Saturday, August 10, 2019

The Impact of Rising Healthcare Cost on Employer Benefits Essay

The Impact of Rising Healthcare Cost on Employer Benefits - Essay Example One of the most strongly affected employee benefits due to increasing healthcare costs have been retirement benefits. The most common retirement benefits that employers provide to their employees are pension, gratuity fund, healthcare and provident fund. These benefits help in ensuring that the retired employees either have a consistent stream of income or a reasonable amount available to them once they have left the organization. Although the number of benefits offered to employees varies from employer to employer, yet on a larger scale the trend in the industry has been affected negatively. The relationship between healthcare costs and retirement benefits has been inversely proportional. The rise in the former has lead to a decrement in the latter. In many cases the impact has been so grave that employers have had to completely cut down on certain benefits like entitlement to healthcare after retirement, pension and gratuity fund. During interviews with managers and employees at different organizations, it was observed that the inflation in the cost of healthcare has lead to immense dissatisfaction among employees. ... Statement of the Nature of the Issue and its Origins The burgeoning cost of healthcare has affected employers' healthcare coverage plans and other benefit policies. Of all the benefits issues the most severely affected and neglected one has been that of retirement plans. In the past companies used to provide full coverage of employee retirement benefits but now an increasing number of employees have to bear the burden themselves. Employees are spending more time at work to earn more in order to meet the demands of the current life style. Improvements in living standards have caused an increase in expenditure on the whole. Owing to this, retirement benefits play an important role in enabling retirees to maintain life styles as they used to lead during employment. In the past, employers assumed all the risks which came with the benefit plans they offered to their employees. They also made significantly large contributions to these plans. However, with the passage of time, they have been shifting the risks on their employees and minimizing the contributions as well. Over the past 10 years the inflation in healthcare costs has been unacceptably huge. Pension fund which was already facing a continuous decline was hit hard by this. A pension fund is a sum of money paid regularly as a retirement benefit. The purpose of this paper is to highlight the impact of rising healthcare costs on the decline in the provision of retirement benefits by employers. It primarily emphasizes the cut down in pension funds to which the employee was initially entitled. Literature Review By several measures, health care spending continues to rise at the fastest rate in history. In 2005 (the latest year data are available), total

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