Harnessing growth through wellness: the future of workforce benefits

LIMRA-EY US research shows the diverse needs of different generations of workers – and how insurers and benefits providers can satisfy them.

In brief

• The working world is forever changed – remote and hybrid models are here to stay, and the gig economy will continue growing.
• With millennials and Generation Z now comprising a majority of workers, benefits plans designed primarily for baby boomers and Generation X must be modernized.
• Stakeholders are looking for digitalization and data-driven solutions, such as generative artificial intelligence (AI) or advanced analytics.

The workforce benefits market continues to experience transformational change due to the shift to remote and hybrid working, the ongoing expansion of the gig economy and intense competition for talent. While foundational benefits (e.g., medical, life and dental insurance) remain central to attractive benefits programs, employees now place significantly more value on a broader range of benefits, particularly across different dimensions of wellness.

The study confirms both the large scope and the accelerated pace of that change, and it demonstrates how flexible and holistic strategies pay off for employers. Our latest report also illustrates the need for insurers and other benefits providers to develop portable and personalized solutions if they are to drive growth in a challenging economic environment.

It also introduces the Wheel of Wellness, a holistic model for designing flexible, high-value benefits programs that help organizations attract the talent that they need and build a happier, healthier, and more productive and financially secure workforce.

Key finding 1: The workforce has never been more heterogeneous, fluid and virtualized – and will only become more so in the years to come

As baby boomers retire in great numbers and Generation X ages, Generation Z and millennials will comprise a large majority of the workforce within a decade. For insurers and benefits providers, the demographic shift equates to a fundamental change in target customer segments.

Not only do younger workers want more and different benefits, many of them are also exploring and engaging in nontraditional employment.

For employers, meeting these diverse needs is a challenge. In our survey, almost one-third of all employers and 40% of those with 1,000 or more workers said that meeting the needs of the multigenerational workforce was a key challenge. And as contractors, freelancers and gig workers become more important, employers will look to engage them via benefits.

Key finding 2: Meeting the expanding and unique benefits needs across generations is critical to attracting and retaining talent

The competition for talent persists despite an uncertain macroeconomic landscape and changing workforce dynamics. Benefits remain a powerful tool for employers to attract and retain the talent that they need to meet their objectives – and employers recognize that they need to offer more.

Many types of benefits included in our survey have seen increases in both employer and employee interest since 2021, with the most significant increases among small employers. Core traditional benefits remain important, but the most dramatic growth in employee interest has been in nonmedical benefits. Consider that employers see paid family leave as the second-most important benefit in the eyes of employees, rated nearly as important as medical insurance.

The holistic wellness revolution

Digitalization is critical to aligning benefits delivery to both employer and worker preferences, driving new levels of engagement and enhancing the value of benefits programs. Stronger digital capabilities will enable insurers and benefits providers to differentiate based on more than just price and to, ultimately, harness growth.