Typical small and midsize U.S. employers seem to be doing what they can to keep existing benefit plans in place.
Kara Hoogensen, senior vice president for specialty benefits at Principal Financial Group Inc., gave that assessment of the benefits market in a recent interview.
The COVID-19 has led to massive economic disruption and an increase in unemployment levels since March, but most of the small and midsize employers that offered substantial benefits before the pandemic say they’re continuing to offer similar benefits packages, Hoogensen said.
“It’s wonderful to see that small businesses are so focused on taking care of their employees,” Hoogensen said.
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Employees at small and midsize employers “are more than employees,” Hoogensen said. “They’re families.”
Hoogensen based her assessment both on what she’s seeing at Principal and on the results of an online employer survey. Dynata helped Principal get survey responses from 511 employers that offer either health insurance or retirement plans as employee benefits.
About 20% of the employers participating in the survey had 2 to 19 employees, 20% had 20 to 59 employees, 20% had 50 to 499 employees, and 40% had 500 or more employees.
Principal found that 89% of the participating employers intend to maintain or improve their health benefits.
Financial professionals hoping to sell individual products to employees affected by benefits cuts might find typical prospects benefiting from similar levels of stability in connection with other types of benefits.
The percentage of employers saying they want to maintain or improve benefits was 90% for life insurance benefits, 88% for disability insurance benefits and 87% for retirement benefits.
The benefit with the weakest level of employer enthusiasm was vacation time: Just 82% of the participating employers said they intend to maintain or add vacation time, and 18% said they might take away vacation days.
Hoogensen said she has seen strong employer interest in providing mental health support for the employees affected by COVID-19, and by COVID-19-related social distancing rules.
She reported seeing some employers using premium payment extensions early on, but no surge in requests for additional extensions.
Instead, Hoogensen said, employers are keeping their benefits plans in force, not letting coverage lapse.
“Our lapse rates are very strong,” Hoogensen said.
— Read More 401(k) Plans Are Liberalizing Rules Than Cutting Benefits: Survey, on ThinkAdvisor.