Industry Trends for 2020

The healthcare benefits industry continues to evolve with rising costs, changing legislation, and the growing need for education about an ever-increasing range of benefits options. According to Chard Snyder, these key trends remain on the forefront going into 2020:

Rising Consumer Healthcare Costs

Consumers continue to struggle to afford healthcare and save for retirement. Escalating healthcare costs are having a negative effect on Americans’ financial health and preparedness. According to a Kaiser Family Foundation survey, paying for healthcare is now the number one concern for Americans. The total annual cost of healthcare for an American family of four now tops $25,000. The average couple needs over $280,000 to fund healthcare costs in retirement. Consumers need focused education initiatives and decision support tools to help them make wise healthcare benefits decisions.

Increased Employer Insurance Spending

Providing health insurance consumes a huge portion of employer budgets. Many are experimenting with innovations in plan design to reduce costs and improve quality. More midsized and large employers are offering consumer-directed health plans in place of or in addition to traditional plans. According to a 2018 national Mercer survey, 33% of employers offer only a traditional medical plan, 54% offer both a traditional plan and a HDHP, and 13% (up from 10% the previous year) offer only a HDHP. Employers need increased assistance and education from knowledgeable benefits brokers to evaluate options and make the best plan choices for the unique needs of their business and their employees.

Convergence of Health & Wealth

The convergence of health and wealth brings employee benefits and retirement savings together. Healthcare will likely be one of the largest – if not the largest – expense most people will face in retirement, and health savings accounts (HSAs) are a star player in this arena. Pre-tax HSA funds can be used now to pay for eligible healthcare expenses, but also invested tax-free and then withdrawn tax-free in retirement. At age 65 or older, HSA monies can also be used for non-medical purposes without incurring the usual 20% penalty (although it will be taxed as income if used for non-medical purposes). Employers are beginning to see the benefit of contributing to an HSA, as well as a 401(k), to help employees with both present and future healthcare expenses. More education is needed, as a 2019 WEX Health study found only 17% of employees are aware an HSA can be used as a retirement tool.

Emerging Smart Technology

Consumers and employers expect technology that offers a personalized experience, meets them where they are, and provides information when they want it, the way they want it. This need exists in the employee benefits industry as it does in others. Employers expect medical carriers and benefit TPAs to utilize cutting-edge technology platforms that provide easy access to reporting, analytics, file sharing, and plan adoption/engagement tools. Employees want smart features like interactive portals and mobile apps that provide secure on-the-go access to their benefits accounts 24/7. Artificial intelligence (AI)-driven solutions and support systems are ever-evolving. Technology will continue to play an increasingly important role in employee benefits adoption, engagement and management.

Need to Attract & Retain Top Talent

In today’s competitive labor market, employers and advisors are looking for creative ways to utilize things like lifestyle HRAs, HSA contributions, and employee education to retain and attract top talent.