Despite continued economic headwinds, benefits captains are not trimming their sails in 2010. However, research indicates that a significant number are making adjustments to plan designs in order stay on an even economic keel.

JHA and Employee Benefit News surveyed 4,500 HR/benefits managers for their "2010 Employer Buying Intentions Report" in August and found that not only are organizations committed to keeping their core insurance benefits - medical, dental, vision, life, short-term disability and long-term disability - but they also are retaining their 2009 plan funding approaches. That's welcome news in light of the toll the recession has taken on so many organizations.

"I would say that the biggest takeaway from the survey is the fact that employers are not looking at changing the benefits they are offering now or how they are funded," says Marcy Updike, senior vice president of market research for JHA, a division of Gen Re LifeHealth.

From the funding standpoint, this means that employers will continue their current approach of sharing the cost of medical and dental insurance with employees, and paying 100% of life, long-term disability and short-term disability coverage, she notes.

ADVISERS' INPUT CRITICAL

The survey indicates that benefits advisers played a large part in employers' 2010 plan decisions.

When asked who they consult prior to making changes to their benefit plans, 81% of the survey respondents said they talk with their broker or third-party administrator. In addition, half (49%) said they ask their peers and 27% solicit feedback from employees. Seven percent indicated they use none of these information sources.

In addition to keeping the same benefits, the survey also suggested that clients intended to stick with their current carriers, especially for the ancillary benefits. Only 14% of respondents said they planned to change medical plan providers, and far fewer (3% to 5%) were planning to switch carriers for life, LTD and STD.

"Our conclusion is that employers don't want to change carriers, but they will if they are faced with high renewal rates," says Updike.

MEDICAL INSURANCE

A whopping 98% of the employers polled said they are continuing to offer medical benefits and would not be changing the way the premium is paid. Furthermore, 82% indicated that the employer's contribution level would remain the same as in 2009. Fourteen percent planned to decrease their contribution and 4% indicated they were increasing the employer share of the premium.

On average, employers contribute 70% of the premiums for medical insurance, with most paying between 66% and 85%. If you're a small employer paying 100% of the premiums, the survey shows that you're in good company - as many as 40% of your peers are doing the same.

Because of continued cost pressures, half of the respondents indicated they are making no changes to their medical plan in 2010. Of these employers, 27% are changing the number or type of plans offered, 14% are switching carriers and 2% are adjusting who is eligible for the plan. Twenty-one percent are making "other" changes. Preferred provider organizations are still the dominant plan choice, with 80% of employers sticking with them in 2010.

DENTAL INSURANCE

As with medical insurance, the number of employers that anticipate canceling their dental insurance or changing the funding method is minimal.

The survey shows that 97% plan no changes to dental coverage. Seven percent of those not offering dental in 2009 plan to add it in 2010, with premiums either shared or 100% employee paid.

Most employers anticipate keeping the percentage they contribute toward the cost of dental insurance consistent, with only 8% expecting to decrease their contribution.

To help control costs, nearly 17% will make a change in either the plan design they offer or the insurance carrier they use. Few expect to increase or decrease the number of employees eligible to participate, and most will limit participation to full-time employees and managers.

Regardless of the funding method, most employers will continue to offer plans that allow employees to use either in-network or out-of-network dentists. Very few (16%) restrict employees to one or the other.

It is expected that the majority of 2010 dental plans will cover 100% of preventive care with no co-pay and a deductible between $50 and $74.

VISION INSURANCE

A slightly higher percentage of employers anticipate dropping vision insurance in 2010 compared with other insurance. However, the drop rate is still only around 1%. More than 95% of the employers plan to continue to offer vision coverage using the same funding approach.

Of those employers that currently do not offer vision insurance, very few are actually looking to add the coverage. Less than 4% of employers are planning to offer vision insurance in 2010, mostly at a cost to the employee.

Vision insurance is the only benefit in the report for which more employees than employers pay the full cost of coverage. Seventy-six percent of employers require employees to contribute to the cost of vision benefits; 39% share premiums and 37% offer 100% employee-paid plans. As with medical insurance, the smaller the firm, the more likely it is to pay 100% of vision.

Participation in vision plans is generally restricted to full-time employees and managers. Only 23% of those surveyed extend this benefit to part-timers.

As for plan design, most employers offer a plan that allows employees to choose either an in-network or out-of-network doctor. For 33% of employers, an in-network doctor is the employees' only choice.

LIFE INSURANCE

This year, 90% of HR/benefit chiefs surveyed offered life insurance as a 100% employer-paid benefit - a trend that's expected to continue into 2010.

What's more, 8% of the respondents not currently offering life indicated that they expect to add it, making life insurance the most popular new benefit in 2010.

As with other benefits, most companies limit life insurance to full-time employees and managers, although 18% extend benefits to part-timers.

For 56% of employers, the life insurance benefit is calculated using a percentage of the employee's salary. The remaining companies use a flat dollar amount.

LONG-TERM DISABILITY INSURANCE

As with life insurance, nine in 10 employers are keeping their LTD plans the same in 2010.

Just over 4% are adding LTD to their lineup, mostly with the employees bearing the premium cost. If they're making any changes at all, it's to their carriers.

More than 60% of employers of all sizes pay 100% of LTD premiums. Fifteen percent offer this insurance to part-time employees.

Most LTD plans offered by the JHA-EBN survey participants allow for an income replacement of about 60% after waiting 90 days.

Also, the majority of plans will cover a disabled employee until age 65 or retirement.

SHORT-TERM DISABILITY INSURANCE

Short-term disability isn't being dropped, but it's least likely to be added to benefits packages. While less than 1% of employers are cancelling STD insurance, only 3% are adding it in 2010. As with other benefits, those offering STD for the first time expect employees to pay 100% of the premiums.

Most employers still pay 100% of STD premiums; 30% ask for employee contributions. About 19% extend STD benefits to part-time workers, but there is usually a minimum number of hours one must work to be eligible, typically 20 to 30 hours a week. The maximum duration of an STD plan varies between 13 weeks and 26 weeks. This begins after an elimination period of one day for an accident and eight days for an illness.

Similar to LTD, most STD plans will replace 60% or 66-2/3% of an employee's income.

OTHER INSURANCE

Less common but still being offered are long-term care insurance, critical illness and other accident insurance.

Companies that offered these benefits in 2009 indicated they will continue them, mostly on an employee-paid basis. For these non-traditional types of benefits, the size of the company appears to play a role in the likelihood of the employer offering them.