How Business Cost-Cutting Can Impact Employee Benefits

New Study: Employees experienced delayed pay raises and higher out-of-pocket medical costs

Columbus, GA – May 28, 2014 – Results from a new study released today by Aflac (NYSE: AFL), the leading provider of voluntary insurance in the United States, demonstrate how employers evaluated costs and made health care benefits decisions as the launch of health care reform approached. The fourth annual Aflac WorkForces Report (AWR) showed the kind of benefits restructuring employers made in 2013, including reducing major medical plan options and shifting costs to employees – decisions that could affect the personal and financial well-being of American workers for years to come.

The study, conducted by Research Now on behalf of Aflac in January 2014, which surveyed 1,856 employers and 5,209 employees at small, medium and large U.S. companies, sheds light on how business decision-makers are adapting to health care reform and the continued high cost of health care.

Is it all about the bottom line?

The 2014 AWR identified employers’ desire to control the bottom line as a likely driver of benefits changes in 2013. The results show that almost half (49 percent) of employers agreed that controlling costs is the top business issue facing companies today, up from 28 percent who agreed that controlling costs including health and/or medical costs was their top business concern in 2011. According to the Aflac study, businesses:

  • Eliminated or delayed raises (32 percent).
  • Eliminated or cut back on benefits (22 percent).
  • Changed some full-time workers to part-time workers (21 percent).
  • Reduced the number of major medical plan options (14 percent).

In addition to changes to employer-sponsored benefits plans, the 2014 AWR shows that a number of businesses took advantage of new insurance options introduced by the Affordable Care Act:

  • 7 percent offered employees health insurance through the new federal and state government exchanges for small businesses (SHOP) or moved employees’ health insurance to a private exchange.
  • 6 percent decided to give employees a stipend to use to purchase their health insurance plan through the public exchanges instead of offering insurance.

“The research shows how the need to control costs is driving workforce decisions. For four consecutive years we have witnessed this growing trend and can foresee the possible ramifications for the U.S. workforce,” said Teresa White, executive vice president and chief operating officer, Aflac Columbus. “When businesses make changes like delaying pay raises and increasing major medical deductibles and out-of-pocket costs, they can further destabilize the precarious financial position of many employees.”

Cost-shifting to employees continues

Research shows workers will continue to see higher deductibles as part of their major medical plans. Over the past several years, a growing number of companies have adopted cost-cutting strategies that include higher deductibles and out-of-pocket costs for employees. However, most workers are unaware of, or unprepared for, the impact such plans may have on their finances.

The Kaiser Family Foundation reports that in the past six years, the number of workers covered by high-deductible health plans has quadrupled, from 5 percent in 2007 to 20 percent in 2013.[1] The 2014 AWR found that more than half of companies (56 percent) increased employees’ copayments and/or employees’ share of premiums in 2013 and the trend shows no signs of slowing, with nearly 6 out of 10 (59 percent) employers saying they intend to do the same in 2014.

In addition, 19 percent of companies implemented a major medical plan with a high deductible (over $1,000) and health savings account (HSA) as an alternative to a traditional medical plan in 2013; 36 percent more than had planned to do so.

Given the growing move toward making employees more responsible for their health care costs and the fact that many workers are already in a financially fragile situation, changes to insurance plans could prove too burdensome for the average U.S. worker. The employee portion of most workers’ health care insurance, including premiums and out-of-pocket costs, has risen at a rate three times greater than their average salary increases over the past three years.[2] The 2014 AWR found that:

Only 17 percent of workers are extremely/very prepared to pay for out-of-pocket expenses related to an unexpected serious illness or accident that aren’t covered by major medical insurance.
Almost 5 out of 10 (49 percent) workers say they would be able to afford less than $1,000 in out-of-pocket expenses associated with an unexpected, serious illness or accident and 27 percent could afford less than $500.

“Shifting more of the cost burden and health care purchase decisions to employees are only effective financial measures for the company if they lead to smarter employee choices and behaviors,” said White. “The Aflac study sets out a clear and convincing case for the careful modification of employer benefits programs to achieve companies’ cost containment goals while still offering employees options that give them the right insurance and financial protection.”

Implications for Employees in 2014

Is it all about the bottom line?

Changes to workplace benefits take on more importance amid the difficult financial situation faced by many workers today. While employers look for ways to limit their benefits spending, they may be overlooking employee-paid benefits, including supplemental insurance policies, which provide an additional layer of coverage for employees beyond major medical insurance.

Fortunately, employees admit wanting more when it comes to employee-paid, voluntary benefits. They see enrollment in voluntary benefit plans as a way to address a number of challenges to their health insurance, including:

  • Rising medical costs (76 percent).
  • Rising coverage costs (66 percent).
  • Increasing deductible and copayments (61 percent).
  • Changes due to health care reform (51 percent).

In fact, when American workers were asked about voluntary benefits, the Aflac study found that:

76 percent say they’re at least somewhat likely to purchase additional benefits if offered to them.
48 percent agree they’re more knowledgeable about voluntary benefits today than last year.
Nearly 7 in 10 (63 percent) see a growing need for voluntary benefits today compared to years past.
88 percent of workers consider voluntary benefits to be an important part of a comprehensive benefits program.

To learn more about the 2014 Aflac WorkForces Report visit or follow @aflac on Twitter.




About the Aflac WorkForces Report
The 2014 Aflac WorkForces Report is the fourth annual Aflac employee benefits study examining benefit trends and attitudes. The study, conducted by Research Now, captures responses from 1,856 benefits decision-makers and 5,209 employees across the U.S. To learn more about the Aflac WorkForces Report, visit

Conducted by Research Now on behalf of Aflac, the research contained two components – employer research and employee research. The Employer Survey was conducted online within the United States from Jan. 7-23, 2014, among 1,856 benefits decision-makers. Results were representative of U.S. companies with at least three employees based on company size (number of employees) and industry. No estimates of theoretical sampling error can be calculated; a full methodology is available.

The Employee Survey was conducted online within the United States from Jan. 7-27, 2014, among 5,209 employed adults ages 18 and older who are employed full or part time at a company with three or more employees and not retired. The first 3,124 interviews were nationally representative while the remaining 2,085 interviews were conducted among the top 20 designated market areas (DMAs) – 100+ interviews per DMA. Results were weighted as needed to match U.S. demographics and to enable year over year trending. No estimates of theoretical sampling error can be calculated; a full methodology is available.

About Research Now
Research Now is the leading global online sampling and online data collection company. With more than 6 million panelists in 38 countries worldwide, Research Now offers a full suite of data collection services. For more information, please visit

About Aflac
When a policyholder gets sick or hurt, Aflac pays cash benefits fast. For nearly six decades, Aflac insurance policies have given policyholders the opportunity to focus on recovery, not financial stress. In the United States, Aflac is the leading provider of voluntary insurance at the worksite. In Japan, Aflac is the number one life insurance company in terms of individual policies in force. Aflac individual and group insurance products help provide protection to more than 50 million people worldwide. For eight consecutive years, Aflac has been recognized by Ethisphere magazine as one of the World’s Most Ethical Companies. In 2014, FORTUNE magazine recognized Aflac as one of the 100 Best Companies to Work For in America for the 16th consecutive year. Also, in 2014, FORTUNE magazine included Aflac on its list of Most Admired Companies for the 13th time, ranking the company number one in the life and health insurance category. Aflac Incorporated is a Fortune 500 company listed on the New York Stock Exchange under the symbol AFL. To find out more about Aflac, visit or