04 Mar Study Shows Value of Benefits Begins to Erode for Employees
Originally posted February 27, 2014 on https://ifawebnews.com
While benefits remain a critical part of the overall employee experience, the perceived value of workplace benefits among employees who participate in both health and retirement plans is starting to erode, according to a new report by global insurance consultancy Mercer.
The trend was revealed in the latest edition of the Mercer Workplace Survey, a broadly cited study that measures attitudes and perceptions of benefit plan participants nationwide.
Mercer reports that despite the concern, the firm has identified ways to enhance both benefit delivery and choice, thereby improving employee perception of benefits.
With benefit coverage cost, reach and adequacy seeming to dominate U.S. news headlines, this drop in perceived value should be of major concern to employers, legislators, regulators and other concerned parties, Mercer suggests. The firm reports that a closer examination of the findings shows that the decreased value perception is being driven by concerns about rising out-of-pocket health costs. And, perhaps of most concern, workers under 50 years of age who say their benefits are “definitely worth it” in terms of what they pay out of pocket has dropped precipitously in just two years from 45% to 30%.
Even with these concerns, participants overall see benefits as critically important. In fact, 93% agree with the statement “my health benefits are as important as my salary,” while 86% disagree with the statement “my benefits don’t matter much to me.”
“Year after year, we find our survey respondents ranking benefits as one of the most important components of their employment value proposition,” said Kerry Donoghue, partner, health and benefits business leader for Mercer’s benefits administration business. “We feel strongly, however, that there are some areas of concern that plan sponsors must take into account as they evaluate and design their benefit plans, particularly as it relates to discontent about rising out-of-pocket expenses and an overall level of relative dissatisfaction among younger employees.”
“Out-of-pocket expenses for employees are likely to continue to rise,” said Beth Umland, director of research for Mercer’s Health and Benefits business. “We’re seeing more cost-shifting and rapid growth in high-deductible consumer-directed health plans as employers are asked to cover more employees under health reform. So it’s critical for sponsors to explicitly communicate the value of the overall benefits program they provide and consider offering educational resources and tools to help participants better manage their health care spending. Giving employees more choice can also help build perceived value.”
Mercer encourages plan sponsors to address the erosion in perceived benefits by designing and implementing benefit plans that are more relevant and customizable to the individual participant. A full array of plan options, such as consumer-directed health plans and private exchanges, can give plan sponsors and their participants potential savings and greater flexibility that more closely aligns with their personal situation and lifestyles.