The COVID-19 pandemic is likely to bring long-lasting changes to life in the United States, and those changes will be reflected in employee benefits.
How COVID-19 could affect health, retirement and other benefits even after the pandemic is over is discussed in James A. Klein’s article “The Impact of the Coronavirus Pandemic on Employee Benefits” in the second quarter issue of Benefits Quarterly.
Klein, president of the American Benefits Council, looks at some of the major areas that COVID-19 has affected and makes predictions for what the future of benefits may hold.
Health Benefits
Behavioral health: The pandemic has exacerbated the existing challenges we already face with access to mental health providers. Employers know that devoting more resources to behavioral health is essential to maintaining or restoring overall good health and is an investment in promoting economic productivity. Hopefully, the pandemic has helped the health system infrastructure recognize the need for more behavioral health providers.
Telehealth: Telehealth has become widely used and accepted. Klein suggests that this expansion may lead to further legislative or regulatory clarification on the use of telehealth and the removal of some barriers to care.
Health care costs: Health care costs declined in 2020, but most benefit professionals expect to see them rise in 2021 as people seek care that they delayed last year. Costs also will rise beyond 2021 because the delays in diagnoses and treatments in 2020 will result in more serious and costly health conditions among workers and family members covered by employer-sponsored plans.
Retirement Benefits
Defined benefit (DB) pensions: Historically low interest rates, coupled with the pandemic causing increased financial pressure on many employer plan sponsors, have made DB funding stabilization a more urgent priority.
Defined contribution (DC) retirement plans: Stock market fluctuations and the resulting impact on retirement savings were cause for worry early in the pandemic, but the recovery of the financial markets lessens the urgency to pursue reforms for DC plans. However, Klein said, policy makers may see the value of pursuing initiatives that import DB features into DC plans.
Retirement and health care costs: As the pandemic disproportionately affected the elderly, policy makers may begin to understand that one’s sense of financial security in retirement is inextricably connected to the ability to manage health care expenses. This could lead to broader, more creative thinking concerning retirement, disability and long-term care, Klein predicted.
Other Benefits
Emergency savings accounts: As millions lost their paychecks, there may be a greater commitment among workers, employers and lawmakers to make emergency fund programs an integral part of total compensation offerings.
Child-care benefits: The pandemic has shined a light on the connection between adequate child care and restoring the economy. Establishing on-site child-care centers or subsidizing child care are among the benefits more employers have focused on and will continue to focus on in the future.
Paid leave: In addition to a patchwork of state and local regulations, employers have had to deal with temporary federal leave legislation enacted during the pandemic. Pressure is increasing for a single federal minimum standard on paid leave.
Related Reading: Organizations Face New Health and Retirement Benefit Implications Due to COVID-19
Conclusion
The health and economic impact of the pandemic has already resulted in changes for employer-sponsored benefits, and there will be more to come in the future. “As a society, we will live for years in the shadow of this devastating event,” Klein wrote. “We can take some solace from the knowledge that for all the risk it poses, it also opens the door to changes that will strengthen employer-sponsored benefits.”
Kathy Bergstrom, CEBS
Senior Editor, Publications at the International Foundation of Employee Benefit Plans
The latest from Word on Benefits:
Randy DeFrehn
Kathy,
Thanks for sharing Jim’s always insightful views!