Most Employers Won’t Change Rewards Programs due to PPACA, but Nearly Half Will
As the health reform law marches toward full implementation over the next several years, a Towers Watson survey has found that almost half (45 percent) of U.S. employers are anticipating changes to their total rewards programs. But most do not foresee changes that affect most employees such as discontinuing healthcare coverage, transitioning full-time workers to part-time, or increasing reliance on contract workers.
“With some of the health care reform provisions going into effect in early 2014, there remains little consensus among employers over what actions they should be taking,” said Laura Sejen, global head of rewards at Towers Watson. “Some employers are adopting a wait-and-see approach, but others are considering changing their total rewards strategy or evaluating their mix of rewards. And in rethinking the total rewards mix, companies are putting a range of options on the table to keep costs down and avoid triggering the excise tax in 2018.”
In fact, the 2013 Towers Watson Talent Management and Rewards Pulse Survey found that about half (49 percent) of companies already considering changes have redirected, or are considering redirecting, rewards from one program to another. Another 42 percent have reduced, or are considering reducing, subsidies for dependent health care coverage. Over one-third (37 percent) have reevaluated, or are considering reevaluating, their employee value proposition to put more emphasis on variable pay. But the overwhelming majority of survey respondents (above 90 percent) are not likely to consider changes that negatively affect employees.
“How an organization balances the mix of its total rewards programs in response to health care reform will depend largely on its overall business strategy as well as its employee value proposition. Some employers, for example, will place greater emphasis on health care benefits, while others will focus more of the total rewards package on base salary and incentives. And while there are still many questions about the actions employers will take as more of the health care provisions take effect, it’s clear that most employers are hesitant to rush and implement changes that will negatively affect workers,” said Sejen.