Six strategies to maximize the impact of your benefits budget | Part 3: Maximizing equity & inclusivity
Throughout our blog series, “Six strategies to maximize the impact of your benefits budget,” we share actionable tips to help HR leaders get the most from their benefits amid economic uncertainty. In Part 1, we introduced the six strategies, and in Part 2 we detailed two strategies focused on simplicity. Part 3 dives into the next two strategies, which increase the impact of your benefits by maximizing equity & inclusivity.
The impact of equity & inclusivity
HR leaders know that when it comes to benefits, one size does not fit all.
Every employee’s needs are unique and personal, with “meaningful” being defined differently across the workforce. And too often, benefits aren’t equally accessible for everyone who is eligible, due to limitations of the products, the cost of using the benefits (e.g., high deductibles), and in the case of reimbursement programs like tuition reimbursement, the inability to float funds before being reimbursed.
As teams are more geographically distributed than ever, and as more than half of Americans are living paycheck-to-paycheck, traditional approaches are only widening the inequity of some benefits.
A 2021 McKinsey study on the impact of inequitable benefits states:
“Black, Hispanic and Latino, Asian, and LGBTQ+ individuals were less likely to report receiving the care they needed and were more likely than the overall employee population to report considering switching employers for reasons related to benefits.
“By taking action to support health equity among employees, employers can not only build a healthier and more productive workforce but also improve employee retention, broaden impact on families over generations, and help create a more just society. Additionally, increased engagement could help employers defray long-term costs.”
HR leaders recognize it’s more important than ever to invest in the wellness, productivity, and engagement of their employees, while respecting and supporting the unique needs and situation of each individual. Making benefits truly inclusive and equitable for all starts with removing limitations and barriers to access, and instead promoting freedom of choice and financial fairness.
Level’s platform and benefits are designed to increase access to care and services for all members. Our customers are increasing the equity and inclusivity of their benefits – and therefore making a more meaningful impact on the current and future wellness of their employees and their families – by leveraging the following two strategies:
Optimizing for employee choice
Access and preference are two key factors in determining the inclusivity of a benefits program. HR leaders are always looking for ways to increase inclusion, especially as the workforce becomes more distributed and diverse. But traditional solutions have made this challenging to achieve and sustain.
As discussed in Part 2, the cost, user experience, and administrative burden for a complex set of disconnected point solutions can’t scale at the same rate as employees’ needs evolve.
But beyond the sheer number of solutions, limitations often prevent employees from fully utilizing their benefits. Take marketplace-based benefits for example. The promise of a built-in shopping experience at top brands, often with discounts offered, presents great appeal for employees. But these marketplaces have a defined set of merchants where the benefits can be used, which presents employees with limited choice.
- What about employees in rural areas who don’t live close to any of the gyms in the marketplace?
- What about employees who want to shop locally and support small businesses?
- And what about employees whose needs are more personal and specific, and not fully met by the merchants included in the marketplace?
HR leaders can eliminate these limitations by delivering benefits that empower employees to spend at the merchants that are most accessible and meaningful to them. For example, enabling employees to spend their wellness dollars at a local gym as opposed to a national chain, or spending their caregiving dollars at a local neighborhood daycare as opposed to a large network franchise.
When incentives to use certain merchants are removed in favor of flexible benefits that empower employees, everyone wins:
- Employees whose needs have been traditionally unmet by benefits now have equal access
- Admin time and overhead is reduced for employers
- Rural employees have the same spending power as urban employees
- Those who want to support local businesses can do so as easily as folks who spend at big-box stores
Delivering more equitable benefits
Removing merchant limitations and misaligned incentives goes a long way to making benefits more equitable thanks to increased access and inclusion. But too often benefit programs are dependent on employees paying out of pocket then submitting for reimbursement.
With more than half of Americans living paycheck-to-paycheck, most employees may not be able to use their benefits simply because they can’t afford to pay out of pocket and wait to be reimbursed. And these workers are often the employees for whom benefits can be most impactful.
As companies invest in DEI initiatives, reducing the out-of-pocket burden for employees is a meaningful step to make benefits more accessible and therefore equitable. And when benefits aren’t dependent on the reimbursement model, benefit and finance teams also get valuable time back.
When benefit dollars are available on a card for employees to spend without using their own money, the playing field is leveled for employees, delivering meaningful impact for HR leaders investing in DEI initiatives.
Strategies in action
A great example of this concept would be education reimbursement programs. Tax-advantaged plans will pay up to $5,250 in eligible expenses each year for employees to further their education and add additional long-term value to the company.
The impact of this benefit is meaningful to so many employees, but it traditionally hasn’t been equally accessible. Employees living paycheck-to-paycheck can’t afford the $2,500 out-of-pocket expense needed to pay for a course (tuition, books, etc.), and typically employees are required to complete the course before being reimbursed. Faced with this steep hurdle, they often choose not to take the course and the benefit dollars go unused.
Level customers remove this barrier to access by providing employees with the Level Card, which can be used to pay for the course up front with employer-provided funds. We’ve seen usage in this sort of benefit increase significantly because the benefit offered to employees is actually made accessible. The impact to the employee’s connection and commitment to their company and their long-term value to the business are both significantly improved.
Coming up next in Part 4, the final post in our series, we’ll detail how to maximize your team’s agility to deliver on evolving employee needs by collapsing disconnected benefits into one lifestyle spending account, and making decisions today that set you up to quickly respond to future changes.
We’re here to help
Level’s benefits and platform are built to enable every employee to fully and easily access the value of their benefits. Benefits can be spent at any merchant, and members don’t have to pay out of pocket and wait to be reimbursed. Not only are our customers delivering on their DEI goals — they’re also eliminating the administrative load of payroll reimbursement processes. If you’d like to explore how Level benefits can help increase the equity & inclusivity of your benefits, reach out here to set up a conversation with our team.