2015 strategic benefits―health care

October 15, 2015

SHRM Survey Findings: 2015 Strategic Benefits—Health Care

2

IntroductionThe 2015 Strategic Benefits Survey is part of a survey series administered annually since 2012 by the Society for Human Resource Management (SHRM). This research is used to determine whether various employee benefits are leveraged to recruit and retain top talent. The six-part series features the following topics:

Part 1: Wellness Initiatives Part 2: Flexible Work Arrangements Part 3: Health Care Part 4: Leveraging Benefits to Retain Employees Part 5: Leveraging Benefits to Recruit Employees Part 6: Assessment and Communication of Benefits

DefinitionsFor the purpose of this survey, total health care costs include employer-paid premiums, administration costs and any individual medical claims covered by the employer.

2015 Strategic Benefits Survey—Health Care ©SHRM 2015

Introduction and Definitions

• Health care coverage: The vast majority (96%) of HR professionals indicated their organizations provided employer-based health care insurance plans to their employees; just 2% of organizations indicated they provided a subsidy for the cost of health care insurance and access to a private exchange to purchase coverage.

» Of those organizations that provided employer-based health care insurance plans or no health care coverage, more than two-thirds (72%) had “not at all” considered providing subsidies to their employees to purchase health care insurance through a private exchange. Very few (3%) planned on offering subsidies in 2016, 2017 or 2018; about two-fifths (42%) were “not sure.”

• Anticipated changes in total health care costs: Three-quarters (76%) of HR professionals said they anticipated their organizations’ total health care costs would increase between plan year 2014 and plan year 2015; of those, the average anticipated increase in total health care costs was 13%.

• Actual changes in total health care costs: About three-quarters (76%) of respondents reported an increase in total health care costs in plan year 2014 compared with plan year 2013.

• Controlling the costs of health care: About one-half (46%) of respondents indicated their organizations increased the employee share contributed to the total costs of health care compared with the previous plan year.

» Looking into plan year 2016, about one-quarter (25%) of respondents reported their organizations plan to increase the employee share contributed to the total costs of health care; however, the majority were not sure (54%).

3

Key Findings


• Controlling the costs of health care (continued): In plan year 2015, respondents indicated their organization was paying, on

average, 76% of total employee health care costs. For the purposes of controlling the costs of health care, about one-half of

organizations reported they created an organizational culture that promotes health and wellness (53%), a statistically significant increase from 2013 (41%), and they offer consumer-directed health plans (e.g., HRAs, HSAs) (48%). About one-third offer a variety of PPO plans, including those with high and low deductibles and co-pays (35%), provide incentives or rewards related to health and wellness (33%), and provide educational initiatives related to health and wellness (32%).

However, there was a statistically significant decrease in respondents who reported their organizations provided incentives or rewards related to health and wellness since 2014 (43%) and educational initiatives related to health and wellness since 2014 (56%), 2013 (45%) and 2012 (52%).

• Most successful activity to help control the costs of health care: About one-fifth (21%-22%) of respondents indicated that offering consumer-directed health plans and creating an organizational culture that promotes health and wellness were the most successful activities in terms of helping control the costs of health care; 14% indicated the most successful activity was offering a variety of PPO plans, including those with high and low deductibles and co-pays. 4

Key Findings (continued)


• Most valuable non-health care benefit: Two-fifths (40%) of respondents indicated they thought the non-health care benefit employees would value most in the next three to five years would be retirement savings and planning benefits; about one-fifth indicated they thought financial and compensation (18%) or flexible working (16%) benefits would be the most valued.


Key Findings (continued)

• Despite some uncertainty about the effects of the Patient Protection and Affordable Care Act (PPACA) on operating expenses, recent research has shown that the majority of organizations do not plan to abandon health care coverage for their employees, even with an option of doing so and paying a penalty in accordance with the act.1 Maintaining coverage can be seen as an effective tool for recruitment and retention strategies, considering that other SHRM research has shown health care is the most highly-valued benefit among employees.2

• Moving forward, HR professionals whose organizations do maintain coverage can expect to perform extensive cost analyses on their health care plans. Health care expenses will continue to increase, according to the majority of HR professionals, and employees will be expected to shoulder a higher share of that burden. Nearly one-half of HR professionals said they increased their employees’ share of health care costs in 2015.

• HR professionals should consider health and wellness programs as another means of keeping health care expenses in check. There were significant increases in the percentage of organizations that offered several of these benefits in the past five years, according to SHRM’s 2015 Employee Benefits survey report. Among the wellness initiatives implemented by a higher number of organizations in 2015 were wellness programs (general), health and lifestyle coaching, smoking cessation programs, and preventive programs specifically targeting employees with chronic health conditions, among others.

6

What Do These Findings Mean for the HR Profession?


1 SHRM Survey Findings: Health Care Reform—2015 Update2 2015 Strategic Benefits Survey—Communicating Benefits; 2015 Employee Job Satisfaction and Engagement Report

2015 Strategic Benefits Survey—Health Care ©SHRM 2015 7

Key Findings

Health Care

8

What do these findings mean for the HR profession?Health Care Coverage Provided to Employees


Yes, we provide employer-based health care insurance plans

Yes, we provide a subsidy for the cost of health care insurance and access to a private exchange to purchase coverage

No, but we contribute toward the cost of purchasing health care insurance in other ways

No

96%

2%

1%

0%

Note: n = 440. Percentages may not total 100% due to rounding.

9

What do these findings mean for the HR profession?

Extent Organizations Have Considered and/or Plan to Provide Subsidies to Employees to Purchase Health Care Insurance


To a large extent

To a moderate extent

To a small extent

Not at all

2%

5%

21%

72%

Yes, in 2016, 2017 or 2018

No

Not sure

3%

55%

42%

n = 409 n = 412

Plans to Offer Subsidies to Purchase Health Care Insurance Through a

Private Exchange

Extent Organization Has Considered Providing Subsidies to Purchase Health

Care Insurance Through a Private Exchange

Note: Respondents whose organizations provided employer-based health care insurance plans or did not provide health care coverage were asked this question.

10

What do these findings mean for the HR profession?Organization Concern About Controlling Health Care Costs


Very concerned

Somewhat concerned

Not very concerned

Not at all concerned

74%

25%

1%

0%

79%

20%

1%

0%

83%

16%

1%

0%

84%

16%

1%

0%

2012 (n = 437)2013 (n = 411)2014 (n = 356)2015 (n = 408)

1, 2

1, 2

Note: Respondents whose organizations provided health care coverage were asked this question. Respondents who answered “not sure” were excluded from this analysis. Percentages may not total 100% due to rounding. 1Statistically significant difference from 2013. 2Statistically significant difference from 2012.

11

What do these findings mean for the HR profession?Actual Change in Total Health Care Costs


Increased

Remained the same

Decreased

76%

16%

8%

69%

20%

11%

72%

19%

10%

74%

17%

9%

2012 (n = 399)2013 (n = 366)

Note: Respondents whose organizations provided health care coverage were asked these questions. Respondents who answered “not sure” were excluded from the analyses. Percentages may not total 100% due to rounding.

Did your organization’s total health care costs last plan year increase, remain the same, or decrease compared with the previous plan year?


What do these findings mean for the HR profession?Anticipated Change in Total Health Care Costs

Increase

Remain the same

Decrease

76%

18%

5%

5% or less

5%-10%

11%-15%

16%-20%

More than 20%

29%

37%

18%

7%

10%

The average anticipated

increase in total health care

costs is 13%.

Anticipated Percentage Increase in Total Health Care Costs Between Plan Year

2014 and 2015

Anticipated Change in Total Health Care Costs Between Plan Year 2014 and 2015

Note: n = 359. Respondents whose organizations provided health care coverage were asked this question. Respondents who answered “not sure” were excluded from the analyses. Percentages may not total 100% due to rounding.

Note: n = 136. Respondents who indicated they anticipate an increase in their organization’s total health care costs in plan year 2015 (compared with plan year 2014) were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages may not total 100% due to rounding.

13


Yes

46%50%

45%47% 2012 (n = 410,

439)2013 (n = 389, 406)

Yes

No

Not sure

25%

21%

54%

26%

23%

51%

24%

21%

55%

22%

18%

60%


Change in Employee Share Contributed to Total Costs of Health Care

In the next plan year, does your organization plan to increase the

employee share contributed to the total costs of health care?

Did your organization increase the employee share contributed to the total

costs of health care this plan year compared with the previous plan year?

Note: Respondents whose organizations provided health care coverage were asked this question. Response options provided were “yes/no/not sure.” Respondents who answered “not sure” were excluded from this analysis. Only “yes” responses are shown.

Note: Respondents whose organizations provided health care coverage were asked this question.

14

What do these findings mean for the HR profession?Percentage of Total Health Care Costs Paid for by Employer

Yes

No

Not sure

16%

54%

30%

19%

48%

33%

21%

39%

40%

15%

50%

35%

2012 (n = 421)2013 (n = 390)


25% or less

26% to 50%

51% to 75%

76% or more

2%

12%

36%

51%2015 (n = 2...

On average, organizations

are paying 76% of total health care costs in

2015. 1

In the next 3 to 5 years, do you think employees at your organization will be paying the majority (more than half) of

total health care costs?

In plan year 2015, approximately what percentage of total health care costs is

your organization paying?

Note: Respondents whose organizations provided health care coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages may not total 100% due to rounding.

Note: Respondents whose organizations provided health care coverage were asked this question. Percentages may not total 100% due to rounding. 1Statistically significant difference from 2013.

Increased the employee share contributed to the cost of brand name prescription drugs

Increased the employee share contributed to the cost of brand name prescription drugs

Offered HMO health plan in place of more costly health care plans

Managed access to high-cost specialty drugs (i.e., pre-authorization requriements, step therapy, special tiers, etc.)

29%

23%

21%

18%

0.4

0.17

0.390.52

15


Activities Organization Engaged in for the Purpose of Controlling the Costs of Health Care


Created an organizational culture that promotes health and wellness

Offered consumer-directed health plans (e.g., HRAs, HSAs)

Offered a variety of PPO plans, including those with high and low deductibles and co-pays

Provided incentives or rewards related to health and wellness

Provided educational initiatives related to health and wellness

53%

48%

35%

33%

32%

45%

44%

40%

43%

56%

41%

40%

35%

45%

45%

42%

40%

52%

2012 (n = 405)2013 (n = 417)2014 (n = 359)2015 (n = 420)

2 1, 2, 3

1

1, 2, 3

Note: Respondents whose organizations provided health care coverage were asked this question. Percentages do not total 100% due to multiple response options. 1Statistically significant difference from 2014. 2Statistically significant difference from 2013. 3Statistically significant difference from 2012.

16


Activities Organization Engaged in for the Purpose of Controlling the Costs of Health Care (continued)


Placed limits on, or increased cost sharing for, spousal health care coverage

Provided discounted over-the-counter drugs

Placed limits on, or increased cost sharing for, dependent health care coverage

Provided access to health provider cost and quality metrics to aid consumer decision-making

Shifted to narrow and/or tiered health provider networks (i.e., negotiating lower prices with in-network providers)

16%

10%

10%

10%

9%

11%

No longer offered PPO health plans in favor of less costly

health care plans

Offered subsidies for the cost of health care purchased through a private exchange instead of

an employer-based health care insurance plan

Other

None - We have not conducted any activities to control the

costs of health care

4%

3%

7%

6%

0.05

0.07

0.05

0.07

0.09

0.02

0.08

2012 (n = 405)2013 (n = 417)2014 (n = 359)2015 (n = 420)

1

Note: Respondents whose organizations provided health care coverage were asked this question. Percentages do not total 100% due to multiple response options. 1Statistically significant difference from 2012.

Most Successful Activity in Terms of Helping Organization Control the Costs of Health Care


Most Successful Activity

Offered consumer-directed health plans (e.g., HRAs, HSAs) 22%

Created an organizational culture that promotes health and wellness 21%Offered a variety of PPO plans, including those with high and low deductibles and co-pays 14%

Increased the employee share contributed to the total costs of health care 9%

Offered HMO (health maintenance organization) health plan 7%

Provided incentives or rewards related to health and wellness 5%

Placed limits on, or increased cost sharing for, spousal health care coverage 4%Provided educational initiatives related to health and wellness 3%No longer offered PPO plans 2%

Note: n = 366. Respondents whose organizations provided health care coverage and conducted one of more activities to control the costs of health care were asked this question.

Most Successful Activity in Terms of Helping Organization Control the Costs of Health Care (continued)


Note: n = 366. Respondents whose organizations provided health care coverage and conducted one of more activities to control the costs of health care were asked this question. 1 i.e., negotiating lower prices with in-network providers 2 i.e., pre-authorization requirements, step therapy, special tiers, etc.

Most Successful ActivityIncreased the employee share contributed to the cost of brand name prescription drugs 2%Provided access to health provider cost and quality metrics to aid consumer decision-making 2%

Shifted to narrow and/or tiered health provider networks1 1%Placed limits on, or increased cost sharing for, dependent health care coverage 1%Offered subsidies for the cost of health care purchased through a private exchange instead of an employer-based health care plan 1%

Provided discounted over-the-counter drugs 1%

Managed access to high-cost specialty drugs2 0%

Other 5%

In the next three to five years, which non-health care benefit from your organization’s benefits package do you think will be the one your employees most

value?

Most Valuable Non-Health Care Benefit in the Next 3 to 5 Years


Non-Health Care Benefit

Retirement savings and planning benefits 40%Financial and compensation benefits (e.g., financial advice, bonus plans and subsidies, educational assistance) 18%Flexible working benefits (e.g., telecommuting, compressed workweek) 16%Leave benefits 12%Preventive health and wellness benefits (e.g., flu vaccinations, smoking cessation program) 8%

Professional and career development benefits (e.g., professional training) 4%Family-friendly benefits (e.g., adoption assistance, elder care referral service) 1%Housing and relocation benefits 0%Other 1%Note: n = 360. Respondents who answered “not sure” were excluded from this analysis. Percentages may not total 100% due to rounding.


Key Findings

Demographics

21

Note: n = 361. Percentages do not total 100% due to multiple response options.

Percentage

Manufacturing 23%Health care and social assistance 16%Professional, scientific and technical services 12%Finance and insurance 10%Government agencies 8%Educational services 7%Transportation and warehousing 6%Retail trade 6%Construction 5%Utilities 4%Mining, quarrying, and oil and gas extraction 4%

Demographics: Organization Industry


22

Key FinDemographics: Organization Industry (continued)

Note: n = 361. Percentages do not total 100% due to multiple response options.

Percentage

Wholesale trade 4%Administrative and support, and waste management and remediation services 4%Real estate and rental and leasing 3%Accommodation and food services 3%Religious, grant-making, civic, professional and similar organizations 3%Arts, entertainment and recreation 2%Repair and maintenance 2%Information 2%Agriculture, forestry, fishing and hunting 1%Personal and laundry services 0%Other industry 11%


23

Key FinDemographics: Organization Sector

Privately owned for-profit

Nonprofit

Publicly owned for-profit

Government

Other

57%

18%

13%

9%

3%

n = 355


24

Key FinDemographics: Organization Staff Size

n = 343


1 to 99 employees

100 to 499 employees

500 to 2,499 employees

2,500 to 24,999 employees

25,000 or more employees

30%

35%

21%

10%

4%

25

Key FinDemographics: Other


n = 359

U.S.-based operations only 77%

Multinational operations 23%

Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?

n = 360

n = 226

n = 226

Single-unit organization: An organization in which the location and the organization are one and the same.

38%

Multi-unit organization: An organization that has more than one location. 62%

Is your organization a single-unit organization or a multi-unit organization?

For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?

Multi-unit headquarters determines HR policies and practices. 56%

Each work location determines HR policies and practices. 3%

A combination of both the work location and the multi-unit headquarters determines HR policies and practices.

41%

Corporate (companywide) 75%

Business unit/division 11%

Facility/location 14%

What is the HR department/function for which you responded throughout this survey?

26

SHRM Survey Findings:

Survey Methodology

SHRM Survey Findings: Strategic Benefits—Health Care


Survey Methodology:• Response rate = 12%• 461 HR professionals from a randomly selected sample of SHRM’s membership

participated in this survey• Margin of error +/- 5%• Survey fielded May-June 2015

Project Lead:Karen Wessels, researcher, workforce planning, SHRM Research

Project Contributors:Evren Esen, director, SHRM-SCP, Survey Programs, SHRM ResearchBruce Elliott, manager, SHRM-SCP, Compensation and BenefitsJennifer Schramm, manager, SHRM-SCP, Workforce Trends and Forecasting, SHRM Research


Additional SHRM Resources

Health Care Reform Resource Page: shrm.org/healthcare

For more survey/poll findings, visit shrm.org/surveys

For more information about SHRM’s Research Services:» Customized Research Service, visit shrm.org/customizedresearch» Engagement Survey Service, visit shrm.org/peopleinsight» Customized Benchmarking Service, visit shrm.org/benchmarks

Follow us on Twitter @SHRM_Research

http://www.shrm.org/surveys

http://www.shrm.org/customizedresearch

http://www.shrm.org/customizedresearch

http://twitter.com/SHRM_Research

http://twitter.com/SHRM_Research


About 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.

http://www.shrm.org/

2015 strategic benefits―health care

Recruiting & HR