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Flexibility the watchword in offering benefit options

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Long-term care insurance, group auto insurance, group financial planning services and other non-traditional benefits are the top choices for employers planning to expand their benefit programs during the next three years, according to a recent Hewitt Associates survey of 509 organizations.

Another key growth area is alternative work arrangements (e.g., flextime, job-sharing, telecommuting), which by the year 2000 will be offered by more than half the employers surveyed.

Faced with meeting the needs of an increasingly diverse work force, most employers are designing flexible programs that allow employees to choose the benefits that best suit their needs and lifestyles.

In addition to other benefit topics, the survey queried employers as to what types of flexible benefits they offered in 1997 and what they plan to add in the near future.

The results point to a strong employer focus on addressing specific needs that occur at different points in the employee's life cycle. Group financial planning services, now offered by only nine percent of respondents, are expected to be offered by 29 percent within the next three years.

Likewise, the number of employers offering long-term care insurance is expected to grow from 18 to 46 percent in the next three years.

In addition, the study showed that more employers are considering offering group auto and home insurance options, with the percentage of companies offering the benefits expected to climb to 35 percent and 31 percent over the next three years, respectively.

In other benefits, the number of employers offering alternative work arrangements, now offered by 44 percent of employers, are expected to increase to 57 percent in the next three years. In contrast, the growth of some other non-traditional benefits, such as choices in personal accident insurance and employer matches to spending accounts, are expected to stagnate and remain in the single digits.

More traditional benefits, such as dependent and health care spending accounts, should show minimal growth because they're already offered by most employers.

"Employers today are taking a more enlightened view, and realizing that employees can be more productive if they're not worrying about things like auto insurance," said Tom Butterworth, a Hewitt benefits consultant.

"These group plans can really offer employers bang for the buck, because they're giving employees convenient access and a discounted rate often at no cost to the employer. By the same token, if I'm an employer, I want my employees to think about risk, and the kinds of events that can disrupt their lives and their ability to be productive. Long-term care insurance is a good example of a benefit that helps employees prepare for a potentially devastating situation," Butterworth said.

The growth in financial planning services is a direct result of the trend toward non-guaranteed sources of retirement income, Butterworth said. "Although some companies still have traditional pension plans, employees now have to take responsibility for their own future financial security.

"Especially at age 40 and older, they become more focused on making the right choices about investment and consumption. Employers have a stake in giving these employees a sense of control, and making sure they have the information and the tools to plan effectively. Again, they're addressing an area of concern and helping employees stay focused on their jobs," he said.

(The preceding article was provided by Hewitt Associates LLC, a global management consulting firm specializing in human resource solutions.)

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