EBRI Forum Highlights Benefit Challenges
August 4, 2014 | By Stephen Miller
Employee benefits have been transformed over the past 30 years. To examine the impact of these changes, the nonprofit Employee Benefit Research Institute (EBRI) recently conducted a policy forum in Washington, D.C., where panels of industry experts and thought leaders shared their insights on the evolution of employee benefits and the opportunities that lie ahead.
Among their observations included in the July 2014 EBRI Issue Brief, “Employee Benefits: Today, Tomorrow, and Yesterday,” are the following:
• Relative to the starting point of 1975, the year after enactment of the Employee Retirement Income Security Act (ERISA), total coverage and active participation of the employment-based benefits system has grown significantly—but the mix has changed dramatically. “Today, the private sector is heavily tilted toward defined contribution retirement plans, with a small and still-declining proportion of participants in defined benefit plans,” noted EBRI CEO and President Dallas Salisbury.
• A massive change has taken place over the last 30 years in terms of the types of health benefits offered by employers. “Thirty-five years ago, and more recently than that, we were talking about [health maintenance organizations]. Today we're talking about accountable care organizations and patient-centered medical homes. Thirty years ago or so, we were talking about cafeteria plans and managed competition, and today we're talking about consumer-driven health plans and private insurance exchanges,” said Paul Fronstin, director of EBRI’s health research education program.
• Nursing home and home health care costs are “the most important risk in terms of looking at families that seem to have enough money [but] end up running short of money in retirement,” observed EBRI Research Director Jack VanDerhei.
• There has been a shift, both on the retirement and health side, to push responsibility back to the individual. “I think employers are, in a sense, trapped by circumstance and essentially have little or no input as to where we're going,” in part due to the burdensome regulatory costs of offering employee benefits, said Howard Fluhr, chairman of the Segal Group, a benefits consultancy.
• Employers now favor voluntary platforms and defined contribution-type programs that allow them to have more cost control. “The problem,” said Larry Zimpleman, chairman of The Principal Financial Group, “is that left to their own decision-making, employees don't make the right choices, leaving us with a voluntary system where people are making really bad choices.”
• The increasing political focus on limiting tax preferences for private-sector health and retirement benefits “is probably the most negative thing that has happened [in benefits] in 35 years,” Zimpleman added.
• For Millennials, benefits are most valued when they come with advice, counseling and recommendations, as well as with a default choice that must be opted out of, rather than an open-ended opportunity to participate. “If Millennials are simply offered choices without direction, their reaction is, ‘You don't care about me. One of these must be better than the other, and you're not telling me which,’ ” said Neil Howe, a senior associate to the Center for Strategic and International Studies in Washington.
• Men and women who are employed are equally likely to provide elder care, said Ellen Galinsky, president of the Families and Work Institute. However, “men experience more work/family conflict than women when they take care of their elderly parents or relatives.”
• “There are some older people who think that benefits are tilted towards younger people—with maternity leave, with educational assistance aimed at early career, and [there is some] thinking that maybe there needs to be more of a tilt towards benefits for older people and the issues they face,” said Mathew Greenwald, president of Greenwald & Associates, a market research firm. “Workers’ needs are getting more complex, and employers will have to think about how they can achieve their overall objectives, especially with people demanding to stay in the workplace longer, by designing benefit packages that help them meet their needs,” he added.