SHRM Survey Findings SHRMEBRI 2014 Health Benefits Survey

SHRM Survey Findings: SHRM/EBRI 2014 Health Benefits Survey November 19, 2014

Key Findings • Very few organizations expect to eliminate health care coverage in 2015. Only 1% of organizations reported expecting to eliminate health care coverage in 2015. No government agencies reported expecting to eliminate coverage. • Large organizations are more likely to expect to make changes to their health plans in 2015 than small organizations. Large organizations (750 or more FTEs) were more likely to report that they expect to make changes to their health plans in a variety of ways. In addition, small organizations (fewer than 750 FTEs) were not significantly more likely to report they expect to make any changes than larger organizations. • Large organizations expect to hit the excise tax in 2018. Large organizations are more likely than small organizations to expect to hit the excise tax in 2018. This could account for significantly more larger organizations expecting to make changes to their health plans in 2015 to avoid the excise tax. • PPO plans are the most common plan that is expected to hit the excise tax in 2018. Nearly 75% of organizations expect their PPO plans to hit the excise tax, more than all other plans combined. • Organizations do not know what they are going to do to avoid the excise tax. Nearly 30% of organizations do not know what they will do to avoid the excise. SHRM/EBRI tax in 2018. Health Benefits Survey ©SHRM 2014 2

What Do These Findings Mean for the HR Profession? • Despite employers’ continued uncertainty surrounding health care reform and its related costs, most organizations are not considering eliminating coverage for their employees at this time. Only 1% of HR professionals who responded to this survey said their organization would eliminate coverage in 2015. • Other research has shown that health care benefits are an extremely valuable recruiting tool, and HR professionals often cite these benefits when hiring new workers or retaining existing employees. Given the competitive nature of finding top talent at the moment, health care benefits should be viewed as an important element of staffing management. • Many HR professionals are already looking ahead to 2018, when an employer tax on high-cost health plans will go into effect. This excise tax of 40% will apply to certain individual and family thresholds on health plans and will prompt HR professionals to re-examine their health care offerings as a means of cutting costs. Although many of the respondents to this survey (30%) said they still don’t know what actions they would take to avoid the excise tax, very few (3. 5%) said they would eliminate health care coverage as a result. SHRM/EBRI Health Benefits Survey ©SHRM 2014 3

SHRM/EBRI 2014 Health Benefits Survey SHRM/EBRI Health Benefits Survey ©SHRM 2014 4

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? Add wellness rewards or penalties 26. 3% Require spouses to get coverage through own employer 7. 9% Institute spousal surcharge 6. 7% Create tiered networks 3. 6% Move to private exchange 3. 2% Adopt a value-based insurance design 2. 6% Provide an employee subsidy for coverage on the private exchange 2. 6% Eliminate coverage for part-time workers 1. 3% Eliminate coverage 1. 0% Adopt reference pricing 0. 6% 0. 0% 5. 0% 10. 0% 15. 0% 20. 0% 25. 0% 30. 0% Note: n = 2, 295 SHRM/EBRI Health Benefits Survey ©SHRM 2014 5

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by staff size) Add wellness rewards or penalties 24. 1% 26. 3% 9. 4% 7. 7% 7. 9% Require spouses to get coverage through own employer Institute spousal surcharge Create tiered networks Move to private exchange 34. 6% 10. 1% 5. 9% 6. 7% 5. 5% 3. 2% 3. 6% 3. 8% 3. 1% 3. 2% 0. 0% 5. 0% 10. 0% 15. 0% 20. 0% 25. 0% 30. 0% 35. 0% 40. 0% 750 or more FTEs Fewer than 750 FTEs Total Note: n = 2, 271 SHRM/EBRI Health Benefits Survey ©SHRM 2014 6

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by staff size, continued) Adopt a value-based insurance design 1. 7% Eliminate coverage Adopt reference pricing 0. 0% 750 or more FTEs 2. 6% 2. 4% 2. 7% 2. 6% Provide an employee subsidy for coverage on the private exchange Eliminate coverage for part-time workers 5. 8% 2. 4% 1. 0% 1. 3% 1. 0% 1. 1% 1. 0% 0. 5% 0. 6% 1. 0% 1. 4% 2. 0% 3. 0% Fewer than 750 FTEs Total 4. 0% 5. 0% 6. 0% 7. 0% Note: n = 2, 135 SHRM/EBRI Health Benefits Survey ©SHRM 2014 7

Do You Plan to Make Any of The Following Changes to Your Health Care Plans in 2015? (by staff size) Comparisons by organization staff size • Organizations with 750 or more FTEs are more likely than organizations with fewer than 750 FTEs to make the following changes to health care plans in 2015: • Institute spousal surcharge. • Eliminate coverage for part-time workers. • Adopt a value-based insurance design (VBID). • Adopt reference pricing. • Create tiered networks. • Add wellness rewards or penalties. Comparisons by organization staff size 750 or more FTEs > Fewer than 750 FTEs Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 8

U. S. Census Bureau Regions SHRM/EBRI Health Benefits Survey ©SHRM 2014 9

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region) 20. 7% Add wellness rewards or penalties 3. 3% Require spouses to get coverage through own employer 8. 0% 7. 8% 7. 9% 25. 9% 27. 9% 28. 7% 26. 3% 10. 9% 4. 4% 8. 1% 6. 8% 7. 3% 6. 7% Institute spousal surcharge 4. 0% 2. 4% 3. 7% 5. 1% 3. 6% Create tiered networks Move to private exchange 1. 6% 2. 6% 4. 2% 3. 9% 3. 2% 0. 0% West Midwest South 5. 0% 10. 0% 15. 0% 20. 0% 25. 0% 30. 0% 35. 0% Northeast Total Note: n = 2, 264 SHRM/EBRI Health Benefits Survey ©SHRM 2014 10

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region, continued) 1. 2% 2. 6% 3. 0% Adopt a value-based insurance design 2. 6% 1. 2% Provide an employee subsidy for coverage on the private exchange 0. 0% West Midwest South 5. 1% 2. 6% 1. 5% 2. 1% 0. 9% 0. 7% 1. 3% 0. 2% Adopt reference pricing 2. 8% 1. 8% Eliminate coverage for part-time workers Eliminate coverage 3. 6% 1. 0% 1. 6% 0. 7% 0. 5% 0. 6% 1. 0% 2. 0% Northeast 3. 0% 4. 0% 5. 0% 6. 0% Total Note: n = 2, 279 SHRM/EBRI Health Benefits Survey ©SHRM 2014 11

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region) Comparisons by region • Organizations in the South and Midwest are more likely than organizations in the West to require spouses to get health care coverage through their own employer. Comparisons by region South Midwest > West • Organizations in the Northeast are more likely than organizations in the South and West to provide an employee subsidy for coverage on the private exchange. Comparisons by organization staff size Northeast > South West Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 12

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region) Comparisons by region • Organizations in the South are more likely than organizations in the West to add wellness rewards or penalties. Comparisons by region South > West Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 13

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by sector) 27. 3% 27. 5% 25. 3% 27. 0% 26. 3% Add wellness rewards or penalties 4. 9% 8. 2% 6. 3% 7. 9% Require spouses to get coverage through own employer 7. 7% 6. 4% 6. 9% 6. 7% Institute spousal surcharge Create tiered networks Move to private exchange 0. 0% Government Nonprofit 3. 8% 4. 4% 3. 5% 2. 5% 3. 6% 1. 6% 2. 7% 3. 7% 2. 8% 3. 2% 5. 0% Privately owned for-profit 10. 0% 15. 0% 20. 0% Publicly owned for-profit 25. 0% 30. 0% Total Note: n = 2, 279 SHRM/EBRI Health Benefits Survey ©SHRM 2014 14

Do You Plan to Make Any of The Following Changes to Your Health Care Plans in 2015? (by sector, continued) 2. 7% 2. 5% 2. 4% 2. 6% Adopt a value-based insurance design 1. 6% Provide an employee subsidy for coverage on the private exchange 0. 9% 0. 5% Eliminate coverage Adopt reference pricing 3. 1% 2. 6% 1. 4% 1. 2% 1. 3% Eliminate coverage for part-time workers 0. 0% 2. 5% 3. 8% 1. 1% 1. 2% 0. 9% 1. 0% 0. 4% 0. 6% 1. 6% 0. 0% 0. 5% 1. 0% 1. 5% 2. 0% 2. 5% 3. 0% 3. 5% 4. 0% Government Nonprofit Privately owned for-profit Publicly owned for-profit Total Note: n = 2, 279 SHRM/EBRI Health Benefits Survey ©SHRM 2014 15

Do You Plan to Make Any of The Following Changes to Your Health Care Plans in 2015? (by business activity) Add wellness rewards or penalties 19. 7% Require spouses to get coverage through own employer 7. 6% 9. 0% 6. 9% 7. 9% Institute spousal surcharge 6. 1% 8. 7% 5. 9% 6. 7% Create tiered networks Move to private exchange 0. 0% Services Manufacturing 26. 1% 29. 2% 26. 3% 4. 0% 2. 8% 3. 2% 3. 6% 3. 3% 2. 8% 2. 7% 3. 2% 5. 0% 10. 0% 15. 0% 20. 0% 25. 0% 30. 0% 35. 0% Consulting Total Note: n = 2, 264 SHRM/EBRI Health Benefits Survey ©SHRM 2014 16

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by business activity, continued) 2. 8% 2. 5% 2. 1% 2. 6% Adopt a value-based insurance design 2. 3% 2. 6% Provide an employee subsidy for coverage on the private exchange 2. 6% 1. 4% 1. 0% 1. 6% 1. 3% Eliminate coverage for part-time workers Eliminate coverage 4. 3% 0. 8% 1. 0% 2. 1% 1. 0% 0. 4% Adopt reference pricing 1. 0% 0. 5% 0. 6% 0. 0% 0. 5% 1. 0% 1. 5% 2. 0% 2. 5% 3. 0% 3. 5% 4. 0% 4. 5% Services Manufacturing Consulting Total Note: n = 2, 264 SHRM/EBRI Health Benefits Survey ©SHRM 2014 17

Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by business activity) Comparison by business activity • Manufacturing organizations are more likely than consulting organizations to add wellness rewards or penalties. Comparison by business activity Manufacturing > Consulting Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 18

Do You Expect Your Organization to Hit the Excise Tax in 2018? 15% 85% No Yes Note: n = 1, 803 SHRM/EBRI Health Benefits Survey ©SHRM 2014 19

Do You Expect Your Organization to Hit the Excise Tax in 2018? (by staff size) 750 or more FTEs 23. 9% 76. 1% Fewer than 750 FTEs 13. 2% 86. 8% Total 15. 0% 85. 0% 0. 0% 20. 0% 40. 0% Yes 60. 0% 80. 0% 100. 0% 120. 0% No Note: n = 1, 713 SHRM/EBRI Health Benefits Survey ©SHRM 2014 20

Do You Expect Your Organization to Hit the Excise Tax in 2018? (by staff size) Comparison by organization staff size • Organizations with 750 or more FTEs are more likely than organizations with fewer than 750 FTEs to expect to hit the excise tax in 2018. Comparison by organization staff size 750 or more FTEs > Fewer than 750 FTEs Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 21

Do You Expect Your Organization to Hit the Excise Tax in 2018? (by region) West 14. 5% 85. 5% Midwest 13. 7% 86. 3% South 13. 9% 86. 1% Northeast Total 0. 0% 18. 8% 81. 2% 15. 0% 85. 0% 20. 0% 40. 0% 60. 0% Yes 80. 0% 100. 0% 120. 0% No Note: n = 1, 791 SHRM/EBRI Health Benefits Survey ©SHRM 2014 22

Do You Expect Your Organization to Hit the Excise Tax in 2018? (by sector) Government 27. 5% 72. 5% Nonprofit 13. 1% 86. 9% Privately owned for-profit 12. 9% 87. 1% Publicly owned for-profit Total 18. 7% 81. 3% 15. 0% 0. 0% 85. 0% 20. 0% 40. 0% Yes 60. 0% 80. 0% 100. 0% 120. 0% No Note: n = 1, 791 SHRM/EBRI Health Benefits Survey ©SHRM 2014 23

Do You Expect Your Organization to Hit the Excise Tax in 2018? (by sector) Comparison by sector • Government agencies are more likely than privately owned for-profit or nonprofit organizations to expect to hit the excise tax in 2018. Comparison by sector Government > Privately owned for-profit Nonprofit Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 24

Do You Expect Your Organization to Hit the Excise Tax in 2018? (by business activity) Services 15. 7% 84. 3% Manufacturing 14. 2% 85. 8% Consulting 10. 4% Total 0. 0% 89. 6% 15. 0% 85. 0% 20. 0% 40. 0% 60. 0% Yes 80. 0% 100. 0% 120. 0% No Note: n = 1, 776 SHRM/EBRI Health Benefits Survey ©SHRM 2014 25

Which Plan(s) Do You Expect to Hit the Excise Tax? Preferred provider organization (PPO) 74. 3% Health maintenance organization (HMO) 18. 5% Point of service (POS) 17. 3% Consumer-driven health plan 7. 6% Exclusive provider organization (EPO) 4. 8% Indemnity (fee for service) 1. 2% Other 1. 6% 0. 0% 10. 0% 20. 0% 30. 0% 40. 0% 50. 0% 60. 0% 70. 0% 80. 0% Note: n = 249 SHRM/EBRI Health Benefits Survey ©SHRM 2014 26

Which Plan(s) Do You Expect to Hit the Excise Tax? (by staff size) 80. 0% 72. 2% 74. 3% Preferred provider organization (PPO) 17. 1% 19. 5% 18. 5% Health maintenance organization (HMO) 11. 4% Point of service (POS) 19. 5% 17. 3% Consumer-driven health plan 7. 1% 7. 7% 7. 6% Exclusive provider organization (EPO) 7. 1% 3. 6% 4. 8% Indemnity (fee for service) 1. 4% 1. 2% Other 1. 4% 1. 8% 1. 6% 0. 0% 10. 0% 20. 0% 30. 0% 40. 0% 50. 0% 60. 0% 70. 0% 80. 0% 90. 0% 750 or more FTEs Fewer than 750 FTEs Total Note: n = 239 SHRM/EBRI Health Benefits Survey ©SHRM 2014 27

Which Plan(s) Do You Expect to Hit the Excise Tax? (by region) 83. 7% 81. 0% 73. 3% 63. 0% 74. 3% Preferred provider organization (PPO) Health maintenance organization (HMO) Point of service (POS) Consumer-driven health plan Exclusive provider organization (EPO) Indemnity (fee for service) Other 11. 1% 15. 1% 18. 5% 9. 3% 11. 1% 17. 4% 17. 3% 0. 0% 9. 5% 11. 6% 3. 7% 7. 6% 4. 7% 3. 2% 2. 3% 11. 1% 4. 8% 0. 0%2. 3% 1. 9% 1. 2% 0. 0% 1. 2% 5. 6% 1. 6% 34. 9% 31. 5% 0. 0% 10. 0% 20. 0% 30. 0% 40. 0% 50. 0% 60. 0% 70. 0% 80. 0% 90. 0% West Midwest South Northeast Total Note: n = 246 SHRM/EBRI Health Benefits Survey ©SHRM 2014 28

Which Plan(s) Do You Expect to Hit the Excise Tax? (by region) Comparisons by region • Organizations in the West are more likely than organizations in the South or Midwest to expect HMO plans to hit the excise tax. Comparisons by region West South Midwest > • Organizations in the Northeast are more likely than organizations in the Midwest and West to expect POS plans to hit the excise tax. Comparisons by organization staff size Northeast > Midwest West Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 29

Which Plan(s) Do You Expect to Hit the Excise Tax? (by sector) 74. 4% 67. 9% 75. 7% 80. 6% 74. 3% Preferred provider organization (PPO) Health maintenance organization (HMO) Point of service (POS) Consumer-driven health plan Exclusive provider organization (EPO) Indemnity (fee for service) Other 21. 4% 15. 7% 18. 5% 35. 9% 5. 6% 15. 4% 23. 2% 18. 3% 17. 3% 5. 1% 5. 4% 7. 0% 13. 9% 7. 6% 3. 6% 7. 8% 2. 8% 4. 8% 1. 8% 0. 9% 2. 8% 1. 2% 5. 1% 0. 9% 2. 8% 1. 6% 0. 0% 10. 0% 20. 0% 30. 0% 40. 0% 50. 0% 60. 0% 70. 0% 80. 0% 90. 0% Government Nonprofit Privately owned for-profit Publicly owned for-profit Total Note: n = 246 SHRM/EBRI Health Benefits Survey ©SHRM 2014 30

Which Plan(s) Do You Expect to Hit the Excise Tax? (by sector) Comparison by sector • Government agencies are more likely than privately owned for-profit or publicly owned for-profit organizations to expect HMO plans to hit the excise tax. Comparison by sector Government > Privately owned for-profit Publicly owned for-profit Note: Only statistically significant differences are shown. SHRM/EBRI Health Benefits Survey ©SHRM 2014 31

Which Plan(s) Do You Expect to Hit the Excise Tax? (by business activity) 75% 73% 67% 74. 3% Preferred provider organization (PPO) 21% 18. 5% Health maintenance organization (HMO) 18% 15% 20% 17. 3% Point of service (POS) 5% 12% 13% 7. 6% Consumer-driven health plan 5% 7% Exclusive provider organization (EPO) 4. 8% Indemnity (fee for service) 1% 2% 1. 2% Other 2% 1. 6% 0. 0% Services 10. 0% 20. 0% Manufacturing 30. 0% 40. 0% Consulting 50. 0% 60. 0% 70. 0% 80. 0% Total Note: n = 244 SHRM/EBRI Health Benefits Survey ©SHRM 2014 32

What Actions, if Any, Will You Take to Avoid the Excise Tax? 35. 0% 29. 4% 30. 0% 25. 0% 20. 0% 16. 5% 15. 3% 15. 0% 10. 6% 9. 4% 10. 0% 4. 7% 5. 0% 4. 7% 3. 5% 2. 4% ad er er O th e vi c es ng ok br Fo llo w e iv at El im ex in a ch a te ot pl hi an ng Pr du de In H ig h- N pl al th he ct ib ee pl oy em e as an n bu tri co n e uc ed R cr e tio ag co ve r e ng ha C le s pl an w tk no no o D e 0. 0% Note: n = 170 SHRM/EBRI Health Benefits Survey ©SHRM 2014 33

Demographics SHRM/EBRI Health Benefits Survey ©SHRM 2014 34

Demographics: Organization Industry Percentage Services—professional, scientific, technical 20% Health care, social assistance 17% Manufacturing (durable goods) 14% High-tech 13% Consulting 12% Business support services 11% Finance 10% Manufacturing (nondurable goods) 9% Retail/wholesale trade 8% Government/public administration—state/local 8% Educational services 7% Publishing, broadcasting, other media 6% Religious, grant-making, civic, professional and similar organizations 6% Transportation, warehousing 6% Note: n = 3, 329. Total number of respondents and percentage for this question exceeded the overall sample size due to multiple response options. SHRM/EBRI Health Benefits Survey ©SHRM 2014 35

Demographics: Organization Industry (continued) Percentage Construction, mining, oil and gas 4% Insurance 4% Services—accommodation, food and drinking places 4% Arts, entertainment, recreation 3% Utilities 3% Telecommunications 3% Real estate, rental, leasing 3% Repair and maintenance 3% Association—professional/trade 1% Biotech 1% Pharmaceutical 1% Waste management and remediation services 1% Government/public administration—federal 1% Note: n = 3, 329. Total number of respondents and percentage for this question exceeded the overall sample size due to multiple response options. SHRM/EBRI Health Benefits Survey ©SHRM 2014 36

Demographics: Organization Sector Privately owned for profit 53% Nonprofit 23% Publicly owned for-profit Government 16% 9% Note: n = 3, 302. Percentages do not equal 100% due to rounding. SHRM/EBRI Health Benefits Survey ©SHRM 2014 37

Demographics: Organization Staff Size 1 to 99 employees 37% 100 to 499 employees 38% 500 to 2, 499 employees 17% 2, 500 to 24, 999 25, 000 or more employees 8% 1% Note: n = 3, 031. Percentages do not equal 100% due to rounding. SHRM/EBRI Health Benefits Survey ©SHRM 2014 38

Demographics: Region 38% South Midwest West Northeast 26% 18% Note: n = 3, 289. SHRM/EBRI Health Benefits Survey ©SHRM 2014 39

Demographics: Business Activity 65% Services Manufacturing Consulting 26% 9% Note: n = 3, 277. SHRM/EBRI Health Benefits Survey ©SHRM 2014 40

Demographics: Organizational Level [VALUE], Business unit/work location [VALUE], Corporate (companywide) Note: n = 3, 190. SHRM/EBRI Health Benefits Survey ©SHRM 2014 41

Survey Methodology • • Response rate = 14% 3, 329 HR professionals from a randomly selected sample of SHRM’s membership Margin of error +/- 5% Survey fielded February 4 to April 7, 2014 SHRM/EBRI Health Benefits Survey ©SHRM 2014 42

About SHRM Research For more survey/poll findings, visit shrm. org/surveys For more information about SHRM’s Customized Research Services, visit shrm. org/customizedresearch Follow us on Twitter @SHRM_Research Project leader: Andrew Mariotti, senior researcher, SHRM Research Project contributors: Steven Hyde, research coordinator, SHRM Research Joseph Coombs, senior analyst, SHRM Research Copy editor: Katya Scanlan, SHRM Knowledge Center SHRM/EBRI Health Benefits Survey ©SHRM 2014 43

About SHRM and EBRI SHRM Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275, 000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm. org. EBRI The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions. The work of EBRI is made possible by funding from its members and sponsors, which include a broad range of public, private, for-profit and nonprofit organizations. For more information go to www. ebri. org or www. asec. org SHRM/EBRI Health Benefits Survey ©SHRM 2014 44