NEW YORK, June 13, 2013 — With health care reform looming, nearly half of U.S. employers (45%) are considering making changes to their total rewards programs or workforce strategies. However, most do not anticipate changes that could negatively affect a significant portion of employees, such as discontinuing employer-sponsored health coverage, asking full-time workers to switch to part time or increasing the use of contract workers, according to a survey of 113 U.S. employers by global professional services company Towers Watson (NYSE, NASDAQ: TW).

"With some of the health care reform provisions going into effect in early 2014, there remains little consensus among employers over what actions they should be taking," said Laura Sejen, global head of rewards at Towers Watson. "Some employers are adopting a wait-and-see approach, but others are considering changing their total rewards strategy or evaluating their mix of rewards. And in rethinking the total rewards mix, companies are putting a range of options on the table to keep costs down and avoid triggering the excise tax in 2018."

Indeed, the 2013 Towers Watson Talent Management and Rewards Pulse Survey found that of those respondents considering making changes, nearly half (49%) either have redirected or are considering redirecting rewards from one program to another, while 42% either have reduced or are considering reducing subsidies for dependent health care coverage. More than one-third (37%) either have reevaluated or are considering reevaluating their employee value proposition to place more emphasis on variable pay. Even among organizations that are considering changing their total rewards strategy or mix, the vast majority of respondents are less inclined to consider changes that could negatively affect workers. For example:

  • 98% said they have not and are not considering asking current full-time employees to change to part-time status.
  • 95% have not and are not considering making greater use of contract workers.
  • 89% have not and are not considering discontinuing employer-sponsored health coverage for some or all active full-time employees.

"How an organization balances the mix of its total rewards programs in response to health care reform will depend largely on its overall business strategy as well as its employee value proposition. Some employers, for example, will place greater emphasis on health care benefits, while others will focus more of the total rewards package on base salary and incentives. And while there are still many questions about the actions employers will take as more of the health care provisions take effect, it's clear that most employers are hesitant to rush and implement changes that will negatively affect workers," said Sejen

About the Survey

This 2013 Towers Watson Talent Management and Rewards Pulse Survey was conducted in April and May, 2013. A total of 113 organizations from the U.S., representing a cross section of industries, participated in the survey.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the web at towerswatson.com.