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Employee Benefits

2023 Midyear Benefit Trends

August 2, 2023

Heading into the latter half of 2023, several benefit trends are impacting employers. While some of these trends are new, many are not, and employers have been trying to address many of the same benefits challenges for the last few years. Though some employers have responded to the challenges by attempting to meet employee demands, such as offering competitive benefits or flexible work arrangements, by and large, most employers are still looking for adequate solutions.

However, understanding the latest benefits trends can help employers evaluate their offerings to best meet employee needs, respond successfully to their challenges and give them an advantage over their competitors while keeping employees happy, healthy and loyal.

1. Employers Struggle to Mitigate Rising Healthcare Costs

Finding ways to reign in rising healthcare costs while keeping benefits affordable is critical for employers during the second half of 2023; however, this won’t be easy. Healthcare costs have risen sharply over the last few years and will likely continue to rise. While average costs increased by 3.2% in 2022, employers expect an increase of 5.4% in 2023, according to a Mercer survey.

2. AI Aims to Improve Benefits Administration

In 2023, artificial intelligence (AI) has made its way into many workplaces nationwide and is revolutionizing how organizations operate and make decisions. Employers are searching for ways to leverage this technology’s ability to create efficiencies, enhance workflows, streamline operations and improve customer experience. AI has the potential to help employers streamline employee benefits administration, thus reducing costs, increasing accuracy and improving compliance.

3. Pay Transparency Becomes the New Norm

Despite many employers’ reluctance to embrace pay transparency—because it can reveal unintended pay gaps and trigger questions from current employees—the practice is expected to become the norm in 2023. At the start of 2023, a fifth of all U.S. workers were covered by pay transparency laws.

Even if employers are currently unaffected by pay transparency mandates, they should consider developing strategies to address this issue since pay transparency likely already impacts them directly or indirectly.

4. Paid Leave Laws Are Impacting More Employers

Several employers expanded their leave policies in response to the COVID-19 pandemic, including increasing paid leave; however, in 2022, many organizations reversed course and reduced leave benefits to pre-pandemic levels. Despite this, many states have enacted laws to provide paid family and medical leave, and more are expected to do so shortly. Employers who are or will soon be subject to paid leave laws should ensure their workplace policies are compliant with 2023 requirements.

5. The Battle Over Remote and Hybrid Work Continues

Although remote and hybrid work is expected to continue to play an integral role in the work landscape, 2023 has seen some significant changes to these arrangements. These changes will likely continue to change and evolve throughout the remainder of the year.

Whether employers embrace flexible work arrangements or ask employees to return to the office, they must help employees to find ways to help improve their mental health and well-being.

6. Family-Building Benefits Expand Alongside Reproductive Health

The Supreme Court’s ruling eliminating the federal constitutional right to abortion care has led to a patchwork of state laws on this type of healthcare; several states banned or restricted insurance coverage for abortion, while others require plans to cover the procedure. Legal challenges to these laws are currently ongoing, and more are expected going forward, making it unclear what the landscape will look like shortly. This has created challenges for employers as they try to find ways to support their employees’ needs and provide competitive benefits. As a result, employers must carefully evaluate any reproductive health-related benefit offered under their group health plans to ensure full compliance with applicable laws and restrictions.

The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.

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