STUDY OF EMPLOYEE BENEFITS: 2006 & BEYOND - Prudential

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