Supporting part-time workers with benefits: A rising tide that lifts all ships

Between COVID-19 isolation and Great Resignation frustration, employers have learned more than ever the importance of helping marginalized segments of the workforce step into the light after years of working and living in the shadows. 

While such outreach initially focused on race, gender, age, disability and sexual orientation as part of diversity, equity and inclusion (DEI) programs, the underlying aim is to ease economic hardship. This means addressing social determinants of health (SDoH) that serve as barriers to health equity. 

Several recent surveys suggest that as many as 60% of working Americans live paycheck to paycheck — even in six-figure households — while a growing number prefer gig work and more flexible schedules. Roughly 26 million people are part-time employees in the U.S. Most of them are in their prime working years and the majority are voluntarily choosing this schedule. 

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As demand for their labor exceeds supply, employers will need to accommodate their growing expectations in terms of benefits and compensation in order to attract and retain more of this talent. Many employers are turning to a trusted adviser for assistance crafting strategies that make basic health insurance and ancillary coverages more accessible and affordable for hourly and part-time workers, among others. These efforts not only promote DEI and health equity, but also attract and retain often overlooked segments of the workforce in a tight labor market. 

This is the final commentary in a four-part series on how the employee populations that benefit advisers serve are benefiting from post-pandemic silver linings. We previously examined the rise of voluntary benefits relative to core offerings, efforts to achieve parity for behavioral health benefits and growing comfort with telehealth. 

Improving the lives of marginalized workers certainly complements these developments. It's worth noting that an employee's ZIP code has a bigger impact on life expectancy than their DNA code, which means SDoH cannot be ignored. It represents an opportunity for brokers to become more consultative because employee health is not a monolith. 

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For those from marginalized communities who don't have much (if any) disposable income for unexpected expenses, finding affordable coverage is a challenge. However, there are benefits available that provide first-dollar coverage for catastrophic health events without incurring the high out-of-pocket exposure of traditional group health insurance. 

Employers that are looking for an affordable health plan for part-timers or lower-income employees may want to offer limited medical fixed indemnity insurance, which our firm published a whitepaper on. As the name suggests, plan participants are offered a fixed benefit for day-to-day expenses that fall into three categories: the "oops," which are cuts, scrapes and bumps that aren't going to touch the deductible; "uh-ohs," which are hospital stays, newborn delivery, etc.; and "oh-noes," which are heart attacks, strokes and other unexpected serious medical episodes. Indemnity-based products like accident, including critical-illness and hospital indemnity, cover those bases. 

Although less generous than a traditional health insurance plan, coverage is available at a fraction of the price on a voluntary basis, partially paid or employer-paid. Plan designs are flexible and customizable, with options for medical, dental, vision and more. Plan participants do not have to worry about paying up front before receiving treatment or having to cut the provider a check, and they can always buy up additional coverage for dependents. 

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While some benefit advisers have pushed individual coverage health reimbursement arrangements known as ICHRAs as a solution, there are caveats to consider. It certainly fixes the cost from an employer standpoint when a defined contribution is earmarked for these vehicles for employees to seek coverage in the individual market through health insurance exchanges, but there's still exposure on the employee side. 

Unlike ICHRAs, the design of fixed medical indemnity benefits helps ease the economic pain where it's most acute for many marginalized workers. ICHRAs may make more sense for middle-class or younger employees who are healthy and don't need to see the doctor all that much. A packaging of an ICHRA with a fixed indemnity plan also would work.

Whatever approach employers end up taking, it's always prudent for organizations to gather meaningful feedback and buy in from those in the workforce who will be affected. Access and engagement has to be meaningful for those employees it is meant for. It doesn't matter what it is as long as they are aware of the benefit, understanding what it is and how it will improve their life. 

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If an employer improves the lives of its most marginalized employees, then it will have a positive cascading effect across the entire workforce. Think of it as a rising tide that lifts all ships. Lower-wage earners are quite often on the frontlines, the first point of contact with customers. In any matter of ways, improving their lot in life will have a direct and immediate impact on the business. Designing a better benefits and compensation package for this group represents a way for employers to let them know that they matter. How often do employees in marginalized communities get to hear that, especially from their employer?