SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits--Carrier Satisfaction/Changes

SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Carrier Satisfaction/Changes

In collaboration with and commissioned by MassMutual

September 18, 2013


• The 2013 Employer Perspectives on Disability Benefits survey, which was commissioned by MassMutual, is a collaboration between the Society for Human Resource Management and MassMutual.

• The survey was sent to a randomly selected sample of SHRM members from a variety of industries. A response rate of 10% was achieved with 4,402 responses.

• The main purpose of this research was to gain a better understanding of organizations’ needs and gaps regarding long-term disability and executive benefits. The 2012 data were collected from a sample including small-, medium- and large-staff-size organizations (see slide 25).

• The findings are divided in the following topics: Base Group Long-Term Disability Plans Compensation and Buy-Up Coverage Supplemental Plan/Individual Disability Income Carrier Satisfaction/Changes Executive Group Life Benefits

2013 Employer Perspectives on Disability Benefits—Carrier Satisfaction/Changes ©SHRM 2013 2

Introduction


• The results of each question are reported by the overall sample, and then, where applicable, statistically significant differences by organization staff size, industry and region are included. Only statistically significant differences with a sample size of 25 or more were reported.

• The results are based on respondents who indicated that they were either “extremely knowledgeable,” “very knowledgeable” or “somewhat knowledgeable” about their organization’s employee benefits plan. The results include respondents from publicly owned for-profit or privately owned for-profit organizations only.


Introduction (continued)

Industries Organization Staff Size Region

Accounting/architectural Computer and electronic

products/technology Energy, gas, oil Financial services Health care services Information services Law firms and legal services Manufacturing Pharmaceutical and medicine Physician and dental offices Professional, scientific and

technical services Telecommunications Utilities Wholesale and retail trade Other industries

1 to 99 employees 100 to 499 employees 500 to 2,499 employees 2,500 to 24,999 employees 25,000 or more employees

Midwest Northeast South West

2013 Employer Perspectives on Disability Benefits—Carrier Satisfaction/Changes ©SHRM 2013


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Carrier Satisfaction/Future Plan Changes


• How do organizations perceive their long-term disability program? Overall, 60% of organizations reported their long-term disability program is an “extremely important” or “very important” element of their organization’s benefits offerings from the perception of employers. Employees’ opinions of this program are rated slightly lower. Approximately one-half (46%) of organizations indicated this program is “extremely important” or “very important” to their employees.

• How frequently do organizations evaluate their long-term disability program? Three-quarters of organizations reported evaluating their long-term disability program on an annual basis. Smaller staff-size organizations are more likely than larger organizations to evaluate their program annually.

Only 15% of organizations are considering making changes to their program in the future. Organizations with 500 to 2,499 employees are more likely than organizations with 1 to 99 employees to consider making changes to their long-term disability program.

The most frequently cited reasons for making changes to the program in the future are shopping the plan to other carriers to obtain cost-efficiencies (58%) and making changes to benefits offerings (51%).


Key Findings in Carrier Satisfaction/Future Plan Changes


• What changes are organizations considering making to their long-term disability program? The most frequently cited changes include 1) increasing the benefit amount (46%), 2) higher monthly maximum (33%), and 3) class of employees with different benefit levels (21%).

• Are many organizations switching their long-term disability carriers? Over one-third (36%) of organizations have switched long-term disability carriers in the past three years. Smaller staff-size organizations are more likely than larger organizations to have switched their carriers.

Among those that switched carriers, the top reasons for making the change are 1) cost of the plan (66%), 2) lower administrative fees (27%), 3) ease of administration (23%), 4) recommendation of an advisor (22%), and 5) additional features/services available (21%).


Key Findings in Carrier Satisfaction/Future Plan Changes (continued)


• HR professionals should strive toward helping their employees recognize the importance of their long-term disability plan. HR must continually work to educate employees about the importance of the benefits as employees may not fully understand the role that benefits play in employee health and financial wellness. Highlighting the value of each benefit that an organization offers has implications for employee retention and recruitment.


What do these findings mean for HR professionals?



From the employer’s perspective, how important is your group long-term disability program in your organization’s benefit offering?

8

Extremely important

Very important

Somewhat important

Not very important

Not at all important

14%

46%

35%

5%

1%

Note: n = 3,533. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding.



Note: Only statistically significant differences are shown.

From the employer’s perspective, how important is your group long-term disability program in your organization’s benefits offering?

Organizations located in the South are more likely than those located in the Midwest and West to report their group long-term disability program is “extremely important” in their organization’s benefits offering. Conversely, organizations located in the Midwest compared with organizations located in the South are more likely to report their group long-term disability program as “somewhat important.”

Comparison by organization demographics

Extremely important South (17%) >Midwest (12%)

West (11%)

Somewhat important Midwest (37%) > South (31%)



From your employees’ perspective, how important is the long-term disability program?

Extremely important

Very important

Somewhat important

Not very important

Not at all important

13%

33%

42%

11%

1%

Note: n = 3,527. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis.




From your employees’ perspective, how important is the long-term disability program?

Organizations with 2,500 to 24,999 employees are more likely than those with 100 to 499 employees to report their group long-term disability program as “extremely important” from their employees’ perspective. Organizations located in the West compared with those located in the South are more likely to report their group long-term disability program as “not very important” from their employees’ perspective.


Extremely important 2,500 to 24,999 employees (16%) > 100 to 499 employees (11%)

Not very important West (14%) > South (9%)



How often is your group long-term disability program evaluated by your benefits broker/benefits firm?

Annually

Biannually

Every three years

Only when needed

Other

75%

8%

10%

6%

0%

Note: n = 3,183. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding.




How often is your group long-term disability program evaluated by your benefits broker/benefits firm?

Smaller staff-size organizations are more likely than larger organizations to have their benefits broker/benefits firm evaluate their group long-term disability program annually. Utilities are more likely than wholesale/retail trade, financial services, manufacturing and other industries to have the program evaluated every three years.


Organization Staff Size Organization Industry

Annually

1 to 99 employees (80%)100 to 499 employees (79%) >500 to 2,499 employees (70%)

2,500 to 24,999 employees (69%)

Other industries (78%) >Utilities (63%)

Every three years

500 to 2,499 employees (13%)2,500 to 24,999 employees (17%) 25,000 or more employees (13%) >

1 to 99 employees (5%)100 to 499 employees (7%)

Utilities (24%) >Wholesale and retail trade (10%)

Financial services (9%) Manufacturing (8%)Other industries (8%)



Are you considering making changes to your long-term disability program in the future?

Yes

No

15%

85%





Are you considering making changes to your long-term disability program in the future?

Organizations with 500 to 2,499 employees are more likely than organizations with 1 to 99 employees to consider making changes to their long-term disability program in the future.


500 to 2,499 employees (19%) > 1 to 99 employees (12%)



Which of the following are the top reasons for making changes to the long-term disability program in the future?

Shopping the plan to other carrier to obtain cost-efficiencies

Changes to benefits offerings

Changes to supplement programs

Taxation of the benefit amount

Self-insuring the plan

Other

58%

51%

27%

12%

6%

6%

Note: n = 345. Only respondents whose organizations offer a group long-term disability plan and are considering making changes to their long-term disability program were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to multiple choice options.



Which of the following potential changes are you considering making to your group long-term disability program in the future?

PercentageIncreasing the benefit amount 46%

Higher monthly maximum 33%

Class of employees with different benefit levels 21%

Changing the treatment of variable compensation 15%

Changing the definition of disability 11%

Employer pays a higher percentage of the premiums 11%

Employer pays a lower percentage of the premiums 10%

Higher replacement percentage 10%

Decreasing elimination/waiting period 7%

Decreasing the benefit amount 5%

Increasing the benefit period 5%

Increasing elimination/waiting period 4%

Decrease in exclusions 3%

Decreasing the benefit period 3%

Lower monthly maximum 3%

Offering an employee buy-up 3%

Increase in exclusions 2%

Lower replacement percentage 1%

Other 7%

Note: n = 297. Only respondents whose organizations offer a group long-term disability plan and are considering making changes to their long-term disability program were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to multiple choice options.



Has your organization switched long-term disability carriers in the past three years?

Yes

No

36%

64%





Has your organization switched long-term disability carriers in the past three years?

Smaller staff-size organizations are more likely than larger organizations to have switched long-term disability carriers in the past three years. Information services are more likely than the utilities industry to have switched disability carriers in the past three years.


100 to 499 employees (41%)500 to 2,499 employees (40%) >

2,500 to 24,999 employees (28%)25,000 or more employees (20%)

1 to 99 employees (35%) > 25,000 or more employees (20%)

Information services (49%) > Utilities (28%)



What prompted the carrier change?

Cost of plan

Lower administrative fees

Ease of administration

Recommendation of an advisor

Additional features/services available

Carrier offering was not competitive

Plan flexibility

Recommendation of Board/Senior Mgmt

Ease of understanding plan

Better customer service

Performance of investment funds

Corporate merger

Other

66%

27%

23%

22%

21%

15%

6%

4%

3%

3%

1%

1%

4%

Note: n = 1,123. Only respondents whose organizations offer a group long-term disability plan and have switched long-term disability carriers in the past three years were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to multiple response options.




What prompted the carrier change?

Smaller staff-size organizations are more likely than larger organizations to switch carriers due to the cost of the plan. Larger staff-size organizations are more likely than smaller organizations to switch carriers due to ease of administration and lower administration fees.


Cost of plan1 to 99 employees (67%)

100 to 499 employees (71%) 500 to 2,400 employees (67%)

> 2,500 to 24,999 employees (51%)

Ease of administration

2,500 to 24,999 employees (33%) > 1 to 99 employees (16%)

Lower administrative fees

100 to 499 employees (25%) 500 to 2,499 employees (35%)





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Demographics



Approximately what percentage of regular, full-time and part-time employees are eligible for employee benefits at your organization?

Less than 25%

25% to 49%

50% to 59%

60% to 69%

70% to 79%

80% to 89%

90% to 99%

100%

Full-time Employees(n = 4,182)

1% 1% 1% 1% 2% 4% 12% 78%

Part-time Employees(n = 3,470)

66% 3% 5% 1% 2% 3% 4% 16%



Which of the following is closest to your job title?

Manager

Generalist

Director

Chief Human Resource Officer

Vice President

Administrator

Supervisor

Associate Director

Specialist

Associate Vice President

Senior Vice President

Analyst

Chief Executive Officer

President

Chief Human Capital Officer

Senior Executive Vice President

Executive Vice President

Other

32%23%

19%9%

6%

2%

1%

1%

1%

1%

1%

1%

%

%

%

%

%

3%

n = 4,394



Demographics: Organization Staff Size

1 - 99 em-ployees

100 - 499 employees

500 - 2,499 employees

2,500 - 24,999 employees

25,000 or more employees

25%

33%

18%

17%

7%

n = 4,382



Demographics: Organization Profit Status

Privately owned for-profit

Publicly owned for-profit

72%

28%

n = 4,402



Demographics: Organization Region

Midwest

South

West

Northeast

35%

26%

22%

17%

n = 4,106



Demographics: Organization Industry

PercentageManufacturing 16%

Wholesale and Retail Trade 14%

Financial services A 10%

Professional, Scientific and Technical Services 8%

Energy, Gas, Oil B 6%

Telecommunications 6%

Accounting / Architectural C 4%

Computer and Electronic Products/Technology D 4%

Health Care Services E 4%

Utilities 4%

Information Services F 3%

Pharmaceutical and Medicine G 2%

Law Firms and Legal Services 2%

Physician and Dental Offices 1%

Other industries 16%

n = 4,402

A Includes Banks, Insurance Companies, Securities and Commodities, Other Finance and Insurance Services categories. B Includes Energy Extraction and Refining, Gas and Oil, and Other Oil, Gas, and Energy Extraction and Refining categories. C Includes Accounting, Tax, Payroll Services and Architectural, Engineering categories. D In the survey labeled as Manufacturing: Computer and Electronic Products/Technology. E Includes Hospitals and Other Health Care Services categories. F Includes Publishing, Motion Picture, Broadcasting (except Internet) and Other Information Services categories. G In the survey labeled as Manufacturing: Pharmaceutical and Medicine category.



U.S.-based operations only 66%

Multinational operations 34%

Single-unit organization: An organization in which the location and the organization are one and the same.

26%

Multi-unit organization: An organization that has more than one location.

74%

Multi-unit headquarters determines HR policies and practices

64%

Each work location determines HR policies and practices

4%

A combination of both the work location and the multi-unit headquarters determines HR policies and practices

33%

Is your organization a single-unit organization or a multi-unit organization?

For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?

Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?

n = 4,387 n = 4,398

Note: n = 3,410. Percentages do not equal 100% due to rounding.

Corporate (companywide) 74%

Business unit/division 15%

Facility/location 11%

n = 3,407

What is the HR department/function for which you responded throughout this survey?

Demographics: Other


• Response rate = 10%

• 4,402 HR professional respondents from a randomly selected sample of a variety of industries in SHRM’s membership

• Margin of error +/- 2%

• Survey fielded: July 10, 2012 to August 3, 2012


SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Carrier Satisfaction/Changes


Survey Methodology



31Disability and Executive Benefits Survey ©SHRM 2012

About MassMutualFounded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyholders every year since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.

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About SHRMThe Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India.

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