1. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Health Care and How Organizations Plan to Adjust to Increased Costs Sample comprised of 293 randomly selected HR professionals. Analyzing 293 responses of 2813 emails sent; 2491 emails received (response rate = 12%) Survey fielded September 20 – 26, 2005; presentation generated on September 27, 2005. Margin of error is +/- 5%.

2. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Changes in hiring decisions based on employee demographics (e.g. age, gender, health, etc.)

3. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Decreases in employee salaries/raises

4. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Decreases in employee training/professional development

5. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Decreases in hiring of new staff

6. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Decreases in other employee benefits (e.g. retirement benefits, retiree health care coverage, pension, etc.)

7. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Decreases in paid leave

8. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Decreases in technology investments

9. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Increases in downsizing/layoffs

10. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Increases in expectations of employee productivity

11. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Increases in exploring the use of offshoring/outsourcing

12. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? Increases in the costs of consumer services/products

13. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Over the next twelve months, how likely is it that your organization will have to make adjustments in the following areas to cover the cost of employee health care coverage? TopicVery UnlikelySomewhat Unlikely Neither Likely nor Unlikely Somewhat Likely Very Likely Changes in hiring decisions based on employee demographics (e.g. age, gender, health, etc.) 61.5%10.2%21.9%4.2%2.1% Decreases in employee salaries/raises41.7%18.7%19.8%16.3%3.5% Decreases in employee training/professional development 37.3%24.6%21.8%12.7%3.5% Decreases in hiring of new staff35.3%18.4%25.4%14.8%6.0% Decreases in other employee benefits (e.g. retirement benefits, retiree health care coverage, pension, etc.) 32.9%23.0%20.8%16.6%6.7% Decreases in paid leave50.5%20.1%23.0%4.9%1.4% Decreases in technology investments43.1%18.5%26.7%8.9%2.8% Increases in downsizing/layoffs46.3%14.2%23.5%11.7%4.3% Increases in expectations of employee productivity 25.4%9.6%16.4%32.5%16.1 Increases in exploring the use of offshoring/outsourcing 49.8%12.0%19.4%13.15.7% Increases in the costs of consumer services/products 29.6%12.0%23.9%26.8%7.7%

14. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage? Shifting more cost to the employee Decreased benefits. Look into HSAs as a way to offer lower premiums. Increase employee contributions Considering addition of spousal surcharge; meaning if an employee's spouse is able to obtain health care coverage elsewhere yet chooses to be covered under our company's plan, the employee will incur a surcharge. passing cost off to the employees. We will expand our disease management programs and consider a "healthy team member" premium shift. Convert plan to an HRA and raise both single and family deductibles. Will consider an HSA next plan year. Implement a cafeteria style benefits package We moved to Health Savings Accounts in September 2004 and we received a 3% decrease this year. Continued increase in the employee's share of health care premiums and other costs. Use of preventive programs and incentives. Change from a traditional PPO plan to a consumer driven health reimbursement account. Passing more of the costs on to the employees Investigating, again, the plans, coverages, and other options available for health care. looking at increasing co-pays, restructuring pharmaceutical card, etc. Switching to a consumer drive health plan and repeatedly educating employees on healthcare consumerism and how this impacts their pocket book as well as our bottom line/profitability. Plan changes to have employees pick up a greater portion of the costs related to health care. Increasing the employee share amount - adding a voluntary supplemental plan thru Aflac.

15. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Higher deductibles. Increased cost sharing, co-pays, deductibles Decreased employee services programs such as birthday candy, instant recognition rewards, etc. Increased time communicating health cost realities to employees, encouraging FSA participation, etc. In-depth review of total compensation package to identify key elements in more detail, weed out those perceived as less important We recently switched carriers (Anthem to United Healthcare). This was based on the employees' decision regarding coverage issues as well as cost. We kept costs almost the same for some employees and at an increase to others (which also increased the cost to the employer). However, our employees (and employer) saw the benefits of switching as Anthem had failed in their negations with the most respected and largest hospital in our city. Now, our employees concern regarding receiving the best care is no longer an issue, they have more choices regarding doctors, and medical coverage is no longer a "hot topic" in our office. Perhaps, offer a "less-rich" plan. Not sure yet, we are still exploring options and ideas. Change in benefit coverages. For example, higher deductibles, co-pays, etc. Primarily in Medical, Dental & Vision. Change of plan design and/or increase employee contribution moving to a tiered plan for coverage as well as increasing deductibles in all categories Reduced benefits for health care coverage. Change in benefit coverages. For example, higher deductibles, co-pays, etc. Primarily in Medical, Dental & Vision. Change of plan design and/or increase employee contribution moving to a tiered plan for coverage as well as increasing deductibles in all categories Reduced benefits for health care coverage. Increase in Deductible Pass on some of the increase to the employees Not during the time frame mentioned, however, within 2 years a new labor agreement will be negotiated which will rely heavily upon changes in health care. increase budget for next fiscal year for benefits increases. This will be done by taking money from operations budget and not replacing outdated equipment.

16. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Potential increase in employee contribution to cover costs higher than planned. Increased cost sharing by employee Restructure the health care plan coverage Increase the employees portion of the premium for health insurance. Could consider increasing employee percentage of payment. Increase employee contributions. Possibly a higher employee contribution Raising co-pays, possibly changing how much of the subsidized rate the employee is paying and changing plan providers to ensure the best possible rates. Increase the bi-weekly employee contribution. creating a smoke free environment and a healthier environment We may change eligibility requirements for all benefits; require employees to pay a portion of their premiums Continued cost-shifting to employees In 2006, we are transitioning to a consumer-driven health plan. Higher employee contributions and higher co-pays. Maybe less medical benefits. Higher co-pay, higher deductibles, higher percentage in employee contribution Over the last three years, our company has already made significant changes to offset the rising costs of healthcare (reduction in coverage benefits, eliminate retiree medical, outsourcing, etc.) Therefore, we are not very likely to make any major changes in the next twelve months. If anything, we will ask employees to pay a larger share of the premiums. Also, you may find interesting that we are now reviewing bringing the benefits administration back in-house - as the services has been extremely poor over the last three years and hasn't had the significant savings that was anticipated. Design health insurance plans where employees pay more in the form of deductibles, out-of-pocket costs. Employees pay more of the premiums. Increase the employee contribution to the cost of the health insurance. Higher deductibles Increase in employee premiums, but would be minimal Raise the amount of employee participation, or switch insurance coverage for a higher deductible and co- insurance payment.

17. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Higher percentage charge to the employee to cover health care benefits Shifting more of the % of the premium away from the company paying and on to the employee paying. We are considering converting from 100% employer paid health coverage to shared responsibility with the employee. Increase employee contributions Considering not allowing spouses to be on the medical plan if they are employed and have the opportunity to get insurance through their own employer. Dependent coverage would be allowed if the employee's birthday was the first in the year. Review other plan options/carrier and change if appropriate Higher employee premiums, co-payments and deductibles. Increase co-payment, deductibles, provide incentives for employees to make better use of their health care dollar and better health care choices in life style. Increase employee cost share of premium Perhaps modify employee contribution to the monthly premium or increase the co-pay amount on prescription drugs. Increased premiums to the employee, increased co-pay's and deductibles. More cost sharing on the employee's part by possibly increasing the deductibles and co- payments/coinsurance. We introduced a cost sharing model that has our employees paying 25% of premium cost as of fiscal 2004 with a 505 cost sharing of all future premium increases. modeling changes such as FSA's; deductibles and consumer based programs and wellness initiatives Not necessarily to cover the costs, but to reduce costs we will continue to look at part-time work without health/dental benefits as a viable option. About 8% of our workforce is currently part-time. We will watch the progress on HSA's. We may look at different carriers which would be a change in our environment. Review plan structure and design; Health savings accounts;

18. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Reduced employer contribution rates. Increase in Premiums paid by employees. Examine new insurance products and increase benefit cost sharing. alter plan (increase co-pays) or employees' contributions towards premium thank you, but I am not qualified to answer these questions We actually are going to contribute at least a 15% increase to the agency's share of the employee health insurance. Increase the cost that employees pay for their coverage We have plans to eliminate a family deductible maximum and change to a deductible for each plan participant. For example, in prior years, an employee has a deductible of $500 and a family would have a maximum of $1,500 even if they had 4 or more participants. Now, each participant will have their own deductible to meet. Constant review of benefits. May look at use of HSA type accounts Increase deductible, though we reimburse deductibles through a Medical Expense Reimbursement Plan (lower premiums, not all employees use full deductible) I'm sure that we will explore the possibility of going to more consumer-driven health care plans, which to this point, we have resisted. Our insurance went down this year and we are looking at the possibility of being self insured. more employee participation in considering alternatives & making choices Change in structure of plan, possibly the high deductible plan. Implemented employee contributions for dependent coverage for first time in July, 2005 and will increase contribution in January, 2006. Made some changes to the medical plan, such as increasing co-pay, deductible and out of pocket maximum. Will increase early retiree contribution in January, 2005. Increasing wellness initiatives. Increased employee contributions Change from self-insured to fully insured Possibly increase the premium for covering dependents. Increase employee contribution Adjust coverage for Short Term Disability; continue to capitalize on TP Administration; aggressive RFQ/Bid process; increased emphasis on well-care

19. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Cost increases passed along to employees! Safety Awareness and Wellness Initiatives All of our employees are Union employees. Under the current contract, there is no employee contribution for health insurance premiums. I would imagine that the next contract negotiations will change that to have the employees make some sort of contribution for their coverage. Currently premiums are paid by employer for employee at 100%. There will be a change in employee paying part of the premium. "wellness" incentives; more cost sharing between employer and employee Increase deductibles Increase office co-pays Increase co-pay for medications Increase employee share in premium premium increases for employees Increase in employee contribution to medical premiums. The company plans to contribute more to employee's health savings accounts to encourage more participation in the plan. Increase employee contributions to medical plan and increase co payments in some areas of the medical plan Putting our coverage out for bid to examine our options; adjusting the percentages of our employee contributions changing the ratio of employer/employee costs for benefits. Employee will pay more of the costs than the 80/20 currently. Employees will share in costs that the employer has been paying at 100% (std, ltd, ) Changes in benefit plan design for bargaining unit employees Increase in employee contributions to health care cost and retirement benefits Increased costs for employees who do not participate in wellness programs Raising associates contribution Considering becoming Self-ensured for the cost-control benefits Introducing initial items to drift towards consumerism

20. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Changes in plan design: increase deductible, decrease first dollar benefits, possibly more employee contribution, etc. We have not had an increase in our health insurance rates for two years. However in anticipation of rising costs, we may increase the employee contributions slightly this year. Cost sharing adjustments – co-pays, premiums Increases in employee portion of cost-sharing. Possibly pass on a larger percentage of the cost for dependent coverage to the employee. This year increased deductible for first time in several years; will attempt to contain costs as long as possible without asking employee to share in costs for health care, but this may be sooner rather than later due to increasing cost of premiums. Sorry - we are a start-up company and none of this applies Travel, vehicle use We will be evaluating proposals from several companies to provide employees other, flex benefit arrangements to accommodate employee needs according to age, etc. We are reviewing our STD, LTD and Life Insurance Policies. However, for the 2006 calendar year, we are unlikely to make any adjustments, but we are taking a two year outlook when reviewing our health & welfare benefit plans. Pass some of the increase to employees for dependent coverage Increase employee share of premiums. Our health care costs are negotiated at the Federal level since we are a Federal agency. I am certain that there will be adjustments this year, if only to keep up with inflation. Unsure at this time. Obtaining quotes from other vendors. Increase in amount of employee contributions/co pays. Administrative changes. Cost shifting, strong wellness initiatives, reduction of plan coverage More cost to the employees

21. © 2005 SHRM SHRM Weekly Online Survey: September 20, 2005 Are there other adjustments your organization is likely to make to cover the costs of employee health care coverage ? (Continued) Offer additional health care options, and possibly increase employee contributions. Decrease the percentage of the employer's contribution Increase employee cost; more employee education Put a surcharge on employees who put their spouses on our insurance when they have medical coverage at their own place of employment. Also increased deductibles. Make adjustments in what is offered through the benefits, such as increased deductibles, plan design. Possibly look to a gradual move towards utilizing an HSA. Change Broker to an organization that has stronger negotiating power with the healthcare carriers. Change in plan design - possible HSA, prescription deductible added. Slightly increase employee cost. There might be a possibility of adjustments in the employee/employer contribution ratio, and coverages within the plan that need to be looked at and evaluated, i.e., lifetime maximum. Company now does not pay as large of a % as we historically have. Instead of 100% for certain things (like individual dental) we now pay 75%... Explore consumer driven health plans, increase employees' share of premiums Formulary in meds, mandatory mail in for filling of maintenance drugs, mandatory steps in meds treatment. Coverage limits on certain drug in quantities per day that will be covered. Review and attempt to keep costs in line. Passing on the entire health insurance increase to employees. Have employees pay more Increasing the employee contribution, introducing a deductible and raising the prescription co-pay. Potentially dropping the group insurance coverage completely. Eliminating dental insurance all together.