1. SHRM Survey Findings: Health Care Reform—Impact on Health Care Coverage and Costs
June 16, 2013

2. Introduction
This is the second part of a two-part survey findings about the impact of the Patient Protection and Affordable Care Act (PPACA) on organizations. This section looks at current and future health care coverage benefits, expected future costs of health care coverage and the impact of the PPACA on employee benefits data are compared to the 2010 and 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 that human resource professionals are facing and the strategies they are using to handle the new regulations.
Additional SHRM resources on health care reform are available at shrm.org/healthcare
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

3. Key Findings: Health Care Coverage
To which groups are organizations currently offering health care coverage? The vast majority of organizations 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 Coverage for domestic partners of employees is offered by 43% of organizations.
Larger organizations are more likely than smaller organizations to offer health care coverage 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. This percentage will increase to 60% in 2014 when the PPACA Employer Mandate becomes effective, whereas the percentage of organizations requiring more than 30 hours per week will decrease from 33% to 13%. About one-quarter (28%) currently offer health care coverage to employees who work less than 30 hours.
Larger organizations are more likely than smaller organizations to currently offer health care coverage to employees who work less than 30 hours per week.
How do organizations fund their primary medical benefit? Just over one-half of organizations have 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 are currently following nondiscrimination rules, and 11% are waiting for more guidance.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

4. Key Findings: Health Care Costs
Did organizations receive medical loss ratio rebates in August 2012? One out of five organizations (21%) received medical loss ratio rebates in About two-thirds of those organizations distributed either a portion (40%) or the full amount (28%) of those rebates to employee participants in the plan. Twenty-one percent applied the rebate toward future participant premiums, and 11% applied it toward other benefit enhancements.
How do organization expect the PPACA to affect health care coverage costs in 2014? The majority (84%) indicates costs will increase, 15% expect no change, and 1% foresee a decrease in costs. 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 larger organizations.
If organizations have increased or decreased health care coverage costs in 2014, do they plan to pass them to their employees? Most organizations (83%) are likely or highly likely to pass on increased costs to their employees, and about one-half (51%) are likely or highly likely to pass on cost savings to their employees.
Smaller organizations are more likely than larger organizations to be highly likely to pass cost savings on to employees.
Privately owned for-profit organizations are more likely than publicly owned for-profit organizations to be highly likely to pass on increased health care coverage costs to employees.
Publicly owned for-profit organizations are more likely than organizations in other sectors to be likely to pass on increased health care coverage costs to employees.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

5. Key Findings: Future Impact of the PPACA
Are organizations concerned about losing employees through voluntary turnover when the public exchanges become available? Sixty-nine percent of organizations are not concerned that the availability of public exchanges will affect voluntary turnover, and one-quarter (26%) are somewhat 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% expect to decrease their benefits offerings. Eleven percent of organizations expect increased or improved health benefits.
How will the level of nonhealth-related employee benefits change as a result of the PPACA? The majority (85%) of organizations indicate that nonhealth-related benefits (e.g., financial benefits, 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 expect a decrease in nonhealth benefits, 45% would reduce financial and compensation or retirement savings and planning benefits. Two out of five organizations (40%) indicate they would reduce employee programs and services. About one-third (34%) would reduce leave benefits.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

6. What do these findings mean for the HR profession?
It is important to have a communication strategy in place to explain 2014 health benefits, especially for employees who will be newly eligible for health care coverage. An increasing number of organizations will be providing health care benefits to part-time workers and reducing the number of hours required to be eligible for coverage. Therefore, some organizations are likely to have more first-time enrollees in their health care program who may not be familiar with benefits offerings and enrollment procedures.
As most organizations expect health care cost increases in 2014 due to the PPACA, actions need to be taken now to prepare for the impact of these costs. Organizations should consider evaluating their overall employee compensation and benefits package as they think about changes to health and nonhealth employee benefits. Almost one-quarter (23%) of organizations expect that they will have decreased health benefits as a result of the PPACA, and 10% expect a decrease in nonhealth benefits. It will be important for organizations to strategically implement benefits changes that have an impact on recruitment and retention of employees.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

7. Health Care Coverage
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

8. To which groups does your organization offer health care coverage?
Note: n = 731. Percentages do not equal 100% due to multiple response options.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

9. To which groups does your organization currently offer health care coverage?
Comparisons by organization staff size
Organizations with 500 to 24,999 employees are more likely than organizations with 1 to 499 employees to currently offer health care coverage to part-time employees.
Comparisons by organization staff size:
Part-time employees
500 to 2,499 employees (49%)
2,500 to 24,999 employees (61%)
>
1 to 99 employees (19%)
100 to 499 employees (33%)
Organizations with 2,500 or more employees are more likely than organizations with 1 to 2,499 employees to currently offer health care coverage to employees’ domestic partners.
Comparisons by organization staff size:
Domestic partner of employee
2,500 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%)
Note: Only statistically significant differences are shown.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

10. How many hours per week do employees need to work to be eligible for health care coverage?
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

11. Comparisons by organization staff size: Less than 30 hours per week
How many hours per week do employees need to work to be eligible for health care coverage?
Comparisons by organization staff size
Organizations with 500 or more employees are more likely than organizations with 1 to 499 employees to currently offer health care coverage to employees who work less than 30 hours per week.
Comparisons by organization staff size:
Less than 30 hours per week
500 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%)
Note: Only statistically significant differences are shown.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

12. How is your organization’s primary medical benefit funded?
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

13. How is your organization’s primary medical benefit funded?
Comparisons by organization staff size
Organizations with 500 or more employees are more likely than organizations with 1 to 499 employees to currently have a self-insured primary medical benefit.
Comparisons by organization staff size:
Self-insured
500 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 sector
Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and government organizations to currently have a self-insured primary medical benefit.
Comparisons by organization sector:
Self-insured
Publicly owned for-profit (71%)
>
Privately owned for-profit (37%)
Nonprofit (38%)
Government (50%)
Note: Only statistically significant differences are shown.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

14. Is your organization currently following nondiscrimination rules for your health care plan?
Nondiscrimination Rules: Under the PPACA, employers subject to the new nondiscrimination provisions must refrain from discriminating in favor of highly compensated employees with regard to health benefits. The Internal Revenue Service has delayed enforcement of these new rules until regulations or further guidance has been issued.
Note: n = 403. Only respondents whose organizations had fully insured primary medical benefits were asked this question.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

15. Health Care Costs
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

16. Did your organization receive any medial loss ratio rebates in August 2012?
Medical Loss Ratio Rebates: These rebates were mandated under the PPACA whenever health insurers did not spend at least a certain percentage (generally, 80% to 85%) of the prior year’s health insurance premiums on health care services. The rebates received in August 2012 covered premiums collected for the 2011 plan year.
n = 568
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

17. What did your organization do with the medical loss ratio rebates received in August 2012?
Note: 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.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

18. In 2014, as a result of the PPACA, do you expect your organization’s overall health care coverage costs to increase, stay the same or decrease?
n = 625
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

19. In 2014, how much do you expect your organization’s health care costs to increase?
Note: n = 490. Only respondents whose organizations expected increased costs in 2014 were asked this question.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

20. In 2014, how much do you expect your organization’s health care costs to increase?
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 their health care costs to increase by 1% to 5%.
Comparisons by organization staff size:
1%-5% increase
2,500 to 24,999 employees (26%)
>
1 to 99 employees (9%)
100 to 499 employees (12%)
Organizations with 100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to expect their health care costs to increase by 11% to 15%.
Comparisons by organization staff size:
11%-15% increase
100 to 499 employees (26%)
>
2,500 to 24,999 employees (7%)
Organizations with 1 to 99 employees are more likely than organizations with 500 to 2,499 employees to expect their health care costs to increase by 16% or more.
Comparisons by organization staff size:
16% or more increase
1 to 99 employees (38%)
>
500 to 2,499 employees (18%)
Note: Only statistically significant differences are shown.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

21. How likely is your organization to pass on to employees any increased or decreased health care coverage costs?
Note: Percentages may not total 100% due to rounding. Respondents who answered “don’t know” were excluded from these analyses.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

22. How likely is your organization to pass on to employees any decreased (i.e., cost savings) health care coverage costs in 2014?
Comparisons by organization staff size
Organizations with 1 to 499 employees are more likely than organizations with 500 to 2,499 employees to be highly likely to pass health care coverage cost savings on to employees.
Comparisons by organization staff size:
Highly likely to pass cost savings on to employees
1 to 99 employees (29%)
100 to 499 employees (21%)
>
500 to 2,499 employees (9%)
Organizations with 1 to 99 employees are more likely than organizations with 2,500 to 24,999 employees to be highly likely to pass health care coverage cost savings on to employees.
Comparisons by organization staff size:
Highly likely to pass cost savings on to employees
1 to 99 employees (29%)
>
2,500 to 24,999 employees (12%)
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013
Note: Only statistically significant differences are shown.

23. How likely is your organization to pass on to employees any increased health care coverage costs in 2014?
Comparisons by organization sector
Privately owned for-profit organizations are more likely than publicly owned for-profit organizations to be highly likely to pass on increased health care coverage costs to employees.
Comparisons by organization sector:
Highly likely to pass on increased costs
Privately owned for-profit (37%)
>
Publicly owned for-profit (19%)
Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and government organizations to be likely to pass on increased health care coverage costs to employees.
Comparisons by organization sector:
Likely to pass on increased costs
Publicly owned for-profit (71%)
>
Privately owned for-profit (47%)
Nonprofit (50%)
Government (36%)
Note: Only statistically significant differences are shown.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

24. Future Impact of the PPACA
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

25. How concerned is your organization about losing its employees to voluntary turnover when public exchanges become available, potentially giving employees new options to purchase affordable coverage on their own?
n = 680
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

26. As a result of the PPACA, do you anticipate that your organization's health- or nonhealth-related employee benefits will increase, stay the same or decrease?
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

27. Which of the following nonhealth-related benefits would your organization be most likely to reduce or cut?
Note: n = 53. Percentages do not equal 100% due to multiple response options. Only respondents who indicated their organization’s nonhealth-related benefits would decrease were asked this question.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

28. Demographics
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

29. Demographics: Organization Industry
Percentage
Health care and social assistance
15%
Manufacturing
Professional, scientific and technical services
Finance and insurance
13%
Educational services
10%
Government agencies 9%
Transportation and warehousing 6%
Retail trade 4%
Utilities
Accommodation and food services 3%
Administrative and support and waste management and remediation services
Construction
Note: n = 751. Percentages do not equal 100% due to multiple response options.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

30. Demographics: Organization Industry (continued)
Percentage
Mining, quarrying, and oil and gas extraction 3%
Religious, grant-making, civic, professional and similar organizations
Wholesale trade
Information 2%
Real estate and rental and leasing
Repair and maintenance
Agriculture, forestry, fishing and hunting 1%
Arts, entertainment, and recreation
Personal and laundry services
<1%
Other industry
11%
Note: n = 751. Percentages do not equal 100% due to multiple response options.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

31. Demographics: Organization Sector
Note: n = 751. Percentages do not total 100% due to rounding.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

32. Demographics: Organization Staff Size
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

33. Demographics: Other
Is your organization a single-unit organization or a multi-unit organization?
Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?
Single-unit organization: An organization in which the location and the organization are one and the same
40%
Multi-unit organization: An organization that has more than one location
60%
U.S.-based operations only
81%
Multinational operations
19%
n = 764
n = 764
For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?
U.S. Region
Midwest
38%
South
27%
Northeast
18%
West
16%
Multi-unit headquarters determines HR policies and practices
68%
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
29%
Note: n = 731. Percentages do not equal 100% due to rounding.
n = 480
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

34. SHRM Survey Findings: Health Care Reform—Impact on Health Care Coverage and Costs
Survey Methodology
Response rate = 14%
818 HR professionals from a randomly selected sample of SHRM’s membership with the job function of benefits or compensation or with the job title of manager or above participated in this survey
Margin of error +/-3%
Survey fielded May 2-16, 2013

35. Additional SHRM Resources
Health Care Reform Resource Page: shrm.org/healthcare
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013

36. About SHRM Research
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37. About SHRM
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 and India.
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013