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

January 10, 2013

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

• The following topics are included in this six-part series:

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

2State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

• 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

3State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

• How are organizations trying to control the costs of health care? The majority (84%) of organizations are “very concerned” about controlling health care costs. The top three activities organizations have engaged in to control health care costs are increasing the employee share contributed to the total costs of health care (52%); providing educational initiatives related to health and wellness (52%); and providing lower cost generic prescription or over-the-counter drugs (50%).

Almost fifty percent (47%) of organizations reported increasing the employee share contributed to the total costs of health care in plan year 2012.

• Can employees expect to pay a larger portion of total health care costs in the future? In 2013, 22% of organizations reported they plan to increase the employee share contributed to the total costs of health care; 18% do not plan to increase the employee contribution; and 60% were not sure if the employee contribution will increase.

In the next three to five years, 15% of organizations currently paying the majority or equal portion of health care costs indicated they believe employees at their organizations will eventually be paying the majority of health care costs; 50% do not believe employees will be paying the majority of health care costs; and 35% were not sure.

Key Findings

4State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Increased in 2011

Remained the same in 2011

Decreased in 2011

74%

17%

9%

5

In plan year 2011, did your organization’s total health care costs increase, decrease or remain the same when compared with the plan year 2010?

Note: n = 399. Respondents whose organizations did not provide health care and those who answered “not sure” were excluded from this analysis.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Very con-

cerned

Somewhat concerned

Not very concerned

Not at all concerned

84%

16%

1%

0%

6

How concerned is your organization about controlling health care costs?

Note: n = 437. Respondents who answered “not sure” were excluded from this analysis. Percentages do not total 100% due to rounding.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

7

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

Note: n = 405. 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.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Activity Percentage

Increased the employee share contributed to the total costs of health care 52%

Provided educational initiatives related to health and wellness 52%

Provided lower cost generic prescription or over-the-counter drugs 50%

Created an organizational culture that promotes health and wellness 45%

Increased employee participation in preventive health and wellness initiatives 44%

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

Provided incentives or rewards related to health and wellness 40%

Changed health care provider 3%

Other 2%

8

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

Note: n = 380. Respondents whose organizations had not conducted any activities to control the costs of health care were excluded from this analysis.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Activity Percentage

Increased the employee share contributed to the total costs of health care 25%

Increased employee participation in preventive health and wellness initiatives 17%

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

Provided lower cost generic prescription or over-the-counter drugs 12%

Created an organizational culture that promotes health and wellness 11%

Provided incentives or rewards related to health and wellness 9%

Provided educational initiatives related to health and wellness 5%

Changed health care provider 4%

Other 0%

Yes

No

47%

53%

9

In plan year 2012, did your organization increase the employee share contributed to the total costs of health care?

Note: n = 410. Respondents who answered “not sure” were excluded from this analysis.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

10

In plan year 2012, did your organization increase the employee share contributed to the total costs of health care?

Comparisons by organization staff size

25,000 or more employees (77%) > 1 to 99 employees (32%)

Note: Only statistically significant differences are shown.

Comparisons by organization staff size

• Organizations with 25,000 or more 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 2012.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Yes

No

Not sure

22%

18%

60%

11

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

n = 439

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

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

90%

6%

3%

12

In plan year 2012, is your organization paying the majority (more than half) of the total health care costs?

Note: n = 438. Percentages do not total 100% due to rounding.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Yes

No

Not sure

15%

50%

35%

13

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

Note: n = 421. Respondents whose organizations indicated that employees were paying the majority of total health care costs were excluded from this analysis.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

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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?

Comparisons by organization staff size

2,500 to 24,999 employees (30%)25,000 or more employees (38%) >

1 to 99 employees (14%)

100 to 499 employees (11%)

500 to 2,499 employees (13%)

Note: Only statistically significant differences are shown.

Comparisons by organization staff size

• Organizations with 2,500 or more employees are more likely than those with 1 to 2,499 employees to indicate they believe employees at their organization will be paying the majority of health care costs in the next three to five years.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

15

Organization Demographics

1 to 99 employees

100 to 499 employees

500 to 2,499 employees

2,500 to 24,999 employees

25,000 or more employees

23%

39%

22%

13%

3%

16

Demographics: Organization Staff Size

n = 447

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

Privately owned for-profit

Nonprofit organization

Publicly owned for-profit

Government sector

51%

22%

19%

8%

17

Demographics: Organization Sector

n = 440

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

PercentageHealth care and social assistance 19%Manufacturing 19%Professional, scientific and technical services 17%Finance and insurance 11%Government agencies 9%Educational services 7%Retail trade 5%Accommodation and food services 4%Construction 4%Information 4%Religious, grantmaking, civic, professional and similar organizations 4%Transportation and warehousing 4%Whole trade 4%Administrative and support and waste management and remediation services 3%Arts, entertainment and recreation 3%Repair and maintenance 3%Agriculture, forestry, fishing and hunting 2%Mining 2%Real estate and rental and leasing 2%Utilities 2%Personal and laundry services 1%

Demographics: Organization Industry

18

Note: n = 447. Percentages do not equal 100% due to multiple response options.

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

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Demographics: Other

U.S.-based operations only 77%

Multinational operations 23%

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.

62%

Each work location determines HR policies and practices.

5%

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

34%

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 = 447

n = 447

Note: n = 286. Percentages do not equal 100% due to rounding.

Corporate (company-wide) 75%

Business unit/division 13%

Facility/location 12%

n = 286

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

State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

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

• Response rate = 12%

• 447 HR professional respondents from a randomly selected sample of SHRM’s membership participated in this survey

• Margin of error +/- 4%

• Survey fielded March 1, 2012 to April 6, 2012

Survey Methodology

20State of Employee Benefits in the Workplace—Health Care ©SHRM 2012

About SHRM Research

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Project leaders:Shawn Fegley, SPHR, survey research analyst, SHRM Research

Project contributors:Mark Schmit, Ph.D., SPHR, vice president, SHRM ResearchEvren Esen, manager, Survey Research Center, SHRM ResearchChristina Lee, SHRM Research

Copy editor:Katya Scanlan, SHRM Knowledge Center

21State of Employee Benefits in the Workplace—Health Care ©SHRM 2012