8TH ANNUAL EMPLOYEE HEALTH AND BENEFITS STUDYEMPLOYEE CHOICE IN BENEFITS - INSIGHTS FROM INDIA & ASIA

© 2015 Marsh LLC. 3 8th Annual Employee Health and Benefits Study

INTRODUCTION EMPLOYEE CHOICE IN BENEFITS - INSIGHTS FROM INDIA AND ASIA

The IMF and the World Bank are forecasting a 6.4% growth rate for India in 2015. A buoyant economy typically translates into a buoyant employment market. With a diverse workforce spanning millennial on one end and baby boomers at the other, corporate India has realized that compensation packages alone are insufficient to win the war for talent acquisition and retention. It is not enough to provide rudimentary health coverage and benefits, but there is now an inherent benefits need to re-evaluate standard benefit offerings into attractive and needs based packages given the diversity and the demands of the workforce. Today, health and benefits have moved from the exclusive realm of the HR department to the boardroom where CXOs are actively involved in deciding on the benefits strategy in view of the greater People strategy.

Our previous year’s 7th Annual Employee Health and Benefits (EH&B) Study focussed on medical insurance cost and its key drivers. The current Survey findings revealed that cost remained a major influencing factor for most organizations. The attempt to find a balance between economy, price and competitive benefits persists, and with double-digit medical inflation in most geographies in Asia, a similar trend is likely to continue in India and alter how we perceive benefits and their value. With a focus on long-term sustainability, the key challenge is to offer benefits packages that are well differentiated, comprehensive and competitive in terms of cost. The Indian insurance sector has reciprocated by opening up to newer benefit plan designs and offering more choice to the consumer. Additionally, as per the employee survey part of Marsh’s 6th Annual Employee Health and Benefits Study, 62% of employees were not satisfied with benefits provided to them by their employer and 60% of surveyed employees said that they would like to build their own benefits package. This trend is gathering momentum and employee choice in benefits is becoming key in providing competitive benefits.

Our latest Study, the 8th Annual Employee Health and Benefits Study outlines the drivers, challenges and strategies impacting employers in the area of choice in benefits across India and draws parallels against its Asian counterparts through the responses received in the Mercer Marsh Benefits 2013 Asia Total Health and Choice in Benefits Survey and the Marsh India 2014 Employee Health and Benefits (EH&B) Survey.

© 2015 Marsh LLC. 4 8th Annual Employee Health and Benefits Study

ABOUT THE SURVEY

The 8th Annual Employee Health and Benefits Study compares employer responses from the following two surveys:

Marsh India 2014 Employee Health and Benefit Survey, received responses from 382 organizations across various industry segments covering 777,714 number of employees. The Mercer Marsh Benefits 2013 Asia Total Health and Choice in Benefits Survey included responses from 1,035 unique organizations across 12 countries in Asia. Participating countries included: China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam.

INDUSTRY SECTOR

Marsh India 2014 Employee Health and Benefit Survey

Mercer Marsh Benefits 2013 Asia Total Health and Choice in Benefits Survey

Advertising  &  Media

Automobile

BioTech/Pharma/Research

BPO/KPO

Consulting

Consumer Durables

Education

Engineering

FMCG

Hospitality

IT/ITES

Logistics

Manufacturing

Media&Entertainment

Others

Petro  & Chemicals

Power  & Energy

Real  Estate  & InfrastructureRetail

Banking & Financial  Services

1% 7%

7%

4%

3%

3%2%

16%

5%1%21%

3%

5%

4%1%

1%5%

1%2%

9%

Manufaturing

Hi-Tech and Technology

BPO/Call Center

Hospitality  and Real Estate

Pharmaceutical

Automative

Professional  and other  services

Health care and life  sciences

Financial  Services

Energy and chemical

Retail  and FMCG

Others

15%

18%

3%3%

3%6%6%

7%

8%

10%

10%

11%

© 2015 Marsh LLC. 5 8th Annual Employee Health and Benefits Study

Marsh India 2014 Employee Health and Benefit Survey

Mercer Marsh Benefits 2013 Asia Total Health and Choice in Benefits Survey

20%

32%

48%

Above  2500 501  to  2500 Below 500 Above  2500 501  to  2500 Below 500

 

19%

25%

56%

NUMBER OF EMPLOYEES

© 2015 Marsh LLC. 6 8th Annual Employee Health and Benefits Study

A good compensation package is not enough to attract and retain the modern day workforce. In an emerging trend that was first identified in the 6th Annual Employee Health and Benefits Study, employees don’t just want a standard health and benefits package but seek options to customise it to suit their need. As this demand grows, more organizations are considering ways to provide their employees with increased choice in their benefits package.

As per the Marsh India 2014 Employee Health and Benefit Survey the key drivers governing employee choice for the employer are:

1. Talent acquisition and retention

2. Employee satisfaction

3. Benefit enhancement

4. Cost management

5. Derive greater value from existing benefits

As per Mercer Marsh Benefits 2013 Asia Total Health and Choice in Benefits Survey, 49% of organizations in Asia support employee choice. In India that drops to 21% of organizations support offering employee choice. However, 50% of the employers stated that they are keen to look at employee choice within the next 3 years. As per the survey, the top constraints for not offering choice are complexity of administration and the perceived heightened cost of benefits. Within the sample of organizations that had not previously considered employee choice, 44% voted ‘Yes’ to a spending account and 39% were favourable towards having standardized flexible plans when presented with simple options such as:

• Voluntary benefits: coverage and services that the employee can purchase with their own money at discounted prices

• Standardized plans: an off-the-shelf flexible benefits plan that is simple, cost efficient, and easy to launch and administer

• Spending account: a simple flexible benefits plan that provides a flex budget that can be used for various non-insurance benefits

With the emerging digital workforce and digital jobs that didn’t exist previously in the past 5 years, a “one size fits all” employee benefits plan limits organizations from attracting this talent pool who prefers choice to standardization plus limits, organizations moving from defined benefits to a defined contribution push co-sharing or co-contribution of the costs with its workforce.

The Marsh India 2014 Employee Health and Benefit Survey Report shows that 18% of the organizations enable some form of employee choice through voluntary and top up plans and an additional 16% offer varied benefits focussed around wellness and lifestyle outside the realm of insurance. A choice based plan typically engages the workforce in a positive way and empowers them with the ability to customize their benefits that are most relevant to them. Additionally, such a plan can be effective in containing costs while increasing the perceived value of benefits.

EXECUTIVESUMMARY

© 2015 Marsh LLC. 7 8th Annual Employee Health and Benefits Study

Under employee choice, the top most prevalent benefits in Asia are Medical, Dependent cover, Health screening and Life cover. In comparison, in India, Parent cover takes precedence over these benefits followed by Medical, Health screening, other health programs and mobile telecommunication.

The prevalence of other lifestyle choices like gym memberships, travel, childcare, vacation and so on, in comparison to Asian companies, continues to be low possibly due to complexity of administration and lack of availability of suitable partners to implement this.

Employers are also looking at portability, easy administration and increased flexibility as the way forward for choice in benefits. 79% of the organizations stated that they would look at engaging an external consultant to resolve the challenges they currently face in offering choice.

Despite the lower adoption of Indian companies towards choice based benefits in comparison to their Asian counterparts, companies in India will have to adapt to keep pace with evolving employee expectations. Employees are increasingly mobile and in a digital and global economy and workforce – comparisons of benefit strategies within industries or geographies become inevitable. With the right tools and advice, employers can offer comprehensive and competitive choice based health and benefits programs to attract and retain their talent and ensure long term sustainability.

TOP CHOICE OFFERINGS

Mercer Marsh Benefits 2013 Asia Total Health and Choice in Benefits Survey

WAY FORWARD FOR CHOICE IN BENEFITS

Marsh India 2014 Employee Health and Benefits Survey

Medical

Dependent's coverage

Health screening

Life

Critical illness

Maternity

Accident

Dental

Long term disability income

Vision

Parent's medical

Traditional chinesemedicine and consultation

Childcare(e.g.vouchers,on site nursery)

Health programs (e.g.smoking cessation,weight management,stress management,wellness)

81%

72%

67%

63%

62%

60%

52%

46%

34%

33%

30%

29%

28%

19%

0% 20% 40% 60% 80% 100%

Portability

Simplify administration rules and processes

More choices and flexibility

Lower cost

Simplify plan design

Integrate with health and wellness strategy

Include work life options and integrated with these vendors

18%

40%

40%

42%

45%

52%

52%

© 2015 Marsh LLC. 9 8th Annual Employee Health and Benefits Study

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