Tomake them more competitive, a third of employers have enhancedtheir supplemental benefit offerings, expanded leave policies,added well-being initiatives, and/or enriched retirement benefits.(Photo: Shutterstock)

It's an employee's market, prompting many employers to increasepay and offer richer benefits to keep talented workers fromdefecting, according to Gallagher's 2019 Benefits Strategy & BenchmarkingSurvey.

Gallagher surveyed 4,155 U.S. employers and found that nearlythree quarters (73 percent) increased employee compensation this year, and more thanhalf (52 percent) enhanced medical benefits. A growing number ofemployers are also improving their supplemental and voluntarybenefit offerings.

Related: Most workers say pension, retirement benefitscritical in job search

"Well aware that the advantage of record low unemployment tiltsheavily in their favor, some employees are using their current jobas leverage to gain increased performance recognition orrenegotiated compensation," the authors write. "And others arecasually or earnestly exploring new opportunities. The antidote toemployee restlessness, churn — and acompromised organizational culture — is regularly identifying andrefreshing rewards to match the preferences of distinct employeepopulations. Delay increases risk in a competitive market, so arelative sense of urgency is important."

While cost-shifting within health care plans was the norm afterthe Great Recession, many employers are having to tweak theirstrategies in the face of a tight labor market. In 2019, almosthalf (47 percent) of the survey respondents did not increase theiremployees' share of deductibles, as well as copays, coinsurance andout-of-pocket maximums.

"But underneath this restraint, cost pressures continue tobuild," the authors write. "It's difficult to balance goals thatare often at cross purposes: offering competitive benefits andpromoting employee health and productivity — while protectingemployees from serious cost-shifting consequences."

For the first time, a majority of employers (51 percent) offereda high-deductible health plan. This plan type now has thesecond-highest enrollment at 24 percent of employers — up 3 pointsin each of the last two years.

To further contain costs, employer strategies have shifted fromthe management of prescription drugs (down 8 points) to specialty drug management (up 7 points),including mandating the use of a specialty pharmacy for some or allspecialty drugs. Just over half (51 percent) of large employers arenow doing this.

"Looking ahead, the outlook favors adoption of cost transparencytools, cost sharing through plan design changes, and well-being incentives," the authors write."About one in five employers expects to introduce each of thesetactics by 2021."

To make them more competitive in the labor market, a third ofemployers have enhanced their supplemental and voluntary benefitofferings, expanded leave policies, added well-being initiatives,and/or enriched retirement benefits, according to the report.

Among the voluntary benefits, stand-alone vision plans are boththe most common (79 percent) and the most likely to be employersubsidized (33 percent). Pretax dependent care reimbursementaccounts also rank among the most frequently used voluntarybenefits (64 percent), but only 3 percent are subsidized. Justunder 30 percent of employers extend the opportunity for legalservices, identity theft protection or supplemental individualdisability insurance.

A majority (58 percent) of employers offered a whole lifeinsurance policy. Among supplemental health plans, accidental deathand dismemberment is the most common (89 percent) and also the mostlikely to be employer subsidized (64 percent).

"Leave policies also contribute to employees' financialsecurity," the authors write. "Perhaps that's why 37 percent ofemployers upgraded this benefit in 2019 with the intent of boostingthe competitive appeal of their total rewards."

Approximately three in four offer disability coverage for theiremployees, including 74 percent that provide a short-termdisability (STD) option and 77 percent that provide a long-termdisability (LTD) option. Many employers pay the full premium forSTD (55 percent), and even more do so for LTD (66 percent).

Well-being programs are becoming more holistic, focusing on bothphysical and mental health issues. Financial well-being is alsoincreasingly emphasized, as 69 percent of employers are nowoffering financial advisor sessions to workers, and 54 percent areoffer financial literacy education to help them improve theirsaving and spending habits.

"It's tougher to win talent today, but competing on higher wagescan easily devolve into an expensive bidding contest," the authorswrite. "The smarter money is on creating stronger culturalattachment points for employees that address their physical,emotional, career and financial well-being. This is where thebetter opportunity lies for differentiating the organization — andstrengthening attraction and retention."

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