ALLIANCE FORUM Are you using your employee benefits strategically? September 2014.

ALLIANCE FORUMAre you using your employee benefits strategically?

September 2014

© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice

What are Employees and Leaders Reading?

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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

© 2014 Mercer Heath & Benefits LLC | For informational purposes only – not intended to be used as legal advice 3

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


Increased Accountability


Increased AccountabilityEmployees

Bearing More Responsibility

Increasing Responsibility =

Increased Options

Drive Employee Participation &

Monitor

Diverse Employee Needs


Talent attraction, retention, engagement

Control over workforce planning

Cost and risk control

Better governance, conformity to regulations

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What Are the Retirement Outcomes Being Sought?

Employer Outcomes

Employee Outcomes

Confidence and control over decision to exit workforce

An adequate income throughout retirement


The Employer Can Play a Stronger Role in Income Adequacy

Optimize Total Reward Spend

Holistic Risk Management

Help Employees

Help Themselves


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

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*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.


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

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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% 12%

7% 6%


Health Care Reform is Driving Shifts in Health Care Delivery and Employer Strategies

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Employer-sponsored medical plans

Large networks and care mgmt is impersonal and illness-focused

Minimal employee accountability for health and decisions

Evolving Benefit DeliveryNew Care Delivery Approaches

Greater Consumer Accountability

CURRENT

FUTURE

ALLIANCE FORUM Are you using your employee benefits strategically? September 2014.

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