Cost-cutting curbs employee benefits

By Stephanie Armour
USA Today

Continued economic uncertainty has more employers trimming employee perks and benefits.

The belt-tightening is affecting such coveted extras as health benefits, paid maternity leave, tuition reimbursement and employee 401(k) matches. Employees are paying more and, in some cases, getting less.

• Health care. Skyrocketing costs have employers charging workers more co-pays and deductibles for doctor and hospital visits.

Some are slashing benefits. More than 40 percent of firms with self-financed plans are reducing benefits this year, according to a study by banking and securities firm Credit Suisse First Boston. That's well above the 25 percent that planned to cut benefits a year ago.

• 401(k) plans. General Motors reduced its 401(k) match from 80 cents on the dollar to 20 cents, and DaimlerChrysler and Ford Motor suspended their matching contributions.

Other companies outside the auto sector also have followed the trend.

"More employers are not matching," says Rick Bloom of Bloom Asset Management in Farmington Hills, Mich. "With the slow economy, companies are looking to save money."

• Other extras. The number of employers offering mental health insurance has dropped from 84 percent to 76 percent in the past five years, according to an April study by the Society for Human Resource Management.

Paid maternity leave not covered by short-term disability fell by 27 percent over the past five years.

"We've seen cutbacks in things that may seem more frivolous, like concierge service and pet-care insurance," says Dave Patel at SHRM.

• Retiree benefits. Coverage for retiree benefits is declining at firms of all sizes.

The percentage of companies with 200 or more workers offering retiree benefits fell from 41 percent in 1999 to 34 percent last year, according to a survey by the Kaiser Family Foundation, the Commonwealth Fund and the Health Research and Educational Trust. That's the lowest rate in five years.

"This is part of a steady trend we've seen over the past decade," says Tricia Neuman, a vice president and director for the Medicare policy project at Kaiser.