Employer views on the role of voluntary benefits may be in for a change.
Traditionally, the primary reason employers offer employee benefits has been to attract and retain talent. Therefore, the decision to offer benefits–and to subsidize them–is, at least in part, a business decision. But employers also offer benefits because they think it is the right thing to do for their employees.
Nearly 75% of employers surveyed by LIMRA believe that employers should provide employees with a comprehensive benefits package for which the employer pays some, or all, of the premium. Just one quarter think all benefits should be selected and paid for by the employee, based on individual needs.
But what happens when employers’ philosophical beliefs run into some practical financial roadblocks?
Research, buttressed by rising benefits costs, suggests employers understand they will have to shift more of the responsibility to employees. In fact, 60% of the surveyed employers agree with the idea that “employees need to take more responsibility when it comes to employee benefits.”
Employers have already shifted much of the responsibility for benefits to employees in the form of costs. The majority of employers surveyed say the bulk of benefits are “contributory” or partially employer paid, with employees responsible for paying part of the cost. Depending on the benefit, only 20% to 45% of employers indicate they pay full freight for many of the traditional, “core” benefits (see Figure 1). Just a fraction say they are not contributing a penny to the annual premium of any offered benefits.
Most cost-shifting is occurring between contributory and voluntary benefits, according to research LIMRA published last year. By comparison, in years past, most cost-shifting was between non-contributory (100% employer-paid) and contributory benefits.
Thus, in practice, employers are moving more benefits towards voluntary, employee-pay-all benefits.
However, many employers do not necessarily recognize that shift–yet.