ROLLING MEADOWS, IL - In 2023, 9 in 10 employers (90%) increased their support for one or more core employee wellbeing dimensions, including physical, emotional, career and financial. As a result, total rewards investments made in 2023 are likely to be based on their potential to create stronger organizational attachment, according to Gallagher's 2023 US Physical & Emotional Wellbeing Report. The Gallagher report examined how employers are adjusting to top trends in employee physical and emotional wellbeing and using these trends to help improve employees' quality of life at and outside of work.

"Today's workforces consist of multiple generations and people from a variety of backgrounds, and this requires employers to analyze whether their benefit offerings are addressing a wide range of employee needs," said William F. Ziebell, CEO of Gallagher's Benefits & HR Consulting Division. "As organizations continue to focus on recruiting and retention as top operational and HR priorities, it's clear that they're paying closer attention to important issues, such as flexibility, burnout and inclusive medical coverage."

The Gallagher study, which is the second installment of the 2023 US Workforce Trends Report Series, was conducted from December 2022 to March 2023 and sourced data and insights from more than 4,000 organizations across the US. The study presents recent findings on current and emerging trends to help employers optimize their investments in employee physical and emotional wellbeing by covering medical, pharmacy and voluntary benefits, as well as absence management strategies.

Pervasive concerns about stress and burnout spark continued focus on emotional wellbeing.

The focus on emotional wellbeing in the workplace continues its upward trend with more than 7 in 10 employers (74%) increasing the importance of this area in 2023. While prioritization of wellbeing starts at the top, more meaningful interactions take place at the operational level. In fact, since last year, providing mental health training for managers, leaders or HR increased by 5 points to 22%.

Employers are investing in building morale, addressing these concerns through clinical care and designated time off for mental health. Roughly 7 in 10 employers (71%) offer clinical care such as virtual or telephonic mental health counseling, and 25% are allowing time off for mental health and burnout (up from 3 points in 2022).

Employers are updating PTO and leave policies that account for life outside of work.

Nearly all employers (96%) offer paid time off (PTO) to full-time employees, and more than 4 in 5 (81%) allow employees to carry over days into future years. The ability to help employees meet their work-life integration needs relies on flexible PTO policies. But less than half (47%) include separate vacation, sick or personal days and only 5% offer unlimited PTO.

The future of absence management is evolving as employers accommodate an aging workforce, mental health challenges and changing benefit expectations. As such, employers have developed strategies for administering leaves and disabilities (49%) or expect to do so in the next two years (15%).

Employers are increasingly adapting to align paid leaves with family-focused policies. For example, access to new child or parent bonding paid leave has increased 5 points from 2022 to 41%. And while just 13% of employers offer paid caregiver leave, of those who offer caregiver leave, the majority provide 11–12 weeks (40%).

Balancing demands for specialty drugs and treatments with rising healthcare plan premiums.

Median health plan premium increases at the most recent renewal were 5%–5.9%, up from 4%–4.9% in 2022, and nearly 4 in 5 employers (78%) believe a moderate or significant rise in healthcare costs is likely this year. Nevertheless, nearly 2 in 5 employers (39%) enhanced their medical benefits in 2023, up 6 points from 2022. After base salary and variable compensation, medical benefits received the most attention from employers (39%), up 6 points from 2022. As a result, the use of employee cost sharing and other cost-management tactics is likely to grow.

Coverage for infertility, autism or transgender services and other specialty treatments can show support for ranging employee populations. Though most of these benefits don't stabilize or lower costs, they often align with preferences that strengthen cultural inclusivity. However, their availability was uneven — autism (53%) and fertility services (46%) are offered by nearly half of employers, voluntary pregnancy termination by one-third (34%) and gender reassignment surgery by one-quarter (25%).

Challenges remain in managing specialty drugs (e.g., weight loss, gene therapies, biosimilars), and 48% of employers don't know or don't use tactics to manage their use and costs. Given the accelerating interest in weight loss drugs specifically, and the high costs associated, employers could quickly absorb expenses that exceed their budget limit and impose other strains on their pharmacy benefit plans.

"It is essential to recruitment, retention and the overall wellbeing of employees to serve diverse needs," said Ziebell. "As such, employers should determine what approaches to coverage and utilization will provide the best results for their employee populations, without driving excessive costs."