Finances of Employee Benefits : Health Costs Drive Changing Trends

This paper presents the most recent federal data on the finances of employee benefits. For decades, retirement costs accounted for the bulk of total spending on benefits by employers, but health costs are rapidly catching up. In fact, voluntary health care costs (spending on health insurance premiums) surpassed employer spending on voluntary retirement benefits (defined contribution and defined benefit plans) in 1989. Since employers tend to budget for total annual compensation costs (including wages, salaries, and benefits), these data show they are devoting a growing share to benefits (especially health benefits) and a declining share to wages and salaries. Wages and salaries remain overwhelmingly the dominant share of employers' total compensation costs (81 percent), but significantly less than it was about 50 years ago