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A Total Compensation Approach to Employee Benefits

Healthcare costs are rising while employees consider health benefits a huge factor in where they work. This leaves employers struggling with how to balance it all.

The 2019 Wellness and Wealth Report by Lively found that 40 percent of employees consider healthcare the most important benefit when considering switching employers. The report also revealed that 76 percent of Americans rank health-care among the top three workplace benefits.

This of course makes sense, given that healthcare spending by families with large employer health plans increased two times faster than workers’ wages over the last decade, on average, driven in part by rising deductibles. According to the Peterson-Kaiser Health System Tracker, the average family spent $4,706 on premiums and $3,020 on cost-sharing for a combined cost of $7,726 in 2018.

For employers, the biggest challenge of providing health benefits is cost, which also has increased substantially. Average health costs paid on behalf of workers by large employers, in the form of premium contributions for family coverage, increased 51 percent over the last 10 years.

Employers have no choice but to spend time and money to attract, retain and motivate employees. In fact, research shows that employers spend on average 25 to 40 percent above wages/salary for costs related to taxes, paid time off, healthcare, retirement and overhead.

Obviously, employers don’t have unlimited funds, yet they need to attract and retain good employees. Using a total compensation approach may be the answer.


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