U.S. employers maintaining health benefits, considering other cost-cutting measures: survey
U.S. employers are planning to maintain core health benefits but are exploring other changes to preserve jobs and manage expenses, according to new a new survey by Arthur J. Gallagher & Co.
The survey, which looked at data from nearly 4,000 employers over several months, found close to half have planned salary freezes for management and executives (43 per cent) and non-management personnel (42 per cent) in order to preserve jobs in 2021.
Following the outbreak of the coronavirus, 83 per cent of employers said they strongly emphasized specific benefits within their total well-being package, including emotional well-being supports (65 per cent), leave policies (47 per cent), medical benefits (39 per cent) and physical well-being benefits (36 per cent).
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However, the pandemic hasn’t forced employers to make mid-year adjustments to coverage, with 86 per cent of employers saying they hadn’t reduced health benefits and didn’t plan to during the crisis. More than two-thirds (79 per cent) said they expect to continue the same health coverage into 2021.
“Over the last decade, a tightening labour market led employers to offer a robust holistic rewards strategy to win the war for talent, but the pandemic has forced decision-makers to closely examine their benefits and compensation strategies,” said William Ziebell, chief executive officer of Gallagher’s benefits and human resources consulting division, in a press release. “Employers are reviewing their benefits offerings to make sure they address employees’ evolving needs and, at the same time, fit within their organizations’ budgets.”
The survey also found employers are continuing to see the high cost of medical services (67 per cent) and specialty drugs (41 per cent) as their biggest cost-management concerns. Gallagher speculated those challenges, along with pandemic-related concerns about higher operating costs and lower revenues, could force organizations to adjust their 2021 benefits and compensation offerings.
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Employers also expressed interest in re-evaluating less commonly used health-care tactics to reduce costs, such as plan eligibility audits (18 per cent) and claim audits (15 per cent), as well as value-generating tactics such as preferred provider networks (14 per cent) and integrated health and disability management programs (nine per cent).
Almost a third (31 per cent) of employers reported using at least one value-based option in their benefits plans, which rose to 58 per cent when looking specifically at large employers. Even before the pandemic, telemedicine was considered the top health-care cost-control tactic in 2020, with 59 per cent of employers saying they provide the service.
In July, 26 per cent of employers said they’d modified their paid-time-off policies, with a further 16 per cent contemplating the move. While just three per cent said they offer unlimited paid time off, Gallagher noted it could be a creative way to support organizational well-being and motivate employees, while eliminating the cost of cashing out any remaining balances during the paid-time-off period or at retirement.
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