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Benefits at a crossroads

Rising benefits costs are forcing employers to make difficult trade-offs

By Jenny Ivy | Updated on July 05, 2011

A recent study by Corporate Synergies Group, a benefits broker and consulting firm, finds that while 54 percent of senior financial executives said that keeping their employees’ medical benefits costs to a minimum was important, many companies are forced to make tough decisions, including reducing workers’ disposable income in order to maintain benefit levels.

In the past five years, a vast majority of companies surveyed (88 percent) increased employee cost-sharing, co-pays, and/or deductibles. One-fifth (21 percent) of companies even reduced or eliminated salary increases and/or bonuses for employees. Almost two-fifths of the respondents (38 percent) took a different tack – they reduced health benefits.

“Financial executives are clearly faced with tough financial trade-offs as they remain committed to offering medical coverage to their employees. Yet in aggregate, these decisions – increased employee cost-sharing, higher deductible plans, reduced employee raises and bonuses – can mean significantly less disposable income for employees. Often these decisions are made in the short-term by slightly tweaking plans year over year, but it’s important that financial executives look at the big picture and realistically consider, and communicate, the long-term implications to their employees,” says John Turner, President and CEO, Corporate Synergies Group.

Some Benefits are Sacrosanct — For Now

According to Corporate Synergies Group, it’s clear that there are some benefits items that most senior financial executives haven’t yet considered “on the table.”

For example, only 9 percent have reduced non-medical benefits and only two percent have eliminated dependent coverage.

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