Employers Increase Benefits that Improve Employee Health and Wellness

Over the last 5 years, benefits that reward employees for improving their health have jumped – a sign that organizations recognize that their employees value these benefits and are looking for ways to cut business costs. For example, the percentage of employers offering health and lifestyle coaching jumped from 33 percent in 2008 to 45 percent in 2012, and rewards or bonuses for completing a health and wellness program increased from 23 percent in 2008 to 35 percent in 2012. “Employers recognize that providing employees with the opportunity to improve their health can increase morale, confidence and productivity,” said Mark J. Schmit, vice president of research at the Society for Human Resource Management (SHRM). “Organizations continue to look for ways to manage costs as the economy slowly improves. Benefits that encourage healthier behavior are a cost effective way to keep up employee morale, while healthier employees also help decrease healthcare costs to employers and employees.” SHRM’s 2012 Employee Benefits Survey found that while most employee benefits stabilized this year, 73 percent of HR professionals reported that the economic downtown negatively impacted employee benefit offerings (11 percent to a large extent and 62 percent to some extent). This is more or less the same as in 2011, when 77 percent said the economy negatively affected benefits to some or a large extent.

Employee Benefits

Because of the economy and recent employment-related legislation, many employers have shifted to benefits that place primary responsibility and control to employees. For example, more employers offer defined contribution retirement-savings plans (92 percent) than defined benefit pension plans (21 percent) in 2012, putting the impetus on employees to manage their own retirement savings instead of relying on employer-provided pensions.

“By shifting primary responsibility in controlling certain healthcare and financial benefits, employers are recognizing a shift in workplace culture,” said Schmit. “The new plans allow employees have more control over how they save for retirement and manage their health, while reducing costs for employers. These plans are also more flexible, and thus more attractive, to employees who will likely not spend an entire career with one organization.”

Employer spending on benefits remained stable this year with organizations spending, on average, 19 percent of an employee’s annual salary on voluntary benefits, 18 percent on mandatory benefits and 10 percent on pay for time employees did not work.

Other study findings include:

• The five most common benefits in 2012 are: paid holidays (97 percent); prescription drug program coverage (97 percent); dental insurance (96 percent); defined contribution retirement savings plans (92 percent); and mail-order prescription programs (91 percent).
• Paid time off plans have become more popular: More than half of organizations (51 percent) provide paid time off plans, a combination of traditional vacation time, sick leave and personal days in one plan, up from 42 percent in 2009.  
• Domestic partner benefits: A third of employers (35 percent) offer health care coverage to same-sex domestic partners, and 32 percent offer it to opposite-sex domestic partners. Fifteen percent provide domestic partner benefits, not including health care coverage, for opposite-sex partners, and the same percent offer the benefit to same-sex partners.
• Health care premium discounts for healthier behavior are on the rise: Health care premiums discounts for getting annual health risk assessments rose from 11 percent in 2008 to 21 percent in 2012, while discounts for not using tobacco products increased to 20 percent this year from 8 percent in 2008.
• Pets at work: Six percent of organizations offer pet health insurance, 5 percent allow pets at work, 1 percent pay for pet care expenses while an employee is traveling for business, and 1 percent have a “Take Your Pet to Work” day.

The annual benefits survey asks HR respondents about their organizations’ employee benefits in 12 sections: business travel, employee programs and services, family-friendly, financial and compensation, flexible working, healthcare and welfare, housing and relocation, leave, preventive health and wellness, professional and career development, retirement savings and planning and other.