The benefits industry has long had a reputation for being staid and resistant to change. After 15 years working in the industry I can attest that this is no longer true. A simple walk down memory lane shows us just how rapidly things have changed.
I started thinking about this pace of change when I came across a folder that had my 401(k) statements from my first job. I was taken aback by how different retirement and health programs are today from when I started my career. Let’s explore how both have changed in the past 10-20 years.
Retirement Programs: Early 2000’s vs. Today
Comparing the retirement program offered to me in 2000 vs. common provisions and features today highlights some dramatic differences.
|Plan Provisions from my First Job||Plan Provisions Today|
|No Target Date funds||Full Target Date fund suites common|
|No Risk Based funds||Risk Based or Managed Account options|
|No stable value option||Stable Value and Guaranteed Accounts|
|One bond offering||Multiple Bond options|
|Ten (yes, ten!) domestic stock funds||A reasonable distribution of domestic, international, and specialty options.|
|Two international options|
The plan had just two enrollment days a year and the statement had no website listed but did have the number to the 24 hour Voice Response System. I was also eligible for a pension plan for which I earned no credit since I left before I was fully vested.
Retirement Programs: Today
Today virtually all 401(k) plans offer 24-hour web and mobile access and target date or risk-based funds while pension plan coverage has rapidly declined. Use of automatic features has reached universal acceptance post PPA. As an industry we have gotten much smarter about how our investment offerings can be tailored to help employees allocate their assets better, smarter, and in a way that maximizes exposure to multiple asset classes.
Health Programs: Early 2000’s and before
My health plan was also the standard for the time, two PPO options and one HMO. Low co-pays, low to medium deductibles, and a lot of talk about in and out of network doctors and facilities.
This benefits package was probably not much different than what I would have received as early as 1990, and if you focus on just health benefits the program looked similar to plans as far back as the early 1980’s. For decades the combination of pension/401(k)/PPO/HMO benefits remained largely undisturbed. Possibly leading to the reputation of the benefits industry.
Health Programs Today:
However new trends are starting to emerge, according to a Towers Watson and National Business Group on Health survey, 66 percent of companies with more than 1,000 employees offered a High Deductible Health Plan in 2013 and that number is expected to grow to 80 percent this year.
Workplace wellness initiatives were rare and haphazard as recently as 10 years ago. According to the RAND Corporation by 2009, 92 percent of employers with more than 200 employees employed at least some workplace wellness initiative and the breadth and depth of these programs continue to evolve every year. These are rapid and head-spinning adoption rates of a radically different approach to health care.
What Will the Long Term Effects Be?
When used effectively these revolutionary programs represent a win/win for the employer/employee partnership with lower costs, increased savings, and more flexibility. However those who struggle to recognize their new role in planning for the future, or fail to capitalize on the opportunities presented will fall behind their peers. On the other hand, employees that are well informed and are given the tools to help them fully participate in their benefit programs will be far better off financially, more stable economically, and happier and more productive in the workplace. As a community its important we acknowledge how quickly the landscape has changed and acknowledge that our employees may be struggling to catch-up.