Budget woes are hitting public sector employers hard — and the effects are going to be felt in their employee benefits programs, reveal recent survey results from Colonial Life & Accident Insurance Company.

Eighty percent of HR managers responding to the survey say their organization is looking at ways to reduce the cost of employee benefits plans. In fact, more than half (58%) report controlling costs is the benefits program’s top priority. The ability to retain key employees and foster employee satisfaction rated a distant second at 20%.

“Budgets are tight and organizations are looking to save money,” says Pat McCullough, Colonial Life assistant vice president. “If they can’t save through premiums or services, they’ll have to reduce head count and nobody wants to do that.”

The survey shows public-sector employers plan to make significant changes in their benefits programs within the next year, many of them strategies to control costs:

  • Increasing employees’ health insurance premiums (64%).
  • Implementing wellness programs/promoting healthy behaviors (52%).
  • Increasing employees’ health insurance deductibles and/or copays (45%).
  • Redesigning health plans to include higher deductibles (27%).

Public-sector HR managers almost unanimously agree it’s important for employees to understand their benefits and appreciate their employers’ investment in them, with 89% saying it’s very important. However, like their counterparts in commercial industries, they don’t think their employees actually understand their benefits. Fifty four percent believe their employees have some understanding and only 42% say their employees have a good understanding.
“Any time you’re introducing changes, especially if it involves cost shifting, a strong communication plan is essential to the success of the entire benefits program,” McCullough says. “Public sector employers have a tremendous opportunity to improve benefits communication without raising costs if they partner with a benefits provider that offers communication and enrollment services. It doesn’t have to cost them — or the taxpayers — one dime.”

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