Employers need attractive health benefits packages

The talent market today is challenged by the continuing COVID-19 pandemic; record levels of attrition; increased focus on diversity, equity, and inclusion; and rising healthcare costs that outpace inflation. In this environment, employers tell us that they are trying to simultaneously expand benefits and manage healthcare costs.

The results of our latest Employer Health Benefits Survey reveal the following:

  1. With record numbers of employees leaving their jobs, the “Great Attrition” is putting pressure on employers and raising their awareness of the importance of employee health benefits.
  2. Employers offer a variety of voluntary benefits to bolster talent acquisition and retention efforts, and they view these efforts as increasingly important.
  3. Employers perceive cost as relatively less important when selecting benefits carriers versus five years ago, despite continued rising costs.
  4. Employers continue to perceive high-deductible health plans as a viable option for managing rising medical costs, and they are increasingly satisfied with this option.
  5. Employers are increasingly interested in benefits solutions that include components—for example, health management and member advocacy—that simultaneously improve member satisfaction and help manage costs. This balanced approach is likely to endure after the pandemic ends.

Because employer benefits decisions have a substantial influence on healthcare delivery, insurance and health service markets, and the overall economy, McKinsey has conducted a US Employer Health Benefits Survey regularly since 2011. The survey provides a longitudinal view of the employer benefits landscape, including changes in offerings and funding across health benefit categories. It also examines employers’ use of and satisfaction with benefits providers and offerings. The data and insights gleaned from the survey can inform strategic decisions by participants in the employee benefits ecosystem—brokers, consultants, carriers, healthcare providers, and service providers—and help them effectively support their clients, patients, and partners.

This article incorporates findings from the most recent survey, which was conducted during September 2021. The survey collected responses from 1,640 employer-benefits decision makers, including C-level executives, human resources leaders, and benefits managers. The survey responses are weighted by employer size and industry to match the whole US economy.

Health benefits can help employers attract and retain employees

Multiple large-scale surveys

have found compelling evidence that employee attrition is at record levels.

Forty percent of employees who responded to a 2021 McKinsey survey said they are at least somewhat likely to quit their jobs in the next three to six months. Among those who are at least “somewhat likely” to quit in that time period, more than 60 percent said they would leave without a job in hand.

Compared with before the pandemic, the proportion of employers reporting that benefits are “very important” in talent management increased 11 percentage points. This highlights the intensity of competition for talent and the growing need for employers to optimize employee benefits.

Voluntary benefits are becoming increasingly important to employers’ overall benefits packages

Seventy-eight percent of respondents reported they offer at least one voluntary benefit.

Employers say they offer these benefits to support employee well-being, enrich core benefit plans, and attract new employees.

Among nonmedical benefits, employers perceive dental, vision, and short-term disability as most important. Critical illness and disability exhibited the fastest growth in perceived importance by employers. This list of benefits does not include other add-on products, such as behavioral health, telemedicine, and family-building benefits.

Employer perceptions of benefit costs are evolving

The percentage of respondents who consider total cost to be “extremely important” when selecting a benefits carrier decreased by 14 percentage points between 2016 and 2021.

Among non-cost factors, respondents consider health management programs, employee customer service, and a broader provider network to be the most important factors.

Nevertheless, 60 percent of respondents reported experiencing healthcare cost increases that outpaced inflation in the past three years, and 63 percent expect that trend to continue, signaling potential cost challenges in the future.

High-deductible health plans are among the top three plans offered by surveyed employers

The proportion of employers offering high-deductible health plans (HDHPs) jumped from 17 percent in 2011 to 29 percent in 2016, according to KFF,

but growth has leveled off since then (32 percent offered an HDHP in 2021). Respondents report 28 percent of their employees have enrolled in an HDHP. Employers increasingly consider an HDHP to be an effective cost management option alongside their other approaches.

Employer satisfaction with HDHPs increased by 20 percentage points from 2018 to 2021, according to the survey. Employers are providing employees with solutions to help navigate HDHP provider choices, which likely has helped to increase employee awareness and acceptance of HDHPs.

Compared with before the pandemic, more surveyed employers have adopted, or have an interest in offering, health management solutions

Health management solutions are typically offered by third-party vendors and health insurers to improve member experience and manage medical costs. Many offer ROI guarantees.

Nevertheless, among surveyed employers who offer programs, more than 20 percent are solely focused on employee satisfaction in offering health management solutions, with no ROI expectation.

Respondents are exhibiting growing interest in member advocacy solutions

Member advocacy solutions can improve care navigation and satisfaction by offering members a single point of contact.

Member advocacy vendors typically charge employers a per member per month (PMPM) fee; some also provide performance or return guarantees of as much as three times the investment.

Increased interest in member advocacy potentially signals a new era of employer benefits in the postpandemic world in which employers balance cost, satisfaction, and optionality to more effectively compete for talent.


Benefits offerings have historically been an important component of employee acquisition and retention strategies, and research confirms that the structure and extent of offerings are only becoming more critical.

Employers competing for talent will need to optimize benefit packages to improve member satisfaction while managing costs.

Employers have several tactical and strategic options at their disposal to strengthen the quality of their benefits packages while managing costs such as the following, for example:

  • introducing navigation and health management tools to help employees navigate the healthcare system (including, for example, finding providers who offer culturally sensitive care), engage in preventive physical and mental care, and manage chronic conditions

  • engaging in innovative contracting arrangements with healthcare providers, especially for care journeys with higher prevalence for working populations (for example, musculoskeletal, pregnancy, or behavioral health), to provide incentives for improved outcomes and reduced costs

  • ensuring the value of benefits is clearly communicated to employees in simple language, in multiple channels, and year-round, including tools to help employees select and enroll in the benefits package that best meets their needs and helps them manage their out-of-pocket costs

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