The evolution of employee benefits programs has had a decisive impact on employers and insurance carriers, and some clear trends are emerging. One relates to the arrival of public exchanges and guaranteed issue; employers have the option of transitioning their dependent coverage strategy, as those dependents can now find coverage on the exchanges. In fact, analysis of data from our bswift client base quantifies the decline in the percentage of “employee plus family” premiums paid for by employers. They are likely to maintain their funding rates for “employee only” coverage, while reevaluating the employee equity and recruiting tradeoffs of subsidizing dependent health coverage.
Another trend revealing a shift in thinking about benefits programs is that some employers — approximately 14% according to bswift research — are considering a defined contribution funding approach as part of their benefits strategies. There are clear advantages to this system: With persistently high health care costs, defined contribution gives CFOs the ability to budget benefits well into the future, and for those involved in benefits administration, it provides a relatively straightforward solution. Defined contribution for health and welfare benefits has received a lot of attention from brokers but, as with most innovations, has been implemented by only a small number of early adopter employers.
bswift has made significant changes to its benefits program. CEO Rich Gallun notes, “We’ve implemented a comprehensive defined contribution solution this year, where the amount of the contribution is based on the wellness of the employee.” Health and welfare benefits remain a key factor in recruiting and retaining employees in a challenging talent market for top technology and service professionals. Defined contribution coupled with wellness incentives represent the optimal path to balance recruiting needs with cost pressures.