Workers Value Employer Health Plans More Than Pensions

By Kathy Gurchiek

More than three-fourths of employees value their employer’s health plan more than retirement savings and want an easy-to-manage medical plan that gives them the freedom to select providers and limits their costs when they visit a doctor or get a prescription.

Those are among the results of an online survey of 1,619 U.S. workers at large employers that the National Business Group on Health released April 12, 2007.

“Employees greatly value their health benefits. This is probably the highest they’ve ever valued [them],” National Business Group on Health President Helen Darling said during a Washington, D.C., press conference.

Good overall benefits are as important, or more important, than other aspects of the job, such as the salary and work environment, workers said, with their health plan rated as the most important of their benefits.

If the employer had to reduce total compensation, few want that to result in reduced health benefit reductions.

Instead, nearly half (46 percent) prefer reducing salary increases, while slightly more than one-third (37 percent) would opt for reduced retirement benefits if a cut had to be made somewhere.

Not so important among health benefits, they said, is coverage of serious illnesses rather than routine costs; incentives for healthy behaviors; a plan that encourages using low-cost, high-quality providers; and some coverage for alternative medicine.

Know Your Workforce

Demographics play a role in what workers value in their employer-provided health plans, and employers should consider that when evaluating their health care benefits, Darling said.

“People who are at the lower end of the wage scale would prefer to have more [taken] out of their paycheck so they are protected at the time of service,” she said.

More than half of survey respondents said they would accept fewer plan choices in order to keep their premium costs low. Some minority groups, though, such as black and Hispanic employees, want to keep the premium cost low but are more likely to want a choice of plans, she noted.

One in seven people in the survey said they smoked cigarettes, and around 65 percent of everyone surveyed favor charging smokers a higher premium. Not surprisingly, mostly nonsmokers support this. Even the idea of giving a cost break to smokers who participate in a tobacco cessation program was met with scant approval, Darling noted.

Two-thirds described themselves as overweight (33 percent) or obese (30 percent). Not surprisingly, fewer people liked the idea of increasing the cost of health coverage for workers who are obese.

Forty percent of people who are obese like the idea of giving a cost break to obese employees who participate in a healthy weight program.

Employers are advised to tread gently and give workers a choice of whether to participate in health improvement programs.

“If we were to be too aggressive it would not fly. We need to be very thoughtful in what we do,” noted Harry Spencer, chairman of the board of the National Business Group on Health. “We want to make sure the programs are right and that they work.”

Other findings:

• About three in four employees prefer receiving health benefits through their employer. Even those who rated their current plan as fair or poor don’t want to purchase a plan on their own.

• About six in 10 are unwilling to reduce their health benefits to improve their retirement benefits, and vice versa.

• 57 percent are against treating the employer’s contribution to health plan premiums as taxable income; 14 percent had no opinion.

• 67 percent are generally happy with their health plan.

Those surveyed were covered by their employer’s health plan, worked for an employer with at least 2,500 employees at the time the survey was conducted in February 2007, and were decision makers in their household regarding health care.

The survey focused on large employers, Darling explained, because “most of the [health benefits] industry is driven by what large employers do, just because it’s a critical mass of people who work at it full time.”

What the Findings Mean for Employers

Employers, Darling said, “will want to factor in just how important health benefits are. They want to make sure when they look at the total package the value of the health benefits remains there and this is communicated effectively.

“The real age of the workforce you’re dealing with and the recruitment and retention challenges should be top of mind,” she pointed out.

If the workforce’s median age is 50, for example, “you want to be sure your benefits, most particularly your health coverage, is as robust as you can make it.”

Simplify your health plans and make them easy to choose and use, she added. Giving employees the option to select providers is “extremely important.”

When it comes to explaining changes to their health benefits, the workers happiest with their current plan prefer hearing from the internal company benefits expert; those least happy trust an independent broker or consultant most, and union members have higher trust in anyone other than the company expert.

Those with a union workforce, Darling said, need to work closely with the union stewards, leaders or representatives to communicate any changes.

When it comes to catastrophic coverage—not something highly valued by a large percentage—employers should emphasize the peace of mind it provides, Darling said.

“Even for high-income or high-middle-income [workers] … if you have a serious catastrophic illness and you don’t have really good protection, you will have major financial problems literally for the rest of your life.”

To support diversity, she said, “lean toward higher contributions and lower point-of-service cost, but also build in a choice.”

Kathy Gurchiek is associate editor for HR News. She can be reached at kgurchiek@shrm.org.