STUDY OF EMPLOYEE BENEFITS: 2006 & BEYOND - Prudential

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Benefits Matter Benefits Cost Sharing Expected to Double by 2010 To maintain their current benefits offerings and coverage levels, more plan sponsors will reluctantly shift costs to employees over the next five years. In fact, twice as many employers expect to increase employee cost sharing by 2010. Among their top cost-sharing strategies are: ■ Asking employees to shoulder a greater proportion of contributory benefits costs, and ■ Offering more voluntary benefits, where the employee pays 100% of the cost While cost sharing is an important expense reduction strategy and is gaining momentum in the marketplace, it represents only a minority of all firms surveyed. New Cost-Reduction Solutions Emerging Innovative cost-reduction initiatives gaining popularity include consumer-driven health plans and integrated health and disability management. While these programs are still relatively new and unproven, many more plan sponsors expect to implement these programs in the next five years. In addition, plan sponsors may show greater interest in flexible plans, such as low-cost, employer-paid “starter” plans with basic levels of coverage that could be supplemented by employee-paid voluntary plans. Ultimately, giving employees greater education and incentives to be effective partners in managing the cost of their benefits will be critical to the success of these cost-reduction strategies. EMPLOYEE BENEFITS COST REDUCTION INITIATIVES Cost shift to employees via contributory benefits Implement consumerdirected health plan Offer wider array of voluntary benefits Integrate healthcare/ disability management Doing in 2006 Plan to do by 2010 19% 37% 24% 41% 16% 31% 19% 34% Multiple Increase 2006-2010 +2.0X +1.7X +1.9X +1.8X 8
Benefits Decision Making Is Increasingly Complex with More Constituencies Having a Voice The primary benefits decision makers remain the CEO/president/owner (especially in firms with less than 100 employees), and other traditional sources of influence, such as human resources and the benefits department. Since benefits costs represent a significant portion of corporate expenses and employee compensation, the decision process has become more critical and more complex, particularly for larger firms. As a result, finance along with risk management and procurement functions are playing a larger role in helping organizations evaluate and negotiate for the most cost-effective benefits solutions. Build It and They Will Come To ensure benefits are achieving the desired result and satisfying employee needs, more companies are also soliciting employee input in deciding not only which benefits to offer, but which providers employees have confidence using. As benefit choices become more complex for employees, and employees shoulder more of the expense, benefit providers must be able to meet their needs for information, responsiveness, and trust. External guidance from benefits brokers/consultants and insurance carriers remains strong as these experts are called upon to help build the right solutions. STRONG INFLUENCERS ON EMPLOYEE BENEFIT DECISIONS 2006 2010 Traditional Influencers New Influencers Important Outside Influencers 15% 15% 24% 28% 21% 24% 25% 27% 63% 63% 25% 27% 47% 48% 45% 46% 40% 40% CEO/ President/ Owner Finance Human Resources Employee Benefits Area Company's Employees Risk Management Procurement Benefits Broker/ Consultant Insurance Company Rep/Agent 9
Page 1 and 2: PRUDENTIAL’S GROUP INSURANCE STUD
Page 3 and 4: Welcome The cost of employee benefi
Page 5 and 6: Methodology This study surveyed a b
Page 7 and 8: Benefits Matter Eight in Ten Plan S
Page 9: Commitment to Benefits Spans Most C
Page 13 and 14: The Gap Among Top Financial Concern
Page 15 and 16: Voluntary Benefits on the Rise, But
Page 17 and 18: Most Plan Sponsors Do Not Require C
Page 19 and 20: Plan Sponsors and Participants Are
Page 21 and 22: Employee Concerns Extend Beyond Fin
Page 23 and 24: Interest in Lifestyle Benefits Vari
Page 25 and 26: Positive Online Outlook Online Tool
Page 27 and 28: Web Technology is Empowering Employ
Page 29 and 30: Plan Sponsors Want Enhanced Perform
Page 31 and 32: Criteria for Progressive Plan Spons
Page 33 and 34: Progressives Are More In Sync with
Page 35 and 36: Progressives Also Outpace Other Com
Page 37: Progressive Employers Value Persona
Page 40 and 41: Summary of Key Findings Theme One:
Page 42: About Prudential Financial Currentl

STUDY OF EMPLOYEE BENEFITS: 2006 & BEYOND - Prudential

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