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  • 1. SHRM Survey Findings: Health Care Reform—Impacton Health Care Coverage and CostsJune 16, 2013
  • 2. • This is the second part of a two-part survey findings about the impact of the PatientProtection and Affordable Care Act (PPACA) on organizations. This section looks at currentand future health care coverage benefits, expected future costs of health care coverageand the impact of the PPACA on employee benefits. 2013 data are compared to the 2010and 2011 data where applicable. The results are broken into the following sections: Health Care Coverage. Health Care Costs. Future Impact of the PPACA. Demographics.• Part one, “Health Care Reform—Challenges and Strategies,” examines the challenges thathuman resource professionals are facing and the strategies they are using to handle thenew regulations.• Additional SHRM resources on health care reform are available at shrm.org/healthcareHealth Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 2Introduction
  • 3. • To which groups are organizations currently offering health care coverage? The vast majority oforganizations offer health care coverage to full-time employees (99%), dependents of employees(92%) and the spouse of employees (92%). Currently, 39% of organizations offer coverage to part-time employees, which will reportedly increase to 46% in 2014. Coverage for domestic partners ofemployees is offered by 43% of organizations. Larger organizations are more likely than smaller organizations to offer health carecoverage to part-time employees and domestic partners of employees.• How many hours per week do employees need to work to be eligible for health care coverage?Currently, 39% of organizations require 30 hours per week to be eligible for coverage. Thispercentage will increase to 60% in 2014 when the PPACA Employer Mandate becomeseffective, whereas the percentage of organizations requiring more than 30 hours per week willdecrease from 33% to 13%. About one-quarter (28%) currently offer health care coverage toemployees who work less than 30 hours. Larger organizations are more likely than smaller organizations to currently offer health carecoverage to employees who work less than 30 hours per week.• How do organizations fund their primary medical benefit? Just over one-half of organizationshave a fully insured medical benefit (52%), and 48% are self-insured. Larger organizations are more likely than smaller organizations to be self-insured. Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and government organizations to be self-insured.• Are organizations following nondiscrimination rules? The majority (88%) of organizations arecurrently following nondiscrimination rules, and 11% are waiting for more guidance.Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 3Key Findings: Health Care Coverage
  • 4. • Did organizations receive medical loss ratio rebates in August 2012? One out of five organizations(21%) received medical loss ratio rebates in 2012. About two-thirds of those organizationsdistributed either a portion (40%) or the full amount (28%) of those rebates to employeeparticipants in the plan. Twenty-one percent applied the rebate toward future participantpremiums, and 11% applied it toward other benefit enhancements.• How do organization expect the PPACA to affect health care coverage costs in 2014? Themajority (84%) indicates costs will increase, 15% expect no change, and 1% foresee a decrease incosts. Of those expecting increased costs, over one-half (55%) predict a 1% to 10% increase, 19%forecast an 11%-15% increase, and one-quarter (26%) expect an increase of 16% or more. Generally, smaller organizations expect a greater increase in costs compared with largerorganizations.• If organizations have increased or decreased health care coverage costs in 2014, do they plan topass them to their employees? Most organizations (83%) are likely or highly likely to pass onincreased costs to their employees, and about one-half (51%) are likely or highly likely to pass oncost savings to their employees. Smaller organizations are more likely than larger organizations to be highly likely to pass costsavings on to employees. Privately owned for-profit organizations are more likely than publicly owned for-profitorganizations to be highly likely to pass on increased health care coverage costs toemployees. Publicly owned for-profit organizations are more likely than organizations in other sectors tobe likely to pass on increased health care coverage costs to employees.Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 4Key Findings: Health Care Costs
  • 5. • Are organizations concerned about losing employees through voluntary turnover when the publicexchanges become available? Sixty-nine percent of organizations are not concerned that theavailability of public exchanges will affect voluntary turnover, and one-quarter (26%) aresomewhat concerned. Few organizations (5%) are very or extremely concerned.• How will the level of health-related employee benefits change as a result of the PPACA? Two-thirds (66%) of organizations anticipate they will offer the same level of benefits, and 23% expectto decrease their benefits offerings. Eleven percent of organizations expect increased orimproved health benefits.• How will the level of nonhealth-related employee benefits change as a result of the PPACA? Themajority (85%) of organizations indicate that nonhealth-related benefits (e.g., financialbenefits, retirement benefits, leave benefits) would remain at the same level. One out of 10 (10%)expect a decrease in nonhealth benefits, and 5% anticipate an increase in the level of benefits.• What type of nonhealth benefits would organizations reduce or cut? Of organizations that expecta decrease in nonhealth benefits, 45% would reduce financial and compensation or retirementsavings and planning benefits. Two out of five organizations (40%) indicate they would reduceemployee programs and services. About one-third (34%) would reduce leave benefits.Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 5Key Findings: Future Impact of the PPACA
  • 6. • It is important to have a communication strategy in place to explain 2014 healthbenefits, especially for employees who will be newly eligible for health care coverage. Anincreasing number of organizations will be providing health care benefits to part-time workers andreducing the number of hours required to be eligible for coverage. Therefore, some organizationsare likely to have more first-time enrollees in their health care program who may not be familiarwith benefits offerings and enrollment procedures.• As most organizations expect health care cost increases in 2014 due to the PPACA, actions needto be taken now to prepare for the impact of these costs. Organizations should considerevaluating their overall employee compensation and benefits package as they think aboutchanges to health and nonhealth employee benefits. Almost one-quarter (23%) of organizationsexpect that they will have decreased health benefits as a result of the PPACA, and 10% expect adecrease in nonhealth benefits. It will be important for organizations to strategically implementbenefits changes that have an impact on recruitment and retention of employees.Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 6What do these findings mean for the HR profession?
  • 7. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 7Health Care Coverage
  • 8. To which groups does your organization offer health carecoverage?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 8Note: n = 731. Percentages do not equal 100% due to multiple response options.1%44%46%90%91%99%1%43%39%92%92%99%None, our organization does not offeremployee health care coverageDomestic partner of employeePart-time employeesSpouse of employeeDependents of employeeFull-time employeesCurrentcoverage2014coverage
  • 9. To which groups does your organization currently offer health carecoverage?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 9Note: Only statistically significant differences are shown.Comparisons by organization staff size:Part-time employees500 to 2,499 employees (49%)2,500 to 24,999 employees (61%)>1 to 99 employees (19%)100 to 499 employees (33%)Comparisons by organization staff size• Organizations with 500 to 24,999 employees are more likely than organizations with 1 to 499 employees to currently offerhealth care coverage to part-time employees.Comparisons by organization staff size:Domestic partner of employee2,500 to 24,999 employees (60%)25,000 or more employees (77%)>1 to 99 employees (35%)100 to 499 employees (40%)500 to 2,499 employees (41%)• Organizations with 2,500 or more employees are more likely than organizations with 1 to 2,499 employees to currentlyoffer health care coverage to employees’ domestic partners.
  • 10. How many hours per week do employees need to work to beeligible for health care coverage?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 10n = 69913%60%27%33%39%28%More than 30 hours30 hoursLess than 30 hoursCurrentcoverage2014coverage
  • 11. How many hours per week do employees need to work to beeligible for health care coverage?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 11Note: Only statistically significant differences are shown.Comparisons by organization staff size:Less than 30 hours per week500 to 2,499 employees (37%)2,500 to 24,999 employees (49%)25,000 or more employees (55%)>1 to 99 employees (16%)100 to 499 employees (18%)Comparisons by organization staff size• Organizations with 500 or more employees are more likely than organizations with 1 to 499 employees to currently offerhealth care coverage to employees who work less than 30 hours per week.
  • 12. How is your organization’s primary medical benefit funded?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 12n = 617Fullyinsured, 51%Self-insured, 49%2014Fullyinsured, 52%Self-insured, 48%Current
  • 13. How is your organization’s primary medical benefit funded?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 13Note: Only statistically significant differences are shown.Comparisons by organization sector• Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and governmentorganizations to currently have a self-insured primary medical benefit.Comparisons by organization sector:Self-insuredPublicly owned for-profit (71%) >Privately owned for-profit (37%)Nonprofit (38%)Government (50%)Comparisons by organization staff size:Self-insured500 to 2,499 employees (64%)2,500 to 24,999 employees (80%)25,000 or more employees (86%)>1 to 99 employees (12%)100 to 499 employees (30%)Comparisons by organization staff size• Organizations with 500 or more employees are more likely than organizations with 1 to 499 employees to currently havea self-insured primary medical benefit.
  • 14. Is your organization currently following nondiscrimination rules foryour health care plan?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 14Note: n = 403. Only respondents whose organizations had fully insured primary medical benefits were asked this question.1%11%88%No, but for other reasonsNo, we are waiting for more guidanceYes, we are currently followingnondiscrimination rulesNondiscrimination Rules: Under the PPACA, employers subject to the new nondiscrimination provisions mustrefrain from discriminating in favor of highly compensated employees with regard to health benefits. TheInternal Revenue Service has delayed enforcement of these new rules until regulations or further guidancehas been issued.
  • 15. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 15Health Care Costs
  • 16. Did your organization receive any medial loss ratio rebates inAugust 2012?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 16n = 568Yes, 21%No, 79%Medical Loss Ratio Rebates: Theserebates were mandated under thePPACA whenever health insurers didnot spend at least a certainpercentage (generally, 80% to 85%)of the prior year’s health insurancepremiums on health care services.The rebates received in August 2012covered premiums collected for the2011 plan year.
  • 17. What did your organization do with the medical loss ratio rebatesreceived in August 2012?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 17Note: n = 117. Only respondents whose organizations received medical loss ratio rebates were asked this question.Percentages do not equal 100% due to multiple response options.5%11%21%28%40%OtherApplied the rebate toward other benefitenhancementsApplied the rebate toward futureparticipant premium paymentsDistributed the full amount of the rebate toemployee participants in the planDistributed a proportion of the rebate toemployee participants in the plan
  • 18. In 2014, as a result of the PPACA, do you expect yourorganization’s overall health care coverage costs toincrease, stay the same or decrease?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 18n = 625Increase, 84%Stay thesame, 15%Decrease,1%
  • 19. In 2014, how much do you expect your organization’s health carecosts to increase?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 19Note: n = 490. Only respondents whose organizations expected increased costs in 2014 were asked this question.26%19%40%15%16% or greaterincrease11%-15% increase6%-10% increase1%-5% increase
  • 20. In 2014, how much do you expect your organization’s health carecosts to increase?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 20Note: Only statistically significant differences are shown.Comparisons by organization staff size:1%-5% increase2,500 to 24,999 employees (26%) >1 to 99 employees (9%)100 to 499 employees (12%)Comparisons by organization staff size• Organizations with 2,500 to 24,999 employees are more likely than organizations with 1 to 499 employees to expect theirhealth care costs to increase by 1% to 5%.Comparisons by organization staff size:11%-15% increase100 to 499 employees (26%) > 2,500 to 24,999 employees (7%)• Organizations with 100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to expecttheir health care costs to increase by 11% to 15%.Comparisons by organization staff size:16% or more increase1 to 99 employees (38%) > 500 to 2,499 employees (18%)• Organizations with 1 to 99 employees are more likely than organizations with 500 to 2,499 employees to expect theirhealth care costs to increase by 16% or more.
  • 21. How likely is your organization to pass on to employees anyincreased or decreased health care coverage costs?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 21Note: Percentages may not total 100% due to rounding. Respondents who answered “don’t know” were excluded fromthese analyses.18%32%33%51%33%13%16%4%Decreased costs(i.e., cost savings)(n = 587)Increased costs(n = 618)2014Highly Likely Likely Unlikely Highly unlikely13%30%38%54%31%13%19%3%Decreased costs(i.e., cost savings)(n = 650)Increased costs(n = 619)2011Highly Likely Likely Unlikely Highly unlikely
  • 22. How likely is your organization to pass on to employees anydecreased (i.e., cost savings) health care coverage costs in 2014?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 22Note: Only statistically significant differences are shown.Comparisons by organization staff sizeComparisons by organization staff size:Highly likely to pass cost savings on to employees1 to 99 employees (29%) > 2,500 to 24,999 employees (12%)• Organizations with 1 to 99 employees are more likely than organizations with 2,500 to 24,999 employees to be highlylikely to pass health care coverage cost savings on to employees.Comparisons by organization staff size:Highly likely to pass cost savings on to employees1 to 99 employees (29%)100 to 499 employees (21%)> 500 to 2,499 employees (9%)• Organizations with 1 to 499 employees are more likely than organizations with 500 to 2,499 employees to be highly likelyto pass health care coverage cost savings on to employees.
  • 23. How likely is your organization to pass on to employees anyincreased health care coverage costs in 2014?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 23Note: Only statistically significant differences are shown.Comparisons by organization sector• Privately owned for-profit organizations are more likely than publicly owned for-profit organizations to be highly likely topass on increased health care coverage costs to employees.Comparisons by organization sector:Highly likely to pass on increased costsPrivately owned for-profit (37%) > Publicly owned for-profit (19%)• Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and governmentorganizations to be likely to pass on increased health care coverage costs to employees.Comparisons by organization sector:Likely to pass on increased costsPublicly owned for-profit (71%) >Privately owned for-profit (47%)Nonprofit (50%)Government (36%)
  • 24. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 24Future Impact of the PPACA
  • 25. How concerned is your organization about losing its employees to voluntaryturnover when public exchanges become available, potentially givingemployees new options to purchase affordable coverage on their own?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 25n = 6802%3%26%69%Extremely concernedVery concernedSomewhat concernedUnconcerned
  • 26. As a result of the PPACA, do you anticipate that yourorganizations health- or nonhealth-related employee benefits willincrease, stay the same or decrease?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 2610%85%5%23%66%11%Decreased benefitsSame level of benefitsIncreased/improved benefitsHealth-relatedbenefits(n = 677)Nonhealth-related benefits(n = 651)
  • 27. Which of the following nonhealth-related benefits would yourorganization be most likely to reduce or cut?Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 27Note: n = 53. Percentages do not equal 100% due to multiple response options. Only respondents who indicated theirorganization’s nonhealth-related benefits would decrease were asked this question.17%13%17%21%23%26%34%40%45%45%Other benefitsHousing and relocationFlexible working benefitsBusiness travelProfessional and career developmentFamily-friendly benefitsLeave benefitsEmployee programs and servicesRetirement savings and planningFinancial and compensation benefits
  • 28. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 28Demographics
  • 29. Demographics: Organization IndustryHealth Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 29Note: n = 751. Percentages do not equal 100% due to multiple response options.PercentageHealth care and social assistance 15%Manufacturing 15%Professional, scientific and technical services 15%Finance and insurance 13%Educational services 10%Government agencies 9%Transportation and warehousing 6%Retail trade 4%Utilities 4%Accommodation and food services 3%Administrative and support and waste management and remediation services 3%Construction 3%
  • 30. Demographics: Organization Industry (continued)Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 30Note: n = 751. Percentages do not equal 100% due to multiple response options.PercentageMining, quarrying, and oil and gas extraction 3%Religious, grant-making, civic, professional and similar organizations 3%Wholesale trade 3%Information 2%Real estate and rental and leasing 2%Repair and maintenance 2%Agriculture, forestry, fishing and hunting 1%Arts, entertainment, and recreation 1%Personal and laundry services <1%Other industry 11%
  • 31. Demographics: Organization SectorHealth Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 31Note: n = 751. Percentages do not total 100% due to rounding.47%24%16%10%4%Privately owned for-profitNonprofitPublicly owned for-profitGovernmentOther
  • 32. Demographics: Organization Staff SizeHealth Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 32n = 81122%35%24%16%3%1 to 99 employees100 to 499 employees500 to 2,499 employees2,500 to 24,999 employees25,000 or more employees
  • 33. n = 764Demographics: OtherHealth Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 33U.S.-based operations only 81%Multinational operations 19%Single-unit organization: An organizationin which the location and theorganization are one and the same40%Multi-unit organization: An organizationthat has more than one location60%Multi-unit headquarters determines HRpolicies and practices68%Each work location determines HR policiesand practices3%A combination of both the work locationand the multi-unit headquartersdetermines HR policies and practices29%Is your organization a single-unit organization ora multi-unit organization?For multi-unit organizations, are HR policies andpractices determined by the multi-unit headquarters,by each work location or by both?Does your organization have U.S.-based operations (business units) only,or does it operate multinationally?n = 764n = 480Midwest 38%South 27%Northeast 18%West 16%Note: n = 731. Percentages do not equal100% due to rounding.U.S. Region
  • 34. • Response rate = 14%• 818 HR professionals from a randomly selected sample of SHRM’s membership with the jobfunction of benefits or compensation or with the job title of manager or aboveparticipated in this survey• Margin of error +/-3%• Survey fielded May 2-16, 201334SHRM Survey Findings: Health Care Reform—Impacton Health Care Coverage and CostsSurvey Methodology
  • 35. • Health Care Reform Resource Page: shrm.org/healthcareHealth Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 35Additional SHRM Resources
  • 36. • For more survey/poll findings, visit www.shrm.org/surveys• For more information about SHRM’s Customized Research Services, visitwww.shrm.org/customizedresearch• Follow us on Twitter @SHRM_ResearchClick on "Insert/Header&Footer" and Type Survey Title Here ©SHRM 2013 36About SHRM ResearchProject leader:Tanya Mulvey, researcher, talent management & workforce skills, SHRM ResearchProject contributors:Alexander Alonso, Ph.D., SPHR, vice president, SHRM ResearchEvren Esen, manager, Survey Research Center, SHRM ResearchCopy editor:Katya Scanlan, SHRM Knowledge Center
  • 37. The Society for Human Resource Management (SHRM) is the world’s largest associationdevoted to human resource management. Representing more than 250,000 members inover 140 countries, the Society serves the needs of HR professionals and advances theinterests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapterswithin the United States and subsidiary offices in China and India.Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 37About SHRM