The one benefit employers won't touch

Companies are cutting back on every conceivable employee benefit – except medical coverage for dependents
AUG 22, 2011
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.

Latest News

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

Despite high marks on satisfaction, client acquisition a struggle for advisors
Despite high marks on satisfaction, client acquisition a struggle for advisors

With a majority find getting new clients a challenge, report suggests fee transparency as a way to foster trust among the unadvised.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.