Fifth Annual Transamerica Center for Health Studies Survey: Employers Hold Steady in Time of Uncertainty

Fifth Annual Transamerica Center for Health Studies Survey: Employers Hold Steady in Time of Uncertainty November 2017

Table of Contents About the Transamerica Center for Health Studies Page 3 About the Survey Page 4 Method Page 5 Terminology Page 6 Executive Summary Page 7 Detailed Findings Healthcare Offerings Health Benefits Page 12 Future Changes Page 24 Wellness Programs Page 40 Employee Satisfaction Page 50 Affordability Page 60 Attitudes and Behaviors Page 72 Knowledge and Information Page 78 Demographics Page 83 Appendix Page 88 2

About the Transamerica Center for Health Studies The Transamerica Center for Health Studies (TCHS) a division of the Transamerica Institute is focused on empowering consumers and employers to achieve the best value and protection from their health coverage, as well as the best outcomes in their personal health and wellness. TCHS engages with the American public through national surveys, its website, research findings and consumer guidance. TCHS also collaborates with healthcare experts and organizations that are equally focused on health coverage and personal health and wellness. The Transamerica Institute is a nonprofit, private foundation funded by contributions from Transamerica Life Insurance Company and its affiliates, as well as unaffiliated third parties. None of the contributors are major medical insurers. 3

About the Survey In September 2013, TCHS conducted the inaugural national survey of the U.S. General Adult Population and Employers regarding their attitudes toward healthcare. The overall goals for the study were to illuminate emerging trends, promote awareness, and help educate the public. The 2017 survey seeks to understand the perspective of U.S. businesses on: The current and future healthcare offerings; Potential policy changes coming out of Washington, D.C.; Resources provided to employees to help them address cost issues; The role they wish employees were taking in minimizing healthcare costs; and, Their concern about affordability of health insurance and other healthcare expenses for employees. The results of the most recent study represent the fifth wave of annual research: Wave 1 (Benchmark Wave): July 2013 (n=758) Wave 2: July 20 (n=751) Wave 3: August/September 2015 (n=1500) Wave 4: August/September 2016 (n=1502) Wave 5: July/August 2017 (n=1520) 4

Method A 20-minute online survey was conducted from July 25 August 10, 2017 among a sample of 1520 employer decision makers ages 18+. Qualified respondents were: Primary decision makers of employee benefits at their company; Employed by or the proprietor of a for-profit (non-educational) organization; and, Owner, CEO/Chairman, Director of HR, Benefits Manager, other HR professional responsible for employee benefits, or other professional responsible for employee benefits. The following sub-samples were achieved: Businesses with 1-49 full-time employees: 731 Businesses with 50-499 full-time employees: 359 Businesses with 500+ full-time employees: 430 Data was weighted (statistically adjusted) based on employer size (by number of employees) to be representative of U.S. businesses. Note: In comparison to the weighted data in other waves, the weighted data for 2015 reflects a lower mean number of employees, more owners, less HR directors, and a shift toward manufacturing and fewer companies in the professional services industry. Percentages were rounded to the nearest whole percent. Differences in the sums of combined categories/answers are due to rounding. Unless otherwise indicated, numbers represent percentages throughout. When comparing to the 2013 benchmark study, please note that qualification criteria were adjusted in the subsequent surveys. In the 2013 Benchmark study: Respondents with at least shared decision making responsibility (as opposed to primary responsibility) for employee benefits; and, Those with titles other than Owner, CEO/Chairman, Director of HR, or Benefits Manager were able to qualify for the survey as long as they met the other qualification criteria. 5

Terminology Employers Terms companies and businesses (etc.) are used interchangeably and refer to for-profit and non-educational institutions. Employer Size When shown by employer size, labels (i.e., 1-49 Employees, etc.) refer to the number of full-time employees. Small Companies Companies with less than 50 employees. Midsize Companies Companies with between 50 and 499 employees. Large Companies Companies with 500 or more employees. 6

Executive Summary Employer-based Health Coverage Employers offer benefits at highest level since 2013. Companies are less likely in 2016 (13 percent) and 2017 (13 percent) than they were in 2015 (18 percent) to say they stopped providing health insurance in the past year. (Q800 and Q811) Only one percent of employers say they will no longer be providing health insurance in two to three years. (Q813) Changes made to healthcare benefits lean positive but there are notable negative changes as well Overall, 31 percent of employers have made changes in the past 12 months to health benefits they offer. (Q1010) Most commonly, employers report they changed plan options (29 percent) or implemented a wellness program (27 percent). However, around one in six (17 percent) say they reduced or eliminated company contribution to cover costs for healthcare benefits (other than health insurance) and 13 percent say they did the same to cover cost for health insurance. (Q1015) Employers believe employee satisfaction with health plans is high. Since 20, over nine in 10 employers say their employees are satisfied with the health insurance plans offered by the company. In fact, three out of four employees say they are satisfied with the health insurance plan and other benefits their company offers. (Q907) 7

Executive Summary Employer-based Health Coverage (cont.) Employers see leaders commitment, but employees feel differently. Consistent with 2015 and 2016, over 80% of employers say leadership is committed to improving the health of their employees, but only one third of employees feel the same way. (Q832 and Q1130C) Health Policy and ACA Awareness is relatively high for healthcare policy changes. Nearly 2 in 3 employers say their company is extremely/very aware of the potential changes to healthcare policy coming out of Washington D.C. (Q1370) When asked how they would like their employer to react if the employer mandate is removed by Congress and the President about more than one-fifth would like to evaluate coverage options (22 percent), not make any change (21 percent), or would like to increase coverage (19 percent). (Q1375) Preexisting conditions cause the biggest concern among employees. Most employers say that employees have expressed some fears of changes in healthcare policy; the most common is losing their healthcare due to pre-existing conditions. (Q1380) 8

Executive Summary Health Policy and ACA (cont.) TV, newspaper, and radio are less likely to be relied upon compared to other healthcare information sources. Employers us healthcare websites, search engines, medical websites, and communications from the government more than mass media to stay current on healthcare industry news. (Q1205) Cost Over four out of five employers expect health costs to increase. Of those who think the costs of providing health benefits in the future will increase, 55 percent believe the quality of health insurance will decrease or stay the same. (Q1321) Most employers are taking action to manage healthcare costs More than three out of four (78 percent) of employers say they are doing something to manage costs. (Q826) Thirty percent say they are creating an organizational culture that promotes health and wellness, and their company is encouraging the use of generic medications. (Q826) Approximately six in ten employers say they are working to keep costs constant for employees share of premiums, deductibles, and co-pays/co-insurance. (Q919) 9

Executive Summary Affordability Employers are taking action to respond to employees concerns about affordability. The majority of employers who are concerned about affordability (86 percent) are taking some action to combat cost. (Q925) Most employers regardless of size are concerned about the affordability of health insurance for their employees, and their employees being able to afford their out-of-pocket healthcare expenses (both 76 percent). (Q923) At the same time, more than one-quarter of employers (28 percent) say they are likely to reduce their contribution to health insurance. (Q12) Workplace Wellness Employers see strong impacts from workplace wellness offerings. About four in five employers believe their wellness programs have had a positive impact on workers health (78 percent), productivity and performance (75 percent), and about 7 in 10 (69 percent) see a positive impact on company healthcare costs. (Q824) However, nearly two in five employers (38 percent) say they do not offer these types of programs to their employees. (Q821) 10

Executive Summary Workplace Wellness (cont.) Employers believe their workplace wellness program improves morale and loyalty. Most employers perceive their workplace programs to positively impact job satisfaction (74 percent), workplace commitment (74 percent), turnover (62 percent), and absenteeism (59 percent. (Q824) Employees continue to underestimate wellness offerings, with a disconnect in those who participate. While employees are slightly more likely than they were in the past to say their employer offers wellness programs (40 percent), it is substantially less than employers reporting of workplace wellness offerings (62 percent). (Q820) Consistent with 2015 and 2016, 84 percent of employers say their leadership is committed to improving the health of their employees, but only around one-third of employees (34 percent) feel the same way. (Q832) Disconnect may be due to managers (78 percent) and professionals (75 percent) being more likely than hourly workers (65 percent) to participate (according to employers). (Q823A) 11

Healthcare Offerings Healthcare Benefits Future Changes Wellness Programs Employee Satisfaction 12

Employers Offer Benefits at Highest Level Since 2013 Companies are less likely in 2017 and 2016 than they were in 2015 to say they stopped providing health insurance in the past year (13% and 13% vs. 18%). % Providing Any Healthcare Benefit % Providing Healthcare by Company Size Yes, to full-time employees 84 80 82 80 78 Yes, Full-time or Part-time Less than 50 Employees (n=731) 50-499 Employees (n=359) 500+ Employees (n=430) 61 99 99 Yes, to part-time employees No, none 19 17 19 18 16 19 18 19 21 July/Aug 2017 Aug/Sept 2016 Aug/Sept 2015 July 20 July 2013 Yes, Full-time 61 99 98 Yes, Part-time 8 23 26 No, none 39 1 1 BASE: All Qualified Respondents (July 2013 n=758, July 20 n=751, Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q800. Does your company provide healthcare benefits to any of your employees? Please select all that apply. Q811 Did you stop providing health insurance in the past year? 13

Providing the Best Benefits Package Remains Top Priority Holding steady from last year, employers feel that offering health insurance to all employees is their company s most important benefit-related priority, followed by ensuring their employees have access to enough qualified providers to meet their health needs. Most Important Healthcare Benefit-Related Priority 2017 (%) July 2013 July 20 Aug/ Sept 2015 Aug/Sept 2016 Providing the best healthcare benefits package possible 18 18 18 15 18 Ensuring our employees have access to enough quality providers (physicians and hospitals) to meet health needs 12 N/A N/A 12 10 Offering health insurance to all employees (both part-time and full-time) 10 6 12 8 9 Lowering insurance premiums for employees Minimizing the company's cost of providing health insurance to employees Expanding current healthcare benefits offerings Lowering out-of-pocket healthcare costs to employees 8 8 8 8 11 9 6 9 18 6 8 7 7 9 7 7 9 10 9 9 Complying with the ACA 6 N/A 7 9 5 Providing the minimum healthcare package necessary to attract and retain employees Adding additional healthcare benefits to supplement the health insurance plan currently offered 5 5 6 6 5 5 6 7 6 6 My company currently does not provide healthcare benefits Only showing responses > 1% 12 17 17 15 BASE: All Qualified Respondents (July 2013 n=758, July 20 n=751, Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q825. Which one of the following is your company s most important healthcare benefit-related priority right now?

Number of Plans Offered Is on Par with 2016 In 2017, 53 percent of employers offer more than three health plans to the employees. Number of Health Plans Offered (%) (Among Employers Offering Benefits) 10 15 11 12 37 43 40 41 More than 5 3 to 5 31 24 28 28 2 1 22 15 19 17 July 20 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 BASE: Company Provides Healthcare Benefits (July 20 n=626, Aug/Sept 2015 n=1165, Aug/Sept 2016 n=1201, July/Aug 2017 n=1202) Q815. How many types of healthcare plans are included in your health insurance coverage options? 15

Little Change in Offerings Based on Size of Company As in previous waves, smaller companies are most likely to offer one to two plans, whereas midsize and large companies most commonly offer three to five plans. Number of Plans by Company Size (%) Less than 50 Employees 50-499 Employees 500+ Employees 20 (n=183) 2015 (n=467) 2016 (n=421) 2017 (n=423) 20 (n=254) 2015 (n=391) 2016 (n=438) 2017 (n=355) 20 (n=189) 2015 (n=307) 2016 (n=342) 2017 (n=424) More than 5 6 6 4 6 7 15 10 11 21 16 17 3 to 5 18 31 25 27 37 48 47 43 46 51 46 47 2 31 26 33 31 39 26 28 31 27 21 25 26 1 45 32 34 32 17 10 13 6 12 10 BASE: Company Provides Healthcare Benefits Q815. How many types of healthcare plans are included in your health insurance coverage options? 16

PPOs and HMOs Remain Most Common Types of Plans For the most part, large companies offer a wider variety of health plans than small ones. Midsize companies fall somewhere in between. Preferred Provider Organization (PPO) Health Maintenance Organization (HMO) Health Savings Account (HSA) High Deductible Health Plan (HDHP) Health Reimbursement Arrangement (HRA) Consumer Driven Health Plan (CDHP) Types of Health Plans Offered (%) Fee For Service (FFS) 6 10 43 43 42 43 39 34 34 32 39 34 24 30 26 33 30 12 21 18 26 21 17 18 20 26 55 58 55 58 57 53 55 53 56 July/Aug 2017 Aug/Sept 2016 Aug/Sept 2015 July 20 July 2013 Types of Health Plans by Company Size (%) Less than 50 Employees (n=423) 50-499 Employees (n=355) 500+ Employees (n=424) PPO 50 50 61 HMO 46 52 56 HSA 30 40 50 HDHP 22 31 41 HRA 16 28 38 CDHP 11 21 26 FFS 12 18 19 BASE: Company Provides Healthcare (July 2013 n=640, July 20 n=626, Aug/Sept 2015 n=1165, Aug/Sept 2016 n=1201, July/Aug 2017 n=1202) Q820. Which types of health plans are included in your health insurance coverage? 17

When Only One Plan Offered, PPOs Are Most Common Consumer-Driven Health Plans (CDHPs)/High-Deductible Health Plans (HDPS) are the most likely to be added to offerings as the number of plans increases. % Types of Health Plans by Number of Plans PPO HMO HDHP CDHP HSA or HRA 80 67 68 68 55 53 56 49 51 50 47 59 60 42 52 42 34 21 31 31 27 26 6 Total 1 2 3 to 5 5+ Number of Plans Offered BASE: Company Provides Healthcare (August 2017 Total n=1202, 1 n=238, 2 n=350, 3-5 n=465, 5+ n=128) Q815. How many types of healthcare plans are included in your health insurance coverage options? Q820. Which types of health plans are included in your health insurance coverage? 18

Nearly Three in 10 Have Changed Plan Options in Past Year About one in four say they have implemented a wellness program, added or increased company contributions, or added healthcare benefits other than health insurance. Changes to Healthcare Benefits in the Last 12 Months (%) Changed plan options Implemented a wellness program Added or increased company contribution to cover costs for health insurance Added healthcare benefits other than health insurance ded or increased company contribution to cover costs for healthcare benefits other than health insurance benefits Implemented additional wellness programs Added an independent third party administrator of health plans Added health insurance Changed insurers Company is now directly paying employee health costs (self-insured health coverage) Reduced or eliminated company contribution to cover costs for healthcare benefits other than health insurance Offered healthcare insurance coverage to additional employees Tightened requirements for employees to be eligible for healthcare benefits Added coverage for spousal to employee health plans Added dependent coverage to employee health plans Narrowed the set of providers in network (physicians and/or hospitals) Loosened requirements for employees to be eligible for healthcare benefits Reduced the number of wellness programs Reduced or removed healthcare benefits other than health insurance Reduced or eliminated company contribution to cover costs for health insurance Eliminated dependent coverage on employee health plans Eliminated a wellness program Removed health insurance Offered coverage to employees through the Small Business Health Options Program (SHOP) marketplace Other BASE: All Qualified Respondents (July/Aug 2017 n=1520) Q1010. In the past 12 months, has your company made any changes to the healthcare benefits it offers/offered? BASE: Has Made Changes in Past 12 Months (July/Aug 2017 n=439) Q1015. What changes were made to the healthcare benefits your company offers? 1 * 9 23 23 22 21 20 18 18 17 17 17 16 15 15 15 13 13 13 12 29 27 Overall, 31 percent of employers have made changes to healthcare benefits they offer in the past 12 months. 19

As in Previous Waves, Most Have Made No Changes to Benefits In the past year, less than one in three employers have made changes to the healthcare benefits they offer. Changes to Healthcare Benefits in the Last 12 Months (%) 28 36 37 28 31 Yes No Don't know 68 62 61 70 68 4 2 2 1 2 July 2013 July 20 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 BASE: Has Made Changes in Past 12 Months (July 2013 n=758, July 20 n=751, August 2015 n=1500, September 2016 n=1502, July/Aug 2017 n=1520) Q1010. In the past 12 months, has your company made any changes to the healthcare benefits it offers/offered? 20

Plan Option is Most Frequent Change During the Last Year Of those who have made changes in past year, over one in four have implemented a wellness program. Changes to Healthcare Benefits in the Last 12 Months (%) Changed plan options Implemented a wellness program Added or increased company contribution to cover costs for health insurance Added healthcare benefits other than health insurance Added or increased company contribution to cover costs for healthcare benefits other than health insurance benefits Implemented additional wellness programs Added an independent third party administrator of health plans Added health insurance Changed insurers Company is now directly paying employee health costs (self-insured health coverage) N/A N/A N/A N/A N/A N/A N/A 4 7 29 26 27 28 25 23 23 21 23 19 16 23 21 21 23 22 22 27 15 21 20 19 16 18 25 27 12 18 21 26 26 31 17 16 19 35 37 38 43 July/Aug 2017 September 2016 August 2015 July 20 July 2013 BASE: Has Made Changes in Past 12 Months (July 2013 n=225, July 20 n=268, August 2015 n=476, September 2016 n=413, July/Aug 2017 n=439) Q1015. What changes were made to the healthcare benefits your company offers? 21

Healthcare Offerings Healthcare Benefits Future Changes Wellness Programs Employee Satisfaction 22

Awareness is Relatively High for Healthcare Policy Changes Nearly two in three employers say their company is extremely/very aware of the potential changes to healthcare policy coming out of Washington D.C. Forty three percent of small companies are only somewhat or not at all aware. Awareness of Policy Changes Coming out of Washington D.C. (%) Total Less than 50 Employees 50-499 Employees 500+ Employees 25 6 3 37 11 6 23 20 3 2 45 20 31 47 28 32 27 30 29 Extremely aware Very aware Somewhat aware Not at all aware I don't know *Added in 2017 BASE: All Qualified Respondents (August 2017 n=1520, Less than 50 Employees n=731, 50-499 Employees n=359, 500+ Employees n=430) Q1370 How aware is your company (e.g., your HR Department, the C-Suite, Senior Management) of the potential changes to healthcare policy coming out of Washington D.C.?

One in Five Prefer No Change if Employer Mandate Removed At the same time, more than one-fifth would like to evaluate coverage options (22 percent) and another one-fifth would like to increase coverage (19 percent). Preferences on How Company Should React If Employer Mandate is Removed (%) Total Less than 50 Employees 50-499 Employees 500+ Employees 37 31 26 26 28 22 21 17 19 19 21 17 8 8 7 6 6 6 7 3 5 5 4 9 4 4 4 4 3 3 1 Evaluate our coverage options *Added in 2017 Not make any changes Increase coverage Continue to cover children up to age 26 I am not sure how my company will react BASE: All Qualified Respondents (August 2017 n=1520, Less than 50 Employees n=731, 50-499 Employees n=359, 500+ Employees n=430) Q1375 If the employer mandate is removed by Congress and the President, which of the following best describes how you would like your company to react? Reduce coverage as much as possible Stop covering The mandate does children up to age not apply 26 24

Pre-existing Conditions Cause Biggest Concern Most employers say that employees have expressed at least some fears with respect to changes in healthcare policy; the most common is losing their healthcare due to pre-existing conditions. Losing healthcare because of a pre-existing condition Employer no longer being mandated to offer healthcare coverage Reduction in Medicare for seniors Limited access to family planning/maternity care Losing dependent coverage for adult children up to 26 years old No lifetime/annual out-of-pocket limits Increase contribution limits for Health Savings Accounts (HSA) Reduction of Medicaid for low income children, disabled, and adults Limited access to gynecological care Tax-payer funded high-risk pool Reduced contribution limits for Health Savings Accounts (HSA) Other My employees haven't expressed any concern regarding healthcare policy. % Reporting Fears Expressed by Employees in Regard to Changes in Healthcare Policy 1 2 * 8 9 26 25 25 28 20 19 26 17 20 20 23 13 18 19 21 18 20 23 15 18 22 20 17 24 23 17 16 17 19 15 12 13 18 11 15 17 18 13 15 18 *Added in 2017 BASE: All Qualified Respondents (August 2017 n=1520, Less than 50 Employees n=731, 50-499 Employees n=359, 500+ Employees n=430) Q1380 Which of the following, if any, have your employees expressed fears in regard to changes in healthcare policy? Please select all that apply. 18 20 29 Total Less than 50 Employees 50-499 Employees 500+ Employees 45 25

Most Will Continue to Buy and Provide Plans to Employees Only 1 percent of employers say they will no longer be providing health insurance in two to three years; about three in 10 expect that they will be self-insured in the future. 62 66 65 Current Healthcare Benefits Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 31 25 28 6 7 6 1 2 2 We buy a plan and provide it to employees We are self-insured We are subsidizing but employees are buying on a private exchange Not applicable Future Healthcare Benefits 57 62 59 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 31 25 29 10 9 8 1 1 1 2 3 3 We will buy a plan and provide it to employees We will be self-insured We will subsidize but employees will be buying on a private exchange We will no longer be providing health insurance at all BASE: Provides Healthcare Benefits (Aug/Sept 2015 n=1165, Aug/Sept 2016 n=1201, July/Aug 2017 n=1202) Q812. Which on of the following describes how you provide health insurance? Q813. Regarding how you provide health insurance, what do you think you will be doing in 2 to 3 years? Not applicable 26

Small Employers Are Most Likely to Be Subsidizing Insurance Three percent of small employers say they will no longer be providing health insurance in two to three years. Current Healthcare Benefits Less than 50 Employess 50-499 Employees 500+ Employees 62 60 68 25 33 28 11 5 3 2 2 1 We buy a plan and provide it to employees We are self-insured We are subsidizing but employees are buying on a private exchange Not applicable Future Healthcare Benefits Less than 50 Employess 50-499 Employees 500+ Employees 55 60 61 26 30 30 13 7 5 3 * 1 3 2 3 We will buy a plan and provide it to employees We will be self-insured We will subsidize but employees will be buying on a private exchange We will no longer be providing health insurance at all Not applicable BASE: Provides Healthcare Benefits (Less than 50 Employees n=423, 40-499 Employees n=355, 500+ Employees n=424) Q812. Which on of the following describes how you provide health insurance? Q813. Regarding how you provide health insurance, what do you think you will be doing in 2 to 3 years? 27

Most Expect to Make Changes to Healthcare Benefits The most common changes that employers envision for the next one to two years are: adjusting plan options, adding benefits other than health insurance, and implementing a wellness program. Expected Changes for Company Healthcare Benefits (%) Change plan options Add healthcare benefits other than health insurance Implement a wellness program Add or increase company contribution to cover costs for health insurance Add coverage for children to employee health plans Add health insurance Add or increase company contribution to cover costs for healthcare benefits other than health insurance benefits Change insurers Offer coverage to employees through the Small Business Health Options Program (SHOP) marketplace Add dependent coverage to employee health plans Company will directly pay employee health costs (self-insured health coverage) Loosen requirements for employees to be eligible for healthcare benefits Tighten requirements for employees to be eligible for healthcare benefits Add an independent third party administrator of health plans Narrow the set of providers in network (physicians and/or hospitals) Reduce or eliminate company contribution to cover costs for health insurance Reduce or eliminate company contribution to cover costs for healthcare benefits other than health insurance Eliminate dependent coverage on employee health plans Reduce or remove healthcare benefits other than health insurance Remove health insurance Increase cost of living pay/pay raises Other None - I don't expect any changes BASE: All Qualified Respondents (August 2017 n=1520) Q1025. What changes, if any, do you expect will be made to your company s healthcare benefits in the next 1 2 years? Please select all that apply. * * 18 16 16 15 13 11 10 10 10 10 9 9 9 8 7 7 6 27 28

Negative Neutral Positive Small Companies Less Likely to Make Changes in One to Two Years The most common changes that are anticipated for all companies (regardless of size) are generally positive or neutral. Expected Changes for Company Healthcare Benefits (%) Add healthcare benefits other than health insurance Implement a wellness program Add or increase company contribution to cover costs for health insurance Add coverage for children to employee health plans Add health insurance Add or increase company contribution to cover costs for healthcare benefits other than health insurance benefits Offer coverage to employees through the Small Business Health Options Program (SHOP) marketplace Add dependent coverage to employee health plans Loosen requirements for employees to be eligible for healthcare benefits Add an independent third party administrator of health plans 9 10 10 11 16 16 15 Less than 50 50-499 500+ 8 23 20 12 19 19 10 20 19 6 18 20 8 18 19 7 15 20 6 6 12 7 12 13 4 10 13 Change plan options 18 21 21 Change insurers 13 11 17 13 Company will directly pay employee health costs 10 7 13 12 Tighten requirements for employees to be eligible for healthcare benefits Narrow the set of providers in network Reduce or eliminate company contribution to cover costs for health insurance 9 9 10 5 12 4 9 13 4 11 12 Responses > than 8% shown BASE: All Qualified Respondents (August 2017 n=1520) Q1025. What changes, if any, do you expect will be made to your company s healthcare benefits in the next 1 2 years? Please select all that apply. BOLD % indicates % is significantly greater than small companies 29

Similar to Previous Years, Most Employers Foresee Change Consistent with 2015 and 2016, about one in five believe they will make changes in their plan options in the future. Expected Changes for Company Healthcare Benefits (%) Change plan options Add healthcare benefits other than health insurance Implement a wellness program Add or increase company contribution to cover costs for health insurance Add coverage for children to employee health plans Add health insurance Add or increase company contribution to cover costs for healthcare benefits other than health insurance benefits Change insurers Offer coverage to employees through the Small Business Health Options Program (SHOP) marketplace Add dependent coverage to employee health plans None - I don't expect any changes Only 10 most commonly changes for 2017 shown 10 16 16 15 16 15 12 13 13 12 11 9 11 10 9 11 16 13 15 BASE: All Qualified Respondents (Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q1025. What changes, if any, do you expect will be made to your company s healthcare benefits in the next 1 2 years? Please select all that apply. 13 18 19 19 19 July/Aug 2017 Aug/Sept 2016 Aug/Sept 2015 26 27 31 30

Size of Company Matters When Considering Change Midsize and large employers are more likely than small employers to say they plan on making changes to healthcare benefits in the next one to two years. Expected Changes for Company Healthcare Benefits (%) Total Less than 50 (n=731) 50-499 (n=359) Change plan options 18 21 21 Add healthcare benefits other than health insurance 16 8 23 20 Implement a wellness program 16 12 19 19 Add or increase company contribution to cover costs for health insurance 15 10 20 19 Add coverage for children to employee health plans 6 18 20 Add health insurance 8 18 19 Add or increase company contribution to cover costs for healthcare benefits other than health insurance benefits 7 15 20 Change insurers 13 11 17 13 Offer coverage to employees through the Small Business Health Options Program (SHOP) marketplace 11 6 Add dependent coverage to employee health plans 10 6 12 Company will directly pay employee health costs (self-insured health coverage) 10 7 13 12 Loosen requirements for employees to be eligible for healthcare benefits 10 7 12 13 Tighten requirements for employees to be eligible for healthcare benefits 10 5 12 Add an independent third party administrator of health plans 9 4 10 13 Narrow the set of providers in network (physicians and/or hospitals) 9 4 9 13 Reduce or eliminate company contribution to cover costs for health insurance 9 4 11 12 Reduce or eliminate company contribution to cover costs for healthcare benefits other than health insurance 8 4 11 10 Eliminate dependent coverage on employee health plans 7 3 9 10 Reduce or remove healthcare benefits other than health insurance 7 4 7 8 Remove health insurance 6 3 6 9 None - I don't expect any changes 27 46 13 15 BOLD % indicates % is significantly greater BASE: All Qualified Respondents (July/Aug 2017 n=1520) than small companies Q1025. What changes, if any, do you expect will be made to your company s healthcare benefits in the next 1 2 years? Please select all that apply. 500+ (n=430) 31

Size of Business Most Common Barrier to Providing Insurance The top reasons for not offering and being unlikely to offer health insurance include: company not big enough, concern about cost, and the mandate not applying to their company. Reasons Not Likely to Offer a Health Insurance Plan in July 2013 July 20 the Next One to Two Years (%) (2017) Aug/Sept 2015 Company is not big enough 52 Aug/Sept 2016 58 64 54 55 Concerned about cost The employee coverage mandate does not apply to my company 25 24 39 27 24 30 N/A 34 26 27 Employees not interested Most of my employees qualify for Medicaid Company or management not interested Believe paying the tax penalty is less expensive than providing health insurance Concerned about administrative complexity and amount of work involved 8 7 6 5 5 13 11 12 7 N/A N/A 6 5 13 9 12 7 N/A 6 4 4 10 10 5 5 Some other reason 17 15 2 18 17 Don't know 10 9 10 8 8 Only responses greater than > 5% shown BASE: Company Doesnt Provide Healthcare Benefits and Not Likely to Offer and Does Not Offer Coverage or Health Insurance (July 2013 n=94*, July 20 n=113, Aug/Sept 2015 n=277, Aug/Sept 2016 n=258, July/Aug 2017 n=274) Q1030. What are the reasons that your company is not likely to offer a health insurance plan in the next 1-2 years? *Small Base. Results are directional in nature. *Of the 274 companies who answered this question, 266 are small companies (less than 50 employees). 32

Slight Majority Assume Quality Will Remain the Same Similar to 2015, about two in five employers expect the quality of health insurance to improve in the next 12 to 36 months. Fifty-two percent expect the quality to remain the same. Quality of Health Insurance in the Future (%) 40 33 40 Improve Stay the Same 50 57 52 Decline 10 10 8 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 BASE: All Qualified Respondents (Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q1321. Do you think the quality of health insurance you are able to offer employees will improve, decline, or stay the same in the next 12 to 36 months? 33

More than in 2016, Employers Expect Quality to Increase Similar to past year, about two in five say they expect costs will rise in the future. However, of those who think the cost of providing health benefits in the future will increase, 55 percent believe the quality of health insurance will decrease or stay the same. 50 % Reporting Quality and Cost Of Health Insurance Will Increase in the Future 45 40 35 30 Expect Quality to Increase in the Future Expect Cost to Increase in the Future 25 20 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 BASE: All Qualified Respondents (Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q1321. Do you think the quality of health insurance you are able to offer employees will improve, decline, or stay the same in the next 12 to 36 months? BASE: All Qualified Respondents (Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q1320. Do you expect that costs for each of the following will increase, decrease, or stay the same in the next 12 to 36 months? 34

Slight Majority Expect Out-of-Pocket Costs to Hold Steady However, 38 percent say they expect their employees out-of-pocket costs to increase in the next 12 to 36 months. Expectations for Total Out-of-Pocket Costs of Health Care for Employees (%) Total Less than 50 Employees 50-499 Employees 500+ Employees 8 6 10 9 38 37 40 37 55 57 50 55 Increase Stay the same Decrease BASE: All Qualified Respondents (July/Aug 2017 n=1520) Q1320 Do you expect that costs for each of the following will increase, decrease, or stay the same in the next 12 to 36 months? 35

Most Companies Give Positive Rating to Current Finances When asked to rate their company s current financial situation, nearly nine in 10 say it is excellent or good. Very few say poor. Company's Current Financial Situation (%) 12 2 Excellent Good Fair Poor 47 39 BASE: All Qualified Respondents (July/Aug 2017 n=1520) Q705. How would you rate your company s current financial situation? 36

Similar to 2016, Most Envision Rise in Profits and Wages More than half of employers today also expect the number of employees and hiring to increase - a significant boost from one year ago. Company Changes In The Next One to Two Years (%) 65 69 57 58 47 56 46 55 Increase Stay the same 30 27 40 40 48 40 48 41 Decrease 5 3 3 2 5 4 6 4 2016 2017 2016 2017 2016 2017 2016 2017 Profitability Wages Number of Employees Hiring BASE: All Qualified Respondents (Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q710. Over the next 1-2 years, how do you anticipate the following will change at your company? 37

Most Employers Are Taking Action to Manage Healthcare Costs Three in 10 say they are creating an organizational culture that promotes health and wellness and their company is encouraging the use of generic medications. Over one in five (22 percent) say they are not taking any actions to manage healthcare costs. Actions Taken to Manage Healthcare Costs (%) Creating an organizational culture that promotes health and wellness Encouraging use of generic medications Offering a health maintenance organization (HMO) health plan Offering a variety of preferred provider organization (PPO) plans, including those with high and low deductibles and co-pays Providing incentives or rewards for making changes to improve employee health and wellness Increasing the employee share contributed to the total costs of healthcare Offering consumer-directed arrangements using health savings plans (e.g., health reimbursement arrangements, health savings accounts) Increasing the employee share contributed to the cost of brand name prescription drugs 30 30 28 27 24 21 20 19 Placing limits on, or increasing cost-sharing for, spousal or dependent healthcare coverage 15 Other 2 We are not taking any actions to manage healthcare costs 22 *Added in 2017 BASE: All Qualified Respondents (July/Aug 2017 n=1520) Q826 Which of the following is your company doing in order to manage healthcare costs specifically? Please select all that apply. 38

Healthcare Offerings Healthcare Benefits Future Changes Wellness Programs Employee Satisfaction 39

Employees Continue to Underestimate Workplace Wellness Over six in 10 employers (62%) say they offer wellness programs, but only 40% of employees (with employer-based coverage) say they work for an employer who offers a wellness program. Currently Offers a Wellness Program (%) Employees with Employer Coverage (%) 61 55 62 38 36 40 Yes No Yes No 62 64 60 39 45 38 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 2015 2016 2017 *New in 2015 BASE: All Respondents (Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q821 Does your company offer a wellness (health promotion) program? From 2015 and 2016 General Population Survey: BASE: Qualified And Full Time, Part Time, Self Employed and has Employer Coverage (2015 n=2752; 2016 n=2849, 2017 n=2887) Q1130A Does your employer offer a workplace wellness (health promotion) program? 40

Company Size and Interest Explain Lack Of Wellness Programs Only about one in 10 (of those who are unlikely to provide a wellness program) say they are concerned about fiduciary liability or their company is encountering business difficulties. Reasons Not Likely to Offer a Wellness Program (%) Company is not big enough 29 Employees are not interested 23 Company is concerned about cost of a wellness program 19 The employee coverage mandate does not apply to my company Company or management is not interested Concerned about the resources needed to administer and monitor the wellness program Employees don't have the time to participate Employees can't afford the cost of participation in the program Concerned about fiduciary liability Company encountering business difficulties 13 11 11 Other 6 Don't know 9 *Added in 2017 BASE: Company Doesn t Provide Wellness Benefist and Not Likely to Offer (July/Aug 2017 n=1031) Q1032 What are the reasons that your company is not likely to offer a wellness program? Please select all that apply. 41

Wellness Programs Have a Variety of Positive Impacts About four in five employers believe their wellness programs have had a positive impact on workers health, productivity, and performance. About seven in 10 see a positive impact on company healthcare costs. 82 82 78 80 80 75 71 72 69 18 18 22 20 18 25 29 28 31 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 Positive Neutral/Negative Aug/Sept 2015 Positive Aug/Sept 2016 July/Aug 2017 Neutral/Negative Aug/Sept 2015 Positive Aug/Sept 2016 July/Aug 2017 Neutral/Negative 4 in 5 employers say their workplace wellness program positively impacts workers health. 4 in 5 employers say their workplace wellness program positively impacts productivity and performance. 7 in 10 employers say their workplace wellness program positively impacts healthcare costs. BASE: Offers A Wellness Program (Aug/Sept 2015 n=811; Aug/Sept 2016 n=777, July/Aug 2017 n=839) Q824. What impact has your workplace health promotion program had on (please use the following scale)? 42

Workplace Wellness Programs Improve Morale and Loyalty Strong majorities of employers say their wellness programs have positive impact on job satisfaction, workplace commitment, turnover, and absenteeism. 74 74 62 59 3 in 4 employers say their workplace wellness program positively impacts workers job satisfaction 3 in 4 employers say their workplace wellness program positively impacts workers commitment to the organization. 3 in 5 employers say their workplace wellness program positively impacts turnover 3 in 5 employers say their workplace wellness program positively impacts absenteeism *Responses Added in 2017 BASE: Offers A Wellness Program (July/Aug 2017 n=839) Q824. What impact has your workplace health promotion program had on (please use the following scale)? 43

Health Education Common Component of Workplace Wellness Employers say health education and employee health screenings are most commonly included in their workplace wellness program. Elements Included in Wellness Programs Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 63 62 66 65 61 62 60 59 58 49 49 47 45 46 46 Health Education Employee screenings with follow-up Supportive physical and social envirnoment for health improvement Links to related employee services for support with personal issues Integration of health promotion into your organization's culture *New in 2015 BASE: Offers A Wellness Program (Aug/Sept 2015 n=811, Aug/Sept 2016 n=777, July/Aug 2017 n=839) Q822 Which of the following elements are offered as part of your wellness (health promotion) program? Please select all that apply. 44

Nearly Half of Employers Include Health Education and Healthy Food Options Forty-eight percent of workplace wellness programs include health education and health food/drink offerings, with 43 percent including health advice to promote healthy behavior. Elements Included in Wellness Programs Health education by providing information promoting health in general Healthy food/drink offerings at offices 48 48 Health advice from a qualified vendor for promoting healthy behavior 43 Clinical screenings and biometric assessments (HRA) Fitness gym facilities or outdoors exercise areas Targeted behavior change programs for high risk employees Links to related employee services for support with personal issues Subsidized gym memberships Social engagement 38 37 37 35 35 34 Mindfulness, meditation, yoga, relaxation training Ergonomic furniture/equipment Individual mental or physical health tracking through a wearable device or online program 30 30 29 *New in 2017 BASE: Offers A Wellness Program (July/Aug 2017 n=839) Q822c What type of wellness program do you offer? Please select all that apply. Other * 45

Managers and Professionals Participate Most in Workplace Wellness Seventy-eight percent of managers and 75 percent of professionals participate in workplace wellness programs, outpacing hourly workers, C-suite, and contractors. Participation in Wellness Programs (%) Participants in Wellness Program (%) 32 16 Managers 78 19 Very High (above 50%) Professionals 75 33 24 High (41-50%) Medium (21%-40%) Low (11%-20%) Hourly workers C-suite 46 65 28 27 Very Low (10% or less) Not applicable Contractors Others 6 29 1 6 Highest Level of Employee Particiaption 13 * 2 Lowest Level of Employee Participation I don't know 1 *Questions Added in 2017 BASE: Offers Wellness Program (July/Aug n=839) Q822a What percentage best describes the highest level of employee participation in any wellness program you offer? Q822b What percentage best describes the lowest level of employee participation in any wellness program you offer? Q823A Who participates in your wellness programs? 46

Employers Say They Have Culture Supporting Health and Wellness About nine in 10 employers say their workplace wellness programs are tailored to employees needs, and they have commitment and support from corporate leadership. Health Elements in Wellness Programs Not at all Not very Somewhat Completely A culture that supports employee wellness 2 7 40 51 % Completely/ Somewhat Present 92 Organizational support for a healthy lifestyle 2 7 41 50 91 Leadership commitment and support for the program 2 9 36 53 89 Programs are tailored to employees' needs and interests 3 9 44 45 89 Process for obtaining feedback from employees on the desirability or appropriateness of the program 3 10 40 47 88 Benefit plan design that encourages preventative screenings 2 10 40 48 87 Peer support for program participation 3 10 43 44 87 Measurement and evaluation of program effectiveness 3 10 42 45 87 Measurement of the degree of participation in the program 2 11 42 45 87 Manager support for participation in program during work time 3 10 37 49 86 Employee involvement in program design 2 12 44 41 85 Non-financial incentives for program participation 4 12 44 40 84 Financial incentives for program participation 5 12 39 *Revised in 2017 BASE: Offers A Wellness Program (July/Aug 2017 n=839) Q823 Please rate the extent to which each of the following elements is present in your program using the following scale. 43 82 47

Employers See Leaders Commitment To Health and Wellness - Far More than Employees Consistent with 2015 and 2016, over 80% of employers say their leadership is committed to improving the health of their employees, but only one third of employees feel the same way. Employer Reported Leadership Commitment to Improving the Health of Their Employees Employee Reported Leadership Commitment to Improving the Health of Their Employees 84 45 83 42 84 44 40 41 39 Strongly Agree Somewhat Agree Somewhat Disagree 33 10 10 12 23 33 34 22 22 43 44 40 Strongly Agree Agree Neither agree nor disagree Disagree 9 10 10 7 7 7 2015 2016 2017 Strongly Disagree 13 10 10 12 2015 2016 2017 Strongly Disagree BASE: All Qualified Respondents (Aug/Sept 2015 n=1500, Aug/Sept 2016 n=1502, July/Aug 2017 n=1520) Q832. How much do you agree or disagree with the following statements? From 2016 General Population Survey: BASE: Qualified And Full Time, Part Time, Self Employed (2015 n=2752, 2016 n=2849, 2017 n=2887) Q1130C Please state the degree to which you agree or disagree with the following statements using the following scale. 48

Healthcare Offerings Healthcare Benefits Future Changes Wellness Programs Employee Satisfaction 49

Employers Believe Employee Satisfaction with Health Plans Is High Since 20, over nine in 10 employers feel their employees are satisfied with the health insurance plans offered by their company. My company s employees are satisfied with the health insurance plan my company offers (%) 27 87 91 48 95 52 94 52 91 52 Strongly agree Somewhat agree 60 43 44 42 39 Somewhat disagree Strongly disagree 10 8 6 3 1 1 4 5 1 3 July 2013 July 20 Aug/Sept 2015 Aug/Sept 2016 July/Aug 2017 BASE: Company Provides Healthcare Benefits (July 2013 n=640, July 20 n=626 Aug/Sept 2015 n=1165, Aug/Sept 2016 n=1201, July/Aug 2017 n=1202) Q907. How much do you agree or disagree with the following statements? 50

Large and Midsize Companies Perceive Higher Satisfaction 86% of small companies say their employees are satisfied with the health insurance plans they offer, compared to over nine in 10 midsize and large companies. My company s employees are satisfied with the health insurance plan my company offers (%). 52 46 49 91 86 92 94 56 Strongly agree Somewhat agree 39 40 43 38 Somewhat disagree Strongly disagree 8 6 3 5 6 4 2 2 Total Less than 50 Employess 50-499 Employees 500+ Employees BASE: Company Provides Healthcare Benefits (August 2017 n=1202, Less than 50 Employees n=423, 40-499 Employees n=355, 500+ Employees n=424) Q907. How much do you agree or disagree with the following statements? 51

Employers Think Employees Are Satisfied with Benefits Other Than Healthcare Since 20, about nine in 10 employers feel their employees are satisfied with the healthcare benefits (other than health insurance) offered by their company. My company s employees are satisfied with the healthcare benefits other than health insurance that my company offers (%). 24 82 41 89 48 49 93 90 89 44 Strongly agree 58 48 44 42 44 Somewhat agree Somewhat disagree Strongly disagree 13 8 8 9 5 6 3 1 2 2 July 2013 July 20 Aug/Sept 2015 Aug/Spet 2016 July/Aug 2017 BASE: Company Provides Healthcare Benefits (July 2013 n=640, July 20 n=626 Aug/Sept 2015 n=1165, Aug/Sept 2016 n=1201, July/Aug 2017 n=1202) Q907. How much do you agree or disagree with the following statements? 52

Satisfaction with Benefits Other Than Healthcare Is Seen as More Widespread in Large Companies Over four in five small employers believe that their employees are satisfied with benefits other than healthcare they offer. About nine in 10 midsize and large employers feel the same way. My company s employees are satisfied with the healthcare benefits other than health insurance that my company offers (%). 89 44 39 47 46 82 89 92 Strongly agree Somewhat agree 44 43 43 46 Somewhat disagree Strongly disagree 13 9 8 2 4 7 2 1 August 2017 Less than 50 Employess 50-499 Employees 500+ Employees BASE: Company Provides Healthcare Benefits (August 2017 n=1202, Less than 50 Employees n=423, 40-499 Employees n=355, 500+ Employees n=424) Q907. How much do you agree or disagree with the following statements? 53