The US employee assistance program (EAP) services market is expected to reach USD 3.1 billion by 2027 from USD 1.6 billion, growing at a CAGR of over 11.35% from 2022 to 2027. Employee Assistance Program (EAP) is a confidential program that assists employees in overcoming various life difficulties that may negatively impact job performance, health, or personal well-being to maximize an organization's success. Employees with personal and work-related concerns include stress, financial, legal, family, workplace conflicts, and alcohol and substance use disorders. EAP services majorly include assessments, counseling, and referrals. EAPs also frequently collaborate with upper management and supervisors to provide prior planning for organizational changes, legal issues, emergency preparedness, and traumatic event reaction.
EAPs refer to employees or resources that help with mental health challenges, substance abuse, financial planning, and work issues. Over the past year, EAP vendors have streamlined the referral process for counseling benefits. Many employers have increased the number of free counseling sessions for employees and their family members. EAPs also offer assistance with financial concerns and caregiving—two of the most common sources of stress in employees' lives. It has been witnessed that 95% of large employers now provide access to virtual mental health counseling, or teletherapy, up from 69% in 2020 in the US. Allowing participants to meet with counselors in the most convenient ways—video, text, or via phone—removes a massive barrier to getting care.
In the employee assistance program services market, the US is the leading country in North America. Due to the increasing industry competition, employees work under pressure to address business challenges. Therefore, stress has an adverse impact that disrupts the employees' work-life balance—increasing awareness of mental and physical health management due to the initiatives taken up by the employers. EAP services are expected to be vital to employee management during the forecast period.
COVID-19 IMPACT ANALYSIS
It is no surprise that the COVID-19 pandemic has taken a toll on the workforce's mental, physical, and financial health. The pandemic has increased the need to address employees’ mental and physical health issues in an already challenged system. While businesses have found ways to physically protect their employees by providing tech support and introducing new leave policies, the disruption it has caused in mental assistance is expected to continue. The uncertainty around family, finances, health, and other concerns have created an environment brewing behavioral health issues.
Health issues such as migraine and depression contribute to around 13% of the losses caused due to ill health at work, and there are high chances that it is caused due to mental pressure and stress. Owing to such factors, employers in the US face significant difficulties, such as lack of productivity and the need to hire, which eventually results in huge costs incurred for employers. As a result, employers in the country have become concerned about reducing these costs by providing assistance programs. This concept witnessed a significant boost by the end of 2020 when the economy started to rise again and offices began to open.
Financial, mental, and physical assistance are directly linked. Financial stress, aggravated by COVID-19, is the leading cause of lost productivity, unplanned absences, lower job performance, and more significant distractions among employees. Financial stress impacts emotional and physical well-being. A financial literacy program is considered suitable for the company's bottom line. Improving financial literacy increases productivity boosts job satisfaction, and saves health care costs and turnover. Several vendors have introduced a financial assistance program due to the pandemic, coupled with modern digital solutions and human support, thus boosting the EAP services market.
OPPORTUNITIES & CHALLENGE ANALYSIS
MENTAL & PHYSICAL HEALTH AWARENESS VIA SOCIAL MEDIA PLATFORMS
Several social media platforms are fit for various purposes and people. If Snapchat is widely popular amongst youngsters, LinkedIn can connect to a clan of professionals. Nevertheless, specific topics are relevant to the entire population irrespective of profession, background, interests, or culture, such as assistance, be it mental, physical, or both. Given the popularity amassed and the amount of time an average individual spends in a day scrolling through social media, it has perhaps become the best and the fastest way to spread awareness regarding mental wellness and physical assistance. Using relevant hashtags can turn a discussion into a trending topic, thus gaining popularity and the necessary attention from EAP service providers.
CONSTANT STRUGGLE FOR EMPLOYEE ENGAGEMENT AND PARTICIPATION
While assistance programs have been well-intentioned efforts by employers to create a better quality of life for their employees, there has been significant debate on whether they work due to largely unsuccessful assistance outcomes. This is either because participation is low or the level of engagement is negligible. Moreover, lack of awareness among employees is a significant issue. It is evident that even if there is a program in place for the betterment of employees, it does not guarantee employee participation if there is a lack of interest among the workforce. While incentives have solved the problem of involvement to a certain degree, these programs still seem superfluous as they do not necessarily improve employees' well-being due to lack of engagement.
RISING DEMAND FOR FINANCIAL ASSISTANCE
Often, employees are not motivated to fix their finances since it drains their energy. For such employees, incentives are a documented success in spurring behavioral change. To combat the well-behind lag of participation, corporates are ratcheting up the incentives offered in combination with assistance programs. They were unheard of half a decade ago but are now gaining popularity rapidly. Vendors are designing incentive programs that are in sync with the goals and objectives of the company. Modest financial incentive programs are mainly effective.
INSIGHTS BY SERVICE TYPE
The U.S. employee assistance services market is dominated by the demand for personal & work stress services, followed by mental health services. However, demand for financial wellness assistance is anticipated to grow significantly in the coming years. The consistency and success rate of these programs vary widely. With organizations grappling with rising health costs, standard programs are no longer sufficient to change the course of the growth trajectory.
INSIGHT BY DELIVERY MODEL
Internal or external EAP models are the most common, with combination or blended models containing both components in variable proportions. Hybrid models give employees more options, adding to the richness rather than diluting the purity. EAPs are dynamic and uniquely adapted as a workplace resource to meet the needs of the current work organization it serves. There has been much discussion regarding the advantages of various EAP models. Still, it is widely agreed that the "workplace is too complicated for pure counseling models," due to which hybrid models are gaining substantial market traction. In 2021, delivery by external vendors accounted for over 66% of the U.S. employee assistance services market share.
INSIGHT BY INTERACTION PLATFORM
In 2021, the U.S. EAP services market was dominated by face-to-face interaction holding almost 90% share in the market. However, owing to the recent trend of working from home due to the COVID-19 pandemic, video and telephonic EAP services have gained significant traction in the last two years. Moreover, since WFH has become a new trend globally and in the US, the video & telephonic employee assistance program services market is anticipated to grow at a significant CAGR during the forecast period.
INSIGHT BY GENDER
In 2021, the EAP services market was dominated by women accounting for over 66% of the market share. This can be attributed to increased stress levels in women being reported more likely than in males. Moreover, when comparing married and single women, there appear to be differences in how they deal with stress. Women aged 35 to 54, who are more likely to be juggling many jobs such as mother, caregiver for elderly parents, homemaker, and occasionally earner, are more stressed than men. Furthermore, as a result of all of these circumstances, it has been observed that women generate a more significant demand for EAP services.
INSIGHT BY INDUSTRY
Employee assistance spending based on industries depends on the volume of the workforce, corporate profits, and the degree of deployment of programs, among other factors. Funding and time are considered the significant barriers to implementing these programs, irrespective of the industry's size. The outlook for corporate wellness assistance programs differs as well. While smaller businesses and non-profit organizations look at it more from a luxury, good-to-have perspective, more prominent end-users are implementing it as a necessity.
The US people pay more excellent prices from workplace stressors, in terms of health costs and perhaps mortality, than do workers in comparison to OECD countries in Europe. Expanding health insurance coverage, increasing awareness about workplace stress costs, and adopting family-friendly work policies more widely could considerably benefit US workers. Doing so could assist in lower exposure to workplace stressors, enhance the nation’s work climate, and lessen the health burden levied by U.S. workplaces. Midwest U.S. EAP services market accounted for the largest share in 2021
The EAP services market in the US is highly fragmented, with several small vendors operating. However, the market is witnessing consolidation, albeit at a slow pace.
Vendors are also looking at new ways to deliver corporate assistance programs using the potential of digital technology to host virtual screenings and offer information via company portals. Moreover, it is increasingly being guided by the roots of CRM as employers look to dynamically tailor their programs and provide an experience that is personal and individualized. For instance, targeting offerings based explicitly on employee health risks and conducting feedback surveys.
Over the past couple of years, however, the market has witnessed the entry of many external players, such as in-house services by large businesses and other entities in the health and fitness space that offer membership discounts to drive up their share in the market. Mergers and acquisitions are expected within the industry as players look to expand and become more comprehensive in their offerings. A trend witnessed among vendors in a landscape where consolidation is taking place is the focus on merging two platforms. As prominent players join hands, resources are spent on connecting rather than innovation.
Vendors compete regarding aftersales services, brand value, customization ability, price, skilled workforce, and technological capability. Most of these vendors offer assistance portals and assistance management services. They work closely with other players operating in the healthcare space, such as medical labs, health insurers, and the like to provide a rounded corporate assistance program. Vendors also tend to tie up with technology companies to develop assistance programs.