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Managing health care costs tops employer concerns: Survey

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For the fourth consecutive year, managing the cost of providing health care to employees is the biggest challenge facing employers in today's corporate climate, according a survey of benefits and human resources executives.

The annual “Top Five Total Rewards Survey,” conducted by New York-based Deloitte Consulting L.L.P. and distributed to members of the Brookfield, Wis.-based International Society of Certified Employee Benefits Specialists, asked participants to identify the five benefits- and human resources-related challenges that most worry them for the coming year.

Managing health care costs, particularly in the wake of the health care reform law, was by far the most common response, with 75% of respondents selecting it as a priority risk.

While 78% of human resources and benefit managers surveyed said they did not expect the Patient Protection and Affordable Care Act to significantly affect staffing levels, the vast majority of respondents—about 85%—said they expect health care costs to rise in the next five years as a result of the law. Sixty-eight percent said they plan to re-evaluate their benefits strategy to offset the law's impacts.

To control costs, a growing number of respondents—70% in 2012 compared with 59% in 2011—said they are considering expanding their wellness offerings to encourage healthy lifestyles. At the same time, fewer executives—46% in 2012 compared with 62% in 2011—said they are planning to increase cost-shifting for employees as a means of reducing their companies' health care expenses, and less than 17% said they would consider rolling back benefit levels or plan options.

Respondents also revealed a rise in the level of concern over their companies' ability to attract and retain quality employees. Looking ahead three years, 25% of executives surveyed said attracting new talent and motivating and retaining employees likely would be their biggest challenge, compared with just 16% in the 2011 survey.

The survey indicated talent shortage concerns were highest among insurance and professional services firms.

“The survey exposes a widening gap between the dwindling supply of skilled workers in America and the growing demands of the modern workplace,” David Lusk, a principal at Deloitte Consulting and author of the report, said in a statement released Wednesday. “A key challenge ahead for employers will be working to help close this skills gap to maintain a competitive edge in the global marketplace.”

In addition to health care and staffing concerns, the survey examined other “total rewards” benefits, including employee retirement programs.

According to the results, 58% of employers surveyed are not planning to rework their retirement programs. A majority of those that are considering changes—largely to their defined contribution savings programs—said they would like to provide employees with better tools and training sessions for retirement planning.

Only 12% of HR and benefit managers said they are considering a pension freeze, down from 23% in 2011. The number of employers indicating they would look at reducing company contributions to their defined contribution plans also dropped by about half in 2012, to 8% from 18%.