Employers Adjust Employee Benefits To Emphasize Health Care And Wellness Even With Rising Costs

Despite rising health care costs, employers are redirecting more of their financial resources toward health and wellness benefits, according to the 2014 SHRM Employee Benefits Report, released by the Society for Human Resource Management (SHRM). “Organizations see a need to maintain key benefits in areas such as health care, where costs are rapidly rising,” said Evren Esen, director of SHRM’s survey programs. “As a result, this may mean fewer resources are left to invest in benefits that are less in demand.”

The report shows a five-year trend increase in the percentage of organizations offering mental health coverage, contraception coverage, vision insurance, and coverage for bariatric and laser vision surgery. Currently, almost all organizations (98 percent) offer some type of health care coverage to their full-time employees, with the most common health insurance being a preferred provider organization (PPO) plan. Five-year trends also show a shift of health care costs to employees. For example, there was a 12 percentage point increase in the number of organizations offering health savings accounts (HSAs) and a 17 percentage point increase in the prevalence of employer contributions to HSAs.

“Offering health benefits is critical to employee recruitment and retention,” said Bruce Elliott, manager of compensation and benefits at SHRM. “However, the rising cost of health benefits, especially health insurance, has made it challenging for some employers to continue offering it. Because of that, employers are evaluating all their benefits and making adjustments.”

According to the report, the median annual cost for employee-only coverage is $5,838, and the median percentage employers contribute toward employee-only health care coverage is 80 percent. “An increase in wellness offerings is a trending tactic for companies looking to save on long-term health care costs often associated with chronic diseases such as diabetes and high blood pressure,” Elliott said.

The top wellness benefits offered to manage chronic diseases and other health-related issues include: health and lifestyle coaching (47 percent), preventive programs specifically targeting employees with chronic health conditions (42 percent), subsidies or reimbursements for fitness center memberships (34 percent), weight-loss programs (32 percent), onsite fitness centers (20 percent), and nutritional counseling (20 percent).

At the same time, the survey noted a decrease in the last five years in financial and compensation benefits such as dependent care flexible spending accounts, undergraduate tuition assistance, and executive incentive bonus plans.

The survey also found the following:

  • The most commonly offered benefits were paid holidays (96 percent), dental insurance and prescription drug programs (both 95 percent), organization-provided break room/kitchenette (91 percent), and traditional 401(k) or similar defined contribution retirement savings plan (89 percent).
  • The shift to defined contribution retirement savings plans and Roth 401(k) savings plans continued in 2014, with only 24 percent of organizations reporting that they now offer defined benefit pension plans that are open to all employees.
  • The most commonly offered women’s health benefit is contraceptive coverage (84 percent).
  • Fifty-nine percent of organizations offered some form of telecommuting: 54 percent of respondents reported that their organizations offered telecommuting on an ad-hoc basis, 29 percent part of the time, and 20 percent on a full-time basis.
  • Fewer organizations are offering undergraduate tuition assistance (54 percent), compared to 2010 (62 percent). Additionally, fewer organizations are offering graduate tuition assistance (50 percent) compared to 2013 (59 percent).
  • The three family-friendly benefits that have decreased over the last year were domestic partner benefits for same-sex and opposite-sex partners and adoption assistance.

The survey contains responses from 510 HR professionals and examines 300 benefits. For more information, visit http://www.shrm.org.

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