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Employers struggle to balance helping employees and their bottom line

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As if managing ever-increasing benefits costs while creating a competitive benefits package and producing an effective annual enrollment isn’t a big enough task for most employers, here comes the coronavirus with a whole new set of challenges.

How can you continue to protect your most valuable resource — your employees — if your business is struggling? Who will pay insurance premiums if employees are laid off or furloughed with no income? When can you get employees (and customers) safely back into the office? And what will this fall’s benefits package look like?

Unum asked nearly 300 employers across the U.S. how they’ve been managing the COVID-19 crisis and what their plans are going forward. Here’s what we learned:

Employers want to do what’s right for their employees — but they’re also facing the reality of managing employment costs in the economic downturn. Many organizations have taken significant steps to reduce employment costs, according to Unum’s survey. Nearly a third — 30% — already have or plan to furlough workers, and another 19% say they might if necessary. Just as many — 31% — have or will cut salaries, hours or shifts for employees. Hiring freezes are in place at 37% of companies, 28% are postponing raises and 22% have stopped bonuses.

One strategy most employers are avoiding: cutting benefits. Nine in 10 employers say they have no plans to eliminate or reduce employer-paid insurance benefits to hold down employment costs.

Many employers are picking up the full cost of insurance premiums for employees who’ve been furloughed. This is another bit of good news: Employers are doing what they can to support their out-of-work staff. More than half of organizations say they’ll fully cover the employee-paid share of medical (52%) or life (54%) insurance premiums to avoid a lapse in coverage while employees are furloughed. And slightly fewer than half say they’re doing the same for dental (46%), long-term disability (45%), vision (44%) and short-term disability (41%) insurance premiums.

Employers are being forced to make tough choices, but many are still concerned about easing the financial burden on their employees and protecting their financial safety nets.

Employers’ return-to-the-office strategies vary widely, from all aboard to none. The vast majority of employers — 92% — have transitioned at least some employees to work-from-home arrangements. Of these, two-thirds are now planning how to return their workers to the office. Most plan to use a phased-in approach, but surprisingly, one in 10 companies plan to allow everyone to return at once.

However, a third of companies haven’t yet created a return plan. The survey didn’t reveal whether these employers are simply planning to continue operating with employees working from home, or they’re understandably too overwhelmed by the complexity of the situation to begin tackling a plan.

A significant number of employers are making changes to their benefits plan design because of the pandemic. A third of employers foresee some changes in their benefit plans going forward. Some are considering reducing the variety of benefits offered or shifting the share of premiums more toward employees. However, some organizations say they’ll go the opposite direction, boosting coverage to be more comprehensive, increase benefit options or add telehealth coverage.

But the greatest number of employers — nearly half at 46% — say they don’t plan to make changes to their benefits plans in the coming year. And one in five companies just aren’t sure yet.

Clearly, organizations across the country are navigating unprecedented changes right now. As employers craft their future benefit offerings, from design changes to building an effective strategy for open enrollment, this is an ideal time to consult their advisors and leverage the expertise of carriers to craft the best possible solutions for their workforce.

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