Employers Adjust Benefits, Emphasizing Health Care

By Stephen Miller, CEBS Jun 25, 2014

Two opposing forces—a strong demand for benefits and their rising cost—underlie trends uncovered in the Society for Human Resource Management’s 2014 Employee Benefits research report, released June 24 at SHRM Annual Conference & Exposition.

In February 2014, SHRM conducted its annual survey to gather information on the types of benefits employers offer to their employees. The results showed that the need to maintain key benefits in areas where costs are rising rapidly may mean fewer resources to invest in benefits that are in less demand.

“This need to counterbalance may be the main reason the latest findings demonstrated an increase in the percentages of organizations offering several types of health care and wellness benefits, yet a decrease in many other categories of employee benefits,” commented Evren Esen, SHRM’s director of survey research.​

The survey revealed the following developments:

Health and welfare
Five-year trends show an increase in the percentage of organizations offering mental health care coverage, contraception coverage, vision insurance, and coverage for bariatric and laser vision surgery.

The shifting of health care costs to employees is most likely behind the 12 percentage point increase from 2010 to 2014 in organizations offering health savings accounts (HSAs), and the 17 percentage point increase in organizations contributing to employee HSAs.

Meanwhile, there were notable declines in the percentage of organizations offering retiree health care coverage and employer-funded health reimbursement arrangements.

Health Savings Accounts (by Year)






Employers offering HSAs






Employers contributing to HSAs






Source: SHRM’s 2014 Employee Benefits research report.

Preventive health and wellness
The past five years saw increases in the percentage of organizations offering employees:

Health and lifestyle coaching.

Preventive programs specifically targeting employees with chronic health conditions.

Rewards or bonuses for completing certain health and wellness programs.

Health care premium discounts for getting an annual health risk assessment.

Health care premium discounts for not using tobacco products.

Health care premium discounts for participating in a wellness program.

Retirement savings and planning
The shift to 401(k)-style defined contribution plans and Roth 401(k) options continues, with only 24 percent of organizations now offering defined benefit pension plans that are open to all employees.

Financial benefits
Between 2010 and 2014, fewer organizations offered dependent care flexible spending accounts, undergraduate educational assistance, incentive bonus plans for executives and 529 college savings plans. Between 2013 and 2014, there was a decline in the percentage of organizations offering graduate educational assistance. The only financial benefit that increased was the use of spot bonuses/awards.

“The decline in educational assistance benefits comes just when many organizations are reporting increased difficulty in finding job seekers with the educational qualifications needed for many high-skilled jobs,” Esen said. “While many organizations are apprehensive about future skills shortages, this concern has not yet translated into greater investments in benefits related to employee professional and career development.”

Gauging value

Benefits programs must be regularly assessed to make sure that employees understand the value of their benefits packages and that the organization is remaining competitive in the marketplace, according to SHRM’s researchers. “The use of benchmarking tools, benefits needs assessments and employee surveys may become even more widespread as technology helps make them more accessible and cost-effective,” Esen noted.

Trending Upward:

Health coaches.
Smoking cessation programs.
Insurance premium discounts for participating in health-risk assessments.

Trending Downward:

Undergraduate tuition benefits.
Long-term care insurance.
Car subsidies for business use of personal vehicles.

​The report was sponsored by Colonial Life.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller. ​

Also see:

Which Office Perks Are In, and Out, Washington Post, June 2014

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