STUDY OF EMPLOYEE BENEFITS: 2006 & BEYOND - Prudential
STUDY OF EMPLOYEE BENEFITS: 2006 & BEYOND - Prudential
STUDY OF EMPLOYEE BENEFITS: 2006 & BEYOND - Prudential
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Benefits Matter<br />
Benefits Cost Sharing Expected to Double by 2010<br />
To maintain their current benefits offerings and coverage levels, more plan sponsors<br />
will reluctantly shift costs to employees over the next five years. In fact, twice as<br />
many employers expect to increase employee cost sharing by 2010. Among their<br />
top cost-sharing strategies are:<br />
■ Asking employees to shoulder a greater proportion of contributory benefits<br />
costs, and<br />
■ Offering more voluntary benefits, where the employee pays 100% of the cost<br />
While cost sharing is an important expense reduction strategy and is gaining<br />
momentum in the marketplace, it represents only a minority of all firms surveyed.<br />
New Cost-Reduction Solutions Emerging<br />
Innovative cost-reduction initiatives gaining popularity include consumer-driven health<br />
plans and integrated health and disability management. While these programs are<br />
still relatively new and unproven, many more plan sponsors expect to implement<br />
these programs in the next five years.<br />
In addition, plan sponsors may show greater interest in flexible plans, such as<br />
low-cost, employer-paid “starter” plans with basic levels of coverage that could<br />
be supplemented by employee-paid voluntary plans.<br />
Ultimately, giving employees greater education and incentives to be effective<br />
partners in managing the cost of their benefits will be critical to the success of<br />
these cost-reduction strategies.<br />
<strong>EMPLOYEE</strong> <strong>BENEFITS</strong> COST REDUCTION INITIATIVES<br />
Cost shift to employees<br />
via contributory benefits<br />
Implement consumerdirected<br />
health plan<br />
Offer wider array of<br />
voluntary benefits<br />
Integrate healthcare/<br />
disability management<br />
Doing in <strong>2006</strong> Plan to do by 2010<br />
19%<br />
37%<br />
24%<br />
41%<br />
16%<br />
31%<br />
19%<br />
34%<br />
Multiple Increase<br />
<strong>2006</strong>-2010<br />
+2.0X<br />
+1.7X<br />
+1.9X<br />
+1.8X<br />
8