Highlights: The 2024 State of Employee Benefits

According to a new report analyzing the trends across core and voluntary employee benefit offerings, employers and employees continue to get creative about managing costs and a holistic benefits package remains a competitive necessity. 

The 2024 State of Employee Benefits report™, conducted by benefits provider Benefitfocus, includes industry data and its own customer enrollment transaction statistics from 2022 through 2024 plan years. The report reveals a diverse, multigenerational workforce demands personalized options, easy-to-use digital experiences and whole-person benefits across health and financial wellness. And, with multiple systems and vendors to manage and benefits to consider, HR teams and employees are burdened with complexity.

Besides creating a need to leverage technology and vendor partnerships to simplify benefits administration and optimize benefits spend, it’s more important than ever for benefits leaders to provide employees with streamlined benefits experiences that can help guide them.

In addition, the report identified four key opportunities for employers to help improve the employee benefits experience for their workforce:

Below are highlights around each opportunity — as well as other insights into the current state of employee benefits.

1. Enabling optimal health plan selections

To meet the needs of an increasingly diverse workforce, most employers (84%) offered their employees a combination of both traditional health plans and high-deductible health plans (HDHPs) for plan year 2024.

• 84% of employers offer their employees the choice of HDHP and traditional plans
• 65% of health plan enrollees selected a traditional plan in plan year 2024, yet enrollment in HDHPs is increasing across most generations.

However, while most employees know what to look for in a health plan, they may not know if they’re making the right choices, from enrollment through utilization. Selecting a sub-optimal health plan has the potential to result in: overpaying for coverage; underutilizing available benefits; having a less-than-satisfactory benefits experience; and under-saving for retirement.

The report indicates employers want to provide holistic guidance and better benefits enrollment support that spans the benefits mix across health and financial wellness — so employees can optimize their selections.

• 67% of employees and 68% of employers believe employer-covered health care to be the most important benefit, ranking in the top spot ahead of life insurance and pension and retirement plans¹
• 70% of benefits eligible working Americans say they want help from their employer to better understand the employee benefits they enrolled in throughout the upcoming year.²

2. Connecting health and savings decisions

Employee participation in health care savings and spending accounts (HSAs and FSAs) declined 20% among employees with a health plan offer between plan years 2022 and 2024, suggesting they may need more effective education, guidance and support to consider how one choice might impact another.

In addition, the report notes the percentage of employers offering HSAs and/or FSAs dropped by 3.7% from plan year 2022 (81%) to plan year 2024 (78%). There are also generational nuances: Plan year 2024 saw significant drops in HSA participation from Baby Boomers and Generation X, down from 38% and 45%, respectively, in plan year 2022 to 19% and 26%, respectively, in plan year 2024.

According to the Employee Benefits Research Institute (EBRI):³

• HSA balances continued to increase over the course of the year, despite higher spending on health care.
• Accounts that received an employer contribution saw higher total contributions and were more likely to invest.
• Most accountholders took a distribution in 2022 — and the average distribution was $1,868.
• Relatively few (13%) HSAs are invested

For employees to realize the full value of consumer-directed health care, employers need to raise awareness of HDHP/HSA programs and their advantages — and provide effective health care and savings resources, including a decision support tool, to help them manage their benefits and health care dollars.

By connecting health and savings year-round, employers can help employees understand and fully optimize the value of their benefits and to utilize them more effectively, potentially leading to better outcomes for the employee and the organization.

3. Offering voluntary benefits that address total well-being

Employees across all generations are taking advantage of accident, critical illness, hospital indemnity, ID theft, legal and pet benefits. (Critical Illness may be referred to as Specified Disease in some states.)

Participation is highest in accident insurance plans, followed by CI and HI insurance plans. When compared with employees enrolled in non-HDHPs, those enrolled in HDHPs have lower participation in all voluntary benefit types, except legal benefits. Generation X has the highest participation overall, followed by millennials and Baby Boomers.

According to Buck’s 2024 well-being and voluntary benefits survey:⁴

• 77% of employers say voluntary benefits are essential for delivering a comprehensive benefits plan 
• 74% see direct cost savings from voluntary benefits programs

The strategy around voluntary benefits — availability and utilization, communication and education — should consider an employee’s needs based on demographics, preferences, claims data and more. Plus, enable employees to easily enroll in supplementary offerings that have the potential to make personal impact.

According to recent Voya research, almost half (47%) of benefits eligible workers agreed that they feel the process to review their voluntary benefits options/coverage was difficult.² A connected benefits experience — one that educates and guides enrollees through benefits selection — can help employees see the value of incorporating supplemental and voluntary benefits into their personal benefits mix.

In fact, using personalized enrollment guidance functionality has been shown to result in 2x higher participation rate in accident and critical illness benefits.⁵

4. Helping cross-generational employees manage health care costs

For plan year 2024, the average employer share of premium increased to over $12,000, reflecting an increasing shift of premium share to the employer over the last three plan years. The employer share of premium was 78% (up from 74% in plan year 2022), yet employees also face higher costs. This can be addressed by considering generational differences:

• Gen Z: Highest HDHP participation
• Gen X: Highest premiums compared to other generations
• Across generations: Higher salaried individuals choose HDHPs

Employees are also taking actions to manage current and future health care costs – and employers have an opportunity to try a targeted “meet employees where they are” approach to benefits education and communications as needs across health care and financial wellness are influenced greatly by their age and life stage.

This involves accessing workforce surveys and benefits data to understand generational preferences and trends while developing benefits strategies and setting goals. Putting data to work can help benefits leaders better evolve their benefits programs, maximize ROI and innovate.

Generational benefits considerations:⁶

• Gen Z struggles with work-related burnout and wants support via robust mental health benefits
• Millennials see their student debt as an impediment to financial health and want employers to help lighten the load
• Gen X wants the time flexibility to attend to their family responsibilities — caring for elderly parents and their children
• Boomers are approaching retirement, and like all the help they can get in achieving financial security before leaving the workforce

Conclusion

Employee benefits are more critical to the workforce than ever, making a successful benefits strategy essential for organizations. Yet as benefits become more costly and complex, administrating benefits and driving impactful employee engagement with them is increasingly challenging for HR teams. Employers do have opportunities to make meaningful changes in the way they administer employee benefits so their HR teams and employees can unlock the full value of their benefit plans and programs.

To learn more about how Voya can help you develop impactful benefits strategies and experiences for your employees, contact your Voya representative today.