Carolyn McAllister, Sarah Sise Author Article for BenefitsPRO About Recent and Future Trends in Employee Benefits
Carolyn McAllister and Sarah Sise, partners in the Quarles & Brady Labor, Employment & Benefits Practice Group, co-authored an article for ALM’s BenefitsPRO about how the employee benefit landscape has changed since the start of the COVID-19 pandemic and key trends they see for the balance of 2023.
In the article, they outline the impact the early stages of the pandemic had on employee benefits, adjustments related to the Great Resignation in 2021, the “new normal” that began to emerge in 2022 and what they see developing in the near future.
As we approach the post-pandemic landscape, in addition to exploring innovative benefits, employers are focusing on making changes to current plans. Here are some trends we are seeing:
- Health care – Cost-saving measures for employers and employees remain a key issue for group health plans. Employers are funding health reimbursement arrangements or providing seed money or matching contributions for health savings accounts to reduce employee costs. Disease management programs and cost-containment measures for prescription drugs are much more prevalent.
- Pension plan terminations – Defined benefit plan terminations have increased leading up to 2023 and are expected to continue. Higher interest rates have made it the right time for many plan sponsors to finally terminate plans that may have been frozen for several years.
- Executive benefits – Employers are focusing on implementing and updating incentives for management and key employees. This includes equity compensation, such as stock options, incentive units and phantom interests, as well as long-term incentive plans and deferred compensation tied to profitability or other key metrics.
- Secure 2.0 – Recent retirement plan legislation offers new opportunities to tailor benefits to the needs of specific employee groups, such as the matching of student loan repayments like they were elective deferrals, adding emergency savings accounts to retirement plans and allowing small incentives (like gift cards) for employees to make elective deferrals.
It takes courage to drive real change and create a culture that values innovative benefits. Expanding to new types of benefits requires an investment of time and resources. It can involve risk when the law is unclear or the way is uncharted. As you journey in the benefits world, it is important to have good consultants and advisors at your side to make the way easier and help you navigate the evolving legal issues.