawaii, the HEC Employees Benefits Plans Survey found the following:

• 94% of respondents offer a fully insured medical plan, with PPOs and HMOs the predominant plan types. Over two-thirds (67.7%) report covering 100% of employee-only medical premiums.
  
• 7% offer medical coverage for FT employees’ dependents with only 11.3% not providing dependent coverage. Of those offering dependent coverage, nearly half (42.9%) cover 50% or more of the premium costs, 8.3% cover less than 50%, and 27.1% do not pay anything for dependent coverage.
  
• Retiree medical coverage has decreased significantly over time, with over three quarters of organizations (85.7%) offering no continuation of health care for retirees. This number has increased from the 2015 report of 83.4% and 2018 at 84.2%.
• Prescription coverage is clearly a not-negotiable area for Hawaii employers, with 98.5% reporting a prescription plan for their employees. Nearly half (47.7%) cover 100% of the premiums and 42.3% report that the prescription coverage is part of their medical plan.
  
• Vision is also a critical benefit offering, with 97.7% of respondents offering a vision plan and nearly half (45.7%) covering 100% of the premium costs.
  
  
  
• Dental plans also appear to be a critical benefit, with 91% offering a full plan and 60.2% of those offering the plans at no premium cost to employees.

As employees navigate their post-pandemic opportunities, it is increasingly clear that employers are looking to offer other benefits as well. Of the 102 participants (of a total of 133) reporting additional benefits, the top four are

• Accident insurance (80.4%)
• Cancer insurance (73.5%)
• Hospital insurance (55.9%)
• Long-term care insurance (50%)

Up-and-coming coverage options including pet insurance, identify theft, and business travel accident insurance come in around 20%. Almost 5% offer hospice insurance.

Employee Assistance Plans (EAPs), Life Insurance, LT Disability, and Other Trends
Hawaii employers appear to view EAPs as an increasingly more important offering to its employees, with 63.9% reporting such plans this year (in contrast to 61.6% in 2015 and 61.8% in 2018).

The WTW survey underscores employees’ need for more assistance in areas typically covered by these EAPs, and it also points to the need for employees to have better navigational tools to understand and better utilize the benefits they have.

Employee health wellness programs and financial wellness programs are not a significant part of the Hawaii employers’ packages, with 26.3% reporting a worksite wellness program and only 12.8% reporting a financial wellness offering. The WTW survey suggests that employers might want to keep a close eye on that front as employees navigate their employment options post-pandemic.

Student loan repayment plans have been a hot topic of public discussion, but 88.7% of Hawaii employers report no such offering in their benefits package with only a few (6.8%) looking to consider it in the future.

Most organizations (83.5%) provide group life insurance with the vast majority (94.6%) covering the full cost of the coverage. 99.1% include AD&D coverage as part of those plans.

Long-Term Disability (LTD) tracks group life insurance, with 85.9% offering the coverage and footing the full premium cost.

401(k) Plans and Pension Plans are still part of the benefits package of most employers (93.2%), but with a slight decrease from 2018 (95.4%).

Bottom Line
Benefits are poised to be an even more critical element in an employer’s ability to recruit and retain top talent, while still posing potentially staggering costs to the employer. Mercer reports that more than half (56%) of large employers are extremely or very focused on employee engagement and experience, up significantly from previous years. Those same employers also report plans to add or expand their voluntary offerings in 2021 in an effort to meet employees where they are and offer options that appeal to them.

Hawaii’s employer landscape is, of course, unique due to our island communities and detachment from the Mainland. The national trends, however, offer a glimpse into what engaged employers are likely to consider in the coming months.

Protocol
A total of 133 Hawaii employers participated in the survey, representing a range of business types and sizes.

• 9% are employers with under 50 employees
• 8% report 50-150 employees
• 18% report 150-400 employees
• 5% report 400-1000 employees
• 8% report 1000+ employees

Industry groups include education services, financial/insurance/real estate, health services, leisure and hospitality, professional and business services, retail/wholesale services, social services, and other.