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

2. SHRM/EBRI Health Benefits Survey ©SHRM 20142 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 tax in 2018.

3. 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 20143 What Do These Findings Mean for the HR Profession?

4. SHRM/EBRI Health Benefits Survey ©SHRM 20144 SHRM/EBRI 2014 Health Benefits Survey

5. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? SHRM/EBRI Health Benefits Survey ©SHRM 20145 Note: n = 2,295

6. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by staff size) SHRM/EBRI Health Benefits Survey ©SHRM 20146 Note: n = 2,271

7. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by staff size, continued) SHRM/EBRI Health Benefits Survey ©SHRM 20147 Note: n = 2,135

8. Do You Plan to Make Any of The Following Changes to Your Health Care Plans in 2015? (by staff size) SHRM/EBRI Health Benefits Survey ©SHRM 20148 Note: Only statistically significant differences are shown. Comparisons by organization staff size 750 or more FTEs>Fewer than 750 FTEs 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.

9. SHRM/EBRI Health Benefits Survey ©SHRM 20149 U.S. Census Bureau Regions

10. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region) SHRM/EBRI Health Benefits Survey ©SHRM 201410 Note: n = 2,264

11. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region, continued) SHRM/EBRI Health Benefits Survey ©SHRM 201411 Note: n = 2,279

12. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region) SHRM/EBRI Health Benefits Survey ©SHRM 201412 Note: Only statistically significant differences are shown. Comparisons by region South Midwest >West 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. 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

13. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by region) SHRM/EBRI Health Benefits Survey ©SHRM 201413 Note: Only statistically significant differences are shown. Comparisons by region South>West Comparisons by region Organizations in the South are more likely than organizations in the West to add wellness rewards or penalties.

14. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by sector) SHRM/EBRI Health Benefits Survey ©SHRM 201414 Note: n = 2,279

15. Do You Plan to Make Any of The Following Changes to Your Health Care Plans in 2015? (by sector, continued) SHRM/EBRI Health Benefits Survey ©SHRM 201415 Note: n = 2,279

16. Do You Plan to Make Any of The Following Changes to Your Health Care Plans in 2015? (by business activity) SHRM/EBRI Health Benefits Survey ©SHRM 201416 Note: n = 2,264

17. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by business activity, continued) SHRM/EBRI Health Benefits Survey ©SHRM 201417 Note: n = 2,264

18. Do You Plan to Make Any of the Following Changes to Your Health Care Plans in 2015? (by business activity) SHRM/EBRI Health Benefits Survey ©SHRM 201418 Note: Only statistically significant differences are shown. Comparison by business activity Manufacturing>Consulting Comparison by business activity Manufacturing organizations are more likely than consulting organizations to add wellness rewards or penalties.

19. Do You Expect Your Organization to Hit the Excise Tax in 2018? SHRM/EBRI Health Benefits Survey ©SHRM 201419 Note: n = 1,803

20. Do You Expect Your Organization to Hit the Excise Tax in 2018? (by staff size) SHRM/EBRI Health Benefits Survey ©SHRM 201420 Note: n = 1,713

21. Do You Expect Your Organization to Hit the Excise Tax in 2018? (by staff size) SHRM/EBRI Health Benefits Survey ©SHRM 201421 Note: Only statistically significant differences are shown. Comparison by organization staff size 750 or more FTEs>Fewer than 750 FTEs 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.

22. Do You Expect Your Organization to Hit the Excise Tax in 2018? (by region) SHRM/EBRI Health Benefits Survey ©SHRM 201422 Note: n = 1,791

23. Do You Expect Your Organization to Hit the Excise Tax in 2018? (by sector) SHRM/EBRI Health Benefits Survey ©SHRM 201423 Note: n = 1,791

24. Do You Expect Your Organization to Hit the Excise Tax in 2018? (by sector) SHRM/EBRI Health Benefits Survey ©SHRM 201424 Note: Only statistically significant differences are shown. Comparison by sector Government> Privately owned for-profit Nonprofit 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.

25. Do You Expect Your Organization to Hit the Excise Tax in 2018? (by business activity) SHRM/EBRI Health Benefits Survey ©SHRM 201425 Note: n = 1,776

26. Which Plan(s) Do You Expect to Hit the Excise Tax? SHRM/EBRI Health Benefits Survey ©SHRM 201426 Note: n = 249

27. Which Plan(s) Do You Expect to Hit the Excise Tax? (by staff size) SHRM/EBRI Health Benefits Survey ©SHRM 201427 Note: n = 239

28. Which Plan(s) Do You Expect to Hit the Excise Tax? (by region) SHRM/EBRI Health Benefits Survey ©SHRM 201428 Note: n = 246

29. Which Plan(s) Do You Expect to Hit the Excise Tax? (by region) SHRM/EBRI Health Benefits Survey ©SHRM 201429 Note: Only statistically significant differences are shown. Comparisons by region West> South Midwest 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. 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

30. Which Plan(s) Do You Expect to Hit the Excise Tax? (by sector) SHRM/EBRI Health Benefits Survey ©SHRM 201430 Note: n = 246

31. Which Plan(s) Do You Expect to Hit the Excise Tax? (by sector) SHRM/EBRI Health Benefits Survey ©SHRM 201431 Note: Only statistically significant differences are shown. Comparison by sector Government> Privately owned for-profit Publicly owned for-profit 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.

32. Which Plan(s) Do You Expect to Hit the Excise Tax? (by business activity) SHRM/EBRI Health Benefits Survey ©SHRM 201432 Note: n = 244

33. What Actions, if Any, Will You Take to Avoid the Excise Tax? SHRM/EBRI Health Benefits Survey ©SHRM 201433 Note: n = 170

34. SHRM/EBRI Health Benefits Survey ©SHRM 201434 Demographics

35. Demographics: Organization Industry 35 Note: n = 3,329. Total number of respondents and percentage for this question exceeded the overall sample size due to multiple response options. Percentage Services—professional, scientific, technical20% Health care, social assistance17% Manufacturing (durable goods)14% High-tech13% Consulting12% Business support services11% Finance10% Manufacturing (nondurable goods)9% Retail/wholesale trade8% Government/public administration—state/local8% Educational services7% Publishing, broadcasting, other media6% Religious, grant-making, civic, professional and similar organizations 6% Transportation, warehousing6% SHRM/EBRI Health Benefits Survey ©SHRM 2014

36. Demographics: Organization Industry (continued) 36 Note: n = 3,329. Total number of respondents and percentage for this question exceeded the overall sample size due to multiple response options. Percentage Construction, mining, oil and gas4% Insurance4% Services—accommodation, food and drinking places4% Arts, entertainment, recreation3% Utilities3% Telecommunications3% Real estate, rental, leasing3% Repair and maintenance3% Association—professional/trade1% Biotech1% Pharmaceutical1% Waste management and remediation services1% Government/public administration—federal1% SHRM/EBRI Health Benefits Survey ©SHRM 2014

37. Demographics: Organization Sector SHRM/EBRI Health Benefits Survey ©SHRM 201437 Note: n = 3,302. Percentages do not equal 100% due to rounding.

38. Demographics: Organization Staff Size SHRM/EBRI Health Benefits Survey ©SHRM 201438 Note: n = 3,031. Percentages do not equal 100% due to rounding.

39. Demographics: Region SHRM/EBRI Health Benefits Survey ©SHRM 201439 Note: n = 3,289.

40. Demographics: Business Activity SHRM/EBRI Health Benefits Survey ©SHRM 201440 Note: n = 3,277.

41. Demographics: Organizational Level SHRM/EBRI Health Benefits Survey ©SHRM 201441 Note: n = 3,190.

42. 42 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

43. For more survey/poll findings, visit shrm.org/surveys shrm.org/surveys For more information about SHRM’s Customized Research Services, visit shrm.org/customizedresearch shrm.org/customizedresearch Follow us on Twitter @SHRM_Research@SHRM_Research 43 About 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

44. 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 201444 About SHRM and EBRI