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ALLIANCE FORUM Are you using your employee benefits strategically? September 2014
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice What are Employees and Leaders Reading? 1 UPS drops coverage for working spouses and estimates covering children to age 26 will cost $60M Petco joined Mercer Marketplace; a new private health care exchange for January 1, 2014 Xerox is increasing their working spouse surcharge to $1,500 annually in 2014 The Hamilton School District in Trenton, NJ, will be limiting substitute teachers to four days per week to avoid 30 hour per week threshold Starbucks announced that it will not be cutting benefits for spouses/partners or reducing hours for workers so that they do not qualify for benefits Delta Airlines faces an increase of $100M in medical costs in 2014 between normal trend and ACA requirements (appears to be at least 38% of the increase) Walmart has been focusing on hiring temporary employees to manage health care costs under ACA
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice 2 Changing Retirement Landscape Workers are increasingly unable to retire due to financial constraints Business complexity is up while risk tolerance is down The notion of retirement is fundamentally changing HR function is becoming more strategic
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice 3 Increased Accountability
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice 4 Increased Accountability Employees Bearing More Responsibility Increasing Responsibility = Increased Options Drive Employee Participation & Monitor Diverse Employee Needs
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice Talent attraction, retention, engagement Control over workforce planning Cost and risk control Better governance, conformity to regulations 5 What Are the Retirement Outcomes Being Sought? Employer Outcomes Employee Outcomes Confidence and control over decision to exit workforce An adequate income throughout retirement
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice 6 The Employer Can Play a Stronger Role in Income Adequacy Optimize Total Reward Spend Holistic Risk Management Help Employees Help Themselves
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice Calm Before the Storm? Growth in total health benefit cost per employee slows to 2.1% in 2013 with a 5.2% increase expected for 2014 7 *Projected Source: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1990-2013; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2013.
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice Staying the Course? While large employers remain committed to offering health coverage, a growing number of small employers say they will likely drop their plans 8 Percent of employers that say they are “very likely” or “likely” to terminate plans within the next five years Source: Mercer’s National Survey of Employer-Sponsored Health Plans 2013 Employers with fewer than 50 employees Employers with 50- 199 employees Employers with 200- 499 employees Employers with 500 or more employees 2012 2013 23% 34% 20% 23% 12% 7% 6%
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© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice Health Care Reform is Driving Shifts in Health Care Delivery and Employer Strategies 9 Employer-sponsored medical plans Large networks and care mgmt is impersonal and illness-focused Minimal employee accountability for health and decisions Evolving Benefit Delivery New Care Delivery Approaches Greater Consumer Accountability CURRENT FUTURE
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