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The shift toward "employee-centric" benefits is increasingly emphasizing
consumer choice and consumer responsibility, as well as shifting risk from the
employer to the employee. This is seen most clearly with the growth of
voluntary employee-paid benefits beginning in the 1990s, the shift in
employer-sponsored retirement plans from defined benefit plans to defined
contribution plans, and the rise of consumer-driven health plans.
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Voluntary benefits represent various insurance and investment products made
available to employees as a "voluntary" option through an employer-sponsored
benefit plan. They were originally called payroll-deduction or salary savings
plans — names that reflected the mostly employee-pay-all nature of this
coverage.
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Today, more than half (52%) of U.S. employers with 10 or more employees
currently offer voluntary worksite benefits. The most common benefits offered
are cancer (29%), accident (24%), supplemental medical (20%) and short term
disability (20%) insurances.1
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Voluntary benefits represent a way to satisfy increasingly diverse employee
needs, control costs and shift risk from employer to employee.
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Larger employers are more likely to offer voluntary worksite benefits to
supplement their core benefits package, smaller businesses look to voluntary
worksite benefits as a way to offer an attractive benefits package without
reducing profits and to help with health costs.2
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In recent decades, there has been a movement away from traditional defined
benefit pension plans toward defined contribution retirement plans. Today there
are approximately 48,000 insured defined benefit plans compared to 170,000
plans 20 years ago.3
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As a result, there has been a proliferation of defined contribution retirement
plans such as 401(k) plans. Fifty-four percent of private-industry workers have
access to defined contribution plans; among those, 79% (on average) choose to
participate. This compares to only 22% of workers who have access to a defined
benefit plan at their place of employment.4
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Ninety-one percent of full-time employees in medium and large firms
participated in employment-based retirement plans in 1985; this dropped to 67%
in 2004.5
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Less than one-third of small-business employees have a retirement plan.
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A LIMRA 2005 Employee Benefits Study revealed that 34% of employees are not
saving anything toward retirement on an annual basis: this proportion
translates into more than 44 million employees who are not preparing themselves
for retirement.6
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One in five Americans nearing retirement lacks any type of a retirement fund at
all.7
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Consumer-driven health plans put the employee in charge of his or her own
health by shifting some of the costs and risks associated with healthcare to
him or her.
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In some cases a saving account — either a health reimbursement account (HRA) or
a health savings account (HSA) — can be offered to the employee. HRAs are
national accounts funded solely by the employer. HSAs are employee-owned and
can be funded by either the employer of the employee.
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A high-deductible health plan with a savings option is the most common example
of consumer-driven healthcare; however, just 7% of employers currently offer
these plans.8
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