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Individual Retirement Account Balances, Contributions, and Rollovers, 2012; With Longitudinal Results 2010–2012: The EBRI IRA Database

May 29, 2014 Comments off

Individual Retirement Account Balances, Contributions, and Rollovers, 2012; With Longitudinal Results 2010–2012: The EBRI IRA Database
Source: Employee Benefit Research Institute

Executive Summary

  • As part of the EBRI Center for Research on Retirement Income (EBRI CRI), the EBRI IRA Database is an ongoing project that collects data from IRA plan administrators across the nation. For year-end 2012, it contained information on 25.3 million accounts owned by 19.9 million unique individuals, with total assets of $2.09 trillion. The EBRI IRA Database is unique in its ability to track individual IRA owners with more than one account, thereby providing a more accurate measure of how much they have accumulated in IRAs.
  • The average IRA account balance in 2012 was $81,660, while the average IRA individual balance (all accounts from the same person combined) was $105,001. Overall, the cumulative IRA average balance was 29 percent larger than the unique account balance.
  • Rollovers overwhelmingly outweighed new contributions in dollar terms. While almost 2.4 million accounts received contributions, compared with the 1.3 million accounts that received rollovers in 2012, 10 times the amount of dollars were added to IRAs through rollovers than from contributions.
  • The average individual IRA balance increased with age for owners ages 25 or older, from $11,009 for those ages 25–29 to $192,961 for those ages 70 or older.
  • Looking at individuals who maintained an IRA account in the database over the three-year period in question, the overall average balance increased each year—from $95,431 in 2010 to $95,547 in 2011 and to $106,205 in 2012.
  • Males had higher individual average and median balances than females: $139,467 and $36,949 for males, respectively, vs., $81,700 and $25,969 for females. However, the likelihood of contributing to an IRA did not significantly differ by gender within the database, as both Roth and traditional IRAs owned by either males or females (as well as those without a gender identified in the database) had similar probabilities of receiving contributions.
  • IRA owners were more likely to be male. In particular, those with an IRA originally opened by a rollover, or a SEP/SIMPLE IRA were much more likely to be male (57.4 percent of the former, and 58.2 percent of the latter).
  • Younger Roth IRA owners were more likely to contribute to the Roth IRA than were older Roth IRA owners: 43 percent of Roth owners ages 25–29 contributed to their Roth in 2012, compared with 21 percent of Roth owners ages 60–64.
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Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2013; and Labor-force Participation Rates of the Population Ages 55 and Older, 2013

April 21, 2014 Comments off

Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2013; and Labor-force Participation Rates of the Population Ages 55 and Older, 2013 (PDF)
Source: Employee Benefit Research Institute

Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2013

  • The population of adults within consumer-driven (CDHPs), high-deductible (HDHP) and traditional health plans was split about 50–50 between men and women in 2013.
  • The CDHP population was more likely than traditional-plan enrollees to be in households with $150,000 or more in income in every year except 2006, 2009 and 2010. They were also more likely to be in households with $100,000–$149,999 in income in most years.
  • CDHP enrollees were roughly twice as likely as individuals with traditional coverage to have college or post-graduate educations in nearly all years of the survey.
  • CDHP enrollees have consistently reported better health status than traditional-plan enrollees, exhibiting better health behavior than traditional-plan enrollees with respect to smoking and (except for 2010 and 2011), exercise, and sometimes obesity rates.

Labor-force Participation Rates of the Population Ages 55 and Older, 2013

  • The labor-force participation rate for those ages 55 and older rose throughout the 1990s and into the 2000s, when it began to level off but with a small increase following the 2007–2008 economic downturn.
  • For those ages 55–64, the upward trend was driven almost exclusively by the increased labor-force participation of women, whereas the male participation rate was flat to declining. However, among those ages 65 or older, the rate increased for both males and females over that period.
  • This upward trend in labor-force participation by older workers is likely related to workers’ current need for continued access to employment-based health insurance and for more years of earnings to accumulate savings in defined contribution (401(k)-type) plans and/or to pay down debt. Many Americans also want to work longer, especially those with more education for whom more meaningful jobs are available that can be performed into older ages.
  • Younger workers’ labor-force participation rates increased when that of older workers declined or remained low during the late 1970s to the early 1990s. But as younger workers’ rates began to decline in the late 1990s, those for older workers continuously increased. Consequently, it appears either that older workers filled the void left by younger workers’ lower participation, or that higher older-worker participation limited the opportunities for younger workers or discouraged them from participating in the labor force.

How Would Defined Contribution Participants React to Lifetime Income Illustrations? Evidence from the 2014 Retirement Confidence Survey

April 3, 2014 Comments off

How Would Defined Contribution Participants React to Lifetime Income Illustrations? Evidence from the 2014 Retirement Confidence Survey
Source: Employee Benefit Research Institute

+ In May 2013, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) published an advance notice of proposed rulemaking (ANPRM) focusing on lifetime income illustrations. The 2014 Retirement Confidence Survey (RCS) included a series of questions concerning monthly income illustrations similar in many respects to those provided by the EBSA’s online Lifetime Income Calculator.

+ The vast majority of respondents said the retirement income projection was useful; more than 1 in 3 (36 percent) of the respondents thought that it was very useful to hear an estimate of the monthly retirement income they might expect from their plan, and another 49 percent thought it was somewhat useful.

+ A total of 17 percent of the respondents indicated that this information would lead them to increase the amount they were contributing. However, of those responding that their illustrated value was much less or somewhat less than expected, 35 percent indicated they would increase their contributions.

Brand-Name and Generic Prescription Drug Use After Adoption of a Full-Replacement, Consumer-Directed Health Plan With a Health Savings Account

April 2, 2014 Comments off

Brand-Name and Generic Prescription Drug Use After Adoption of a Full-Replacement, Consumer-Directed Health Plan With a Health Savings Account (PDF)
Source: Employee Benefit Research institute

+ A full-replacement HSA plan was associated with a 4.7 percentage-point rise in the generic-drug dispensing rate (GDR) after one year, and settled 3.4 percentage points higher after four years. The GDR for maintenance medications experienced a similar effect, while for nonmaintenance conditions the GDR rose by 4.1 percentage points after one year, but was just 1.7 percentage points higher after four years.

+ At the end of the four-year follow-up period, GDR was greater by 4.5 percentage points for hypertension, 15.4 per-centage points for dyslipidemia, and 7.8 percentage points for asthma/COPD. No significant effects were detected for diabetes GDR, but the measure for depression was lower by 8.4 percentage points after 2010.

+ GDR increases were due to individuals discontinuing use of brand-name drugs without substituting generic therapy. After one year under the full-replacement HSA plan, 0.43 fewer generic and 0.95 fewer brand-name prescriptions were filled, on average.

EBRI’s 2014 Retirement Confidence Survey: Confidence Rebounds—for Those With Retirement Plans

March 24, 2014 Comments off

EBRI’s 2014 Retirement Confidence Survey: Confidence Rebounds—for Those With Retirement Plans
Source: Employee Benefit Research Institute

The percentage of workers confident about having enough money for a comfortable retirement, at record lows between 2009 and 2013, increased in 2014. Eighteen percent are now very confident (up from 13 percent in 2013), while 37 percent are somewhat confident. Twenty-four percent are not at all confident (statistically unchanged from 28 percent in 2013).

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2012

December 24, 2013 Comments off

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2012
Source: Employee Benefit Research institute

Retirement plan participation varies widely by type and characteristics of both workers and employers. In 2012, 39.4 percent of all workers (or 61.6 million Americans) participated in an employment-based retirement plan, compared with 39.7 percent and 61.0 million in 2011. But among full-time, full-year wage and salary workers ages 21 to 64—those with the strongest connection to the work force—53.5 percent participated.

Being nonwhite, younger, female, never married; having lower educational attainment, lower earnings, poorer health status, no health insurance through one’s own employer; not working full time, full year, and working in service occupations or farming, fisheries, and forestry occupations were all associated with lower levels of participation in a retirement plan.

Those working for smaller firms, private-sector firms, or firms in the “other” (not professional) services industry were also less likely to participate in a plan than their comparison groups. Geographic location also affects the likelihood of participating in a retirement plan. Workers in the South and West were less likely to participate in a plan than those in other regions of the country.

The Most Valued Benefit is…

November 22, 2013 Comments off

The Most Valued Benefit is… (PDF)
Source: Employee Benefit Research Institute

There’s not much disputing the most valued benefit among today’s workers—once again, it’s health insurance, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI).

The 2013 Health and Voluntary Workplace Benefits Survey (WBS), conducted by EBRI and Greenwald & Associates, reveals that the vast majority of workers say that their benefits package is very or extremely important in their decision to accept a job―and those workers continue to rank health insurance as the first or second most important benefit provided by employers.

Between 1999 and 2013, the percentage of workers ranking health insurance as the first- or second-most important benefit varied between 75 percent and 82 percent.

“Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News,” and “IRA Asset Allocation, 2011”

November 8, 2013 Comments off

“Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News,” and “IRA Asset Allocation, 2011”
Source: Employee Benefit Research Institute

Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News

In 2010, Medicare covered 62 percent of the cost of health care services for Medicare beneficiaries age 65 and older, while out-of-pocket spending accounted for 12 percent, and private insurance covered 13 percent. Individuals can expect to pay a greater share of their costs out-of-pocket in the future because of the combination of the financial condition of the Medicare program and cutbacks to employment-based retiree health programs.

Because women have longer life expectancies than men, women will generally need larger savings than men to cover health insurance premiums and health care expenses in retirement post-65 when examining needed savings regardless of the savings targets. In 2013, a man would need $65,000 in savings and a woman would need $86,000 if each had a goal of having a 50 percent chance of having enough money saved to cover health care expenses in retirement. If either instead wanted a 90 percent chance of having enough savings, $122,000 would be needed for a man and $139,000 would be needed for a woman.

Savings targets declined between 6 percent and 11 percent between 2012 and 2013 for a person or couple age 65. For a married couple both with drug expenses at the 90th percentile throughout retirement who wanted a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings fell from $387,000 in 2012 to $360,000 in 2013.

IRA Asset Allocation, 2011

Individual retirement accounts (IRAs) are a vital component of U.S. retirement savings, representing more than 25 percent of all retirement assets in the nation. A substantial portion of these IRA assets originated in other tax-qualified retirement plans, such as defined benefit (pension) and 401(k) plans, and were subsequently moved to IRAs through rollovers.

In the entire EBRI IRA Database in 2011, 44.4 percent of the assets were in equities, 10.7 percent in balanced funds, 18.0 percent in bonds, 13.0 percent in money, and 13.8 percent in other assets.

Male and female IRA owners had virtually identical allocations to bonds, equities, and money. However, males were more likely to have assets in the “other” category, while females had a higher percentage of assets in balanced funds. For IRA owners above age 25, the percentage allocated to money and balanced funds decreased as the age of the owner increased, while bond allocations increased with age.

What Factors Influence Health Care Benefits?

October 3, 2013 Comments off

What Factors Influence Health Care Benefits? (PDF)
Source: Employee Benefit Research Institute

Where you work, what you do, and how much you work influences the likelihood that you’ll have employment-based health benefits, according to new research.

A report by the nonpartisan Employee Benefit Research Institute finds that in 2012, workers were much more likely to have employment-based health benefits than nonworkers, who typically receive such coverage through spouses or parents.

More than 67 percent of workers had employmentbased health benefits, compared with 35 percent of nonworkers. In addition, 71.7 percent of individuals in families headed by full-year, fulltime workers had employment-based health benefits, roughly twice as many as among those in families headed by part-time, part-year workers.

The report also highlights that the nature of the employment, the individual industry, and firm size often determine the cost and extent of coverage. For example, workers employed in the public sector and in manufacturing were more likely than other workers to have employment-based health benefits in their own name in 2012.

Expected Retirement Age Continues to Rise

September 12, 2013 Comments off

Expected Retirement Age Continues to Rise (PDF)
Source: Employee Benefit Research Institute

The age at which workers expect to retire is slowly rising, according to a recent report by the nonpartisan Employee Benefit Research Institute (EBRI).

Twenty-five percent of workers in the 2013 Retirement Confidence Survey say the age at which they expect to retire has changed in the past year, and of those, the vast majority (88 percent) report that their expected retirement age has increased. This means that in 2013, 22 percent of all workers planned to postpone their retirement.

In 1991, just 11 percent of workers expected to retire after age 65, but now 36 percent of workers report they expect to wait until after age 65 to retire—and 7 percent don’t plan to retire at all, according to the Retirement Confidence Survey.

Reality Checks: A Comparative Analysis of Future Benefits from Private-Sector, Voluntary-Enrollment 401(k) Plans vs. Stylized, Final-Average-Pay Defined Benefit and Cash Balance Plans

July 8, 2013 Comments off

Reality Checks: A Comparative Analysis of Future Benefits from Private-Sector, Voluntary-Enrollment 401(k) Plans vs. Stylized, Final-Average-Pay Defined Benefit and Cash Balance Plans
Source: Employee Benefit Research Institute

Executive Summary

  • A rapidly growing public policy concern facing the United States is whether future generations of retired Americans, particularly those in the Baby Boomer and Gen X cohorts, will have adequate retirement incomes. There have been several policy studies in recent years that suggest that the decreasing relevance of defined benefit (DB) plans relative to defined contribution plans (such as 401(k)s) since the 1980s will have a negative impact on the percentage of future retirees who will achieve a specified level of retirement income adequacy.
  • This Issue Brief provides a direct comparison of the likely benefits under specific types of defined contribution (DC) and DB retirement plans. The DC plans modeled in this analysis represent voluntary enrollment (VE) 401(k) plans, while the DB plans are represented by two stylized plans: a high-three-year, final-average defined benefit plan and a cash balance plan.
  • The results presented in this Issue Brief show that if historical rates of return are assumed as well as annuity purchase prices reflecting average bond rates over the last 27 years, the median pairwise comparisons result in a strong outcome advantage for VE 401(k) plans over both the stylized, final-average DB plan and the stylized cash balance plan.
  • When the robustness of these findings are subjected to various “stress tests” by reducing the rate of return assumptions by 200 basis points and increasing the annuity purchase price to reflect today’s bond rates, results show that in many cases the VE 401(k) plans lose their comparative advantage to the stylized, final-average DB plans (at least at the median) for lower-paid employees; however, VE 401(k) plans’ median advantages over the stylized cash balance plans remain in force.
  • When the simulation results are subjected to both stresses simultaneously, virtually all of the median differences between the VE 401(k) plans and the stylized, final-average DB plan are reversed, regardless of income quartile. However, even in this scenario, based on the median differences, virtually all of the participants will do better in the VE 401(k) plans than the stylized cash balance plan.

“Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2012,” and “Retirement Plan Participation and Asset Allocation, 2010”

May 7, 2013 Comments off

“Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2012,” and “Retirement Plan Participation and Asset Allocation, 2010”

Source: Employee Benefit Research Institute

Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2012

  • Generally, the population of adults within both high-deductible (HDHP) and traditional health plans have been split 50–50 between men and women. In contrast, differences in gender have been found between consumer-driven health plan (CDHP) enrollees and those with traditional coverage.
  • In most years, CDHP enrollees were less likely than those with traditional coverage to be between the ages of 21 and 34, and the CDHP population was more likely than traditional-plan enrollees to be in households with $150,000 or more in income in every year except 2009 and 2010.
  • CDHP enrollees were roughly twice as likely as individuals with traditional coverage to have college or post-graduate educations in nearly all years of the survey.
  • CDHP enrollees have consistently reported better health status than traditional-plan enrollees, exhibiting better health behavior than traditional-plan enrollees with respect to smoking and (except for 2010 and 2011), exercise, and sometimes obesity rates.

Retirement Plan Participation and Asset Allocation, 2010

  • The likelihood of a working family head participating in a retirement plan increased with the size of his or her employer. In 2010, among family heads working for employers with 10–19 employees, 22.4 percent participated in a plan, compared with 67.2 percent of family heads who worked for employers with 500 or more employees.
  • In 2010, 18.9 percent of family heads who participated in an employment-based retirement plan had a defined benefit (DB) plan only, while 65.0 percent had a defined contribution (DC) plan only, and the remaining 16.1 percent had both a DB and a DC plan. This was a significant change from 1992, when 42.3 percent had a DB plan only, and 40.8 percent had a DC plan only.
  • Asset allocation within a family head’s retirement plan seems to be affected by his or her ownership of other types of retirement plans. Those who own an IRA are more likely to be invested all in stocks if they also own a 401(k)-type of plan. Those who own a DB plan and a 401(k)-type plan are less likely to allocate their DC plan to all interest-earning assets.

EBRI’s 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many

March 20, 2013 Comments off

EBRI’s 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many
Source: Employee Benefit Research Institute

• The percentage of workers confident about having enough money for a comfortable retirement is essentially unchanged from the record lows observed in 2011. While more than half express some level of confidence (13 percent are very confident and 38 percent are somewhat confident), 28 percent are not at all confident (up from 23 percent in 2012 but statistically equivalent to 27 percent in 2011), and 21 percent are not too confident.

• Retiree confidence in having a financially secure retirement is also unchanged, with18 percent very confident and 14 percent not at all confident.

• One reason that retirement confidence has remained low despite a brightening economic outlook may be that some workers may be waking up to a realization of just how much they may need to save. Asked how much they believe they will need to save to achieve a financially secure retirement, a striking number of workers cite large savings targets: 20 percent say they need to save between 20 and 29 percent of their income and nearly one-quarter (23 percent) indicate they need to save 30 percent or more.

• Aggressive as those savings targets appear to be, they may not be based on a careful analysis of their individual circumstances. Only 46 percent report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.

• Retirement savings may be taking a back seat to more immediate financial concerns: Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today. Both workers and retirees are most likely to identify job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each).

• Cost of living and day-to-day expenses head the list of reasons why workers do not contribute (or contribute more) to their employer’s plan, with 41 percent of eligible workers citing this factor.

• Debt may be another factor standing in the way; 55 percent of workers and 39 percent of retirees report having a problem with their level of debt, and only half (50 percent of workers and 52 percent of retirees) say they could definitely come up with $2,000 if an unexpected need arose within the next month.

• Worker confidence in the affordability of various aspects of retirement continues to decline. In particular, increases are seen in the percentage of workers not at all confident about their ability to pay for basic expenses (16 percent, up from 12 percent in 2011), medical expenses (29 percent, up from 24 percent in 2012), and long-term care expenses (39 percent, up from 34 percent in 2012).

• Just 23 percent of workers (and 28 percent of retirees) report they have obtained investment advice from a professional financial advisor who was paid through fees or commissions. Of these workers, 27 percent followed all of the advice, but more disregarded some of it and followed most (41 percent) or some (27 percent).

Views on Health Coverage and Retirement: Findings from the 2012 Health Confidence Survey/Tax Preferences and Mandates: Is the Danish Savings Experience Applicable to the United States?

February 4, 2013 Comments off

Views on Health Coverage and Retirement: Findings from the 2012 Health Confidence Survey/Tax Preferences and Mandates: Is the Danish Savings Experience Applicable to the United States?

Source: Employee Benefit Research Institute

Views on Health Coverage and Retirement: Findings from the 2012 Health Confidence Survey,®

  • More than one-half of Americans (54 percent) reported that access to health insurance in their retirement decision was extremely important, and another 28 percent reported it was very important in 2012.
  • Overall, more than one-half of workers (53 percent) reported that they planned to work longer than they would like in order to continue receiving health insurance through work, although only 19 percent of retirees reported that they had worked longer than they would have liked to in order to continue receiving health insurance through work.
  • In 2003, 15 percent of workers reported that they would retire earlier than planned if they were guaranteed access to health insurance, but by 2012, 27 percent reported that they would retire earlier than planned under that condition.

Tax Preferences and Mandates: Is the Danish Savings Experience Applicable to the United States?

  • In an environment where lawmakers are struggling to raise tax revenue, public-policy tax “expenditures” have come under heavy scrutiny—in particular, tax preferences to boost retirement savings in employer- provided retirement plans.
  • A recent study based on data from Denmark has called into question the usefulness of such retirement tax expenditures in boosting real savings.
  • The study of Danish workers explored only the impact that changes in tax incentives for work place retirement plans might have on worker savings behaviors; of critical importance, it did not explore how employers might respond to changes in retirement savings tax incentives. Evidence suggests U.S. employers would react negatively to a loss of tax incentives by reducing or ending their retirement plans.
  • While the study of Danish savings behaviors presented the impact of tax-incentives and the “nudges” of automatic mandatory savings as an “either/or” solution, the optimal solution—certainly for a voluntary system such as the one currently in place in the U.S.—may well be a combination of the two.

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2011

November 27, 2012 Comments off

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2011

Source: Employee Benefit Research Institute

Executive Summary

  • In 2011, the percentage of workers participating in an employment-based retirement plan was essentially unchanged from a year earlier. Specifically, the percentage of all workers (including part-time and self-employed) participating in an employment-based retirement plan moved from 39.6 percent in 2009, to 39.8 percent in 2010, to 39.7 in 2011.
  • The increase in the number of workers participating in 2011 halted the three year decline from 2008–2010. Some of the categories examined had increases in the probability of workers participating and others showed decreases. Many of the categories of workers remained near their 2009 levels of participation.
  • The type of employment has a major impact on participation rates. Among full-time, full-year wage and salary workers ages 21–64 (those with the strongest connection to the work force), 53.7 percent participated. This rate varies significantly across various worker characteristics and the characteristics of their employers.
  • Being nonwhite, younger, female, never married; having lower educational attainment, lower earnings, poorer health status, no health insurance through own employer; not working full time, full year, and working in service occupations or farming, fisheries, and forestry occupations were all associated with a lower level of participation in a retirement plan.
  • Workers in the South and West were less likely to participate in a plan than those in other regions of the country.
  • The overall percentage of females participating in a plan was lower than that of males (the retirement plan participation gender gap significantly closed from 1987?2009 before slightly widening in 2010 and 2011). But when controlling for work status or earnings, the female participation level actually surpasses that of males.
  • Nonnative-born Hispanics had substantially lower participation levels than native-born Hispanics, even when controlling for age and earnings. This results in Hispanics as a group looking to lag significantly in terms of retirement plan participation, when only the nonnative Hispanics actually have participation levels substantially below those of all other workers.
  • The downturns in the economy and stock market in 2008 and into 2009 showed a two-year decline in both the number and percentage of workers participating in an employment-based retirement plan. The 2010 and 2011 participation levels stabilized as the economy recovered.

2012 Health Confidence Survey: Americans Remain Confident About Health Care, Concerned About Costs, Following Supreme Court Decision

September 24, 2012 Comments off

2012 Health Confidence Survey: Americans Remain Confident About Health Care, Concerned About Costs, Following Supreme Court Decision
Source: Employee Benefit Research Institute

Executive Summary

  • Confidence about various aspects of today’s health care system has remained fairly level before and after the passage of the Patient Protection and Affordable Care Act (PPACA), and has not apparently been impacted by the June 2012 Supreme Court decision.
  • Asked to rate the health care system, Americans offer a diverse perspective: 28 percent consider it to be “good,” 28 percent say “fair,” and 26 percent rate it “poor,” while 12 percent rate it very good and 5 percent say it is “excellent.” However, the 2012 Health Confidence Survey finds that the percentage of
  • Americans rating the health care system as poor doubled between 1998 and 2004 (rising from 15 percent to 30 percent).

  • In contrast with the ratings for the health care system overall, Americans’ rating of their own health plans continues to be generally favorable—more than half of those with health insurance are extremely or very satisfied with their current plans, and a third are somewhat satisfied.
  • Dissatisfaction with the health care system appears to be focused primarily on cost.
  • Among those experiencing cost increases in their plans in the past year, 31 percent state they have decreased their contributions to retirement plans, and more than half have decreased their contributions to other savings as a result.

Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?

August 6, 2012 Comments off

Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?

Source: Employee Benefit Research Institute

This Issue Brief examines issues related to private health insurance exchanges, possible structures of an exchange, funding, as well as the pros, cons, and uncertainties to employers of adopting them. A summary of recent surveys on employer attitudes are examined, as are some changes that employers have made to other benefits that might serve as historical precedents for a move to some type of defined contribution health benefits approach.

  • The combination of insurance market reforms and the embodiment of the exchange structure in the Patient Protection and Affordable Care Act (PPACA) has brought a renewed focus on limiting employer’s health care cost exposure.
  • The key provisions of PPACA influencing these considerations are not the availability of exchanges per se, but a number of insurance market reforms that are combined with the exchanges, such as guaranteed issue, modified community rating, premium and cost sharing subsidies, and increased choice of health plan.
  • Following the growth of defined contribution (DC) retirement benefits, DC health benefits were seen as promising tools to help control employer benefit costs by capping the employer’s per-worker insurance contribution and engaging workers in their health care choices.
  • Employers never moved in the direction of giving workers a defined or fixed contribution to purchase health insurance for a number of reasons: They were hesitant to drop group coverage in favor of offering individual policies, and they were concerned that many employees would not be able to secure coverage in the individual market.
  • Employer issues addressed with an exchange/fixed contribution approach include cost certainty, total compensation transparency, uniformity of benefits in multi-state environments, COBRA costs, the looming excise tax on high cost coverage (the so-called “Cadillac tax”) under PPACA, the potential for reduced administrative costs, and higher employee satisfaction.
  • Employer issues that need to be addressed in adopting a private exchange/fixed contribution approach include plan design, implications of adverse selection, setting the level of fixed contribution, the amount of plan choice, and geographic cost variation.
  • Issues not addressed by an exchange/fixed contribution approach include worker preference of, and satisfaction with, employment-based coverage, group purchasing efficiencies, the role of employer as advocate in coverage disputes, delivery innovation and health care quality, and health literacy issues.

Own-to-Rent Transitions and Changes in Housing Equity for Older Americans,’ and ‘Health Plan Choice: Findings from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey

July 25, 2012 Comments off

Own-to-Rent Transitions and Changes in Housing Equity for Older Americans,’ and ‘Health Plan Choice: Findings from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey
Source: Employee Benefit Research Institute

Own-to-Rent Transitions and Changes in Housing Equity for Older Americans

  • Owning is the most common housing arrangement for older Americans: At age 65, more than 8 in 10 Americans report living in houses they own.
  • The transition rate from home ownership to renting is 3 percent at age 50, bottoming out at 1.6 percent at age 65. However, these transition rates increase after age 85, reaching a peak of 4.7 percent at age 90.
  • Death of a spouse is the most common factor associated with a transition from owning to renting. The next common factor is a drop in household income.
  • Median household income for those between ages 50 and 64 who continue to own their home is $79,758, while those who shift from owning to renting in that same age group have a median household income of $53,520.
  • Ownership rates are very different for couples and singles, but don’t change a lot across owners’ ages. The home ownership rate hovers around 90 percent for couples and 60 percent for singles.

Health Plan Choice: Findings from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey

  • Nearly one-half (47 percent) of covered workers had a choice of health plans in 2011.
  • Forty-two percent of large firms offered two or more choices of health plans, compared with 15 percent of smaller firms. Half of consumer-driven health plan enrollees reported that they chose that offering because of the lower premium, while 45 percent reported that the opportunity to save money in the account for future years was a primary reason.
  • Among individuals with traditional health coverage, 39 percent cited the good network of providers and 32 percent reported the low out-of-pocket costs as the main reasons for enrolling in the plan.

Individual Retirement Account Balances, Contributions, and Rollovers, 2010: The EBRI IRA Database

June 15, 2012 Comments off
Source:  Employee Benefits Research Institute

Executive Summary

  • In 2010, IRA owners were more likely to be male, especially those whose accounts originated from a rollover or were a SEP/SIMPLE. Among all IRA owners in the database, nearly one-half (45.8 percent) were ages 45–64.
  • The average and median IRA account balance in 2010 was $67,438 and $17,863, respectively, while the average and median IRA individual balance (all accounts from the same person combined) was $91,864 and $25,296.
  • Individuals with a traditional IRA originating from rollovers had the highest average and median balance of $123,426 and $38,138, respectively. Roth owners had the lowest average and median balance at $22,437 and $11,471. The average and median individual IRA balance increased with age through age 70.
  • The average amount contributed to an IRA in the database was $3,335 in 2010. The average contribution was highest for accounts owned by those ages 65–69, and more contributions were made to Roth accounts than to traditional accounts (both those originating from contributions and rollovers). However, the average contribution to a traditional account was higher, at $3,517, compared with $3,240 to a Roth account. Yet, a higher overall amount was contributed to Roths ($2.3 billion for Roths compared with $1.3 billion for traditional accounts).
  • Focusing on those owning traditional or Roth IRAs, 9.3 percent of the accounts received contributions, and 12.1 percent of the individuals owning these IRA types contributed to them in 2010. Among traditional IRA owners, 5.2 percent contributed, while 24.0 percent of those owning a Roth contributed to it during 2010.
  • Of those individuals contributing to an IRA, 43.5 percent contributed the maximum amount. Of those contributing to a traditional IRA, 48.7 percent maxed out their contribution, while 39.3 percent did so with a Roth.
  • The average and median account balances increased from $54,863 and $15,756 respectively in 2008 to $67,438 and $17,863 in 2010. This represents an increase of 22.9 percent in the average account balance and 13.4 percent in the median balance. The total individual balances also increased for both the average (32.2 percent) and the median (26.2 percent).
  • The average and median rollover amounts were $69,012 and $17,614 respectively, compared with the average contribution of $3,335.

Individual Retirement Account Balances, Contributions, and Rollovers, 2010: The EBRI IRA Database

June 3, 2012 Comments off
Source:  Employee Benefits Research Institute

Executive Summary

  • In 2010, IRA owners were more likely to be male, especially those whose accounts originated from a rollover or were a SEP/SIMPLE. Among all IRA owners in the database, nearly one-half (45.8 percent) were ages 45–64.
  • The average and median IRA account balance in 2010 was $67,438 and $17,863, respectively, while the average and median IRA individual balance (all accounts from the same person combined) was $91,864 and $25,296.
  • Individuals with a traditional IRA originating from rollovers had the highest average and median balance of $123,426 and $38,138, respectively. Roth owners had the lowest average and median balance at $22,437 and $11,471. The average and median individual IRA balance increased with age through age 70.
  • The average amount contributed to an IRA in the database was $3,335 in 2010. The average contribution was highest for accounts owned by those ages 65–69, and more contributions were made to Roth accounts than to traditional accounts (both those originating from contributions and rollovers). However, the average contribution to a traditional account was higher, at $3,517, compared with $3,240 to a Roth account. Yet, a higher overall amount was contributed to Roths ($2.3 billion for Roths compared with $1.3 billion for traditional accounts).
  • Focusing on those owning traditional or Roth IRAs, 9.3 percent of the accounts received contributions, and 12.1 percent of the individuals owning these IRA types contributed to them in 2010. Among traditional IRA owners, 5.2 percent contributed, while 24.0 percent of those owning a Roth contributed to it during 2010.
  • Of those individuals contributing to an IRA, 43.5 percent contributed the maximum amount. Of those contributing to a traditional IRA, 48.7 percent maxed out their contribution, while 39.3 percent did so with a Roth.
  • The average and median account balances increased from $54,863 and $15,756 respectively in 2008 to $67,438 and $17,863 in 2010. This represents an increase of 22.9 percent in the average account balance and 13.4 percent in the median balance. The total individual balances also increased for both the average (32.2 percent) and the median (26.2 percent).
  • The average and median rollover amounts were $69,012 and $17,614 respectively, compared with the average contribution of $3,335.
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