Costs Up, Benefits Down in 2003

June 23, 2003 (PLANSPONSOR.com) - Benefit costs are up, and most employers are cutting back on most, but not all, benefit programs.

Nearly all (92%) of the 584 human resource professionals surveyed experienced an increase in their organization’s health-care costs in the 2003 plan year, according to the Society for Human Resource Management’s (SHRM) newly-released 2003 Benefits Survey. Those increases averaged an 18% cost increase for employers, and a 13% increase in costs for workers.

Of potentially greater concern to workers: Nearly a quarter of those organizations that experienced an increase in costs have decreased other benefits, according to SHRM.

Down Coverage

HMO coverage dropped to 54% from 59%, according to the report, while employer-funded health reimbursement accounts dropped to 20% from 28%, and exclusive provider organization coverage fell to just 9% from 14% a year ago.

Well baby programs fell to 42 from 57 percent, while prenatal programs fell to 27 percent from 44.

Prescription drug coverage rose to 98 percent from 95 percent.

On the other hand, cancer insurance is now offered by 28% of the survey respondents compared with 21% a year ago, while, according to the report, slight increases were also seen for:

  • smoking cessation programs,
  • fitness center subsidy programs,
  • weight loss programs,
  • grief recovery programs, and
  • experimental drug coverage programs.

Other Cuts

Non-health-care benefits have declined as well. For example, the SHRM survey notes that new hire referral bonuses, executive and non-executive sign on bonuses, and stock options have all decreased for 2003. Additionally, matching charitable contributions and spot bonuses each dropped 10%, while stock purchase plans fell 8% in 2003. Additionally:

  • flextime is now offered by 55% compared with 64% that offered the benefit in 2002
  • professional memberships, while still common, dropped to 85% from 89%
  • just 26% now offered food services or subsidized cafeterias, compared with 29% a year ago
  • career counseling programs dropped to 24% from 29%
  • executive club memberships are down to 22% from 33%
  • travel-planning services dropped to 20% from 27%

Dry cleaning services, concierge services, employer-sponsored personal shopping discounts, and massage therapy services also saw slight decreases from 2002, while organized, sponsored sports teams fell to 32% from 39% in last year’s survey.

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