Employers Shifting Health Benefits Costs to Employees

Trends and Tradeoffs in Employee Medical Benefits, a survey conducted by Corporate Synergies Group and the Financial Executive Research Foundation, found that in the past five years, a vast majority of companies surveyed (88%) increased employee cost-sharing, co-pays, and/or deductibles. One-fifth (21%) of companies even reduced or eliminated salary increases and/or bonuses for employees. Almost two-fifths of the respondents (38%) reduced health benefits.   

Only 9% have reduced non-medical benefits and only 2% have eliminated dependent coverage. While voluntary benefits are slowly catching on, only 4% of those surveyed have shifted from employer-paid policies to voluntary policies for medical coverage and only 3% have shifted to voluntary policies for non-medical benefits.  

According to a press release, 60% of respondents have switched to higher deductible plans in the last two fiscal years, while half (51%) of businesses currently offer a health savings account (HSA) to their employees. Financial executives see a number of advantages in offering HSAs, most often citing the tax deductible contributions (76%), allowing employees the flexibility to decide how to spend their medical dollars (62%), giving employees more control over individual health care decisions (60%) and the offsetting of high deductibles (58%).   

Among the companies that do not currently offer an HSA, 32% believe that they need more education about the benefits of HSAs, and 30% say their employees need more education about the advantages of HSAs. Nine percent of financial executives that do not offer HSAs believe that their employees think negatively about them.  

Many companies are also turning to cost reduction programs – 65% have offered wellness programs to their employees, such as weight loss programs, smoking cessation programs, on-site gyms, and/or nutritional seminars and services, 28% have offered disease management programs, and 15% have put a greater emphasis on claims profiling. Nonetheless, half (52%) of financial executives have not yet seen a return on their investment for these programs. Of the 35% of companies that have seen a return on investment for these programs, 42% said it took over two years to realize.   

Among the companies surveyed, 48% said final benefits decisions are made by the executive team or board of directors, and 44% said they’re made by HR. Senior financial executives are the final decision makers in 28% of companies.   

While 83% of respondents say that the final decisions have been made consistently by the same group at their organization, there does seem to be a slight shift to the executive team. Of those who said that the decision maker had changed in the last three years, almost half (44%) responded that the medical benefits decision was now led by the executive team. Yet, despite the finance department’s common role in employee benefits decisions, just 47% say they are very informed about their various options and feel comfortable making the decisions.