The New Business of Employee Benefits

By Kyra Durko on May 12, 2021

A conversation with Ellen Meza, Director of Global Benefits at DocuSign

Gone are the days when your employer is simply providing you a 401k and health insurance. In a competitive job market with rising hiring costs, it is increasingly important for employers to develop a deeper relationship with their employees. 

This trend has given way to what we call “the D2E business model”. Companies are increasingly selling direct-to-employer, rather than direct-to-consumer. Mental health is a great example, which now has many D2E companies like Modern Health and Spring Health.

I recently had the privilege to (virtually) sit down with Ellen Meza, Director of Global Benefits at DocuSign, and discuss trends in employee benefits and tips for companies on how to best go to market with this strategy. We hope you find the interview below insightful. 

Walk us through the history of employer benefits. What was the standard set of benefits employees got 10 years ago, 5 years ago, and now today? 

10 years ago, companies were focused on ensuring employees had access to great health care. Health care included medical, dental, and vision coverage. Those types of core benefits haven’t changed in years. To that end, in the last 5 years we have started to see a lot of innovation directly related to carve-out or top-up medical care. Things like chronic care management for diabetes, heart conditions, obesity and cancer had started popping up. This was great for larger organizations with slightly older or unhealthy populations, but, depending on the size of the company or the average age and health of the employee and dependent population, those benefits may not have done much for you. 

Today, the big three – medical, dental, vision – is now the big four, with mental healthcare becoming a standard pillar. The term well-being, or wellness, has been around for a long time, but, for the last 10 years, it was focused on physical well-being. Recently, that definition has broadened, and there is a stronger focus on emotional and mental health. We’ve come across some really amazing players in the mental health space and have seen employers take the leap to offer it as a care-out to their medical plan offering. Even more recently, other areas of well-being are starting to take center stage like meditation or mindfulness, sleep support, and caregiving. We believe that employees are going to have access to and receive better care because of this shift to employers offering mental health support as a standalone offering. It’s a worthwhile area to invest in because the return on investment isn’t always directly quantifiable in terms of dollars when it comes to mental health care. Companies might face drops in productivity, absenteeism, attrition, etc. but not know why.

In the next three to five years, we predict financial well-being will become its own pillar.  Perhaps soon after caregiver support will emerge. The government is starting to talk about providing financial benefits for those that take time-off to have or bond with children, but, in the meantime, employers are feeling like this benefit could be appealing to attracting and retaining great talent, especially women.

Are companies actually expanding their budget for these new benefits? How do they make room for new offerings? 

Employers are trying to be smarter with their dollars, driving towards more consumer engagement in health care such as high deductible plans with HSAs and other cost-savings vehicles.  These savings can make additional investments possible.  For instance, more niche vendors are coming into the space allowing companies to add on smaller, cost-effective programs in addition to their core benefits. Companies don’t have to buy a whole suite of products anymore, which is the way it was before when you partnered with Aetna, Blue Cross/Blue Shield, Cigna, etc. Now that there are niche vendors, you can decide to buy based on data from employee feedback gleaned from pulse surveys or actual claims utilization. It is easier to make the argument that an organization really needs this one bespoke thing as opposed to a whole suite of products, and likely there is a vendor out there that solves this gap in care well.

What trends have you seen in business models and pricing structures from these vendors? Which models best align with what you’re looking for? 

Some vendors charge on a per employee per month (PEPM) basis, some on a per active employee, and some charge a flat fee based on their expected utilization. It’s important to make decisions about the right pricing structure based on what’s best for the employer, their budget and finance considerations. These things can differ based on many different factors within the organization. 

If engagement is a priority for your company, which generally it is, you want your vendor to be just as incentivized as you are to engage employees. Pricing shouldn’t focus on headcount growth, which the PEPM model depends on, but instead be focused on really engaging the population and providing a benefit that the employees see value in and keep using on a regular basis.

The traditional way of pricing on a PEPM basis penalizes companies for scaling and doesn’t inherently incentivize the vendor to get more employees engaged – i.e. vendors worry they’ll make less profit if their service is used by more people which is not a good model. Charging a flat fee based on expected utilization enables vendors to charge companies for the actual services received and puts pressure on them to achieve their engagement goals. I’m glad to pay more if, in fact, more of the population is using the benefit and finding it useful. The goal setting process and ensuring the vendor meets those goals should be embedded in the sales and implementation process.

What are the most successful tactics that you or your partners have used to boost employee engagement and adoption of new benefits?

This is definitely correlated with how financially incentivized the vendor is to grow engagement within our company. It’s really important that companies and vendors are aligned on the reasons the benefit is being offered. In the case of mental health, it’s mainly to serve as many people as possible who need clinical care, but the program must also address those that want to be preventative about mental health. 

Our expectation is that the vendor will create a marketing campaign and materials that are fine-tuned to address the needs of our organization. This will drive success of the program and employee engagement. To do this well, the vendor has to put in the work to understand our organization, embedding themselves into the culture. How our benefits team is  engaging with and speaking about the program will also drive adoption. We try to host webinars or open office sessions with our senior leaders and speak about why we are offering a new benefit. People get really excited, and we find touch points along the way to get them to sign up. However, at the end of the day, it’s really about the vendor understanding our organization and how to target our  employees.

What types of benefits, anecdotally, have you seen the most demand from your employees for?

Before we had a mental health offering that was definitely the number one thing. The industry was having such a tough time getting enough qualified therapists that wanted to be part of a network. Getting appointments through medical insurance was basically impossible. Based on recent engagement with Spring Health at DocuSign and similarly with other companies I’ve consulted with or worked for, this seems to be true across the board.

Now with kids learning virtually, the focus has shifted to caregiving. Families are trying to figure out how to manage work-family balance and make sure they are balancing their two jobs as employee and caregiver. Figuring out a way to avoid working at one o’clock in the morning and keeping employees happy and productive will be critical. Solving for the caregiver crisis is going to be the next really big challenge for employers. 

The third biggest area of demand is around financial wellness. The number one question we get from employees is “what should I do financially with my bonus, stock option, etc.?” Employers today are telling employees to talk to professional financial planners but cannot legally refer them to a financial planner. However, it can be difficult for employees to find and vet these tax professional and financial planners on their own — especially for employees who may be coming into larger sums of money for the first time through stock vesting. This can be as big of a life event as having a baby or a healthcare crisis. A solution that allows employers to support employees by giving them access to a third-party platform that can help them navigate this process could be helpful. 

As more startups and younger companies have entered the benefits space, has your purchasing process changed? How has the role of brokers evolved?

For me personally, there has been a huge shift from completely trusting our consultants and brokers to tell us what to do, to me spending more time searching for what I think is right for DocuSign. Consultants are having a harder time really building the right kind of relationship with the employer, and helping employees understand what’s new and innovative in the vendor space. There has been a huge influx of benefit-related startups. It’s impossible for consultants to meet with all of them, understand the offering and know to which employers to introduce them. Consultants aren’t going to always have the best answers anymore.

I would advise any company to be thoughtful about which vendors they choose to work with. For companies wanting to carve out benefit programs and make unique and innovative choices, moving away from the traditional ‘one-vendor-fits-all’ approach, it’s best to work with tech-forward consultancies, like some of the smaller bespoke companies. Some of the larger consultants are focused on finding solutions for their largest clients as opposed to small and mid sized ones like DocuSign. These larger consultants may not be best when you want to do something out of the ordinary. It’s also important for vendors that are new and upcoming in the benefits and people space to build relationships directly with benefits leaders. At this point, about half of the vendors we evaluate come in through my and my team’s own network, not through brokers or consultants anymore.

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