More than half of small business employers who offer employee benefits encounter challenges during the enrollment process, according to a recent study from The Guardian Life Insurance Company of America, a provider of employee and voluntary benefits to small and midsize companies.

The study, conducted just prior to the recent volatile events on Wall Street, examined small business owners' (1 to 100 employees) decisions about employee benefits. The survey release coincides with the beginning of the fall open enrollment season when millions of employees make important decisions about their benefits for the coming year.

The study revealed that more than 40 percent of employers plan to take action to manage benefit costs.

• About 22% said they would absorb medical benefit costs and 20% would absorb non-medical benefit costs. Approximately the same percentage would either shift more/all costs to employees or cut back on medical employee benefits while slightly fewer would for non-medical benefits.

   

• 33% said they would use a combination of the above approaches.

   

• Nearly half (45%) of small business employers would offer benefits on a voluntary basis.

"Facing an economic downturn and a tightened credit market, disposable income is tight for everyone," said Elena Wu, second vice president of Group Marketing and Worksite for Guardian. "Employees will have to make important decisions and tradeoffs around disposable income, but one thing everyone should maximize is benefits through the workplace - they provide immeasurable value during these times. With employers understandably pre-occupied with business concerns, support for helping employees understand their options in order to make sound decisions is more important than ever."

Benefit Enrollment Challenges

The study also revealed that more than half of small business employers who offer employee benefits encounter obstacles during the enrollment process -- both administrative challenges and obstacles with engaging employees in taking advantage of offerings. The most frequently cited are:

Administrative Challenges:

• Managing paper work and administrative responsibilities (23%)

Challenges with Engaging Employees:

• Getting employees to submit completed forms on time (23%)
   
• Providing clear, easy-to-understand information about options (20%)

About the Survey

A telephone survey was conducted among a sample of 500 small business executives during the period June 25-July 3, 2008. Respondents included owners and benefit decision makers of companies with fewer than 100 full-time employees. The sample is drawn from infoUSA's Small Business database. The executives were segmented into the following industry categories: manufacturing/construction, transportation and communication, wholesale/retail, financial services, and professional services. The margin of error was plus or minus 4.4 percentage points.