Health care bill to impact benefits, recession still hurting wages

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The government’s health care bill will have lasting effects on employee benefits programs in companies of all sizes, according to a recent survey conducted by Accountants International (AI), a Burlingame, CA-based provider of accounting and finance staffing and recruitment.

As companies wait to see how their specific health care costs are affected during the implementation of the health care bill, they will continue trying to reduce the costs of health care-related benefits, while at the same time remaining competitive, states AI’s annual report, “2010 Compensation, Benefits and Workplace Trends Guide.” Medical coverage benefits dropped during 2009 from the previous year, but still remain the No. 1 benefit offered.

As was the case in last year’s AI guide, the 3,500 executives in accounting, finance, and human resources who responded to AI’s survey reported that their organizations trimmed benefits that were directly related to cash outlay, and supported employee well-being through means other than cash payments. Analysis and comparison of data from two years of responses indicate that compensation may be affected by the recession even as the economy improves.

Benefits cost-reduction trends

Some companies reduced the amount of the overall benefits or coverage offered, while others discontinued certain benefits altogether. Even though medical insurance was one of the most frequently reduced benefits, close to one-half of organizations surveyed covered 76 percent to 99 percent of the cost of health benefits, and 19 percent offered full coverage.

Preferred provider plans were offered by 90 percent of the organizations surveyed; 65 percent offered health maintenance organization (HMO) benefits, and 16 percent offered health savings accounts (HSAs).

The most commonly reduced and discontinued benefits reported by executives reflect the overall trend to trim benefits directly related to cash outlay.

Top reduced benefits:

  • Bonuses
  • 401(k) plans
  • Medical insurance
  • Social benefits/activities
  • Tuition reimbursement

Top discontinued benefits:

  • Bonuses
  • Tuition reimbursement
  • Profit sharing
  • Pension
  • Exercise facilities/discount

Two-thirds of the companies surveyed categorized time off as vacation and sick leave; 36 percent categorized time off as Paid Time Off (PTO).

Companies worked hard to retain company loyalty and employee engagement in the difficult economic environment, the guide reported. “Their efforts are reflected in the fact that a solid majority (87 percent) reported no increase in absenteeism” during the past year.

Wellness programs

Nearly half (48 percent) of companies reported having a wellness program in place in 2009. Such programs have been shown to reduce costs related to health care benefits. Incentives respondents listed for employee participation in wellness programs are that the programs promote good health and minimize medical expenses. Some companies offer financial incentives for participation.

Changes in financial rewards benefits

While 401(k) plans were offered by virtually every company, along with medical benefits and life insurance, 401(k) plans topped the list of most-frequently reduced benefits. Significantly, however, more than two-thirds of companies still offer an employer-match incentive.

AI statistics from the past decade show a slight downward trend in the number of organizations offering 401(k) plans. Data show that 85 percent offered 401(k) plans in 2009 compared to 92 percent in 2008, and 96 percent in 2007. These numbers do not reflect direct year-over-year statistics, but trends.

Half of the executives reported that merit increases were postponed or not offered. At companies that still offer merit increases, the rate of increase declined at most levels.

Compensation outlook

The recession will continue to impact compensation even as the economy improves, according to the guide. While variances in starting salaries are linked to local economic conditions, a comparison of 2009 data against 2008 indicates that the “continued focus on cost containment will have a lasting effect on overall compensation packages. Starting salaries for most accounting and finance positions are expected to remain at current levels, with some markets reporting declining salaries in higher-level positions. Positions that require specialized experience, such as tax accountants, SEC managers and even financial analysts, might be the exception to the rule.”

Salary ranges

The complete AI guide presents a wide range of salaries provided by survey respondents, and it is organized by geographic marketplace for more than 40 markets nationwide. Salary ranges are for new hires in each position to avoid inconsistencies created by job tenure, internal transfers, or other factors.

The guide provides general descriptions of positions and salary ranges at the executive, management, and staff levels. The job descriptions include the basic responsibilities for each title, as well as the standard level of education and experience required. Users of the guide can apply the job descriptions and salary ranges to their own organizations.

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