Younger workers more willing to make trade-off in benefits plans

Younger employees are more willing to reduce or eliminate a traditional health benefit to cover the cost of a wellness benefit compared to their older counterparts, according to new research by Accompass Inc.

The research, which surveyed 1,623 employees and 183 employers, found 45 per cent of generation Z employees (ages 18 to 24) and 41 per cent of millennials (ages 25 to 34) would make the trade-off compared to 37 per cent of generation X employees (ages 35 to 54) and 25 per cent of baby boomers (ages 55 and over).

Read: How to support Generation Z employees

Health-care spending accounts (27 per cent), life or disability insurance (20 per cent), paramedical benefits (20 per cent) and vision care (17 per cent) were the top traditional benefits that employee respondents would trade for a wellness benefit.

There’s a greater appreciation among Canadian employees for wellness programs and their use as preventative measures for health issues, notes Sarah Beech, president at Accompass. She says employees continue to seek more benefits and programs around health and well-being, such as employee engagement programs and wellness challenges.

Employers are in tune with this demand and 90 per cent of those surveyed said they believe wellness benefits prevent or manage chronic illness and reduce costs.

Read: 2017 Group Benefits Providers Report: Insurers playing a role amid rising emphasis on mental health

Employees and employers generally agreed on the value of certain wellness benefits but their ranking of each benefit’s importance differed slightly, according to the report. Both groups ranked gym or subsidized gym membership and financial planning resources as their top wellness benefits but diverged in employees’ preference for subsidized healthy foods and employers’ preference for implementing onsite health assessments.

“The mechanics of providing healthy food at work is likely one factor in the low potential uptake by employers,” noted the report. But as the research found, employees, especially younger ones, value benefits that make life more convenient.

In fact, when asked how they would improve their benefits plan, 25 per cent of employees chose an easier claims process, just behind higher coverage limits, cited by 30 per cent. Some 24 per cent said new types of coverage and the same percentage said more flexibility. But among generation Z respondents, 35 per cent chose an easier claims process as their top improvement.

Read: Employers should embrace generational differences in the workplace: survey

In regards to traditional health benefits, the research found employees continue to value dental and prescription drug coverage the most. It also suggested employers that provide more coverage for chronic conditions may have a competitive advantage over those who don’t provide coverage. Fewer than half (42.5 per cent) of employee respondents with a benefits plan are taking medication for a chronic illness compared to 26 per cent of those without a plan.

The higher prevalence of chronic illnesses is inevitable with an aging workforce and it’s common for Canadians to have more than one chronic illness, says Beech. This ties back to the value of the benefits plan, she says, and by providing coverage, employers can ensure their employees function normally despite their health conditions.

Younger people also appreciate the coverage for chronic illnesses because they’ve witnessed their parents use their benefits plan to manage them, says Beech. “So there’s a greater appreciation than we might have seen 30 years ago.”

Read: Employee expectations, employer offerings don’t match up: report

The research also found that while 50 per cent of employers said they offer benefits because they care about the welfare of employees, 40 per cent cited the need to stay competitive with other organizations.

And while this might seem logical, Beech cautions plan sponsors to refrain from shaping their benefits plan based on other organizations’ benefits framework. “Lots of times, plan sponsors make assumptions based on their competitors. We believe the future is more what’s right for your organization and what your people want.”