Benefits update: what are Indiana employers offering in pay and benefits?

• Author: McKimmie, Kathy
• Position: Employee Benefits

Ten years ago, employers' annual pay increases were the big news, says Theresa Worman, director of business development for Comp-data Surveys, a pay and benefits survey firm that studies trends in Indiana and elsewhere. Then with four or five years of holding steady at about 4 percent, interest in pay waned in favor of more pressing employment issues, such as healthcare costs. But after 9/11, pay increases hit the news again, she says, as pundits predicted employers would cut them to below 2 percent.

But even with Indiana's hard-hit economy, that didn't happen. "Companies ended up pulling back," says Worman, "but by less that 1 percent." The 2002 Compensation Data Indiana survey reports that, overall, Indiana employers will spend 3.54 percent on pay increases this year, down from their 2002 estimate of 3.99 percent projected a year ago, and from the 4.06 percent overall increases in 2001. Projections for 2003 call for a 3.47 percent rise.

Indiana employers have been responding to uncertainty in the economy in other ways, including a slight decrease in the number of companies that provide benefits to employees who work less than full-time, a perk that was added during a tight labor market. There's also a hesitancy on the part of some employers to hire new fulltime employees at this time, says Worman, which may explain the jump in the number of companies allowing some positions to be filled permanently by temps who do not receive benefits--13.6 percent this year, up from 11.3 percent in 2001.

The most expensive of those benefits, of course, is health care, "Employers are absolutely shocked at the continuing cost of health care" says Hud Peters, senior consultant with Mercer Human Resource Consulting, a global firm with an office in Indianapolis. With 15 to 20 percent increases common, and some as high as 50 percent, he says employers are being much more aggressive than last year in moving costs to employees.

Peters cites four cost-control measures that are most common this year: increasing the employee's percentage of the premium, raising the cost for family coverage, charging higher co-pays for specialists than for primary-care physicians (i.e., $25 per visit versus $15), and reducing spousal coverage through carveouts, surcharges, or through the carrot approach--paying a monthly amount if the employee leaves the plan and takes spousal coverage elsewhere.

Nationally, health-care cost increases were in the double digits for the second year in...