With the increasing competition for top talent, offering a compelling package of U.S. employee health benefits has become a crucial strategy for companies seeking to recruit and retain the best personnel. For H.R. professionals, understanding the healthcare benefits that resonate most with the workforce is vital to ensuring employee satisfaction and the company’s bottom line.
When did employers start offering benefits to employees?
Employers started offering employee benefits as far back as the late 19th and early 20th centuries. The origin and evolution of employee benefits can be traced through a series of historical events and needs:
- Industrial Revolution: As industrialization grew in the late 19th century, employers increasingly needed to attract and retain skilled workers. Some employers began offering non-wage benefits to entice workers and deter them from joining unions or striking.
- Early Pension Plans: One of the earliest forms of employee benefits was the pension plan. The American Express Company introduced one of the first private pension plans in the U.S. in 1875.
- World War II Era: The employee benefits landscape saw significant shifts during World War II. Wartime wage and price controls prohibited employers from raising salaries to attract or retain workers. However, these controls did not apply to fringe benefits, so employers offered health insurance to compete for scarce labor without violating the wage controls. This period marked a significant expansion in the role of employer-sponsored health benefits in the U.S.
- Post-War Era: After World War II, with the economy booming, the trend continued, with unions playing a pivotal role. Through collective bargaining, labor unions pushed for (and won) increased benefits for their members. Health insurance, pensions, and other benefits became more standardized components of compensation packages.
- Tax Implications: The tax code also played a role in the growth of employer-sponsored health insurance. In 1954, the Internal Revenue Service codified the policy that employer contributions to employee health plans are tax-deductible for the employer and tax-free for the employee. This further incentivized employers to offer health insurance as a part of the compensation package.
From the mid-20th century onwards, as healthcare costs rose and the labor market landscape evolved, employer-sponsored benefits became an even more crucial part of the employment contract, with variations depending on industry, company size, and other factors. Uses expanded beyond health insurance and pensions to include paid time off, life insurance, disability insurance, and, more recently, perks such as flexible working arrangements, wellness programs, and tuition reimbursement.
Please read our article The Development of Human Resources: A Historical Perspective to learn more about H.R. departments’ historical evolution.
- The Importance of Comprehensive Health Coverage
FAST FACT: According to a survey by the Society for Human Resource Management (SHRM), 56% of U.S. adults claim that healthcare and insurance concerns are key factors when deciding to stay in or leave a job.
Key Takeaway: Providing comprehensive health coverage is no longer just a nice-to-have—it’s a necessity. A robust health benefits package keeps employees healthy and can improve job satisfaction, reduce absenteeism, and enhance overall productivity.
- Consideration of Preventative Care
FAST FACT: The Centers for Disease Control and Prevention (CDC) estimates that 75% of the nation’s healthcare expenditures go towards treating preventable chronic illnesses.
Key Takeaway: Incorporating preventative care in U.S. employee health benefits can lead to significant long-term cost savings. H.R. professionals should ensure that health plans cover regular check-ups, screenings, and vaccinations, enabling employees to catch and address potential health issues early on.
- Mental Health Benefits Are a Must
FAST FACT:Â A report by the National Alliance on Mental Illness (NAMI) states that 1 in 5 U.S. adults experience mental illness each year.
Key Takeaway: It’s clear that mental health support is a pressing need. Offering benefits like counseling services, stress management workshops, and resources for mental health can provide employees with the necessary tools to navigate challenges, ultimately fostering a healthier and more productive work environment.
- The Rising Demand for Telehealth Services
FAST FACT: In a study conducted by FAIR Health, telehealth claims increased by nearly 3,000% in 2020 compared to 2019.
Key Takeaway: The rise in telehealth popularity underscores its convenience and accessibility. Incorporating telemedicine options into U.S. employee health benefits can reduce absenteeism, as employees won’t need to take as much time off to see doctors in person. Plus, it provides an avenue for care during after-hours or when in-person visits aren’t feasible.
- Dental and Vision Benefits: Not to be Overlooked
FAST FACT: Per the National Association of Dental Plans, roughly 77% of Americans had dental benefits in 2019.
Key Takeaway: Dental and vision benefits are often considered supplementary but crucial for holistic employee wellness. Regular dental and eye exams can detect signs of systemic diseases like diabetes and hypertension, ensuring early intervention and better health outcomes.
- Flexibility and Personalization: The Future of Healthcare Benefits
FAST FACT: A Willis Towers Watson survey revealed that 73% of workers desire more personalized health benefits that can be tailored to individual needs.
Key Takeaway: The one-size-fits-all model is gradually becoming obsolete. Employees value the ability to choose benefits that best fit their unique needs. Offering Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), or a la carte options can empower employees to create their ideal health package.
More Healthcare Benefits Trends for H.R. in 2024
For H.R. professionals eager to keep abreast of contemporary trends, a notable article from “H.R. Executive” titled “2024 Benefits Trends: Why Healthcare Plans Are Going Retro” offers insights into the upcoming innovations and approaches that H.R. teams are considering for employee health benefits in the coming year.
Which companies are known for providing competitive employee benefits?
Determining which company has the “best” employee benefits can be subjective, as it depends on the criteria used for evaluation—whether that’s the breadth of benefits offered, the quality of the health care, the balance of work and personal life, educational opportunities, or other criteria. What one person values in terms of benefits (e.g., parental leave, education reimbursement) might be different from someone else (e.g., health coverage, retirement contributions). Rankings can also vary yearly as companies adjust their benefits packages in response to the competitive market and changing employee needs. According to topworkplaces.com’s article “Companies with the Best Benefits 2023,” companies with the best benefits include Paycor, CMC, Marsh McLennan Agency, and Baldwin Risk Partners.
Many U.S. tech companies, such as Google, Microsoft, and Facebook, are frequently recognized for their substantial and forward-thinking employee benefits. Additionally, in the retail sector, Patagonia stands out, while American Express is a notable mention in the finance industry.
Good Employee Benefits Attract Top Talent
As healthcare needs and preferences evolve, so must the U.S. employee health benefits that companies offer. By staying informed about current trends and understanding their stats, H.R. professionals can craft benefits packages that attract top talent and promote long-term employee well-being and satisfaction. The strategic integration of comprehensive coverage, preventive care, mental health support, telehealth services, and personalized options can elevate an organization’s standing in today’s competitive talent landscape.
