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

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave