1. September 17, 2010 SHRM Poll: Organizations’ Response to Health Care Reform—Organizations’ Short-Term Decisions

2. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Health Care Reform Series: Poll 2 Introduction Landmark legislation that brought about major reforms in health care coverage in the United States was enacted in March 2010. The law affects employers and HR professionals in a variety of ways. SHRM will be conducting a series of polls on health care reform and its implications for employers and employees. This presentation covers the findings from the second poll in this series, which was conducted in July 2010. 2

3. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Key Findings What is the impact of the “grandfathered” status on organizations? 30% of HR professionals say they are attempting to maintain their organization’s grandfathered status, whereas 11% have decided not to maintain their organization’s grandfathered status. Are organizations planning to implement wellness programs in light of the health care reform law? Almost two-thirds (64%) of organizations already implemented wellness programs, and 18% are planning to implement them. What provisions in the new law are organizations planning to implement before they become required by law? About one-third of organizations reported that their plan already meets legal requirement in the following areas: 1) removing all preexisting condition exclusions for children under age 19, 2) removing annual maximums, and 3) re-evaluating current retiree medical plan. 3

4. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 4 Based on the new health care reform law’s “grandfathered” status, which one of the following statements best describes your organization’s position? Note: n = 826. Percentages do not total 100% due to rounding. 30% of organizations are attempting to maintain their grandfathered status.^ 11% of organizations have decided not to maintain their grandfathered status.*

5. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Based on the new health care reform law’s “grandfathered“ status, which one of the following statements best describes your organization’s position? We are or will be conducting analyses and exploring different health care options to decide whether to keep the grandfathered status (by union status): Organizations with no employees under a collective bargaining agreement (23%) were more likely than unionized organizations (14%) to report that they are or will be conducting analyses and exploring different health care options to decide whether to keep the grandfathered status. We have not yet begun to consider the issues around grandfathered status (by medical benefit funding): Self-insured organizations (24%) were more likely than insured organizations (11%) to report that they have not yet begun to consider the issues around grandfathered status. Not sure what grandfathered status means (by operations location): Organizations with multinational operations (13%) were more likely than U.S.-based (8%) organizations to report that they are not sure what grandfathered status means. We will attempt to maintain grandfathered status to avoid additional costs to the organization and/or employees (by medical benefit funding): Self-insured organizations (24%) were more likely than insured organizations (17%) to report they will attempt to maintain grandfathered status to avoid additional costs to the organization and/or employees. We will attempt to maintain grandfathered status to avoid having to comply with specific elements of the new law (by operations location): Organizations with multinational operations (13%) were more likely than U.S.-based organizations (8%) to report they will attempt to maintain grandfathered status to avoid having to comply with specific elements of the new law. 5 Comparison by Organization’s Operations Location, Union Status and Medical Benefit Funding

6. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Are there provisions in the new health care reform law that your organization is planning to implement before they become required by law? Currently Offering and Plan Already Meets Legal Requirement Implementing Before Required by Law Not Implementing Until Required by Law Removing all preexisting condition exclusions for children under age 1936%11%53% Removing annual maximums30%9%61% Re-evaluating current retiree medical plan27%14%58% Removing lifetime maximums24%11%66% Extending coverage to adult children up to age 26 regardless of status (student/married) 22%21%57% Extending coverage to adult children up to age 26 regardless of the availability of other coverage 20%19%61% Reducing the maximum health care flexible spending account (FSA) employee contributions prior to 2013 8% 83% 6 Note: n = 209-705. Percentages do not total 100% due to rounding. “Not sure/not applicable” responses were excluded from this analysis.

7. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Are there provisions in the new health care reform law that your organization is planning to implement before they become required by law? Removing all preexisting condition exclusions for children under age 19 (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with 500 to 2,499 employees to report that removing all preexisting condition exclusions for children under age 19 is one of the provisions in the new law that their organizations already offer. Extending coverage to adult children up to age 26 regardless of status (student/married) (by staff size): Smaller organizations (those with less than 500 employees) were more likely than organizations with 500 to 2,499 employees to report that extending coverage to adult children up to age 26 regardless of status is one of the provisions in the new law that their organizations already offer. Extending coverage to adult children up to age 26 regardless of the availability of other coverage (by staff size): Smaller organizations (those with less than 500 employees) were more likely than organizations with 500 to 2,499 employees to report that extending coverage to adult children up to age 26 regardless of the availability of other coverage is one of the provisions in the new law that their organizations already offer. 7 Comparison of Provisions Organizations Are Currently Offering by Organization’s Staff Size Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 500 to 2,499 employees (29%)2,500 to 24,999 employees (50%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (30%)500 to 2,499 employees (15%)Smaller organizations > larger organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (29%)500 to 2,499 employees (13%)Smaller organizations > larger organizations

8. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Are there provisions in the new health care reform law that your organization is planning to implement before they become required by law? Differences Based on Organization’s Operations Location Differences Based on Medical Benefit Funding Differences Based on Union Status Removing annual maximums Insured (37%) > self- insured (26%) Removing lifetime maximums Insured (34%) > self- insured (18%) Unionized (31%) > non- unionized (22%) Extending coverage to adult children up to age 26 regardless of status (student/married) U.S.-based only organizations (24%) > Multinational operations (15%) Insured (39%) > self- insured (10%) Extending coverage to adult children up to age 26 regardless of the availability of other coverage Insured (35%) > self- insured (8%) 8 Comparison of Provisions Organizations Are Currently Offering by Selected Organizational Demographics Note: Blank cell indicates that there were no significant differences in this category.

9. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Are you planning to implement wellness programs in light of the new health care reform law? 9 Note: n = 598. “Not sure/not applicable” responses were excluded from this analysis. Comparison by Organization’s Medical Benefit Funding: Self-insured organizations (69%) were more likely than insured organizations (57%) to report implementing wellness programs in light of the new health care law.

10. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 How is your organization’s primary medical benefit currently funded? 10 Note: n = 749

11. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 How is your organization’s primary medical benefit currently funded? By staff size: Larger organizations (those with 500 or more employees) were more likely than organizations with fewer than 500 employees to report that their organization’s primary medical benefit is self-insured. By operations location: Organizations with multinational operations (71%) were more likely than U.S.-based only (51%) organizations to report that their organization’s primary medical benefit is self-insured. By sector: Publicly owned for-profits (72%) were more likely than privately owned for-profits (50%) and nonprofits (49%) to report that their organization’s primary medical benefit is self-insured. By union status: Unionized organizations (64%) were more likely than non-unionized (54%) organizations to report that their organization’s primary medical benefit is self-insured. 11 Comparison by Organization’s Staff Size, Operations Location, Sector and Union Status Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (39%)500 to 2,499 employees (69%) 2,500 to 24,999 employees (84%) 25,000 or more employees (84%) Larger organizations > smaller organizations

12. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Demographics: Organization Industry Industry Manufacturing –other 18% Health care, social assistance (e.g., hospitals, clinics) 13% Financial services (e.g., banking) 8% Services –professional, scientific, technical, legal 7% Educational services/education 6% Government/public administration—federal, state/local, tribal 5% Retail/wholesale trade 5% Construction, mining, oil and gas 4% Insurance 4% 12 Note: n = 754. Percentages do not total 100% due to rounding.

13. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Demographics: Organization Industry (continued) Industry Other services (e.g., other nonprofit, church/religious organizations)4% Transportation, warehousing (e.g., distribution)3% High-tech3% Services—accommodation, food and drinking places3% Utilities2% Real estate, rental, leasing2% Publishing, broadcasting, other media2% Manufacturing—auto/auto-related2% Arts, entertainment, recreation1% Consulting1% Telecommunications1% Association—professional/trade0% Pharmaceutical0% Biotech0% Other5% 13 Note: n = 754. Percentages do not total 100% due to rounding.

14. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Demographics: Organization Sector 14 Note: n = 756

15. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Demographics: Organization Staff Size 15 Note: n = 497. Percentages do not total 100% due to rounding.

16. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 Demographics: Other 16 Note: n = 763 U.S.-based operations75% Multinational operations25% Single-unit company: A company in which the location and the company are one and the same 29% Multi-unit company: A company that has more than one location 71% Multi-unit headquarters determines HR policies and practices 64% Each work location determines HR policies and practices 1% A combination of both the work location and the multi-unit headquarters determine HR policies and practices 35% Is organization a single-unit company or a multi- unit company? Are HR policies and practices determined by the multi-unit corporate headquarters, by each work location or both? Does the organization have U.S.-based operations (business units) only or does it operate multinationally? Note: n = 750 Note: n = 556 19% of organizations indicated that employees at their work location were unionized. Note: n = 755

17. Organizations’ Response to Health Care Reform – Pending Short Term Decisions | ©SHRM 2010 SHRM Poll: Organizations’ Response to Health Care Reform – Poll 2 Response rate = 21% Sample comprised of 1,095 randomly selected HR professionals with the job title of manager and above, as well as HR professionals in the compensation and benefits functional area. All analyses were based on respondents working at organizations with a staff size of 50 employees or more. Margin of error is +/- 3% Survey fielded July 22–August 3, 2010 17 Methodology For more poll findings, visit: www.shrm.org/surveys www.shrm.org/surveys Follow us on Twitter: http://twitter.com/SHRM_Research http://twitter.com/SHRM_Research