The one benefit employers won't touch

As businesses struggle to recover from the recession, they are cutting back on employee benefits – except for ‘third-rail' benefits that most don't dare touch. That's according to a survey of around 156 business executives conducted in February through May by benefits consulting firm Corporate Synergies Group and the Financial Executive Research Foundation. Executives reported that they are increasing the employee's share of the cost for several components of their benefits packages and cutting back others. The reason? What else – concern over rising costs. The shifting of the benefits burden over the last five years includes increased co-pays and/or deductibles (88%), high-deductible plans or health savings accounts (42%), and reduced coverage levels (38%). Dependent coverage, however, is the big untouchable. Indeed, only 2% of employers said they had dared to tread there, even as 21% said they have reduced or eliminated salary increases and/or bonuses for employees in order to continue offering medical coverage as costs continue to surge. Employers were a bit more willing to cut back on non-medical employee benefits, with 9% saying they had done that. Not surprisingly, employers are attempting to match the benefits their competitors offer in order to retain their best employees, the executives said. But the report added that “most are looking to cut where their competitors are cutting as well.” Self-insuring remains popular, particularly with larger firms. Among firms with more than 500 employees, 79% said they provide medical benefits through self-insurance. Almost half of the surveyed companies self-insure, and 8% have moved to self-insurance within the past five years. Employees are doing their best to cope with their rising share of the cost of insurance. The most popular route is to move to a higher deductible plan (60%), while only 11% dropped their dependents from coverage.