SHRM Survey Findings: State of Employee Benefits in the Workplace—Health Care

December 18, 2013

State of Employee Benefits in the Workplace—Health Care ©SHRM 2013 2

• This is part three of a series of SHRM survey findings examining employee benefits in the workplace.

• The following topics are included in the six-part series titled State of Employee Benefits in the Workplace:

» 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: Communicating benefits

Introduction

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• For the purpose of this survey, total health care costs includes employer-paid premiums, administration costs and any possible individual medical claims covered by the employer.

Definition

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• How are organizations trying to control the costs of health care? The majority (83%) of organizations are “very concerned” about controlling health care costs. The top three activities organizations have engaged in to control health care costs are providing educational initiatives related to health and wellness (45%), increasing employee participation in preventive health and wellness initiatives (43%), and creating an organizational culture that promotes health and wellness (41%).

• Can employees expect to pay a larger portion of total health care costs in the future? Looking into plan year 2014, 24% of organizations reported they plan to increase the employee share contributed to the total costs of health care, whereas 21% do not plan to increase the employee share, and 55% were unsure.

Focusing on the next three to five years, 21% of organizations currently paying the majority or an equal portion of health care costs believe that employees at their organizations will eventually be paying the majority of health care costs.

Key Findings

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• The current expectation of whether employees will take on more of their health care costs is unclear, but organizations are hopeful that the employees’ share contribution will be smaller than employers’ share contribution in the future. Although there was a decline in the number of organizations raising the employee share contribution compared to 2012, a moderate percentage of organizations still chose to implement such policy to battle health care costs. Nevertheless, many organizations are optimistic that employers will cover a larger amount of total health care costs in the future.

• Organizations’ strategies to control health care costs have shifted within the last year, and may continue to transform as organizations comply with the Affordable Care Act (ACA). Compared to last year, more organizations shifted the burden of high health care costs to their employees (e.g., increasing the employee share contribution). This year, however, organizations placed more emphasis on encouraging awareness and engagement of health and wellness. Organizations taking this more proactive approach to support preventive health may see outcomes such as fewer health care claims.

As health care costs continue to increase, HR professionals will have to determine modifications to their organization’s health benefit plan, and whether these changes will have any impact on their organization’s overall total rewards strategy. For instance, will trimming or eliminating health care benefits hinder an organization’s ability to attract and retain talent?

What do these findings mean for the HR profession?

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How did your organization’s total health care costs change from last plan year compared with the plan year before?

Note: Only respondents whose organizations provide health care were asked this question. Respondents who answered “not sure” were excluded from this analysis. Percentages may not total 100% due to rounding.

Increased

Remained the same

Decreased

72%

19%

10%

74%

17%

9%

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

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How concerned is your organization about controlling health care costs?

Note: Only respondents whose organizations provide health care were asked this question. Respondents who answered “not sure” were excluded from this analysis. Percentages may not total 100% due to rounding.

Very con-

cerned

Somewhat concerned

Not very concerned

Not at all concerned

83%

16%

1%

0%

84%

16%

1%

0%

2012 (n = 437)2013 (n = 411)

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Which of the following activities has your organization engaged in for the purpose of controlling the costs of health care?

Note: Only respondents whose organizations provide health care were asked this question. Respondents whose organizations had not conducted any activities to control the costs of health care were excluded from this analysis. Percentages do not equal 100% due to multiple response options. An asterisk (*) indicates that this response option was not asked in 2013.

Activity2013

(n = 417)2012

(n = 405)

Provided educational initiatives related to health and wellness 45% 52%

Increased employee participation in preventive health and wellness initiatives

43% 44%

Created an organizational culture that promotes health and wellness

41% 45%

Offered consumer-directed health plans (e.g., HRAs, HSAs) 40% 42%

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

39% 52%

Provided lower-cost generic prescription or over-the-counter drugs

39% 50%

Provided incentives or rewards related to health and wellness 35% 40%

Changed health care provider* - 3%

Other 7% 2%

9State of Employee Benefits in the Workplace—Health Care ©SHRM 2013

Comparisons by organization staff size

100 to 499 employees (47%)500 to 2,499 employees (59%)

2,500 to 24,999 (49%)> 1 to 99 employees (25%)

Comparisons by organization staff size

500 to 2,499 employees (63%) >1 to 99 employees (16%)

100 to 499 employees (31%)

Which of the following activities has your organization engaged in for the purpose of controlling the costs of health care?

Comparisons by organization staff size

• Organizations with 500 to 24,999 employees are more likely than those with 1 to 99 employees to indicate they provided lower-cost generic prescription or over-the-counter drugs to control the costs of health care.

Comparisons by organization staff size

500 to 2,499 employees (51%)2,500 to 24,999 employees (64%) > 1 to 99 employees (27%)

Note: Only statistically significant differences are shown.

• Organizations with 100 to 24,999 employees are more likely than those with 1 to 99 employees to indicate they increased employee participation in preventive health and wellness initiatives to control the costs of health care.

• Organizations with 500 to 2,499 employees are more likely than those with 1 to 499 employees to indicate they provided incentives or rewards related to health and wellness to control the costs of health care.

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Which one activity has been the most successful in terms of helping your organization control the costs of health care?

Note: Only respondents whose organizations provide health care and conduct some kind of activity to control the costs of health care were asked this question. An asterisk (*) indicates that the option was not asked in the 2013 survey.

Activity2013

(n = 365)2012

(n = 380)

Offered consumer-directed health plans (e.g., HRAs, HSAs) 22% 15%

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

20% 25%

Increased employee participation in preventive health and wellness initiatives

13% 17%

Created an organizational culture that promotes health and wellness

12% 11%

Provided lower-cost generic prescription or over-the-counter drugs

10% 12%

Provided incentives or rewards related to health and wellness 9% 9%

Provided educational initiatives related to health and wellness 7% 5%

Changed health care provider* - 4%

Other 7% 0%

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In plan year 2013, did your organization increase the employee share contributed to the total costs of health care?

Note: Only respondents whose organizations provide health care were asked this question. Respondents who answered “not sure” were excluded from this analysis.

Yes

No

45%

55%

47%

53%

2012 (n = 410)2013 (n = 389)

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In plan year 2013, did your organization increase the employee share contributed to the total costs of health care?

Note: Only statistically significant differences are shown.

Comparisons by organization staff size

500 to 2,499 employees (57%) > 1 to 99 employees (33%)

Comparisons by organization staff size

• Organizations with 500 to 2,499 employees were more likely than organizations with 1 to 99 employees to increase the employee share contributed to the total costs of health care in plan year 2013.

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In the next plan year, does your organization plan to increase the employee share contributed to the total costs of health care?

Note: Only respondents whose organizations provide health care were asked this question.

Yes

No

Not sure

24%

21%

55%

22%

18%

60%

2012 (n = 439)2013 (n = 406)

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In plan year 2013, is your organization paying the majority (more than half) of the total health care costs?

Note: Only respondents whose organizations provide health care were asked this question. Percentages may not total 100% due to rounding.

Yes, the organization is paying the majority of health care costs

No, the organization and employee pay an equal share of the health care costs

No, the employee is paying the majority of the health care costs

92%

5%

3%

90%

6%

3%

2012 (n = 438)

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In three to five years, do you believe employees at your organization will be paying the majority of health care costs?

Note: Only respondents whose organizations provide health care were asked this question. Respondents whose organizations indicated that employees were paying the majority of total health care costs were excluded from this analysis.

Yes

No

Not sure

21%

39%

40%

15%

50%

35%

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

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Organization Demographics

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Demographics: Organization Staff Size

n = 363

1 to 99 em-ployees

100 to 499 employees

500 to 2,499 employees

2,500 to 24,999 employees

25,000 or more employees

33%

32%

17%

12%

6%

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Demographics: Organization Sector

n = 377

Privately owned for-profit

Nonprofit organization

Publicly owned for-profit

Government sector

Other

51%

24%

12%

11%

2%

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Demographics: Organization Industry

Note: n = 375. Percentages do not equal 100% due to multiple response options.

PercentageProfessional, scientific and technical services 21%Health care and social assistance 17%Manufacturing 15%Government agencies 12%Finance and insurance 10%Educational services 9%Religious, grantmaking, civic, professional and similar organizations 5%Accommodation and food services 4%Administrative and support and waste management and remediation services 4%Construction 4%Mining 4%Transportation and warehousing 4%Arts, entertainment and recreation 3%Information 3%Retail trade 3%Real estate and rental and leasing 2%Repair and maintenance 2%Utilities 2%Whole trade 2%Agriculture, forestry, fishing and hunting 1%Personal and laundry services 1%Other 7%

State of Employee Benefits in the Workplace—Health Care ©SHRM 2013 20

U.S.-based operations only 80%

Multinational operations 20%

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

39%

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

61%

Multi-unit headquarters determines HR policies and practices.

59%

Each work location determines HR policies and practices.

4%

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

37%

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?

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

n = 381 n = 381

n = 244

Corporate (company-wide) 73%

Business unit/division 16%

Facility/location 11%

n = 244

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

Demographics: Other

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SHRM Survey Findings: State of Employee Benefits in the Workplace—Health Care

• Response rate = 11%• 441 HR professional respondents from a randomly selected sample of SHRM’s

membership participated in this survey• Margin of error +/- 5%• Survey fielded May 3-22, 2013

Survey Methodology

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• SHRM Research Findings: Health Care Reform—Impact of Health Care Coverage and Costs

• SHRM Research Findings: Health Care Reform—Challenges and Strategies

• Health Care Reform Resource Page

• SHRM Toolkit: Managing Health Care Costs

Additional SHRM Resources

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

For more information about SHRM’s Customized Research Services, visit www.shrm.org/customizedresearch

Follow us on Twitter @SHRM_Research

About SHRM Research

Project leaders:Christina Lee, researcher, SHRM Research

Project contributors:Alexander Alonso, Ph.D., SPHR, vice president, SHRM ResearchEvren Esen, manager, Survey Research Center, SHRM Research

Copy editor:Katya Scanlan, SHRM Knowledge Center

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The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates.

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