2024-25 Open Enrollment Trends
Chief Marketing Officer, MGIS
In a constantly evolving hiring market, employers are looking for ways to recruit and retain the best workers and must competitively search for the right talent. Employees have gained negotiation leverage and want higher salaries, a better benefits package, career advancement opportunities, and improved work-life balance.
The labor market is tight right now. The Great Resignation has come and gone, but it has led to an era of employees looking to gain more value from their employment and move to jobs that better match their skills, interests, and salary requirements. Many businesses realized that their workforce would no longer stay in a position they weren’t satisfied in or compensated for appropriately, either in salary or with the right benefits.
Employees can be selective, but it comes at a cost. The average annual turnover rate in the US is nearly 50%1, and the costs to an employer can be quite high. For example, losing one physician can range from $500K to more than $1M, including recruitment, sign-on incentives, lost revenue, and onboarding2. High retention rates can help boost employee productivity and result in strong employee experience and engagement.
So, how can employers recruit and retain top talent in a market of short supply and high demand? The right benefit offering, which includes quality disability insurance, can help.
The Opportunity
Employers that offer competitive benefits tend to experience higher workforce satisfaction and an improved sense of morale. This can mean a heightened level of overall success for the business. After all, the more satisfied employees are in their position, the more engaged they are likely to be. This can result in increased employee productivity, solid performance, stronger commitment, a sense of belonging, and a positive organizational culture in general.
According to recent research conducted by LIMRA and EY3, small businesses, particularly, look to workforce benefits as an important component of their talent management strategies. In fact, almost 7 in 10 say that their company’s benefits package will be critical to attracting and retaining the best workers. Half indicate that they see themselves offering more benefits in five years than today, and nearly half say their business will offer some or more insurance benefits to their freelance or contract workers in the future.
LIMRA also addresses the various workplace benefits programs that may have positive impacts. These include: financial, emotional and physical wellness programs; integrating insurance, health and retirement savings offerings; personalized or customized benefits; bundling multiple benefits products with a single carrier or provider; bundling coverage types into one product (i.e., one product addressing multiple needs); expanding voluntary (i.e., employee-paid) benefits and offerings; and using company and employee data to enhance the employee experience and make data-driven benefits decisions3.
Income Protection is a Critical Element of Any Competitive Benefits Package
The ability to earn an income funds an employee’s life and is the foundation of financial well-being. Disability income insurance protects a worker’s paycheck by replacing a portion of income if he/she becomes too sick or injured to work. Many employers offer group disability insurance, a great protection foundation. These plans can be voluntary, employer-paid, or a combination of both.
But with firms with less than 49 employees, only 21% offer group long-term disability (LTD) and a mere 28% have short-term disability (STD) plans4 as part of their benefits package. This is a striking missed opportunity for businesses to help employees protect their income and offer a strong incentive to join a company or stay in a position.
Group Long-Term Disability (LTD) policies are offered through employers and can work well to recruit and retain top talent. Group LTD policies usually cover 60% of income up to a benefit maximum. By adding Group LTD to the income-protection mix, the income replacement gap can shrink significantly. Robust group disability coverage is not just an employee benefit but a crucial component that can protect an individual’s income in the event of a disability.
More importantly, Group LTD is an exceptional retainment tool because the employer owns the policy. Most Group LTD policies do not include options that allow a covered participant to continue their coverage after leaving the organization, thereby incentivizing those covered by the LTD plan to stay. Group LTD policies are also advantageous because they do not require difficult medical and financial underwriting processes.
Offering a comprehensive disability insurance plan is a valuable tool employers can use to attract and retain high-quality employees. It shows that the employer values employees’ well-being and is willing to invest in their financial security. This can make a significant difference for job seekers considering multiple job offers or leaving their current position. For employers, offering quality disability insurance can also improve their bottom line by reducing turnover costs and maintaining a stable workforce.
Next steps
As an employer, working with an experienced benefits broker to help build a protection plan that will work best for your company is a good idea. If you already offer a Group LTD plan, many brokers will perform a policy audit on your existing disability insurance policy to see if any gaps need filling. Likewise, employees should also work with a financial professional to assess current coverage and identify any income gaps.
The job market is competitive, and a strong benefits package is an excellent way to recruit and retain the best talent. Remember, a strong benefits package must contain quality income protection – it will go a long way toward creating financial security and peace of mind for your valued employees.
1 Built In, “38 Employee Turnover Statistics to Know”, https://builtin.com/recruiting/employee-turnover-statistics
2 American Medical Association, “How much physician burnout is costing your organization”, https://www.ama-assn.org/practice-management/physician-health/how-much-physician-burnout-costing-your-organization
3 LIMRA, “Small Business – Hot Market for Benefits Providers” August 2024
4 Bureau of Labor Statistics, https://www.bls.gov/opub/ted/2018/the-benefits-of-working-for-a-small-business.htm#
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