Health Costs Top 'Benefit Priorities' List

February 17, 2004 (PLANSPONSOR.com) - More than 85% of employers say wrangling in the cost of health benefits should be a top priority, with 32% looking to consumer-driven health benefits as a possible vehicle to this end.

Thus for the fifth consecutive year, controlling health care benefit costs topped the annual “Top Five Benefit Priorities” survey conducted by the International Society of Certified Employee Benefit Specialists (ISCEBS) and the Human Capital practice of Deloitte Consulting LLP. The tenth installment of the study was the first year that consumerism in plan design and consumer-driven health care models have made the list of top five priorities.

“It will be interesting to track this perspective over the next several years to see if these concerns shift in response to the adoption by many organizations of the consumer-driven health care models which, similar to defined contribution plans, places greater personal and financial responsibility for health care with the employee,” Joseph Kelly, principal and national service line leader of Total Rewards within Deloitte Consulting’s Human Capital practice said in a news release.

Promoting increased employee consumerism via plan design for health and welfare plans and expanding the use of self-service technology for communications and/or administration virtually tied for second place on the list, with the remaining top priorities, each garnering about 26% of responses:

  • consideration toward adding or moving to a consumer-driven health care model
  • providing financial/retirement planning tools and information
  • providing increased investment education
  • evaluate/implement/expand the use of Internet/intranet applications.

At the other end of the urgency spectrum, the following possible priorities received either no votes, or were identified as a priority by less than one percent of the survey base:

  • evaluate the adoption of an early retirement window to facilitate staffreduction
  • evaluate/implement equity offerings other than stock options
  • evaluate/modify existing stock option program
  • create a structure for global rewards coordination

Employee Voice

However, the employer’s view diverged from that of the employees, who saw retirement as a top priority. This as the ISCEBS members were asked to remove their employer hats and identify their top five priorities for 2004 from an employee perspective. In ranking benefit priorities from an employee’s perspective, 66% cited evaluating the adequacy of the current level of retirement savings as the top priority. This was followed by:

  • evaluating current investment options (62%)
  • learning more about health risks and how to control them (48%)
  • identifying additional ways to save for retirement (43%)
  • better management of health costs (41%).

“It is notable that the employee perspective places a higher emphasis on preparing for retirement than the rising cost of health care,” says Coffey. “This may be good news for employers, because they generally can have a greater impact on helping employees with retirement planning than they can on controlling health care costs, at least in the short run.”

Deloitte Consulting and the ISCEBS electronically surveyed more than 3,000 employee benefits specialists throughout all regions of the United States during the fall of 2003. Survey participants were asked to respond both as professionals and as employees.

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