7 Emerging Trends in Employee Benefits and Compensation Strategies

As we move into 2024, the landscape of employee benefits and compensation continues to evolve, building on the significant changes we saw in 2023. This year promises to be pivotal, with experts predicting major trends that organizations should pay close attention to.

1. Rising Interest in GLP-1 Medications: GLP-1 drugs, particularly Ozempic and Wegovy, gained popularity in 2023 as weight loss aids, leading to a surge in employee demand. This year, the debate intensifies as employers grapple with whether to include these expensive drugs in their coverage, weighing the benefits of employee health against cost and long-term side effects. A survey indicates a growing trend towards covering these medications, with positive impacts on employee health and satisfaction noted.
2. Enhanced Financial Well-being Programs: The financial stress of employees, exacerbated by factors like inflation and debt, is pushing employers to prioritize financial health. This includes a broader range of financial benefits such as budgeting assistance, debt repayment tools, and support for emergency savings. The introduction of SECURE Act 2.0 provisions further encourages this trend.
3. Salary Increases in Line with Inflation: After several years of high inflation, salary increases are expected to match or exceed inflation rates for the first time since 2020. With projections suggesting lower inflation and employers planning for significant pay raises, there’s an anticipation of narrowing the gap between real and nominal wages.
4. Focus on Mental Health: Mental health remains a key focus, especially considering the heightened stress of an election year. Expect an increase in resources and benefits like mental health days and apps to support employee well-being.
5. Managing Rising Health Care Costs: Employers face the challenge of controlling escalating health care costs without overburdening employees. Strategies might include integrated wellness programs, telemedicine, and stricter control on prescription drugs.
6. Greater Pay Transparency: Following legislative trends in 2023, more states are expected to enact pay transparency laws. Organizations are adapting by being more open about pay ranges, which is seen to foster trust and retention among employees.
7. Potential Return of Pensions: Notably, IBM’s decision to unfreeze its pension plan may lead other employers to reconsider pension plans as part of their retirement benefits, seeking to offer employees a more secure post-retirement income.

These trends indicate a dynamic year ahead in the realm of employee benefits and compensation, with a strong focus on health, financial stability, and transparency. To explore these strategies further and tailor them to your organization’s needs, we encourage you to connect with your broker today.