More than half of U.S. workers are worried their health care benefit costs will increase and the scope of their benefits will decrease over the next few years. Also, employers are underestimating the role that health care and retirement benefits play in retaining top employees, according to two forthcoming studies by Watson Wyatt Worldwide, a leading global human capital consulting firm.
The Watson Wyatt WorkUSA(TM) 2006 study found that 69 percent of workers are concerned their employer will increase out-of-pocket health care costs through higher deductibles and co-payments over the next three years. Additionally, 53 percent worry that their employer will reduce the scope of their health care benefits by limiting providers or items covered in the next two years. More than 12,000 workers across all job levels and in all major industries participated in the study.
ìNo employee wants to pay more for less, especially when it comes to their own health,î said Ilene Gochman, director of organization effectiveness at Watson Wyatt Worldwide. ìAs their concerns escalate, employees will increasingly consider health care benefits when deciding whether to stay with their current companies. And if the trend continues, these benefits could become a real differentiator as employers try to hold on to key talent.î According to the WorkUSA survey, two out of three employees said health care benefits are an important reason to stay with their company.
Meanwhile, Watson Wyattís 2006 Strategic Rewards study found that 22 percent of top-performing employees cite health care benefits as one of the top three reasons they leave a company. Employers, however, underestimate the importance of health care benefits in keeping employees. None of the employers surveyed think health care coverage is a key reason top-performing employees leave.
Concern over retirement benefits, too
The WorkUSA study shows that employees are also concerned about retirement benefits, although to a lesser degree. Forty-three percent of employees are concerned their company will reduce pension, retirement or retiree medical benefits in the next three years, while 30 percent of employees covered by a defined benefit pension plan are concerned their company will freeze or terminate their plan over the same time. Meanwhile, the Strategic Rewards study shows that only 2 percent of employers believe that top performers would consider leaving over retirement benefits, much lower than the 17 percent of top employees who cited retirement benefits as a main reason for leaving.
ìItís not surprising that employees are concerned about benefits reductions, given the changing relationship between employers and employees,î said Laury Sejen, director of strategic rewards at Watson Wyatt. ìEmployers can help ease those concerns by explaining the competitive pressures they face in the marketplace and associated trade-offs in reward programs. By clearly communicating their total rewards strategy, management can pave the way to better employee understanding of their total package and acceptance of any benefit changes that need to be made.î
The Watson Wyatt 2006 WorkUSA and 2006 Strategic Rewards surveys will be available in October.
Most workers fear higher costs, reductions in health benefits, Watson Wyatt Survey finds
Employers Underestimate Possible Retention Risk Relating to Health, Retirement Benefits
