Rising Health Care Costs Force Employers
to Cut Some Non-Essential Benefits
Health Care Benefits Cuts: As a result of the weak economy and health care costs that continue to rise, employers are tightening their belts and reducing some benefits, according to this recent benefits survey.
SHRM Releases Its 2003 Survey of Employer Benefits
As a result of the weak economy and health care costs that continue to rise, employers are tightening their belts and reducing some benefits, according to results from the Society for Human Resource Management’s (SHRM) newly-released 2003 Benefits Survey. The survey of 584 HR professionals covered 193 benefits offered by employers and tracked trends over the past five years.
“Although organizations are feeling the pinch of a weak economy, there is an ever-present desire to maintain benefit packages as an important component of recruiting and retaining valued employees,” said SHRM Vice President of Knowledge Development, Debra Cohen, PhD, SPHR. “Organizations want to be employers of choice and compete for the best pool of employees. Human resource professionals have worked with their CEOs to create benefit packages that tailor to their employees needs and differentiate their organizations as exceptional places to work while maintaining the sound fiscal guidelines demanded by successful organizations.”
Nearly all respondents (92 percent) indicated that their organization’s health care costs increased for the 2003 plan year resulting in an 18 percent cost increase for employers and a 13 percent cost increase for employees. Nearly one quarter of those organizations that experienced an increase in costs have decreased other benefits.
Some health care benefits declined in 2003 from 2002 while others actually increased.
- HMO coverage dropped to 54 from 59 percent, employer-funded health reimbursement accounts dropped to 20 percent from 28 percent, and exclusive provider organization coverage fell to nine percent from 14 percent.
- Well baby programs fell to 42 from 57 percent, while prenatal programs fell to 27 percent from 44.
- Prescription drug coverage rose to 98 percent from 95 percent.
- Cancer insurance is offered by 28 percent this year compared to 21 percent last year.
- Slight increases were also seen for smoking cessation programs, fitness center subsidy programs, weight loss programs, grief recovery programs, and experimental drug coverage programs.
Some non-health care benefits have decreased this year.
- New hire referral bonuses, executive and non-executive sign on bonuses, and stock options have all decreased for 2003.
- Matching charitable contributions and spot bonuses each dropped ten percent, while stock purchase plans fell eight percent this year.
- Flextime is offered by 55 percent down from 64 percent in 2002.
Professional memberships dropped to 85 from 89 percent. - Organized sponsored sports teams fell to 32 percent from 39 percent.
- Food services or subsidized cafeteria fell to 26 percent from 29 percent.
- Career counseling programs dropped to 24 percent from 29 percent.
- Executive club memberships are down to 22 percent from 33 percent.
- Travel-planning services dropped to 20 percent from 27 percent.
- Dry cleaning services, concierge services, employer-sponsored personal shopping discounts and massage therapy services also saw slight decreases from 2002.
The SHRM Benefits Survey offers a comprehensive look at what benefits are being offered by organizations. Information is provided on health care benefits, family-friendly benefits, housing benefits, personal service benefits, financial benefits, travel benefits and leave benefits.
The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Visit SHRM Online at www.shrm.org.