The number of companies in Hong Kong that is interested in adopting flexible benefits increased from 13% in 2015 to 28% in 2016, according to “The Hong Kong Employee Health and Benefits Survey 2016” conducted by Mercer Marsh Benefits (MMB), a partnership between global professional services firms, Mercer and Marsh.
When asked about the reasons for implementing flexible benefits programs, 88% said they are responding to diverse workforce needs and values, while 75% said it helps to remain competitive in the marketplace and improve employee engagement.
Other reasons include maximizing the value of existing benefits spend, increasing employees’ appreciation of their benefits, supporting a total rewards program, controlling how much the company contributes to the cost of benefits and helping with staff retention and recruitment.
“We are glad to see that there was an uptrend for companies in Hong Kong to adopt flexible benefits. Seventy-five percent of respondents who provided choice to employees in their benefits programs seek employees’ opinions when designing the programs. This reflects that companies would like to design programs that are most suitable to employees by considering their needs and preferences,” says Eva Liu, Principal and Regional Consultant, Mercer Marsh Benefits.
“Medical (38%), dental (38%) and wellness programs (38%) were the most popular flexible benefits used by employees. This highlights the importance of medical and dental coverage as well as overall health management to employees.”
Of the companies who did not currently provide flexible programs for their employees, 28% intended to offer such choices within the next five years, while 55% were uncertain about introducing such plans.
“For employers that offer employee choice programs, the main challenges faced during implementation are cost and demonstrating return on investment. Other challenges include complexity of administration and resource constraints,” added Liu.
“However, companies will need to overcome these challenges to adopt these flexible programs to engage, retain and respond to their employees.”
Employers concerned about rising medical costs
Eighty-eight percent of Hong Kong employers are concerned about rising medical costs. Most of the companies bear full premium costs for employee benefits for both medical and risk. Compared to 2015, the costs of both medical and risk benefits increased as a percentage of annual payroll.
With regard to rising medical costs, 55% of companies have adopted cost-containment measures. The most popular measure adopted by employers is implementation of a panel arrangement (34% from 32% in 2015), followed by providing wellness programs.
An increased percentage of respondents implemented a cost-sharing arrangement with employees, while there was a significant drop in the percentage of respondents (37% from 47% in 2015) adopting remarketing.