Survey of PA businesses shows pandemic had minor impact on benefit plans

Pennsylvania businesses mostly held back on making large changes to their benefit plans during the pandemic, according to a survey of 100 organizations by Harrisburg employee benefit and investment advisory firm Conrad Siegel.

The recently published a survey outlined how area retirement and health plans were affected by the pandemic.

In the survey, 94% of employers said they chose to continue employer contributions to participant retirement plans last year and 54% expected their health care benefit costs to stay the same.

Conrad Siegel’s survey also showed that 57% of employers expect their employees to continue to work at home and anticipate further opportunities for staff to work remotely. That change could bring about more revisions to benefit plans and plan designs in the long term, said Rob Glus, a partner and consulting actuary at the firm.

In the short term, Glus didn’t see many of his clients making knee-jerk reactions to their health benefits in the wake of the pandemic.

“Those numbers aren’t surprising, they are relatively consistent with what I saw in my clients,” he said. “People had enough to work on during the pandemic. They didn’t want to change their health plans and the last thing you want to do on top of that is make changes to the medical program.”

That isn’t to say that there weren’t some changes to company health plans last year, such as plans having to cover testing at no out-of-pocket cost and the increase in utilization of telehealth causing some plans to have to cover telehealth for the first time.

Nearly 50% of respondents said that they expected one of their biggest challenges this year to be standard and ongoing health costs not related to COVID-19. Glus agreed, noting that the pandemic caused many employees to put off visiting their health care provider and many of those people may now visit their providers this year.

“We had a reduction of utilization but now there may be pent up demand,” he said. “The question is how much of that will hit now in 2021, either from pent up demand or people putting off preventative services because they weren’t comfortable going to the doctor.”

The survey also showed that employers anticipate an increase in mental health and substance abuse as a result of the pandemic, with 54% of respondents saying they would be increasing mental health and substance abuse services this year. Twenty two percent of employers with employer-sponsored health plans said that their biggest challenge would be providing adequate mental health services for their members in 2021.

Glus said it’s too early to predict how health plans could change as a result of the pandemic, but the shift to remote work for many employees will no doubt bring further changes to health plans.

Retirement plans remained mostly unchanged in 2020, which mirrored what Scott Gehman, a retirement plan consultant at Conrad Siegel, said he has seen among his clients.

According to the survey, only 2% eliminated their employer contributions and 4% redacted their contributions. 52% of employers added the CARES Act in-service withdrawal provision to their retirement plan, allowing individuals diagnosed or financially impacted by COVID-19 to withdraw up to $100,000 from their 401(k) or other qualified plan or IRA.

Gehman said that adding the in-service withdrawal provision was just one way that businesses tried to offer assistance to their employees, another being increasing retirement plan loan limits, which 25% of employers did last year.

“A lot of sponsors saw this as temporary and didn’t want to make huge changes,” said Gehman. “I think the bigger story that hasn’t played out yet is what the remote work environment will do to retirement plans.”