Shrm health-care-reform-impact-costs-coverage

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

• 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. 2013 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 2
Introduction

• 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 2014. 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.
Key Findings: Health Care Coverage

• Did organizations receive medical loss ratio rebates in August 2012? One out of five organizations
(21%) received medical loss ratio rebates in 2012. 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.
Key Findings: Health Care Costs

• 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.
Key Findings: Future Impact of the PPACA

• 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.
What do these findings mean for the HR profession?

Health Care Coverage

To which groups does your organization offer health care
coverage?
Note: n = 731. Percentages do not equal 100% due to multiple response options.
1%
44%
46%
90%
91%
99%
1%
43%
39%
92%
92%
99%
None, our organization does not offer
employee health care coverage
Domestic partner of employee
Part-time employees
Spouse of employee
Dependents of employee
Full-time employees
Current
coverage
2014
coverage

To which groups does your organization currently offer health care
coverage?
Note: Only statistically significant differences are shown.
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%)
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.
Domestic partner of employee
2,500 to 24,999 employees (60%)
25,000 or more employees (77%)
>
500 to 2,499 employees (41%)
• 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.

How many hours per week do employees need to work to be
eligible for health care coverage?
n = 699
13%
60%
27%
33%
39%
28%
More than 30 hours
30 hours
Less than 30 hours
Current
coverage
2014
coverage

How many hours per week do employees need to work to be
eligible for health care coverage?
Less than 30 hours per week
500 to 2,499 employees (37%)
2,500 to 24,999 employees (49%)
>
• 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.

How is your organization’s primary medical benefit funded?
n = 617
Fully
insured,
51%
Self-
insured,
49%
2014
Fully
insured,
52%
Self-
insured,
48%
Current

How is your organization’s primary medical benefit funded?
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%)
Self-insured
500 to 2,499 employees (64%)
2,500 to 24,999 employees (80%)
>
• 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.

Is your organization currently following nondiscrimination rules for
your health care plan?
Note: n = 403. Only respondents whose organizations had fully insured primary medical benefits were asked this question.
1%
11%
88%
No, but for other reasons
No, we are waiting for more guidance
Yes, we are currently following
nondiscrimination rules
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.

Health Care Costs

Did your organization receive any medial loss ratio rebates in
August 2012?
n = 568
Yes, 21%
No, 79%
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.

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.
5%
11%
21%
28%
40%
Other
Applied the rebate toward other benefit
enhancements
Applied the rebate toward future participant
premium payments
Distributed the full amount of the rebate to
employee participants in the plan
Distributed a proportion of the rebate to
employee participants in the plan

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
Increase,
84%
Stay the
same, 15%
Decrease,
1%

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.
26%
19%
40%
15%
16% or greater
increase
11%-15% increase
6%-10% increase
1%-5% increase

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

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.
18%
32%
33%
51%
33%
13%
16%
4%
Decreased costs
(i.e., cost savings)
(n = 587)
Increased costs
(n = 618)
2014
Highly Likely Likely Unlikely Highly unlikely
13%
30%
38%
54%
31%
13%
19%
3%
Decreased costs
(i.e., cost savings)
(n = 650)
Increased costs
(n = 619)
2011
Highly Likely Likely Unlikely Highly unlikely

decreased (i.e., cost savings) health care coverage costs in 2014?
Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 22Note: Only statistically significant differences are shown.
Highly likely to pass cost savings on to employees
1 to 99 employees (29%) > 2,500 to 24,999 employees (12%)
• 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.
Highly likely to pass cost savings on to employees
> 500 to 2,499 employees (9%)
• 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.

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.
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.
Likely to pass on increased costs
Publicly owned for-profit (71%) >
Privately owned for-profit (47%)
Nonprofit (50%)
Government (36%)

Future Impact of the PPACA

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
2%
3%
26%
69%
Extremely concerned
Very concerned
Somewhat concerned
Unconcerned

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?
10%
85%
5%
23%
66%
11%
Decreased benefits
Same level of benefits
Increased/improved benefits
Health-related
benefits
(n = 677)
Nonhealth-
related benefits
(n = 651)

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.
17%
13%
17%
21%
23%
26%
34%
40%
45%
45%
Other benefits
Housing and relocation
Flexible working benefits
Business travel
Professional and career development
Family-friendly benefits
Leave benefits
Employee programs and services
Retirement savings and planning
Financial and compensation benefits

Demographics

Demographics: Organization Industry
Percentage
Health care and social assistance 15%
Manufacturing 15%
Professional, scientific and technical services 15%
Finance and insurance 13%
Educational services 10%
Government agencies 9%
Transportation and warehousing 6%
Retail trade 4%
Utilities 4%
Accommodation and food services 3%
Administrative and support and waste management and remediation services 3%
Construction 3%

Demographics: Organization Industry (continued)
Percentage
Mining, quarrying, and oil and gas extraction 3%
Religious, grant-making, civic, professional and similar organizations 3%
Wholesale trade 3%
Information 2%
Real estate and rental and leasing 2%
Repair and maintenance 2%
Agriculture, forestry, fishing and hunting 1%
Arts, entertainment, and recreation 1%
Personal and laundry services <1%
Other industry 11%

Demographics: Organization Sector
Note: n = 751. Percentages do not total 100% due to rounding.
47%
24%
16%
10%
4%
Privately owned for-profit
Nonprofit
Publicly owned for-profit
Government
Other

Demographics: Organization Staff Size
n = 811
22%
35%
24%
16%
3%
1 to 99 employees
100 to 499 employees
500 to 2,499 employees
2,500 to 24,999 employees
25,000 or more employees

n = 764
Demographics: Other
U.S.-based operations only 81%
Multinational operations 19%
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%
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%
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 = 764
n = 480
Midwest 38%
South 27%
Northeast 18%
West 16%
Note: n = 731. Percentages do not equal
100% due to rounding.
U.S. Region

• 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
34
SHRM Survey Findings: Health Care Reform—Impact
on Health Care Coverage and Costs
Survey Methodology

• Health Care Reform Resource Page: shrm.org/healthcare
Additional SHRM Resources

• For more survey/poll findings, visit www.shrm.org/surveys
• For more information about SHRM’s Customized Research Services, visit
www.shrm.org/customizedresearch
• Follow us on Twitter @SHRM_Research
Click on "Insert/Header&Footer" and Type Survey Title Here ©SHRM 2013 36
About SHRM Research
Project leader:
Tanya Mulvey, researcher, talent management & workforce skills, SHRM Research
Project contributors:
Alexander Alonso, Ph.D., SPHR, vice president, SHRM Research
Evren Esen, manager, Survey Research Center, SHRM Research
Copy editor:
Katya Scanlan, SHRM Knowledge Center

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.
About SHRM

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