By KATIE KUEHNER-HEBERT, a freelance writer based in San Diego with more than two decades of journalism experience and expertise in financial writing
SAN DIEGO---The recession coupled with the historic passage of federal
healthcare reform is dramatically changing the way companies are handling employee benefits, according to preliminary findings of a survey of employers, employees, insurance brokers and consultants by Prudential Group Insurance.
Companies are increasingly requiring their employees to make more of the decisions regarding their benefits and to assume greater financial responsibility, so say the study's early findings. Employers are also placing greater emphasis on worker productivity to contain healthcare costs.
Lori High, president of Prudential Group Insurance, and Jean Wiskowski, Prudential's vice president of analytics and marketing research, outlined some of the preliminary key findings at a session of the annual conference of the Disability Management
Employer Coalition, which took place in San Diego from Aug. 1 to 4.
Controlling healthcare costs has become the No. 1 employee benefits objective for companies: 70 percent of the survey's participants responded that controlling that cost was "highly important." As a result, benefits are increasingly becoming more "employee-driven"--meaning that employees will take on more decision-making and financial responsibility for their benefits.
"The pace of employee benefits cuts might slow once the economy recovers fully," High told conference attendees. "However, since we're facing an ambiguous economic climate, employers are anxious to continue cost-cutting. There's little chance that the industry will revert back to the paternalistic model. It appears as though the era of fully employer-paid benefits is close to its end."
Out of the plan sponsors who responded to the survey, 34 percent said their employees paid a "greater share" of their benefits costs in 2010, compared with 19 percent in Prudential's 2007 survey. That percentage is expected to rise to 53 percent by 2015.
However, the percentage of employers who are increasingly educating their employees about their company's benefits options dropped from 34 percent in 2007 to 28 percent in 2010.
"It's expected to recover somewhat by 2015, but it is not increasing at nearly the same proportion as is employee responsibility for their benefits," Wiskowski said.
Despite increased focus, only 29 percent of the plan sponsors said they are "highly successful" in achieving their cost-sharing goals.
Consequently, employers are increasingly using worker productivity to help control benefits costs. According to the survey, 49 percent of employers said this was an important objective.
"The rationale is, by helping employees stay healthy and actively at work, employers can keep healthcare costs down and productivity up," High said.
Survey respondents said they influenced worker productivity in a number of ways, including implementing wellness, preventative and work/life balance initiatives; return-to-work initiatives; and benefits integration initiatives.
According to the survey, 60 percent to 69 percent of workers said that maintaining a healthy lifestyle, reducing stress, improving their emotional well-being and achieving a better work/life balance was "highly important."
For employers responding to the survey, 38 percent said that wellness programs are an important benefit strategy today, and 57 percent predicted they would expand their use of the programs by 2015.
"This increased focus is in keeping with employee interests--and in line with worker productivity as a benefits cost-containment strategy," Wiskowski said.
Employers will view this strategy as a success if their return on investment improves, High said.
"They'll have to look for it over a long-term period, as their employee population gets healthier and then maintains their health," she said.
RETURN-TO-WORK AND INTEGRATION
Nearly two-thirds (62 percent) of the employers surveyed said they use return-to-work initiatives either to some extent or a great extent, and 66 percent reported that they were "highly successful" in achieving their desired cost savings by using such programs.
"Helping employees return to work makes them feel valued and secure in their jobs," High said. "It impacts other employees, too, because they think they'll get the same assistance. That in turn increases everyone's engagement and commitment to the company. Bottom line: productivity improves."
More than half (58 percent) of the employers surveyed are using benefits integration to some extent or a great extent. High said the real potential for integration is in conducting data analytics and predictive modeling, to further drive down costs while at the same time improving employee satisfaction.
Prudential will release the full results of its fifth annual study in October, as well as a second survey of employers only, titled "The Market for Integrated Health Care & Disability Management." Both studies were conducted online between March and May. Respondents were a representative cross-section of U.S. companies with at least 50 full-time employees.
August 5, 2010
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