'Employer and Employee Reactions to Health Reform: Findings From the 2010 EBRI/MGA Consumer Engagement in Health Care Survey and the 2010 SHRM Organizations’ Response to Health Care Reform Poll'; and 'Self-Reported Benefit Accrual Rates of Defined Benefit Plans: An Analysis of the 2004 and 2007 Survey of Consumer Finances'

January 2011, Vol. 32, No. 1
Paperback, 16 pp.
PDF, 504 kb
Employee Benefit Research Institute, 2011

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Executive Summary

REACTIONS TO HEALTH REFORM


SURVEY DATA: This paper presents data from the 2010 EBRI/MGA Consumer Engagement in Health Care Survey and the Society for Human Resource Management’s 2010 SHRM Organizations’ Response to Health Care Reform Poll to examine how employers might respond to health reform and employees expectations of changes to health coverage.


RESPONSE TO EXPECTED COST INCREASES: Employers are uncertain regarding changing benefits in response to health reform, but they are likely to pass along any cost increases to workers. Workers are mostly expecting such cost increases.


FUTURE OF COVERAGE: Employers are evenly split as to whether they will change health coverage as a result of health reform while workers are split between thinking their benefits will remain the same or erode. While few workers expect employers to drop coverage after 2014, and very few employers plan to drop coverage, employers are evenly split between having decided to continue to offer coverage and being undecided about the future of employment-based health coverage.


SELF-REPORTED DB ACCRUAL RATES


PENSION ACCRUAL RATES AND THE SCF: The Survey of Consumer Finances (SCF) measures respondents’ self-reported expected benefits from defined benefit (DB) pension plans. As a percentage of final pay, the mean annual benefit accrual rates in 2004 and 2007 are estimated to have been 2.06 percent and 2.48 percent, respectively. These rates are higher than the average annual accrual rate of 1.59 percent reported by the U.S. Department of Labor’s 2005 National Compensation Survey (NCS), which is based on official plan documents. This suggests that the 2004 and 2007 SCF respondents overestimated their expected pension benefits at retirement, unless they had more generous accrual formulas than plan participants in the 2005 NCS.


YOUNG PARTICIPANTS EXPECTING LESS GENEROUS BENEFITS: Despite the likely measurement error in self-reported expected benefits, young DB plan participants reported having less generous benefit formulas than older participants, the SCF finds. Respondents to the 2007 SCF who expected to work 25 or more years before retirement estimate their mean annual benefit accrual rate to be 1.68 percent, compared with 2.60 percent for those who expected to work less than five years before retirement.