Health Care Costs | Employee Benefits

ADP Research Institute®

Talent Management Challenge: Shifting Health Care Costs to Employees Comes With Potential Risks

This insight is from: "Why You Should Care About Wellness Programs"



Containing rising health care costs is a business imperative for today’s employers. In our recent survey of midsized (50-999 employees) and large (1,000+ employees) companies, the vast majority of HR/benefits decision makers cited controlling health care costs as a medium or top priority. But what strategies are they employing to accomplish this goal? The overwhelming majority of employers we surveyed have asked employees to share or increase their share of health insurance costs. While this cost-sharing arrangement has reduced health care costs for employers, it appears to be having a negative impact on employee morale, job satisfaction, and less directly, retention.

The Power of Wellness Programs:  Fact or Fiction in an Uncertain Future of Escalating Health Care Costs

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As Employees’ Share of Health care Costs Goes Up, Job Satisfaction Goes Down

The 2010 MetLife Study of Employee Benefits Trends showed that employee loyalty had declined year over year, and was, at the time of the study, at a three-year low. The MetLife study also revealed that one in three employees is a flight risk. What does this have to do with health care benefits? Our survey findings suggest there may be a link. Many of the HR/benefit decision makers we surveyed indicate that shifting health care costs to employees has had a negative impact on morale and job satisfaction. This is not surprising given that benefits cost-sharing hits employees where it hurts the most - in the paycheck.

Benefits Costs and Employee Retention: Will They Stay or Will They Go?

Will shifting health care costs to employees drive them away? Our survey results reveal that employers don’t think so, or at least they don’t believe employees will leave in large numbers. However, in the MetLife study, more than half of the employees surveyed indicated that employee benefits are an important reason why they stay with their current employer. What’s the take-away from these seemingly contrasting findings? It’s probably safe to say that employers should be mindful of the importance employees place on employee benefits and factor this into HR strategies moving forward.

Health Care Benefits Cost-Sharing Summary

In summary, many employers are asking employees to share or increase their share of health care insurance costs in order to offset the rising cost of providing health care benefits. More than a third of HR/benefits decision makers we surveyed think that employee benefits cost-sharing has had a negative impact on employee morale and job satisfaction. Employers don’t think it will influence retention rates in a significant way, but given the importance that employees place on benefit costs, they shouldn’t disregard a possible connection.

*A complete list of sources and citations can be found in the full report.

- 60% of employees stay with employers because of their benefits package. Source: MetLife 8th Annual Study of Employee Benefits Trends, 2010.

About This Report: Report data and conclusions are based on a recent HR/Benefits Pulse Survey conducted by the ADP Research Institute, a specialized group within ADP that provides insights for leaders in both the private and public sectors around issues of human capital management, employment trends and workforce strategy. See full report for details on research methodology.

Keywords: Talent Management

Business Types: Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

Wellness

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