The days of employers standing pat with health plans year to year are clearly over.

A study on how employers will respond to the benefits costs of older employees offers a stark example of that.

LIMRA designed a study to discover what strategies employers are contemplating for managing the benefits costs of an aging workforce.

It found that 73 percent of respondents are already planning to manage the additional costs of employing older workers.

They plainly want to have older workers on the job—90 percent said older workers represented a benefit to the enterprise.

So most are looking for ways to manage this inevitable increase.

Only 5 percent of the respondents said they weren’t planning to do anything to offset those costs.

Nearly half—49 percent—did say they were going to absorb the cost into the business.

That signals that these employers are monitoring the costs and are ready to make adjustments, but perhaps haven’t determined which levers to pull yet.

When asked for more specifics about managing these costs, five strategies rose to the top.

Respondents were able to list more than one, so the totals below exceed 100 percent. In descending order, here’s what they said:

41 percent plan to pass on increased costs to employees
33 percent plan to reduce healthcare benefits
30 percent said they will reduce overall workforce costs
28 percent plan to reduce their retirement plan contributions
24 percent said they would cut life, disability, or other specific benefits

“Despite higher benefits costs, nine in 10 employers believe keeping older workers on the job is good for business,” LIMRA said. “Eighty percent of employers said that when older workers leave, the company loses experience, leadership and institutional knowledge. While leaving may be an employer concern, recent trends suggest older employees want to stay on the job longer for several reasons, most notably to increase their retirement savings.”

That trend has gotten the attention of employers; the study found that 60 percent were concerned about these postponed retirements and the effect it could have on the career paths of younger workers.

“Most employers are looking at benefit plan design to manage both ends of the age spectrum and remain competitive to workers of all ages. Advisors have an opportunity to help employers achieve this balance with effective benefit plan designs for today’s diverse workforce,” LIMRA concluded.

Instant Insights /

Employers planning how to manage older worker costs

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