Employers Committed to Active Employee Health Benefits for 2010

by Clive Riddle, March 9, 2009

Are employers going to shed health benefits from their employee compensation packages as the recession deepens? Last week, Hewitt Associates released results from a January 2009 employer survey, in their report: Survey Findings: Challenges for Health Care in Uncertain Times 2009.

Commenting on the survey results, Jim Winkler, Hewitt’s head of Health Management Consulting, said "in today's environment, employers are under pressure to cut health care expenses, but they realize that short term cost management tactics do not address the underlying drivers of health care cost. This leaves them with two options: making a long-term commitment to improving the health of employees and their families, or exiting health care altogether. Most companies believe that investing in the long-term health of their population is the most effective way to mitigate costs and create a more productive and engaged workforce."

However, in keeping with survey results and company headlines, Hewitt found retiree health benefits are not as sacred. While less than 1% of the 340 large employers surveyed plan to eliminate health benefits for their active populations, 13% indicated plans to eliminate benefits for their retirees next year.

Furthermore, while employers thus remain committed to offering benefits to actives, they intend to make a number of reductions and adjustments in order to cope with the economic downturn. Hewitt found that:

• 49% intend to reduce the number ofplans and options offered
• 65% plan on increasing the level of employee cost sharing with insurance premiums
• 30% intend to reduce, and 6% eliminate incentive programs; while 24% will reduce and 2% eliminate wellness programs, often just recently put in place
• Another 26% plan on reducing retiree health benefits, in addition to the 13% who will eliminate them
• 13% will reduce, and 6% eliminate health benefits for part time employees

On the other hand, despite the downturn, many employers are looking to enhance certain programs and initiatives for 2010:

• 40% will increase consumer driven plan offerings
• 33% will increase wellness programs
• 20% will increase incentive programs
• 13% will increase their overall health benefits package

Because the impact of the recession didn’t hit until the 2009 benefit year was already put into place, whatever employers are going to change as a result of the recession, their changes are coming in 2010 versus having already implemented them in 2009.