Researchers predict that one-third of the U.S. workforce will be age 50 or older by 2016. (Heidkampe, Mabe & DeGraaf, 2012). By 2050, the U.S. Census Bureau predicts that workers age 65 and older will make up 19 percent of the total U.S. workforce.
Mature workers offer companies many advantages: experience, commitment and a strong work ethic, and they can offer important perspectives to younger workers. But how will they affect your benefit programs?
Medical claims: The risk of many health conditions, such as osteoarthritis, high blood pressure, cardiovascular disease, cancer and more, increase as we age. Maintaining a healthy lifestyle can reduce their incidence.
Action steps: Promote wellness. A 2010 Harvard University study reported that every dollar spent on wellness saved $3.27 in medical expenses. A newsletter or occasional events probably won’t create the desired results. To reduce medical costs, target preventable conditions that contribute to your group medical claims and design a program to achieve measurable results in those areas.
Disabilities: The good news is that workers age 65+ have the lowest incidence of work-related injuries per hour of full-time work of any age group. The bad news is that injuries (together with poisoning) rank third on the list of the top five causes of new disability claims. Musculoskeletal/connective tissue disorders, cancer and cardiovascular/circulatory disorders ranked first, second and fifth on the list-and the likelihood of all these disorders increases with age. (Source: Council for Disability Awareness, 2013 Long-Term Disability Claims Review)
Older patients also take longer to heal in general. They are also more likely to experience comorbidities, or another disorder or disease that occurs at the same time. This makes treating older employees more challenging and expensive.
- Provide short- and long-term disability benefits to employees to help them through the financial difficulties of a disability and focus on recuperation.
- If your organization has a return-to-work program for workers’ compensation claims, consider integrating non-occupational disabilities into the program. A formal program that includes regular contact with disabled workers as they recuperate and appropriate light-duty work as they’re able can speed return to full-time, productive work.
- Consider wellness. Lifestyle-related conditions such as obesity, high blood pressure and diabetes can increase the risk of disability.
Time off: Older workers value vacation and leisure time. Unlike time- or cash-strapped younger workers, many also have the lifestyle flexibility and financial resources for extensive travel.
Action steps: Compare your paid time-off benefits to those of your competitors. In addition to considering number of days off, consider program flexibility. Do you allow workers to accrue unused vacation time from year to year so they can take an extended trip? How about sabbaticals or time off for volunteering? Allowing employees to take time off for volunteer work increases employee satisfaction and improves your organization’s image in the community.
Retirement: The Employee Benefit Research Institute’s annual Retirement Confidence Survey found that only 18 percent of workers are very confident they will have enough money for a comfortable retirement, while 37 percent are somewhat confident.
- Offer retirement savings benefits. “Retirement confidence is strongly related to retirement plan participation,” noted Jack VanDerhei, EBRI research director. Workers who have money in a defined contribution plan or IRA or have a defined benefit plan are more than twice as likely as those without to be very confident of their retirement finances, he said.
- Provide financial education, with an emphasis on retirement savings. Not only will this help your employees understand their retirement benefits, it could help you increase participation rates and avoid nondiscrimination issues.
Retiree medical benefits: EBRI estimates a Medicare-eligible man retiring in 2013 would need $65,000 in savings to have a 50 percent chance of having enough money saved to cover his retirement health costs. A woman would need $86,000. To increase their odds to 90 percent, a man would need $122,000 in savings, while a woman would need $139,000.
By 2010, only 17.7 percent of workers had access to retiree health benefits through their employer. And as medical inflation increases, retiree medical benefits become increasingly unaffordable. The answer, then, is to encourage employees to build their own savings for medical care needed in retirement.
Action steps: Offer employees a Health Savings Account (HSA). To be eligible, they must have health coverage through a high-deductible health plan (HDHP) and no other health coverage (with the exception of certain limited benefit programs, such as cancer insurance or hospital indemnity insurance). An HSA allows participants to contribute pre-tax dollars, and funds grow tax-free. If account owners withdraw funds to pay qualified medical expenses, withdrawals will not count toward their taxable income.
Long-term care: Almost 70 percent of people turning age 65 will need long-term care at some point in their lives. On average, a woman will need 3.7 years of care and a man will need 2.2 years. Among all people who need long-term care, 20 percent will need services for more than five years. The cost of these services can vary greatly depending on region and where the care is given, whether in a nursing home, an assisted living facility or the person’s own home. And contrary to common belief, Medicare does not cover long-term care services.
Action steps: Consider offering your employees long-term care insurance. When offered on a voluntary (employee-paid) basis, employees can pay their premiums with convenient payroll deduction.
The bottom line: A one-size-fits-all approach to benefits wastes money and time. To get the most of your investment, rebalance your benefits portfolio regularly to reflect your employees’ needs and interests, and your organization’s goals and budget.