Budget woes are hitting public sector employers hard — and the effects are going to be felt in their employee benefits programs. That's according to a new survey conducted by Colonial Life & Accident Insurance Company with members of the International Public Management Association for Human Resources last month.

The vast majority — 80% — of human resources managers responding to the survey say their organization is looking at ways to reduce the cost of their employee benefits plan. In fact, more than half — 58% — say controlling costs is the benefits program's top priority. The ability to retain key employees and create employee satisfaction rated a distant second at 20%.

The survey shows public sector employers plan to make significant changes in their benefits programs within the next year, many of them strategies to control costs:

- Increasing employees' health insurance premiums: 64%

- Implementing wellness programs/promoting healthy behaviors: 52%

- Increasing employees' health insurance deductibles and/or co-pays: 45%

- Redesigning health plans to include higher deductibles: 27%

"Budgets are tight and organizations are looking to save money," says Pat McCullough, Colonial Life's assistant vice president, public sector practice leader. "If they can't save through premiums or services, they'll have to reduce head count and nobody wants to do that."

Public sector HR managers agree it's important for employees to understand their benefits and appreciate their employers' investment in them, however, like their counterparts in commercial industries, they don't think their employees actually do understand their benefits. Just over half —54% — indicate their employees have some understanding and only 42% say their employees have a good understanding.

"Any time you're introducing changes, especially if it involves cost shifting, a strong communication plan is essential to the success of the entire benefits program," says McCullough. "Public sector employers have a tremendous opportunity to improve benefits communication without raising costs if they partner with a benefits provider that offers communication and enrollment services. It doesn't have to cost them — or the taxpayers — one dime."

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