Has the COVID-19 Pandemic Affected Employer Contributions? 

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Considering the COVID-19 pandemic’s massive impact on the workforce, a more robust benefits package is not a matter of if, but what. As in, what changes should employers make to benefits packages to retain employees and attract high-quality talent? For 2022, you’ll want to explore your many options to bolster your current benefits — and give your company the competitive edge in a tight labor market.

Before we discuss the future of healthcare packages, let’s take a look at what’s already in place. We’ll start with the baseline components of plans in 2020 and 2021: premium contributions, plan types, cost-sharing mechanisms, and enrollment eligibility that firms offer to employees.

Premium Contributions

According to the 2020 California Employer Health Benefits Survey, the average employer contribution to health insurance premiums (including the employer contribution) was $653 for individuals and $1,717 for families. Since California employers must cover at least 50% of the cost of an employee-only premium, they can expect to pay at least $327 for each employee-only plan. 

While 50% is the bare-minimum employer contribution to health insurance in California, employers contribute significantly more at the national scale. For example, according to the Kaiser Family Foundation’s 2021 Employer Health Benefits Survey, employers paid 83% of monthly premiums for individuals and 72% of monthly premiums for families.

Significant factors that influence premium contribution rates are the size of the firm and the prevalence of young workers. Overall, larger employers are more likely to provide health benefits to at least some employees; and smaller employers typically cover a smaller share of the premium costs for families. For example, small firms covered 37% of employee premiums for family coverage, whereas large firms covered 24% of family plans. And among firms that had a larger share of workers under age 27, employers contributed a smaller percentage for both single and family coverage. 

Plan Types

The PPO was the most common plan type among employers in 2021, accounting for 46% of employee plans. The runners up included a high-deductible plan with a savings option (28%), an HMO (16%), a POS (9%), and an indemnity (1%) plan. 


In 2021, most employers offered plans with cost-sharing requirements, such as a deductible, copays, and coinsurance. Specifically, 85% of covered employees paid an annual deductible, which amounted to an average of $1,669. Though the rate was higher among small firms ($2,379) and lower in large firms ($1,397), all plan types among all firm sizes have seen an increase in deductibles in recent years.

Beyond deductibles, most employees were required to pay a flat rate (copay) to see an in-network physician, while some paid a percentage of the cost (coinsurance) of services. Most employees also paid extra for ER services and outpatient care, either as copays or coinsurance.


Of employees who were eligible to enroll in a health plan through their employer, about 77% actually enrolled.

COVID-19’s Impact on Employer-Sponsored Plans

Now we have a breakdown of baseline costs and benefits between 2020 and 2021. Onto the next question: Which benefit components have stayed the same — and which have changed — as a result of the COVID-19 pandemic? 

The components of employee benefits that have remained constant include … 

  • The percentage of people offered and electing employer-provided coverage 
  • Average deductible and cost-sharing levels

Meanwhile, the following components changed somewhat:

  • Premiums increased modestly (about 4%), but the increase nearly equalled out the rate of inflation and increases in workers’ wages.
  • Employees did lose coverage due to pandemic-related disruptions in their employment, though most enrollees kept their health insurance coverage. 

On the other hand, other employer-provided benefits were significantly altered in 2020-21 to support employees’ health needs in remote and hybrid workplaces. Specific components of employee benefits included the following changes: 

  • Expanded options for telemedicine
  • More accessible mental health support: stress management resources, personal or life coaching benefits, meditation or mindfulness program offerings (that could be reimbursed or subsidized)
  • Decreased in-person wellness programs, such as gym memberships, trainers, onsite wellness events, and discounts and bonuses offered for participating in or completing wellness programs
  • Transitions to wellness events, resources, and programs that were hosted online or could be self-guided
  • Increased use of urgent care facilities and virtual visits, in place of office and ER visits, by employees
  • Expanded parental leave benefits for employees to care for children or adult family members at home
  • Higher percentage of paid family leave — maternity, paternity, parental, and family leave  — by employers, beyond what is required by state law or short-term disability

Key Incentives in Employee Benefits Packages

Let’s dive deeper into specific perks that were significantly revised or expanded during 2020-21 — and that are expected to continue as a priority in 2022. 


In 2021, a greater number of small and large businesses offered telemedicine services, including video chat and remote monitoring. In fact, 95% of firms with 50 or more employees offered benefits that included telemedicine services. Employers also expanded the number and types of providers available, the locations and settings where benefits could be used, and ways to communicate with providers. An additional selling point: reduced or waived cost-sharing for telemedicine services.

Mental Health Services

You and your employees know all too well the toll on your collective financial, job, family, health, and housing security in the wake of the pandemic. These unprecedented, compounding stressors have amplified the need for awareness and support of mental health among employees. Of companies with 50 or more employees, 31% expanded access to mental health or substance abuse services, via Employee Assistance Programs (EAPs) or other programs — and 12% saw an increase in employees’ use of services since the pandemic began. 

Additionally, a significant number of employers (38% of smaller firms and 58% of larger firms) added or expanded the number of mental health providers; they also reduced or waived cost-sharing for services, increased coverage for out-of-network services, and expanded digital content and online counseling services for managing emotional, financial, relationship, and family distress.

Health and Wellness Programs:

The majority of small and large firms provided at least one health and wellness program that promoted healthy habits among employees, such as weight management, smoking cessation, and behavioral and lifestyle coaching. While some small and large firms reduced or eliminated these incentives since the start of COVID-19, a much larger percentage (between 15% and 34%) added a digital component and/or modified their program content to address the needs of employees working from home. 

Planning Benefits Changes for the COVID-19 Era

Because the pandemic still impacts our personal and work lives, the changes already implemented in 2020 and 2021 are expected to continue into 2022. As an employer, consider adding or maintaining these key components for future benefits packages:

  • Increased or steady contribution to individual and family premiums 
  • Expansion of telemedicine services, as well as online health and wellness resources and programs
  • Enhanced Employee Assistance Programs (EAPs)
  • Increased cost-sharing for health insurance expenses: premiums, deductibles, copayments, coinsurance, etc.
  • Personalized design of benefits packages to better match employees’ needs
  • Continued shift to urgent care and away from ER visits 
  • Increased plan price transparency, due to a federal law that requires health plans to provide an estimated cost of services and cost-sharing to employees. 

Should Employers Revise Benefits Packages in 2022?

Last year saw a substantial increase in accessible, expansive resources for employees to manage the ongoing stressors and health challenges brought on by the pandemic. Will these changes stick around in coming years? 

The answer depends on you and your employees. If your employees currently work in a hybrid or remote environment, they may return to the office over time. And whether they stay home or transition to an onsite workplace, the adjustments they made during the pandemic — more time off, more flexible work hours, greater need for healthcare services, and expanded access to online resources and telemedicine — are likely to remain a top priority for their health plan preferences. 

In fact, according to a 2019-2020 Global Benefits Attitudes Survey by HR consultancy Willis Towers Watson, 37% of employees preferred having a more substantial benefits package than a bump in their salary / wages or bonuses; and 42% would sacrifice extra pay for a more comprehensive health plan. Meanwhile, more than half of employees reported that a benefits package was more important to them in 2020 than in previous years — and this was before the pandemic hit! 

In short, employees want plan options that fit their health needs, plan pricing that is clearly communicated, and access to health and wellness resources that support their changing home and work environments. Therefore, employers should anticipate higher budgets for health plans in 2022. A more robust health package will accommodate the uncertainty of employee retention and hiring, as well the likelihood of ongoing health needs of employees who are managing COVID complications, chronic health conditions, and mental health challenges.

Want to expand your employee benefits packages for employees? Talk to an agent at Regency West. They’ll walk you through options to build a package that suits your budget and the needs of your employees.