Public sector employers focused on stability in benefits
Working as a teacher or as a local government public official may not be the most high-paying of jobs, and as such, employees rely on the benefits included with working as a public servant.
To assist in identifying the benefit trends in the public sector, MetLife recently released findings from its 14th Annual U.S. Employee Benefit Trend Study, detailing top trends for public education, state and local government employers.
Also see: “Hospital indemnity programs expand options.”
How changes in the market are affecting participants
While almost half of public education employers — 47% of kindergarten through grade 12 and 42% in higher education — are focused on stability in the coming year, mirroring a trend among all employers, this is exacerbated in state and local governments, with an even larger percentage, 65%, focused on creating stability amidst change.
Randy Stram, senior vice president of national accounts, group voluntary and worksite benefits for MetLife, says this change, referred to in the study, is directed not only to changes in the benefits market, but also changes in politics and who might take the presidential office in November.
“[Public sector] employers are trying to get their hands around their budget,” Stram says. “They are changing their dynamics around the Affordable Care Act, Obamacare and the increasing healthcare costs associated with that; four generations in the workforce, the flood of baby boomers that are at or soon will be at the age of retirement, and bringing stability to all of those things.”
Stram added that employers are adding more responsibilities to their employees to encourage loyalty and retention to increase productivity and quality of work. Public sector employers are also beginning to discover a correlation between satisfaction that employee has from their benefits and the impact that can have on their overall satisfaction and loyalty.
Also see: “Advisers on the move: Pentegra hires Barrer.”
Budgeting for benefits
Higher education employers are more likely, at 41%, than their counterparts in K-12 education, at 26%, to change plan design to help balance their budgets. K-12 and higher education employers are about equally as likely to consider increasing employee contributions and to encourage competitive bidding.
On the state and local government side, 66% of public sector government employees agree that non-medical benefits such as critical illness and accident coverage can help limit their out-of-pocket expenses. On the other hand, 78% of government employers believe that voluntary benefits can help employees pay for out-of-pocket medical expenses.
The desire for portable benefits
As workplace flexibility becomes important to many workers, interest in portable benefits, which allow workers to take their benefits with them when they change jobs or prepare to retire, is also growing.
In state and local governments, there’s a sizable gap in portability between employees interested in portable benefits, which stands at 81%, and state and local governments who offer them, which falls to 32%.
At least 45% of government employers offer portable benefits to help employees maintain continuity when planning for their families’ futures and their retirement. 24% offer them because it’s a benefit to employees at no cost to the employer, while 18% offer them to help employees who are making a career change after having been with the organization for many years.
“In the public sector, historically, there is a very, very rich benefits plan and less rich wages,” Stram says. “Now what is happening is the public sector can no longer afford these rich benefits plans any longer so there has to be some takeaways, and as they occur employees want to make sure the benefits they have can be taken with them if they choose to leave or go to a new location.”
The role of the broker
Unlike private businesses, the public sector has many rigorous and structured processes around procurement and bidding, brokers tend to take a hands-off approach when dealing with those in the education, local and state government industries.
“[Brokers] are less involved in the public sector than in the corporate sector,” Stram says. “That does not mean that they are not involved at all, but not as much as they are in the corporate sector.”
MetLife offered these final quick tips for employers and advisers in the public sector to keep in mind when moving forward with coming enrollment periods:
- Provide a wide range of non-medical benefits to ensure that employees of all ages and life stages have access to the coverage that can give them peace of mind for the unexpected. Employees understand that non-medical benefits can limit their out-of-pocket expenses.
- Look for solutions to better educate employees on their benefit choices. Employees value their benefit options but are looking for one-on-one consultations to make informed decisions.
- Adapt to the changing workforce. The shift in employee demographic is highlighting a need for portable benefits. Millennials place greater value on work-life balance than their older counterparts and baby boomers are interested in continuing to work past the traditional retirement age. This shift of employees moving to part-time or consulting status is driving a need for portable benefits.