“Satisfaction With Health Coverage and Care: Findings from the 2013 EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey,” and “Contributory 'Negligence?' The Impact of Future Contributions to Defined Contribution Plans on Retirement ..

Health Plans: Who’s happier with their health plan—those in “traditional” managed care plans, or those in so-called “consumer-driven” and high-deductible plans? The latest data from EBRI show that the overall satisfaction rate among consumer-driven health plan (CDHP) enrollees is gradually increasing, while it is gradually decreasing among traditional enrollees. Gen Xers: Are Gen Xers in worse shape than the Baby Boom generation when it comes to having enough money for retirement? Not if you take into account future contributions and the current trends in automatic plan design features, according to a new report by EBRI.

Satisfaction With Health Coverage and Care: Findings from the 2013 EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey

The overall satisfaction rate among consumer-driven health plan (CDHP) enrollees increased in most years of the EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey (CEHCS), while it decreased in most years among traditional enrollees.
Differences in out-of-pocket costs may explain some of the differences in overall satisfaction rates. In 2013, 44 percent of traditional-plan participants were extremely or very satisfied with out-of-pocket costs (for health care services other than for prescription drugs), while 20 percent of high-deductible health plan (HDHP) enrollees and 31 percent of CDHP participants were extremely or very satisfied. Satisfaction has been trending upward among CDHP enrollees.
CDHP and HDHP enrollees were less likely than those in a traditional plan both to recommend their health plan to friends or co-workers and to stay with their current health plan if they had the opportunity to switch plans. The percentage of HDHP and CDHP enrollees reporting that they would be extremely or very likely to recommend their plan to friends or co-workers has been trending upward, while it has been flat among individuals with traditional coverage.

Contributory “Negligence?” The Impact of Future Contributions to Defined Contribution Plans on Retirement Income Adequacy for Gen Xers

One of the major findings in each of the last five annual retirement income adequacy studies by EBRI was that the retirement income adequacy prospects for Gen Xers were approximately the same as Baby Boomers. However, recent studies by other organizations suggest Gen Xers will fare much worse than the Boomers. Unfortunately, these studies appear to be plagued by either explicitly ignoring future contributions to defined contribution plans or failing to account for the recent changes in many defined contribution plans to incorporate automatic enrollment features (including automatic escalation of contributions).
Ignoring future contributions exaggerates the percentage of Gen-X workers simulated to run short of money in retirement by roughly 10 to 12 percentage points among all but the lowest-income group.

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Pa no. 3 tion with o mo old, ult, this ed Retireme dels ia worker employer yee B def 96 lly rk (2011) ine with (Employee Benefit Research Institute, EB for e u d a a ne R nt Co t-of-pock a youn n I cont fit N s d limited num a combi o employer Re a nfidence tg a eri n search Institut sation as semployees al butions an eyz t spending o alysis also inc n ed atio c Surv th be o provi opposed to 10 ntributio n of r of o e S ey.” wit C det d e, Nov F h ed n p re EBRI N tions. thirty pres e n to ludes sp rmini s predicte o e def cription nd mber or 0 percent on the first three pe o stic ex an adm ine tes, emor nt d February 2014 s’ self- 200 no. 3 d dr contribution epenses un years i3). ugs ttedly der b r (Employee eported has be the o from the arbitrary f e basel ligi plans at th ). en tr , b expected ility Be ine Cons decr en nef if ding rcent iease umer t e Impact of Changing b Future DC b Contributions for Gen Xers Percentage Extremely or Very Satisfied With the 2013 EBRI/Greenwald & Associates Consumer Contributions to Defined Contribution Plans on Retirement to Friend or Co-W Ov Getting Health erall Health Gen X Care Doctor for G eCosts, rsPlan, ,A en Xers, orker p by poi Y by by , by nt ears T T men yy by pe T pe of Future y Income pe tof Health Plan, 2005–2013 of When Needed, 2005–2013 of Health Plan, 2005–2013 Health DC Eligibility Quartile Plan, 2005–2013 Statement of Ownership in contri assumptions a Expen bene of compensation. For early results of this ph upwar Research fits cashouts time d ditur si from defi butio nce th e S e n Insti u 201 D re added to s of 5 at rvey (as a B pl job 0, r ne tute, March ans 0 d ben e turnover, perc gar wer d fu efi the part en le e nction o t ss of pla froz t. Wh pe 2011): hard ns en (Cop ile ion plan icipa ship f this o a n 2–10. ty gne wi t’ pe (Fi elan s and es thd account b n viously result and omena, see Yakoboski and VanDerhei (199 d and Van rincome g awals ure foun 5 after ( ) d )a . a nd tWhil D h nerh s in small at d some 2014. In the e those the avera ei, accomp 20 hea this 10 e w r ). lde g itanying th traditional c h e annu insura creases in ase, the susp al nce ben simulated life-paths RR ension a c e no fi d o 6). R valu verage t accrual uof t-of es than contributions) we -poc rates re ket, healt more like completely in for entities 2004 an and h-r ly to el plan ated d 2007 in the Fi The Employee gure 5 proviBenefit Research Institute (EBRI) and Greenwa des the results of analyzing the impact of chld & Associates created the EBRI/Greenwald & Associates anging future DC contributions for Gen Xers as a function 90 90% % 70% August 2014 • 90 90 Vol. 35, No. 8 % % Overall Health Plan, by Type of Health Plan, 2005–2013 ? The . . “Ka “The Aug nust 2 sas Future Ret Role o 012 f Soci EBRI N al iSecurity, rement otes 10 90 article (Van 0% % Incom Define e Assessment d Derhei, Benefits, a August n Project.” A d Private 2012) prov Ret proirement ject of t ided ad Accou h de EB itionRI Educ n alts in t evide hation n e ce Fac on whe and e of the Research th er Fund United States Postal Service Statement of Ownership, Management, and Circulation Income Adequacy for Gen Xers Engagement in Health Care Survey CRR’s NRRI relies on wealth-to-income patterns dating back to 1983 (a time period in which DC plans have evolved ignorin lowest-i expenses, plu were estimated at report 90 loan % bei gncome the n defa g extremely im s quart ults stochastic ex pact of 2.06 were ile f show or very satisfied utur perc substanti eent an penses n to h contri ally ave su d butio from n 2.48 reduce wit nffi s percent of fi does u cient r hrsing-home d out-o or , th elimi etirem f-pock e pe n na ate a e rcent l pa e nt resources nt costs for d d . y, home-healt decre respect ase is still pr t ively. Th o escription h care prev 5. ent t (at le ese ra 3 dr pe he ugs than those rcent overa ast until m tes wer from r e the h unni ill a gh po ner tha n g with id t n short o t such he EB an H n thex fRI a e av mo Dpen HP n ney in erage alysis or a ses of Consumer Eng both preretiarement wa gement in He ge quartil alth Care Sur e 20 an 05d fu ve 20 yture (CEHCS) to 06 20 years 07 20 of e 08 examine issues ligi 2009 bility for DC 2010 20 surro 11 pla 20 unding co n12 partici 2013p nsumer- ation. directed health care, Publication Title: EBRI Employee Benefit Research Institute Notes. 9 ? Retireme and t Also in deferrin . “A he M Po 200 g nt Cri r ilba st e 9, -Cris tir ns a ne e k Memorial is,” ment to is Assessment of Retirement Income Ad w su EBRI N brout age Fund. J otes, 70 ine no. 1 woul was a 20 uly 05d 16, (Employee d prov 20 ded to allo 06 200 ide retirem 20 2. 07 Be 20 w sim 08 nef eint t Researc 20 ulations of var eq 09 income ua20 cy 10 for Baby Boomers h Inst adequacy for 2011 iitute, Jan ou 20s 12styles of ta 20 the 13 uary v and Gen ast majority of 201 rget-date fu 4): 8 Xers –21 .” . nds for a EBRI Issue Baby Boomer s 2005 2006 2007 2008 2009 2010 2011 2012 2013 80% 2005 2006 2007 2008 2009 2010 2011 2012 2013 from a secondary savings Gist and Hatch (2014). plan to t90 h% e primary retirement plan in many cases, and 401(k) plans have changed for 80 80 80% % % 80% 77% finds retireme annual are cover CDHP, the r reductio accrua nt dec ed by Medic elative incr ns in l rate o reases by just RRR faid). 1.59 e valu ase T percent his version o in satisfaction es as lar 0.3 perc report gentage poi e as f the mo e rates for o 13.7 d by the percent ndel ts from U.S. is c ut-o fo o fDepartm the ns -r th ptructed to ock baselin ose with 20 et e costs for nt o e v simulate r falue. Labor’s orp rmore The escrip e 20 seco tirement income ye 05 tion ars of e nd i National drn ug come s was much g ligibil Compensation S qu itadequacy, as y whe artile n has a r broke eater for unoted rv n out ey Publication Number: 1085-4452 including the cost of insurance, the cost of care, satisfaction with health care, satisfaction with a health care plan, reasons By Jack By Paul Fronstin, Ph. VanDerhei, Ph.D., D., Employee B Employee 20e 0 Be 5nene fit 20fit R 06 Research e 20 search 07 Insti 20 In 08tstitute ute 20 09 2010 2011 2012 2013 Brief, comparison wi and no. Gen Xers. 354 (Employe th participa 60% e Bn et-directe nefit Researc d invest h Institute, ments (Van February 2 Derhei, Ju 01ne 1). 20 09). 73%* 73% 73% 72%^ many eli gible participants from voluntary enrollment to automatic enrollment). 72% 80% 71%^ The basel . . “Mas “Ho ine r ws e Much a sults (ro chus Wo etts w Fut uld i 3 of the ure R t Take? gr etirem Achiev id) sh enow th ting Inco Retir e e me Assessment Projec xe pect men ed t Income impact of Equi fut.” A valency ture y project o ears of betw eli efe the EBRI n gibility i Final 71% -Avera f Education a contributio ge-Pay D nns to d efine DC d 70% by decrease (NC above. Alt HDHP an pr S), eretir wh of d C e ich em rna 4. Dent wag iHP enrol 4 percent s tive versions o basede on o l quar ees t agef h fpoints, w tile. icial fan it the plan was model a hile doc for tuh traditional lments lo e th w similar ird qua . This sug pla ana rtin le enro lysis for re g decreases ests that the 2004 llees. plac 4.6 percenta ement r an ates, s d 20 ge points, an 07 SCF tandar d respon -of d t-h livi e hi dents ng ca ghest lculatio wage ns, 70% 80% 70% 10 for choosing a plan, and sources of health information. The 2013 CEHCS is comparable with findings 69%* from the 2005–2007 68% 68%^ 68% 68%^70 68% % 70% 67%^ See Van 70 70 D % % erhei, Holden, Alonso and Bass (December 2013) for details of the year-end 2012 data. 67%^ 67% 66%* 66%^ 1) Filing Date: 08/15/2014. 2) Issue Frequency: Monthly. 3) Number of Issues Published Annually: 12. 4) Annual 65% 65% plans ar ? ? Bene Research In Apr The .e not Tes Se fit il Plan ptemb t 2010, Fu imodifi mony. U.S. Co A nd ccruals an e an the mo r 20 ed, d t 12 as t he M del EBRI Notes aken f ngres d was ilb Voank Memoria luntary Enro rom Figure s compl . Se article (VanDerh nae te tely r Healt l ll 3 of ment 4 Fun e-param h Va d , Educ . D nD 0 64% e 1ei, erhei cem eterized (ation, Labor k) P Sept b (Fe ler 1, ans in ember with bruar 2 the 002. a 2012) 401(k y 20 n Pri d Pensions C 14 v)ate Sector. -plan analyzed th ). Focu desi sing on ogn mmittee. ” e EBRI N pa im those rameters for pact of otes, The likely to inc Wo nore .bbly s 1 asing th p 2 be onsors that ( Stool: mo Emp st e lo yee overestimated their quartil and ote her decre ad-hoc thresho ases 3.5 ex perc pect lds e ed ntage . pension poi ben nts. efits at retire 64%* ment, unless they had more generous accrual formulas than 63%^ EBRI/Commonwealth Fund Consumerism in Health Care surveys, and the 2008 -2012 CEHCS. Subscription Price: $300 per year or is inclu 70% ded as part of a membership subscription. 5) Complete Mailing Address of Satisfaction With Health Coverage and Care: Findings from While this approach in 60% directly takes into account the future contribution activity on a macro level, it does not attempt Introduction 70% 67% 50% Access to Doctors—Satisfaction levels with getting doctor appointments were high relative to other aspects of 66%^ 60% affect Retireme Bene defa had a ed by fit ult-co da Resear opt nt change i n e(I tribution rat d a n)security ch Institut utomatic-e n assumptions r in e fo e, D A nrol r m eautomatic e erica lcember ment e (T ga provisio -1 rdin 201 66 n g future c 3 ), r) o 58% ns (VanD : 1 7 llment *Oct. 20 1–23. o 40 nt e 10 1(k rhei ributio b. ) , April plans ns to 2 with a DC 010). pla u tomatic escalation of contributions. ns—those withth 20 or more years of 11 60% plan Introduction partic 60ipa % nts in the 2005 NCS. 60% Known Office of P 64%^ ublication: (N 52%^ ot printer): Employee Benefit Research Institute (EBRI), 1100 13 Street NW, Suite 878, It is important to note that the current analysis only looks at the scenario in which 100 percent of the average . “Oregon Futur 63%e Retirement 55%^ Income Assessment Project.” A project of the EBRI Education and Research Fund to per In contrast, t form thh ee bottom type of m row icro in th simulations re e panel of Fi flectin gure 2 g eligi shows the RRR results if bility, participation, contri futur bution e contributio activity, asset ns are allocation, increased by and 62%^ The 2013 survey was conduc 53% ted within the United States between August 8 and August 20, 2013, through a 13-minute Measuring reti References 61%rement security—or more precisely, retirement income adequacy—is an area of critical and growing health the 2013 EBRI/Greenwald & Associates Consumer care, regardless of 52% plan type. In 52% ^2013, about two-thirds of plan participants were extremely or very satisfied 60%^ 60% future Baseline Assumptions Washin eligi 50gto b %ilitn y—the model , DC 20005. 6) Percentage of Simula again Cote mplete Mailin d finds that the g Address of He largest neagativ dquarters or e impact woul General Bu d be sine for those i ss Office of Publis n the three her (Not highest 46% 46% This article examines satisfa Percentage of Simula ction w ted ith various aspects of health care by type of health plan. It examines satisfaction deterministic costs in retirem 49% 45% 49% 45%^ent are assume 49% d for consumption purposes as well as 100 percent of the stochastic expenses 50 49% % 44% 58%^ ? ? and t 60 T A complet % . . he N “R “hTe M o he eti ve rilba Impact o mb ement ely er 2 nupdat k Memorial 01 Savin f a 2 ed versi R EBRI Notes ge s Shortfalls tirement Fund. 57% 44% o^n ofSeptember 2001. the article Savi for 44% nati ngs Tod (VanDerh onal model Accou ay’s Work nt C e i, a ers wa Nov p,” .s produ ” th e EBRI Issue Brief, EBRI N mber 2 ced for o 012 tes, ) no. 1 the reclassifie May 2 no. 38 0 (Employee d0 9, th 10 (Em e EBRI RRRs to p Be loyee Policy nefit R provi Bene Forum an esearch d fit Resear e additional d use ch d 50 percent. In this case, the simulated life-paths 48%^ for entities in the lowest-income quartile shown to have sufficient cashout behav 50% ior at job cha Life-Paths Tn hage t like RSPM does. The 2013 Pew study chose a third option and "did not assume any Internet surve y. The national or base sample was drawn from Ipsos’s online panel of Internet users who have agreed to printer): 50 50% % Employee Benefit Re Life-Paths That search Institute (EBRI), 1100 13 Street NW, Suite 878, Washington, DC 20005. 7) Full In contrast, concern with their for abi in RliS dividuals, em tPM bases the DB y to get doctor appointme ployers, regulat accruals 41% o nto n s (Fi rs, and a tim gur ee ser polic 6). ies of DB y Satisfaction makers alike. plan ra -type a tes have The Employe nd gener beene largely o Ben sity paramet efitflat a Resea m ers coded ong tra rch Institut ditio froe nal m, ® Copeland, Craig. “Individual Retirement Account Balances, Contributions, and Rollovers, 2011: The EBRI IRA preretirement Percentage wage of Sim quartil ulated es. For 40% example, comparing the baseline RRR value for those in t45% he * lowest-wa 45% g^e quartile Engagement in Health Care Survey, The baseline version of Will Not Run the model used for this analysis assumes: p. 2 among Appendix A: Brief Chronology three groups Will Not Run of health-plan enroll 50% ees: of the EBRI those with a consum Retire er-driven h ment Sec ealthu plrity Projection Model an (CDHP 9 ), those with a high- (e.g., nursing home and home health care expenses). For an example of how the RRR values change if only 80 or 90 Institute, Au Institute, in th information on those substa 40 e July % Octo 2gust 20 010 ber 20 EB13 RI Issue 10a ). ): 2 2 - Brie n9. tially a f (Va bnDer ove th hei a e thresho nd Copel ld; cl and, ose to the 2010). threshold; and substantially 52%* below the EB Names an RI Empd Co loyee mplete Mailin Benefit Resear g Address ch Institute Not es of Publisher, Ed es (ISSN itor, 1085 and Managing Editor (Do not leave bla ?4452) is published monthly by the Emplo nk): Pu yee blis Be her, nefit Research new retireme saving be nt res Life-P o yond th urces to aths Thae t grow prevent th th of existi em from runn ng private ing short wealth and amounts of money in r e in pension tirement incr plae nase by s." 1.0 percentage point Short of Money 41%* participate in research surveys. Two thousand adults ages 21 -64 who had health insurance through an e40% mplo * yer or (EBRI) launched a major project to provi 40% de this type of assessment in the late 1990s on 39%*^ behalf of several states among ot plan enrol . “A her t lees, Behavioral hings, summa whiSle t hort of hey Mod Mone ha el for ry-pla yve b Pr en, descri en edicti trenndi g ption ng Employ up -ty ward pe info ee am Contributio rmation on ong CDHP ns to m enr 40 oo re than llees. How 1(k) Plans th 1,000 lar e .” ve North Am r, amon ge-salaried DB g eri bot can Actuari h gro 48%*plans ups, al per Database,” EBRI th Issue Brief, no. 386, (Employee Benefit Research Institute, May 20 49 1%* 3). with 20 or more years of eligibility (35.9 percent who would not run short of money) with the RRR value for the same Will Not Run ® 38%*^ Employ 40ee Be % nefit Research I in Retirement nstitute – Education and Research Fund, 1100 13 Street NW, Suite 878, Washington, deductible Institute, 50% hea 1100 lth plan 13 St. (HDH NW, P), a Suite nd those 878, Washington, with traditio DC na 20005- l covera 4051, ge. at Th$300 e findi pengs r year preo srented is included in this 37%*^ as pape part 31% r are *^ of d a emembership rived percent of aver 40% age deterministic costs are assumed, see VanDerhei (June 2014). 47%*^ 47%* ? EBRI’s Retirement S 40% in Retirement ecurity Projection Model (RSPM) grew out of a multi-year project to analyze the future threshold. 46%* from the baseline value. The second quartile has an increase of 4.4 percentage points, whil29% e t*^ he third quartile ? All workers retire at age 65. 40% purchased dire Short of ctly from a carrier were drawn randomly from Money the Ipsos sample for this base sample. This sample was year. concerne satisfaction l d as 30%e vels fel to whether l betw th eeir resi en 201dents 2 and w 2o 013. uld Th have su e sam ffe icient pattern income, was found or wh for en t satisfaction hey might becom with ceh fina oice o ncially f docto rs ?subscription. DC 20 Journal The . . “R “R ne 005. Edit ,vol eti eal w mo riement I ty Checks: A Pe um or, Dallas L. 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Will ribution It Cost, PO Researc ntary-Enrollment STMASTER plan and Ho h 27% Fun *^im : d, pacts Send w 1100 Does 401(k address ) cohort under the assumption that all future contributions are 32%ig * nored (27.4 percent) results in a 43%dec *^ rease in those in Retirement 30% Contributory “ from the 2013 EBRI/GreenwN ald egligence?” & Associat 30% es Consumer The Impact of Future Engagement in Health Care Survey 24%*^ (CEHC 24% S), a * n online survey In contrast, E Copelan th d, Crai Bg, RI’s R and SJack PM is Va able to nDerh the draw from param i. “The Declining eter Role s estimated fr of Private De om admin fined Be 41% nef i*strative data 30% it *Pension P coll lans: ected Who from a Is Aff wi ect de ed, economic well-being of the retired population at the state level. 29% The *29% E * mployee Bene 23% fit R * esearch Institute (EBRI) 29%* increases 4.0 percentage points and the highest-wage 40quartile increases 2.5 percent %*^40% 20% * * 40%* age points. changes 13 Street NW, Suite 878, Washingt to: EBRI Notes, 1100 13 St. on, DC 2 NW, 0005. Mana S30% uite * 878, gin 28% Washington, *g Editor, Step DC h2000 en Blakely 5-4051. , Employ Copyrigee Benefit Rese ht 22%2014 *^ by Emarch ployee Benefit stratified by ge 30% nder, age, region, income, and race. The response rate was 37.2 percent (32 percent for the base sample or indigent, 12 once they reached retirement age. After con27% du*cting stu 27%*^ dies for Orego 20%* n, Kansas, and Massachusetts, EBRI (Fig ? ur Plans vs. Styli Eligibility retireme The e 7 March ). nt inc for P 20 zarticipatio 13 ed, ome adequacy EBRI N Final-Av n in otes erage a De article (Van in -Sept Pay fined Con ember DefiDerhei ned Be t 20 ribution 10 an nefit (Van d A Pla an d Der na d Cash m Help?” hs, March 2013) ei, S Bala e EBRI Notes, ptembe nce Pla r 20 n used a m no. 9 s” 10 20% EB ), a *RI Issue n (Employee d odifi was later ed version Brie Be f, use no nefit R . 38 of d to compute RSPM 7 esearch to 30% 38%* who ? 40 woul % They immedia 30 d no % t run short of tely begi money in n dra 30%w retir ing bene ement o fits from f 8.5 perce Sociantage l 27% Se*^ curity points an.d DB plans (if any ) . Defined as birth cohorts from 1965 to 1974. 37%* 25% th * 18%* 37%* 26% 18%* * 16% 37% *^ * 26% 18% ** that examines issues surrounding consumer-directed health 17%* care, including the cost of insurance, the cost of care, range of recor Research . “ 20 T % he Institute. d Changi keepers All ng rights (i Fac n reserved, some cases all e of Private Vol. R 35, etirement the way no. 8. Pla back ns to 19 .” EBRI Issue Brief, 96). The mode no. l cu 2 rre 32 n (Employee tly has detail Be ed nefit contri Researc butionh Institute – Edu and and t Ho he M w.” ilba Incation an Robert nk Memorial L. d Res Clar Fund, earch F k and workin Olivia und, 11 M g 00 13 iwith t tchell, 23%* he o Street eds., 16%*fficR NW, Suite 878, ee of orienti th 16% e n governor of Or * g Reti Washin rement gto Risk ego n, DC 20005. 8) nM , set out in the late 1990s to anagement. Owner: Ful New York: l 35% 24% * * 35%*^ 24%*^ ® Contributions to Defined Contribution Plans on Retirement national sample, and 44 percent for the oversample). As a nonprobability sample, traditi 22%* onal survey margin of error 20% 23%* developed a national model in 2003—EBRI’s Retir 13%e *ment Security Projection Model 22%* (RSPM). (Employe Institute, S Retireme assess the pro e B nt Sa ept enefit ember vings Short babil Researc ity that 2010): fh all re Institute, 13– ssponde (RSS 20. ) for nt ho Jun Ba e u 2 by Boomers seholds 013a). woul ad not r nd Generation un short Xers in of money October 2010 in retirement 21%*^ (Va if the nDerhei, y did, in October fact, Figure 3 provides a similar analysis to that in Figure 2, but this time only the youngest half 10 21%* of the Gen Xers are Name: Employee Benefit Research Institute 31% – Edu * cation and Research Fund. 9) Known Bondholders, Mortgagees, and 20%*^ Plan Design Assumptions 19%* satisfaction 20%with health care, satisfaction with health care plans, reasons for choosing a plan, and sources of health information Institute, A Oxford on Univer 24 pril mill sity 20ion i Press 01).n di for vidual the 20 partic P %ension ipants from mor Research Coue n than cil , 20 6 10: 0,0 00 12 pla 2–1n 36. s. see if this situation coul 20% d be evaluated for the state. The resulting analysis (VanDerhei and Copeland, September 13 ? To the extent that the sum of their expenses and uninsured medical expenses exceed the projected, after- 20 20% % 17%*^ 17%* 17%* estimates do not apply. Howe However,10 w %hen the same cal ver, had the s culation is und urvey used ertaken fa pr or th ob e se ability sample, the margin of cond-wage quartile with 20 error for the national sample or more years of eligibility, Income Adequacy for Gen Xers It should be Other Security 30% noted that this Holders Owning or Hold analysis is no ing 1 Pe t attempting to estimate the change in rcent or More of Tp. 1 otal Amou 0 nt of Bonds, retirement income adequacy if f Mortgages or Other Securities: uture 201 accumulate 0a). the amount they said would be required in the 2013 Retirement Confidence Survey. 15%*^ included (those born between 1970 and 1974). As expected, the impact of eliminating future contributions is typically 14%* Attitude Toward Health Plan information. This paper also presents tr 10% ends in satisfaction using findings from the 2005 ?2007 EBRI/Commonwealth The compl . . “Wha “T ehe xio n Impact o t a S and com ustaine f Aut position of d o Low-yiel matic Enroll retir d Rat ement in m e Environm ent plan 40 desi 1ent (k) P gns have Means lans on for R F un ut der e utirement re R gone etirem consider Inco entme Adequa Accumulatio able chancy: Results ge ns o:v A Simu er theFrom past lation 3 the 0 2001) focused primarily on simulated retirement wealth with a comparison to ad hoc thresholds for retirement tax, annual income from those sources, they immediately begin to withdraw money from their individual In 2 No 01ne. 0, it 10) Tax was updated to i Status (For completio ncorporate The Em n by th nonprofit organization plo e impact of yee Benefi si t Research Institut mulating seve s authorized to mail at nonprofit ral sign e (EBRI) was founded in 1978. Its ificant environme rates) T ntal he purp changes, i om se, function, ission is to ncluding would have been ±2.2 percent. 10% 11%^ VanDerhei, the decreas Ja e ick, Sarah s 24.9 percent Holden, Luis A age points 10%^ l.onso, and Steven It increases furthBa er to ss. “401(k) 27 percePlan Asset Al ntage points f loo cation, Accou r the third-wn age t Balanc quartes, an ile and d contributions were actually eliminated. Instea Deloitte Consu 10% lting for the Investment Comd, it is attempting to estimat pany Institute. Inside the Str e the bias ucture o introduced by mode f Defined Contributi ls that ignore this on/401(k) Plan 1 more pronounced with the younger Gen Xers—who have a ® longer career (and contribution opportunity) remaining This EBRI Notes Article attempts to reco 8% 8% ncile the RSPM results regarding retirement income adequacy and those 10 0% % 8% 8% 8%^ 10% Funand nonprofit status of this organization d Consumerism in 7% Health 7% Care survey contribute to and the s, and t , to encourag exempt sta he 2008t ?e, an us for federal incom 2012 d to enhanc CEHCS. e the developmen e tax purposes: t of sound empl Has not changedo during yee benefit As in years ? ? Study 201 In October t T previous with he Ju 3 EB Based o a w nRI R e years of 20 ell-c e e 13 tstimony before n h irement Pla ronicl EBRI the n D e Issue d decli Secu s esign urvey, in ri Brief Modifi n ty Projection the S e in ( 2V tcat 013 e h an nate e number iDer ons individu He hei, Ju Model. of Large P alth, Educatio an als in ne d generosity ” 20 EBRI N la CDHP an 13a) Sponsors.” n, Labor us otes,bc or a ed provisions RS no. n and P HDHP w PEBRI Issue M 6 (Employee Ben to provi e of DB pension plans i nsions Comm ered fo Brief, e a und to be l dir no. 341 eefit Research ittee on ct com e (Employee ss likely p n ar “Th the is on of t e I pr n Wobbly than stitute, ivate B he th ene slik e ose Ju ctor fit ely ne expenditures. a accounts (DC and cash-balance plans, as well as IRAs). define 20d % benefit (DB) plan fre 10% ezes, automatic enrollment provisions for 401(k) plans, and the crises in the financial and Traditional HDHP CDHP 20.6 percentage Incom points e Quartile and for the high 0% est-wage quartile. future cash Loan Activity i Fees: A flow. Study n 2 Assessing 012.” EB the RI Issue Br Mechanics ief,o n f o th . 39 e ‘A 4, ll-I (Empl n’ Feo eyee B . Novem ene bfit er R 2e 0search I 11. nstitute, December 2013); and ICI Who we are Lowest-Income Highest-Income than preceding 12 m does the entire onths: 501(c)(3). cohort. In this c 11) Public programs and so ase, tation he simulat A T ’s name: und public policy ed li EBRI Employ A fe-paths G L A N C through objective for e ee Be ntities in nefit R E esearch I th resear e lo ch and west-incom nstitute Note educatie on. EBR quartil s. 12) I is the only e sho Issue wn to published by Pew concerning the relativ 0% e status of Gen Xers compared with Boomers. It begins with a brief overview The sample was divided into three groups: those with a consumer-driven health plan (CDHP), those with a high-deductible Fu Contr ture1 Y ibutions ears of Im DC pac Eligibilit t y Second Third in a and t traditio 201 Research Stool: Reti b he r en 3b ef api ): 2– its un nal d Insti expa pla 12. rem den tr sp nsion o ute, Apr eboth to nt e(In cifif) c securit r il DC of typ e 2010). commend th es of feri y in Am ngs, DC anotably t erica,” the neir h d DB e retirem alth he mode pla 40n 1(k e to fr nt l w )pl plan. Mor aans. ien s used to ds or eco-workers over, fo analyze th llowi e relativ (Fi ng g e ure nactment 8 e) import , and t oance o f the stay with P of em ension th ployer eir - 0 1-9 10-19 20+ 0% Quartile Quartile housing markets. EBRI has updated RSPM on an annual basis since then to incorporate changes in financial and real Date for Circulation Data Below: August 2014. 13) Extent and Nature of Circulation: a. Total Number of Copie c s: Average Research 0% Perspective , Vol. 19, no. a 12 (December 2013). b ? The Ap 0%ril 2001 EBRI Issue Br privat ief (V e, nonprof anDerhei it and Copelan , nonpartisan, Washington, DC-b d, April 2001) hiased organi ghlighted t zat hie on com changes in mitted exclusivel private pension y to If there is sufficient money to pay expenses without tapping into the tax-qualified individual accounts, those residuals To e have suf xamin fici e tr entends i Fut retirem ure Con ntri satisfa buti ent r ons T Elim re adi ction rates, t sources to pr ti in ona ated l h ee sampl vent them 39.7% e was from di runn vided into t HDHP 53 ing sho .6% hrt of mo ree groups: those ney i 55.8%n retirem with a CDH ent PcCDHP, those de 62crease .6% by 1. with an 7 per- of RSPM and t Sources: EBR Fhen a uture Con nalyz I/C triommonw butiones s E t ealth Fund C limhe im inatedapact o onsumerism f cin hangi Health 19.1% ng Care fut Survur ey, e DC 2005–2007; EBR as 43 bs .6% umpti I/Greenw ons ald on r & Associates C etirem 57.7% onsumer ent iEngagement in ncome ad 71 Hequacy ealth .7% for Gen health plan (HDHP), and those with tradition a al health coverage. Individuals were assigned to the CDHP or HDHP group if c b Finke, 14 Michael, Wade D. Pfa Tradi u, tiona an ld David M. Blanchett. 2013. HDH “Th P e 4 Percent Rule Is Not Sa CDH fe in P a Low-Yield World.” current Protection 10 provide % healt Act d h pla rof 2006 etire n iment ben f th (PPA ey h Tradi ), ad th there has tie ona fits le o and Social pport been a unity to s Sec dramatic urity (Van witch pla increase i Der HDH ns (Fi P hei, Octo gn t ure he 9). Ho ber ado 2010b). pwever, tion o f t sh oe -calle perce CDH d P n “auto tagem of H atic” DHP a plan nd No. Copies Each Issue During Preceding 12 Months: 448; No. Copies of Single Issue Published Nearest to Filing Date: 448. Comparing the second and third rows of the grid in Figure 5 shows the impact on RRR values of decreasing future estate Note that the market conditions, as well Fut se results are s ure Contributions Decre lightly different than those ap ased by public as 50un % poli derlycing y r 39.7% edemo search gra and ppearing in Figu hic edu chan cat 57.ion on 7%ges and c re 2 of Van econo han mic s ges 66ecuri D .6% i er n 4 hei (February 2 ty0 1a(nd em k) parti ploc 78 yipant ee .014). The previ 4% be be nefi havio t issures . o. us Care Surv Future C ey, o2008 ntributio –2013. ns Decreased by 50% 20.2% 49.1% 65.5% 79.6% ? T . . he Ju “Al “Falli n l o eng Stocks: 20 r Noth 13 EBRI N ing? An Wh otes 0% at Will Ha Expan article dedppen P (V er anD s to Re pective o erhei, Ju tirees' I n R neen 20 tirement comes? Th 13b) use Rea d e d Worker RSP ines M s to show .” Perspective,” Prese EBRI Notes, that 25 no. 1 –27 1perce n (Employee tation nt of for Baby Th Ben e efit plan participation for defined benefit (DB) and defined contribution (DC) plans and used the model to quantify are assumed to be invested in a non-tax-advantaged account, where the investment income is taxed as ordinary HDHP, an centage points d those with from th tradit e basional h eline valu ealth e, w co hile t verage. he thir Indivi d quartil duals e were decre as ases 13.5 signed to t perc he entage CDHP apoints, nd HDHP grou and theps hi igh f te hey st- Xers. they had b. Paid and/or a deductible of at least $1,000 for individual coverage Requested Circulation (1) Paid/Requested futu Outside- re contri or $2,000 f County butions Ma or family coverage. To be assi il Subscriptions Stated on Form 3526: Averag future contri gned to the CD butions e HP Journal . “401 No ote: surv f(k) Bas Fin eli Partici ne ey ancial question pPlan ant changed snin in th in 2009 from g, 2 e 6 Wake (6 asking ): 46 of th about "O –39 55. .7% eut-of-pocket Financ i health al Crisis: Ch care costs 60.6% for my an ges in health care" to "O Accou 73 ut-of-pocket .2% nt Balan health care ces, 2 costs for 085 07–2 .5% my 011,” EBRI CDHP enrollees reportin Satisfaction With Health Coverage and Care: Findings from the 2013 designs, notably automatic Sources: EBR Baseline I/Commonw g th e ealth Fund C at they nrollment, EBRI’s member onsumerism woul con d be in tribution Health extrem 20.4% ship includes a Care -rate Surv ely ey, or very lik 2005–2007; EBR acceleratio cross-section of 53.5% ely t I/G n, a reenw o recommen n ald d t & h pension funds; businesses; trade associations Associates C e ad70 vent .1% donsumer their of quali Engagement i planf to ied fr n H de 83 iends or ealth C .fault 1% are investme co- ; nt Sources: EBR Sources: EBR I/C I/C ommonw ommonw ealth Fund C ealth Fund C onsumerism onsumerism in in Health Health Care Care Surv Surv eyey , 2005 , 2005 –2007; EBR –2007; EBR I/G I/G reenw reenw ald ald & & Associates C Associates C onsumer onsumer Engagement in Engagement in Health Health contributions by half. Again, focusin futu g o re co n t nh triose wit butions h 20 or more years of future eligibility, the model finds that the analysis looked at the impact of preretirement wage quartile for all Boomers and Gen Xers, whereas the current analysis is other health care" because of the introduction of a question specifical 15 ly asking about out-of-pocket costs for drugs. ? R Economic Crisi T Boomers an eh se e N arch In o Surv ve ey mb , 2008–2013. stitu d er 2 s Gen of 2 te 01 , Xers N 0 0o 0EBRI Issue Brief ve 8: who mbe What Will Ha rwould hav 2012): 11 ex ppen e–2 ha pa 3 to Ret nde d a . d dequate uirees’ p dec on re ear re aI sncomes? 2 ed b tirement lier y 5work 0 inco 009 by E m APPAM BRI to e un baseder li provi ne Fall retu C do e rn assumption nfere the firs nce incrt r e (No ased esul b v s based on ytember s 5 of a 0 ne 20w 09). how much t Future C heo importa ntributions Incn reas ce o ed by 5 f individu 0% al-acc 39.7% ount plans was exp 64.3% ected to increase 78.0% because of these 90.3% changes. income. I No. Cop ndivi ies E dual ach Issue Durin accounts are tracke g Preceding 12 M d until the onths: po299 int at ; No. Cop which t ies of Sin hey are depl gle Issue Publish eted. At that ed Nearest to Filing point, any net Date: housin 299 g . had a wage q deducti uartil Ca C e re Surv ab Fut re Surv decreas le ure C of at eyey , o 2008 , ntrib 2008 le es – utio 2013. – 12. ast 2013. ns Inc$1,0 9 p reased ercent 0 by 5 0 for 0%a ege lindi imin points at ved idual 21.4% . coverage or $2, 57.000 9% for family 7 cover 74.1%age. To be assigned 85.6% to the CDHP a group, they mu a st also have had an account, s labor unions; h uch as a ealth car heal e prov th savings account (HSA) or he iders and insurers; government org alth reimburse anizations; and service firms. ment arrangement Issue Brie 0% Traditional = f, no. 39 Health 1 plan w (Employ ith no deductible ee Bene or <$1,000 (indiv fit Research I idual), <$2,000 (family nstitute,). October 2013); and ICI Research Perspective, Vol. 19, Throu EBRI/Greenwald & Associates Consumer ghout, E Traditional = BRI has evalu Health plan wated t ith no deductible he retirement in or <$1,000 (individual), <$2,000 (family come adequacy pEngagement in Health Care Survey, ercent ). for various demographic cohorts, notably t percent he by age workers has alternatives (QDIAs), specif been trending u ically th pward, e whil utiliz e i ation of t has been target flat -date among in fundsdivi (TDFs). duals with traditional coverage. In addition, the a a largest negati Traditional = ve impact Health wo plan w uild th a no be o deductible n those or <$1,000 (indiv in the t idual), <$2,000 (family hree highest prer b ). etirement wage quartiles. For c those in the lowest- limited to Gen (2) Paid In-Cou b TXers. While the RRRs for the second and thir raditional = nty Subscription Health plan with no s Stated on Form 3526; Averag deductible or <$1,000 (individual), <$2,000 (family d wage quartiles are approximately the sam e No. Cop ). ies Each Issue During Preceding 12 e, the RRR value for Months: 45; b HDHP = High-deductible health plan with deductible $1,000+ (individual), $2,000+ (family), no account. Gist, John R. HDHP = High-deduc and Megan tib E. le health Hatch. plan w“Retire ith deductible m$1,000+ (indiv ent Replac idual), $2,000+ (fam ement Ratily e), no s an acd count. Retirement Wealth Inequality Among Baby The overall s historical aver imulation mo impact is ages delprovi T that raditiona were des ed as l sim timated t ulated to well as separate analyses he impa end ct of c up runni han ng sh gin HDH looking at th g P 40 ort of mo 1(k) plan ney i e impact de ns retir ign var e by a ment iabl ge, r e if s today’s and CDH elative wage P asshistori umptions level, cally lo on an w d b b equity is assumed to be ad 2ded to retireme 3nt savings in th4e form of ® a lump-sum distribution (not a reverse annuity group, they Reti c m HDHP = High-deduc re HDHP = High-deduc m us entt als Reao di have nestib s tib Ra le lhealth e ting had a health splan plan n acco wiw th ith deduc deduc 48 un tible .9% tible t, s $1,000+ (indiv $1,000+ (indiv uch asidual), $2,000+ (fam a idual), $2,000+ (fam health savin 54.5% ilyily ), no ), no gs acac caccount ount. count. (HSA) or h 57.7% ealth reimbursement 60.5% Source: Employ c ee Benefit Research Institute Retirement Security Projection Model Versions 2064–2078. (HRA), with a rollover provis CDHP = Consumer-driven ion that they health plan with deduc could use to pay f tible $1,000+ (individual), o $2,000+ (fam r medical exp ily), with enses or account. the ability to take their account with no. 7 . . “I Tes October ncr CDHP = Cons tim easing Default ony. Joint 201 um3. er-driv D en O health Deferral L/SEC Pu plan with Rates in Automatic deduc blictible Hearin $1,000+ (indiv g on idual), Target Enrollment 401(k $2,000+ (fam ®Dates ily), w F ith unds account. .) Pl Hoans: Th w Would Tar e Impa get-Dat ct on R e eFunds tirement Likely Savi ngs cohorts of Earl increase bet Pau ?No. Cop l Fr With onstin the assistance o ies of S Source: Employ w , Ph.D., een 20 y Boomers, ingle Issue Pub EB 12 ee Benefit R RI an d 201 f Late Boomers, th esearch Instit e K lished 3 was ansas Insuran ute R Nearest to Filing stati etirement an stically signi d Security ce Departm Gen Projection M Xe Date: fric s,ant amon the latt 45 odel en . (3) Sales t, EBRI Versions er g C 1995, bein was a D THP enrol hr 2064–2078. g the ough De ble to creat first lees. alers a gen end Carriers, Str e trational co he EBRI Rhort etirement eet Vendors, to have a full c c wage quartilCDHP = Cons e with 20 um or mo er-driven health re years o plan with deduc f fut tible ure e $1,000+ (indiv ligibility, idual), the ch $2,000+ (fam ange ily), ww ith o aculd r count. educe the number who would have the lowest-income quartile for Gen Xers a CDHP = Consumer-driven health plan with (20.4 percent) is considerably larger deductible $1,000+ (individual), $2,000+ (family), with accthan the ount. RRR value for all Boomers and Gen * Difference between HDHP/CDHP and Traditional is statistically significant at p = 0.05 or better. Boomer * aD Differenc an efined contribution. d O e t betw her een HDHP/CDHP Birth Cohand T orts,” raditional Journal is statis tic of allyRet signific ireme ant at p nt, = 0.05 Su or better. mmer 2014. retireme interest rat nt inc es were ome adequacy assumed to be a . Until re perm cently how anent e condit ver, th ioer n. e was extremely limited evidence on the impact of future years o Defined contribution. f eligibility for participation in a DC plan. A brief summary highlights the key findings and provides a mortgage Sour (RA ces:M EB)). RI/C If all ommonw the ealth Fretirement sav und ConsEBRI’s work advances knowledge and unders umerism in Heaings ar lth Care Sue exha rvey, 2005uste –2007; E d, a BRI/n Gree d if t nwald h &e Soc Associatieal S tanding of emplo s Cons eucu mer E rity and DB ngagement in y Hee benefits and their eapa lth Ca yments are no re Survey, t arrangement * Differenc * Differenc (HRA) e betw e betw with een HDHP/CDHP TM een HDHP/CDHP a rollover and T and T provision that raditional raditional is s ist s atis tatis tictic ally they c ally si gnific signific ant ant o at uld at p = p 0.05 =use to 0.05 or better. or better. pay for medical expenses or with portability so In the midst o Counter Sa b les, f these drama and Other Non- tic shifts, USPS P th aid e tDist reatment o ribution: Av f D erag C-pla e No. Cop n design ies E (espe ach Issue Dur cially 401(k ing Preced ) plans) va ing 12 ries dramat Months: 0 ical ; Nly o. them should they change ^ Estimate is statistica jobs. Individuals lly different from the prior ywith only a flexible spending acc ear shown at the p = 0.05 or better. ount (FSA) were not included in the CDHP group. Impact Success in ^ b Estimate D Futur efined Pla as birth cohorts e is n 40 statistica s Wit 1(kh lly ) Acc Auto different from 1965 to 1974, currently umatic Escalati m from the prior y ulations? ear show (T ages 40 on.” -1 n 60), at the p ?49. EBRI N Jun = 0.05 or better. e 20 otes, 09. no. 9 (Employee Benefit Research Institute, September working care Readiness Rati er in a ng define (R d-contributio RR) based on n-c a entric r full stochastic, de etirement pc lan umulation environme mon del t. that took i n to account th e house h old’s Impact by Future Years of Eligibility for efined as birth cohorts from 1965 to 1974, currently ages 40 Defined Contribu ?49. tion Plan Participants ^ Estimate is statistically different from the prior year shown at the p = 0.05 or better. enough mon^e Estimate y in re is tirem statisticae llyn different t by 3.0 from the prior y perceear show ntagen poi at the p nts = , 0.05 or better. with larger impacts among the other wage quartiles: for the Xers combined (16.8 percent). This is in large part due to the assumption that automatic enrollment will continue to increase VanDerhei, 2008 Ja –20ck, and Lori L 13. ucas. “The importance to Impact of the nation’s econo Auto-enrollment my an among policy d Automatic Con makers, tthe news ribution Escal media, and ation on the public. It series of Cop automatic contribution escalation ies of Sin cautionary conside gle Issue Publish rations wi ed Nearest to Filing th (Van respect to r Derhei a Date: e nlyin d Lucas, 20 0; (4) g on Other Classe results 10). fr om other s Mailed T retir hroug ement h the USP income S: Ave ade rage No. quacy models ® sufficient to pay expenses, the individual is designated as having run short of money at that point. that they aSour could take their ac ce: Employee Benefit Rescount earch Instit with ute R t etirhe ement m if Sec they c urity Projection M hanged odel jo Ve bs rsions . In 1995, 2064- dividuals 2078. were assigned to the HDHP group if among the retirement income adequacy models. For example, the NRRI model projects financial assets in 401(k) Holden, ? The overall satisfaction rat Sarah Traditional and = Heal Jack th plan w Van ith no D derhei. educ et iblamong co e or “Th <$1,0 e 00 I(in ndi nsu fluence vidua m l), <$2 er-dr of ,000 iAu ven (famtomatic ily health ). Enroll plan (C ment, DHP) Catch enroll -U ees i p, an ncreased d IRA Co in ntributio most years of t ns on he ? 201 The 2): Aug 12– ust 2 22.0 13 EBRI Issue Brief (VanDerhei, August 2013) used RSPM to analyze the Obama administration’s longevity risk, post-retirement investment risk, and exposure to long-term nursing-home and home-health-care a s Fiecond- gure 4 provi wage quartil des the resu e 9.7 pe lts drawn from rcentag does this b e point analyzin sy , co 9.2 perc nducting g thent e im and p age pa ct of cha publishing policy re oints fonr ging future DC the third- sear wach, analysis, ge contributions quartile, and 4 and special reports on for .9 pe Genrce Xers a ntage s a the participatio Copies Ea b Defined c ch Issue Dur n rates of lower ontribution. ing Prec income worke eding 12 Months: rs in the fut 0; No. Copies ure. of Single Issue Published Nearest to Filing Date: 0; c. Total Because the ba HDHP = se sample (national sample) High-deductible health plan with deductible $1,included only 18 000+ (individual), $2,000+0 individuals in (family), no account. a CDHP and 397 individuals with an HDHP, an What we do Retirement Income Adequacy.” . “The Expected Impact of Au EBRI toma Issue tic Es Brie calation f, no. of 4 340 91 (Employee (k) Contributions Benefit on Researc Retirement h Institute, Income.” Nove EBRI Notes, mber 2010); suggesting that retirement income adequacy may be significantly worse for Gen Xers than for Boomers. b they did not c have an account used for health care expenses with a rollover provision or portability if they changed One of plans a th nd oth e ma Defined ejor findings r accou as birth cohort nts “based on s fr in om 1965 each o to 1974, f wealt th cur e a rently h n-to-i nual stu ages 40 ncome pa ?49.dies sitterns by nce 2010 ag was e grou that the p from th overa e 1 ll retir 983–2 ement 010 in Fed come adequac eral Reserve y 401(k) CDH Accum P = Consum ulations er-driven heal at th pl Ret an wiitrement. h deductible $1 ” EBR ,000+ (iI ndIssue ividual), $2, Br 000+ ( ief fan amild y), w ICI ith ac P coe unt rspective. . July 2005. ?Paid a EBRI/Gree In F fiscal year e nd/or Re bruary n (FY wa quested Circula 2011, )ld 2014 & Associate thebu mod dget tion [Sum of el was pro emplo s Consumer E posal to i y used ee benef 15b. (1), to n ianalyze n ts issues; holding educational br clude a c gagement (2), (3), a the ap on im in nd (4)] Average No. Cop pact of Heal tax-de th Ca th ferre e 2 re d S 0iefings for EBRI memb u 08– rrvey (CEHCS etirement 20 ies E 09 crisis in t ac savi h Issue Durin ), ngs that whil he e it ers, congressional and fina de wou g Preced nci cra eased ld l an lim ing 12 d r it th in most eal e risks. The first state-level RSPM results were presented to the Kansas’ Long-Term Care Services Task Force on points for function of th fut e high ure yea est-wa rs of geel quartil igibility e.for D C plan participation. oversample of individuals with a CDHP * Difference between HDHP/CDHP and Traditionor HDHP was added. The oversampl al is statistically significant at p = 0.05 or better. e included 1,062 individuals with a CDHP. In One of th no. 9 and . “Is DCIIA (Employee B e pri Workin mResearch Re ary outputs g to e Ag nefit e 7 p of RS Res o0 rt R ( ePM is t e N arch I ally ovemb th n he Ans stitute ee pro r 201 w d,uction er for Sept 0). ember of Retireme Retir 2 007 e ment nt I ): n 2– come Ad R 8 eadin ess Ratin equa cy ?” g s (RRRs) for EBRI N otes, no. 8 various subgr (Employee oups 5 Months: 344; No. Copies of Single Issue Pu federal agen blis cyhed Neare staff, and th st to e news Filing media; Date: and sponsoring public opinion survey 344. d. Free Distribution by Mail (Samples, s on employee prospects for Gen 15 jobs. This ^ Egro stimatu ep i is stn at Xers were clu isticald ly di ed ffere in ntd frividuals w approximat om the prior yeai rth sel how an y n at th HSA-eli the e same as p = 0.05 g oribl bette Early Boom e r.health plan er but s and Late Bo may also have omers. inclu Howev ded indivi er, a dnumber uals withof a Surveys of Consumer Finances (SCF).” In essence, the NRRI projections appear to rely on an outdated perspective of years among traditional enrollees. estate market amounts accus on retir mulated in ement income specified retirem adequacy ent acco (Van unts t Dero hei, Fe that necessa bruary 201 ry to provi 1). de the maximum annuity The July 1 second q 1, 20 u0 artile o 2 (Van f the y Derhei ounger Gen Xe and Copelanrs has esse d, July 200 ntially 2), and the TM the same de results o crease (9.8 percentage points) as the entire f the Massachusetts study were presente Gen d It is import ant to note at the outset that modeling assumptions about contribution rates and plan design only have an addition to being stratified, the base sample MacDonald, Bonnie-Jeanne, and Kevin D. Moore. was also “Movi weighted by gender, ng Beyond the Limitations age, education, region, incom of Traditional Replacem e, and ent Rates.” of the complimentary Bene populat fit Resear ion. Th , and other free): ch e EB Institut RI Retireme e, A (1) Outside-Cou ugust 201 nt Readiness R 2): 10– nty as St 21. atin ated o g (EBRI n Form 3526: A RRR) is defi verage No. Cop ned as the ies Eac percen h Issue Durin tage of simulate g d lif e- benefit issues. EBRI’s Education and Research Fund (EBRI-ERF) performs the charitable, high deductible who were not eligible to contribute to an HSA. Individuals with traditional health coverage had a 4 recent 01(k)- studies plan de suggest signs and Gen saving Xers will s trend fasre . much worse t h an th e Boomers in t e rms of retirement income adequacy. For Yakoboski, . “Mea Paul and Jack suring Retirem VanDerhei ent Incom . e “Contribution Rates and Pl Adequacy: Calculating Realisti an F c Income eatures: An A Replacement nalysis of L Rate as.” rge 401(k) Plan EBRI Issue Comparin The basel permitted g ine th re bottom esults (ro for a tax-qua an w d 3 third of the lified DB rows grid) sh pla of t n u he ow th nder current la grid e e inx F pect igure ed w. 5 im revea pact of ls th fu e impact on ture years of R eli RR valu gibility i es of f co in ntributio creasing f ns to utuDC re Xer cohort (9.9 on Dec. 1, percentage points). 2002 (VanDerhei and Copeland, December 2002). 3 Preceding 12 Months: 45; No. Copies of Single Issue Published Nearest to Filing Date: 45; (2) In-County as Stated on Form educational, and scientific functions of the Institute. EBRI-ERF is a tax-exempt organization impact o race/ethnicity to reflect the actual proportion Society n tho ofs Act e individu uaries a (Se ls eligi ptember ble for, 20 an 11). d w s in the po ho ultimat pulael tion ages 21–6 y participate in, a 4 with private health insura DC plan. Individuals wi ncthout access t e coverage. Th oe paths that ? ? Differenc An Apri do l 2011 not es in run article out-of-pocket short introdu of money ced a costs may expl in n retirement. ew method o ain some f an Figure 9 of t alyzing t he differe he results nces from in overall RSPM satisf (VanD action rates. In erhei, April 20 2013, 11). Figure 3 Figure 5 Figure 5 Figure 7 Figure 3 broad ran example, ge o Pew f(20 plan ty 13) used data from pes, including he the alt P h maint anel Study enanc of e orga Income nizat Dynamics to estimate ions (HMOs), preferre median d provid repl er organ acement ization rates s by 3526: Averag Data.” Brief, . “R no. eti EB rement 29 RI Issue B e No. Cop 7 (Employe Rea ies E d riief n e B ess Ratin ac . No. 174 (Employee Benefit e h Issue Durin nefit Researc gs and g Preced Retirem h Institute, ing 12 M ent Savin Seonths: ptember Research In gs Short 9; No. Copies of S 2006 falls for stitute, ). Gen June 19 ingle Issue Pub Xers: Th 96). e Im lished pact of El Nearest to igibility for contributio plans are not ns by 5 modifi 0 perce ed. In t nt. his case, Focusin supported b g Gen on t Xers with hose wit y contributions h no 20 fu or mo and g ture y re ye rants. ears of ars of eligfutur ibility h e eave an ligibility, RRR for thos of 39e in .7 perc theent. lowe Tst-wa his ge a a b workplace retirement Percentage programs are lik Extremely ely to be or fou Very nd in Likely the “at risk” population to Stay With Current regardless of Health Plan modeling assumptions. CDHP oversam 44 percent ple was weighted by gender, of traditional Impact of Percentage Extremely -plan Impact part Changing Percentage Extremely icipa of Changing age, income, and nts were Future DC or extr Ve Future DC emel ryrace/ethnicity. Satisfied With Contributions for y or or very satis Very Contributions Satisfied Mofre info ied with o Out-of-Pocket Gen rmatio uXers, t-o n can be fo f-pocket costs und in Fro (for healt nstin h ? Rather t The Dece han mb simply com er 2013 EBRI Notes Percentage Extremely puting an article overa (V ll perce anDerh ntage ei, or Dec of Very the simulat ember Satisfied With 2013 ed ) used life-paths Quality RSPM to in a expa particular nd the coh anoalysis in th rt that woul e d 16 ? RSPM was expanded to a national model—the first national, micro-simulation, retirement-income-adequacy In contrast, t Filing Dateh : 9 e RS . (3) Other Classe PM has been com s Maile plet d Te hroug ly revamped si h the USPSnc : Av e th erage No e origin . Co al 2003 model pies Each Issue to accou During Preced nt for the dramati ing 12 Months: c Impact by Preretirement Wage Quartile (PPOs), other managed care plans, and plans with a broad variety of cost-sharing arrangements. The shared Munnel age co EBRI specifically chose not to rely on hort l, Alici (as a, suming r Anthony etirement at Webb and age 65) and fo France a replacement- sca Golub-Sass. und t rate target as a me hat "Th the e valu Nation es have a al sure of Reti decr rement success eas e Risk d in RSPM, for s from 82 Index: percent for An everal reasons: Update," early Issue in Participation in a 401(k) Plan.” EBRI Notes, no. 6 (Employee Benefit Research Institute, June 2012): 9–21. quartil number Very few e, th incr tra e R e da itRR valu sional-plan es dramatical es enr (theo ly—to 60. num llees ber were proje 6 no percent—for t too or cted not to r not at Gen un all satisf Xers w short o ith o fied w mo nney in ei to ni th the retir ne ir h futur e ealt me h ent) incr pl years of an in a ease el ny igi by 7. year of bility. 4 perce the Those su ntw rvey. age ith b If Had the Opportunity to Change, by Type of Health Plan, 2005–2013 of Health Care Receiv Prescription by Income for YO With Choice of Doctors, Drug Costs, UNG Quartile and ER ed, Gen by by Xers, Y T T ears yy pe pe of Health Plan, 2005–2013 by of Future of Health Plan, 2009–2013 Income 2005–2013 DC Eligibility Quartile Impact of Changing Future C (2013). 0 ; No. Copi . “Defies of Sing ned Benefit le Issue Plan Fr Publi ee shed zes: Neare Wo ho's ntributi st to Filing Affected ons to Defi Date , How Much, : 0. e. Free Distr an ned Contributi d Ributio eplac n Outside ing Lost Accruals the Mail (Carr on Pl .” ans on EBRI Issue iers of other Brief, care not have June 20 servic 13 suf es other Issue Br ficient r ief. tha etirem Rath n for prescript ent incom er than tryin e to ion dr gpay for t to refl ugs), whi ect th he sim le 20 e rulated e e perc al-world ent xpe ovari fnses, the hig ation in h-dedu ne D ctibl B w m ac e cruals, the e hthod comput ealth plan bas (HD ed t eline HP) he analysis model, built in part from administrative 401(k) data. The initial re6sults were presented at the EBRI December trends noted above: automatic enrollment (AE) in 401(k) plans, automatic escalation of contributions, and the boomers to Fi characteristics gure Brief 2 pr 12-20 esents the 59 perc of t (Chis gro enter ent RR for L for Rs for up’s members Retir ate B Ge eoomers ment n Xers Resear were that by wa and 50 ch ge percent at parti quart Boston ciile p for Gen ants for th College, did not e Xers. baseline Octobe have an Similarly, M contri r 20 HRA 12 but ).- u ibased pla on assumptio nnell, Webb, an n ann d either s as w d Golu e ha ll as b-Sass d n th oe 90% EBRI Issue Briefs are periodicals providing expert evaluations of employee benefit issues and 100% points. T 10 In 2 ?19 01 years h 3, only he in crease for 11 ave the percent o ir th probabiliti e f traditional second-wage es of- not plan enro quartil running short llees e is 8.7 we re no perc of mo et too or ntage ney i po n r not a e ints tirement ,t 5.1 all sa p incr erce tisfie entage ased to d with their health poi 7nts 3.2 f perce or then thir plan t, wd- hile (Figure wa ge means): Average No. Copies Each Issue During Preceding 12 Months: 0; No. Copies of Single Issue Published Nearest to 90 90 % % 90% ® Retireme no. 2 . “R 90 91 % eti (Empl nt Income Adequ rement I oyee B ncom ene efit Ad Requ esearch I acy fo acy for Gen Xers n r Boomers stitute, March and 2 Gen 006). Xers : Evidence from the 2012 EBRI Retirement Security enrollees and 31 percent of CDHP participants were extremely or very satisfied. Satisfaction has been trending in th perce e ntage previou of shous analysis use eholds th dat woul the med m dian eet accrual rat that requ e i irem n the ent more sample than (1.5 percent a specifie of d p final com ercentagpeensa of tition per ye mes in the ar ?2003 Po Because very f licy Forum (Van ew househo Derhei an lds annuitize d Copela all ( nd, or even mo 2003). st) of their individual accounts in retirement, a replacement- increased utilization of TDFs, whether trends, as well through QDIA as critical analy s or through ses of emplo particy ipant ee benefit po -directe licies an d investments. d proposals. EBRI Notes is a EBRI’s Retirement Security Projection Model deductible or Filing Date : a de 0. f. T ducti otal Free Distr ble that was ibutio be n [Sum of 15d (1), (2), 20 low 05 curre 2006 nt thr 2007 esholds that 2008 (3) 20 and (4)]: Average No. Cop 09 wo 2010uld 20qua 11 lify 2012for 20 HSA tax i13 es Each Issue Dur preference. ing Preced ing (20 three While panel Int 1 Our 2) alternat used th iv ernet surveys e e scenarios National Re mentione a tirement re nonrando d a Risk bm, ove. Th Index studies have (NRRI e third row ) d model emo in t ns from h trated that such sur e pa tnel o he Ce f nter Figure for 2 vRetirement R ey provi s, wh des th en careful e ebaselin search ly designed, obtain e resu (CRR) ltat s from quartil those wit 2). In com e, an h p20 d ari 2or more ye son, 22 percent of HDHP .7 percenta ® ars have ge points a for proba th an e b d 19 high ility o perc es f t85.5 -wa ent o g percent. e fquartil CDHPe. enrollees report ed that they 80% wer * e not too or not at all 11 79% Park, Youngkyun. “Retirement Income Adequacy With Immediate and Longevity Annuities,” EBRI Issue Brief, no. 357, Projection Model. ” EBRI Notes, 90% monthly no. 5 period (Employee ical providing current informati Benefit Research Institute, May on on a variety of employ 2012): 2–14. 78%ee b enefit topics. upwar of pa simulation. rticipatio d amonn) as g CDH the P e styliz nrollees. ed value for the baseline counterfactual simulations. Th 78% e ne * w research computed Figure 12 Months: 1 provi 80% 54 des th ; No. Cop 77% e overa ies of S 14ll RRRs ingle Issue Pub for Gen Xers for lished Nearest to Filing the baseline contri Date: bution assumpti 54. g. Total Distribution (Sum of 15c. And 15e.): ons, as well as three rate focus would overlook the potential risk of outliving their income (longevity risk). 2005 2006 2007 2008 2009 2010 2011 2012 76% 2013 80 80 % % 80% 76% 76%^ Boston th One of the results comparable with rand e 20 . 14 College “P versi 80% ba rojsic objectives ections on to estimate 2010 “at of R of SP F Mut . om-digit-dia ure R of R 75%o RS ughly etirem PM is to 75%^r 1 isk” - l te en in-5 simulate the ratings at tlephone survey Income (20.4 perc age Secu ent) of t percenta 65 rity: Impact s. Taylor (2003), for by a he simu ge o ge gro f of Long th u lat e p. e po They d pu example, provided the results from a life Term lation esti -paths f C mated t are Insura at risk of or entiti hat not es in nce. 44 perc having retir ” 2005 Americ the lo ent o west-i f em nco ean nt me 2009 2005 201020062011 2007 2012 2008 2020 1309 2010 2011 2012 2013 75%^ ? The basic model 74% was subse ^ quently modified for testimony for the Senate Special Committee on Aging to quantify satisfied Endnotes with their health pla 76% n. Overall, dissatisfaction among CDHP and HDHP enrollees has been trending downward 73% EBRIef is a weekly roundup of EBRI research and insights, as well as updates on surveys, Average (Employe No. Co e Bepies Ea nefit Researc ch Issue 72% h During Pr Institute, ^ eced May ing 12 Months: 2011). 398 72% ; No. Cop 72%ies of Single Issue Published Nearest to Filing How much difference might t publications 72% 74% his make? Holden and VanD 72% erhei ^ (2005) demonstrated the large positive impact AE 71%* alternative scenarios: the actual final-avera 73% ge 73% DB accrual that would be required to 71% provi * d 71% e an equal amount of retirement income at 71%^ 72% 72% 70%* 71% The top Society on .row o “Modfifying the Agi theng/ grid in Natio Federal Fi nal C 80 gure % 71% o Tax 4 uncil o 71% shows Tren A atm the ch gent of ing Joint ange i 40 Con 1 69% (n k *)the R P fer lan ence, M RRs i Contributions: Project f f arch uture contr 2005. ibutie o71% d Im ns are ^ 71% pact o ignor n71% e Participa d. Wh ^ ilen those t Account with households income a number o quartil ? CDHP a e hav d f sur e ages 50 q en u v suffici d ate to cove eys that were c HDHP enrol ent r ?59 at er a tir that time le v ees ment r erage onducted at th were ex esourc wer less lik penses and un e e “at risk,” e same time us s to pr ely than t event but t insu hose i them from h red in e percenta g the same q n heal a tra th ru d car itio ge ne ning short o i nal costs (i u nestionnaires b creased plan both nclu to f ding to r money in 55 o p th e long-term e via telephone and online. commend th rcent retir fore - care costs) ment. Ho households eir health wev ag at pla eage es r, He n Summary 1 ? As explor and Conclusions ed in 70% the June 2011studies, litig EBRI Issue atio Brief, n, leg RSPM islation an allo d regulati wed retir on aff ement incom ecting emplo 68%* e ayd ee equacy to benefit plans, w be ash sessed at ile EBRI’s durin Da g th te: tehe sur 398 bene . h. Copies not Distrib fvic ey per ial imp iod. act of a man uted: Average datory coNo. Cop ntribution of 5 ies Each Issue Durin percent of com g Preced pensation. ing 12 M (Va onths: nDerhe 50; N i, Jan o. Cou pi ar es of S y 2004 ingle ). 70% Satisfaction 67%* A brief chronology of RSPM is provided in Appendix A. 70% 68%^ ? While the annuity purchase pri 70 70 % % ce relied upon in a replacement-rate target does depend on an implicit assumption 68%^ would like 70 ly h % ave on employees eligible to participate in 401(k) plans, especially at the lower-income quartiles. age 65 as would be produced by the annuitized value of the projected sum of the 401(k) and IRA r67% ollover ^ Blog supplements our regular publications, offering commentary on questions received from ___ no years o Issue P __. “Sel u f f bl f-Reporte u isture e hed Nearest to Fi ligibil d Ben ity eare u fit ling D Accr naff a ual te: ecte 50 Rad . i. T tes by o of ignor tal (Sum of 15f. Defing th ined Ben e impact of e And 15g.): Aver fit Plans: thAn eir no An age No. Co alysis n-existe of nt contri pie the s Each Issue 200bution 4 and s, the R 2 During 007 SuRR va rvey of lues 40 65 or fo more than und that the ?49 an Balances. older t d 62 twi h r ”ce as many use o percent for o EBRI N ughout f demo 64% o retir tes, (53.5 th graphic weighting alo no. e 64% ose ages ment in 3 perc (Employe ent) spe 30 ? o c39 ifi f those e B c. income n ee was su nef in it R the an esearc d fficient second-incom age h Institute, grou to bring almost all of t pinge quartile s. RSPM March 2 also are 012 h pr ): projected to e results from the online sur 2 ovides in –18. form have eno ation on ugh, the a vsey are to frie retireme nds nt a or c ges later o-workers than and 65 to s (Van tay w Derh ith t ei and Co heir current peland, he June alth plan 20 62% 1 if th 1 * ). ey had the opportunity to switch plans. ? Future contributions to 63% DC plans are 63%^ completely eliminated. As mentioned previously, studies by both CRR and Pew h 63% ave *63% in * dicated that retir63% emen 63%*t readiness of Gen Xers is much 70% 61%*^ Respon . dents Testiwere asked a mony. U.S. Co series of qu ngress. Senat estions regarding their e Special 60%* Committee on attitude Aging. toward th Do We Hav eir he e a C alth risis in plan an Ad their merica? R satisfact esults ion VanDerhei with respect to (at least some) future ma (September 200 61%^7) use 61% d the PPA auto-enroll rket returns, it does not typically a 61% m *^ent safe harbors to show 61%* cco how mu unt for the po ch largtential investment risk er balances in AE ?Preced The mode ing 12 M l wa onths: s enhanc 448; No. Cop ed to allow ies of Sin an anal gle Issue Publish ysis of the im ed Nearest to Filing pact of annuitizing Date: defin 448 ed co . j. Percent Paid a ntribution an nd/or d individual balances. 60% news reporters, policymakers, and others. The EBRI Databook on Employee Benefits is a 58%*^ 2 60% Consumer Finances.” EBRI Notes, no. 1 (Employee Benefit Research Institute, January 2011): 9–15. decreaseQuality of Car by 7.0 percent e— age Other t points for h 58% an 60*^ % in thos 58% 20 ^06, e w in ith on dividuals e to nine in a CD years of HP we fre as uture satisfied as in eligibility. The div decrea iduals se in with tra RRR d valu itional es is distributio close to the re 70.1 percent The per 60 n o % o c fplies from the parallel teleph enta the lik f those ge of HDHP ely n in the um third-income ber o and CDH f years b Pone surve e quartile, e nfore rollees re those y and 8 . He also found that portin de3emed .1 percent g that they “at risk” run of in some wou those in l short of d be cases, propensity weighting (meaning the the extrem hi money, as ghest-i ely or very ncome wellikely l as the percentage quartil to e. Individuals b 60 60% % orn between 1948–1954. 57%* worse than Boomers. In fact, the Pew study actually shows a decrease in the median replacement rate at age 65 of Requested Circulation: Average No. Copies Each Issue During Preceding 12 Months: 86%; No. Copies of Single Issue From th . “Tax e EBR Reform O I55% -ERF Retir ptione s:me Promoting nt statis Sec tical urity Pr re Retireme fereojection Model nce work nt S on ecurity.” emplo (T-1 yEB ee41 ben RI I ), essue Brie 27 fit pr Ja ograms and wor n. 2f, 0 no. 04. 36 4 k force-related (Employee Be issues. nefit Research with vario associated with us aspects of t “risky” asset heir health cal alocati re, inons (investment risk). cluding satisfaction with the quality of care received, out-of-pocket 401 ? ? (k) plans Future contributions to In a July would like 2011 EBRI N ly be for otes DC eli a plan rticle gib sle are (Va em re nployees as Der duched ei, Ju by a ly 2 50 res perc 01ult o 1)ent. , RS f aPM utomatic escalation was used to provide of employee contributio preliminary evidencn e of s. the retirement account (IRA) balances at retirement age (VanDerhei and Copeland, 2004). 60% 52%^ coverage wit 17.3 percenta hge the qua points lity of for thcare rec ose with e ived. 10 ?19 y Bye 2013, ars of abo future e ut two ligibil -thir ity, ds while of indivi amon duals g t wheth hose wit er ihn a 20 C or more ye DHP (67 perce ars of nt) of pr propensity for a certain type eretirement compensati of person to be online) reduce on they would need in terms of a d the remaining gaps, but in dditional savings in order to other cases it did not reduce the have a 50, 7 52%0 *, or 90 per- ?Publ recom The January ished Ne mend ar th est 2014 eir to Filin plan EBRI N g Dat to fr otes eie : 86 nds article % or co . 16. Publicat 51% (Van -worDerhe kers ion of Statem has i, Jan been uarent of Ow y 20 trendi 14ng upwa ) use nersd hip Pu RSPM to rd, w blicatio hile mode it n: Will be printed hal the s bee likel n flat am ihood that in the ong August 401(k) 50%* 32 percentage points Percentage of wh Simula en te Early Boomers d are compared to Gen Xers, and 9 percentage points when the status of Modeling Differences Pew Charitable Trusts. Retirement Security Across Generations: Are Americans Prepared for 49%* Their 49%*^Golden Years?” expenses, cho In contrast, t Institute, Nov 50% hie first ce of ember doctors, row in t 2011 and ability to he ). pane 50%l of Fi gure get 2 doctor a shows ppointments. the RRR result s if one assumes no future contributions to DC VanDimpact o erhei and Co f the pelan “20/2 d0 (2 ca 008 ps”) on proj used a v ect ersion of ed retirement the RS acc PM to umulations pr model the impa oposed by ct of automatic the Nation enr al Commission 48% ollment a * nd on 3 50% 47% 50 50% % 47%^ PercentaLife ge of -PS atihs mula Tha tet d 2014 issue of this publication. 14) Signature and Title of Editor, Publisher, Business Manager, or Owner: Dallas Salisbury, VanD Individu erhei, als b Jao ck, and Nevin rn between 1955–1964. Adams. “A Little Help: The Impact of On-line Calculators 46%* and Financial Advisors on Setting or with future el tra igid biti ilit oy, the nal covera decrge ease is (68 perc 22.9ent perc ) were entage extr points. emel y or very satis f ied w ith t he quality of care received (Figure 3). cent remaining gaps ? ? proba Additio indivi Future contri duals bilit nal r y of r . Perhaps the wit efi butions to nements h trad etireme itional nmost striking difference in de wer tDC income c e plans are incr o introduce verage. adequacy. d to ea evaluat sed by 50 e mo thgraphics between telephone an per e im cent. pact of purchasing long-te 45%*^45%d online surveys was the * rm care insurance on under- participants currently ages 25–29 would have sufficient 401(k) accumulations that, when combined with Social 50% Contact EBRI Publications, (202) 659-0670; fax publication orders to 44%*^ (202) 775-6312. Late Boomers ? Previous EBRI research (Van Life is-P compare W atill Not Run hs That d to that oD f erhei, June 201 Gen Xers. 2) has demo ns trated that o n e o f the biggest financial o bstacles in 2013. There plans a editor; Employ are fter a 20 number 14. I ee Benefit Re n th of is case, the possible sea ex rch simulat pla Institute, pu natioens for t d life blis -paths f her; Stephe hese voer entiti ry di n Blake fferent es in ly, t managing ed choe lo nclusions: west-inco itor. Date: 08/15/2014. me quartile shown to have automatic esc Fiscal Realation o sponsibility f em and R ployee contr eform. ibutions for all workers (whether or not they were currently 401(k) participants Will Not Run Short of Money 40%* Adequate . Testim Reti ony. U.S. Co rement-Savin ngres gs Targets: Evi s. Senate Financ denc e Co e from the mmittee. 20Tax 13 Re Reform O tiremenp t Conf tions: Promoting idence SurveRetirement Security y,” 39% EB *^RI Notes, no. In contrast, individuals with an HDHP were less likely to be satisfied with the quality of care received than those in a representation of minorities in 40% online samples. Subscriptions to 40% EBRI Issue Briefs are included as part of EBRI membership, or as part of a retireme Security nt inc benefits, could repl ome adequacyace 60, (VanDerhei, 2005). 70 or 80 perc ent of their preretirement income on an inflation-adjusted 40% 38%*^38%* Overall S terms of maintaining retirement income adequacy for ho 40 40% % atisfaction With Health Plan—Traditional-plan us eeho nrollees lds who wer might o e more like therwise have s ly than CDH ufficient P and financial HDHP 4 Orders/ Short of in Retirement Money 37%*^ The suffici basel ent r ine etir value o ement r f e 57.7 sourc percent es to pr is take event n from them from Figur ru e n1 of ning short o VanDerhe f money in i (February retir 36% 20 * e 14) an ment d decr indi ea ca ses by 1. tes that, 3 whe percent- n or eligible nonparticipants). 40% Individuals born between 1965–1974. 34%* The second row of the grid in Figure 4 shows the change in the RRRs if future contributions are 34% re *^duced by 50 per- VanDerhei and Copeland (2010) descri $199 annual sub be how househol scription 34%*^ to ds are EBRI Not tracke es d throu and EBRI Issue gh retireBrie ment a fs. Change of ge and how th Address: eir EBRI, Social Security Administration, Board of Trustees. “The 2013 Ann 33% 34% ual *^ * Report of the 33% Bo * ard of Trustees of the Federal ( 3 T(Employe -170), 15 in Retirement e B Sep enef t. 20 it R 11e. searc h Institute, March 2013). It is diffi traditional ? Thecult to Aug plaust 2 n dir in every e0ctly com 11 EBRI N yeap r of t are th otes he surv article (Van e replac ey. By 2 ement r Derhei, 01ate ca 3, 61 August lc percent of HDHP enrol ulati2011) used R ons in the PeS wPM to a stud lees y were extr wi nalyze th the the im RR emel R va pact o y or very satis lues produc f DB plans ed by fied in basis. 31%* 32%*^ 12 enrollees to be extremely or very satisfied with their overall plan in all years of the survey. In 2013, 58 percent of I certify 1. How the models account reso that all information furnis urces at retirement age is the risk o hed on this form is true and complete: Stephe for expected f 31% reti lo *ng- rement term care costs fo benefits from partici r a pro n Blake lonpged perio ation ly, Edito in ra D d. and Director of As with the annuit B plan. ization Contributory “Negligence?” The Imp 30%*act of Future Contributions to Defined considere age ? points The mode d as fro m a singl l the was used to bas e grou eline valu p, 57. eval7 uate th e. 1100 13th St. NW, Suite 878, Washington, perce e im n t of t pa h ct of e simu DB lat fre e d e zlife es on - paths f partici o r Gen X p DC, 20005-4051, (202) 659-0670; fax number, ants by simu ers will not lating t run he m shor inim t of mo um em ney i ployer- n 30% 30% 28%* 16 cent. Again, t 30 30 % % here is no difference for those with zero years of 27%* future eligibility, but the R 27%*^RR values decrease by retireme Old-A nt inc ge and ome/w Survivors ealth is simulate Insurance d afor nd Fede the fo ral llowi Disa ng c bility omponents: Insurance Trust Funds.” 30% with Endnotes Subscriptions quality of care received, compared 30% with 68 percent 26%among tra *^ ditional plan enrollees. Satisfaction with quality of RSPM; Commun achievin howev ication g r ee r, when tir s. Date: 08/15/2014. ement the income RRR val ade ues quacy were simul for Baby ated Boomers assum and ing no Gen future co Xers. ntributions to DC plans (and no 5 TM traditional experience cite -plan enrollees d above, in the were extremely real world few retirees ha or very satisfied with t ve l heir ong-term care insurance policies in place that overall health plans, compared with 47 perc would ent VanD erhei, . “T Ja heck, and Crai Importanceg of Copelan Define (202) 775-6312 d d . Ben “The efit Pl Impa ans for ; e-mail: ct of D R ee fe tirement subs rring Retir criptions@ebr Inc eo ment Age o me Adequac i.org Me n y Reti mbe .” EBRI N rement Income Adequacy.” rship Information: otes, no. 8 (Em Inquiries ployee Contribu The 2014 ver tion Plans on Retirement sion of RSPM produced an EBRI Retirement Readiness Rating Income Adequacy for Gen Xers, (RRR) of 56.7 percent for Early Boomer by Jack VanDerhes, i, retirement. (This combines the experience of both those with and without a DC balance). However, when future ? T contributio he Februar ny ra 201 te that 4 EBRI Issue Brief would be nee (Van ded to De f rhe inancial i, Februar ly iny 2014) focus demnify the employees for ed on how the pr the oba reductio bility of n n i on t runn their e ing sh xpected ort of 2.9 percentage points for those with one to nine years of future eligibility, by 6.5 percentage points for those with 10 ? 1 http://www.ssa.gov/oact/tr/2013/tr2013.pdf Contribu The pattern o tion Trends f decreases in RRR values when future contributions are ignored reflects higher-income workers’ greater care offsettin 2. fe ll g How (or bet beh ween 20 avioral mod if) th 12e models acco anific d 201 ation by 3 for both indivi em unt for ployees the rec d or em uals wit ent ch ployers hanges in a C)D , the HP and many overall those with defRRR ined contribution valu tra e d ditional ecreas (DC) pla covera ed by 8.8 ge. n s to i percenta ncorporate ge More information about the data can be regarding 20% found in the appe EBRI membership an ndix and in Fronstin, “Satisfaction With Health Coverage an d/or contributions to EBRI-ERF should be directed to EBRI d among CD 20HP enrollees % and 40 percent among HDHP enrollees (Figure 1). cover the potentially catastrophic financ 20 20 % % ial impact of this exposure. Therefore, any attempt to simply add the cost 58.5 percent for Late Boomers, and 57.7 perc EBRI Issue Benefit Resear Brief, ch no. Institut 35 20 8e, % (E Amployee ugust 201 Be 1 ent for Gen ne ): 7–1 fit R6. esearch Xers. See Va Institute, Jun nDerhei (February 20 e 2011). 14) for more detail. Ph ? .D., In Se EBRI 20ptem % ber, it was used to support testimony before the Senate Finance Committee (VanDerhei, September contributio ? retirement inc Social S money i ns t n e retire curity o DC ome un ment varies . plans ar der e completely va wirious rate-of-r th respect to lo ignoreetur ngev d inn R itassumpt ySP , inv M, the estment return, an ions (VanDerh RRR value falls d potenti ei, March by 8.8 a 2006). l l perc ongenta -term health ca ge points, to 4 re costs in 8.9 per- 19 years of future eligibility, and for those with 20 or more years of future eligibility, the decrease is 7.1 percentage President Dallas Salisbury at the above address, (202) 659-0670; e-mail: salisbury@ebri.org probability of eligibility and participation, their propensity to contribute at higher rates, and their smaller proportionate Care: Findings points The proj (a ection automatic e decrease of from the 2012 of futur nr 1o e 5llment .3 wor percent k EBRI/MGA Con er an featur ) d em for es (i Ge plo nclu n Xers. O sum yer contri din er Engage g au bbutio tomatic escalation of contributions). viou ment in Health sly, the ns to DC fina plans ncial im Care Surv is part pact o icularly ey”f i(g EBRI Notes, norin importa g futur nt, pa Au e contributions gust, 2013). rticularly amoto ng Utkus, Steph of long-term ca en P., and re insurance into a replacement-rate method Jean A. Young. “How America Saves 2014, ology wi A Report ll vastly underestimat On Vanguard 2013 e the potential severity of Defined Contribution cent. 201 retirement (e.g., nursing home costs). 1) in analy zing the pot e n tial im pact o f various types TM of tax-reform options on retirement income. This was 10% points. Out-of-Pocket Costs—Differences in out-of-pocket costs may explain some of the difference in overall . . “Ca “ 10 T % he p ping T EBRI R ax-Pre etireme fe 10 rred nt Rea % Retir dinees me s nt Contri Rating: butio Retir ne s: Prelim ment Ininar come Preparation y Evidence of a the Im nd Futur pact o e Pro f the spects.” Nationa EBRI l 2 6 ? One of th 10 10 % % e major findings in each of the last five annual retirement income adequacy studies by EBRI was that income replacement by Social Security relative to lower-income workers. It ranges from a decrease of 9.9 percent age DC plans Overall satisfa ? Later that y 10 will % vcary with tion rates ear, an aupdate am ge, iong C ncome an d version of DHP d t enr ho e future years the llees i model ncrease was of d from de elivelope gibi 37 lity for partic per d to cent to enhance 52 per ipatio the n in cent EBR a I intera between DC plan ctive . 2006 a Ballpark nd 2009, younger workers who have longer participation windows, and for whom (particularly in their initial savings years) See The cohorts http://wwere defined a ww.i-say.com/ s follows in Pew (2013): early boomers born between 1946 and 1955; late boomers born ? Plan DC balanc this exposure. Data.” es. Editorial Board: Dallas L. Salisbury, publisher; Stephen Blakely, editor. Any views expressed in this publication and those of the authors should expanded in the November 2011 EBRI Issue Brief (VanDerhei, November 2011). Incom ® e Quartile and satisfaction ra 3. How the tes among enr models proj oect llees i futnure em traditional ployeplans, H e and employ DHPs, an er contributio d CDHPs. In ns t 2013, o DC plans 44 perc . ent of traditional-plan Commission on Fiscal R Issue Brief, no. 344 (Employ espon esibility e Beneand R fit Res ee form R arch Institute ecommendatio , July 201 ns.” 0).EBRI N otes, no. 7 (Employee Benefit ? the ret The Juin reme e 20nt 14 income EBRI Notes adeq uacy prosp article (VanD ect es for rhei, Ju Gen ne Xers 201 wer 4a) provi e appro des xin m eately the w results sho same as Ba wing hoby w ma Boomers. ny years into 3 po although th ints E$timate among ere was th by ose in t providi a drop i he s ng Mon n e satisfaction cond te Carlo quartile t simul rates bet o a ations of t decreas weene 20 of 1 he0 r 92 e and .4 plac per 20 ement c10 en. Sati tage rates nee points sfaction rate d in edthe thi for s in speci rcre d quart faic sed proba f ile rom 43 and of bilitie p s of 11.4 per- erce nt these contr not be ascribed to the officers, ibutions constitut trust e a significan ees, members, or t percentag other sponsors of the E e of their account g mployeer Benefit Research owth. Institute, the EBRI Educ ation and between 1956 and 1965; and Gen Xers born 0% between 1966 and 1975. Contributions Impact 0% If th In theory, a r e future c Incomeo a Q ntributio ndom sample uartile and ns are reduced of 2,000 yields a statistical prec by 50 percent, the RR ision of plus or minus 2.2 per R value for this cohort is projected to centage points (with 95 percent decrease by 0% 0% 0% lowest second third highest lowest second third highest lowest second third highest lowest second third highest The bottom row of the grid in Figure 4 sho Lowes w t-s the Income Q chan uartilege in thS e ecRRRs ond if future co Tntributions are hird Highe assumed to be st-Income Quartile higher c 0% b partici VanDerhei, pants were extrem Jack. “The Imely or pact of very a Le aa akages satisfied on with out-o 401(k) Acc f-pocket umulations bb costs (for at Retireme healthnt car Ae g services ot e,” ERISA c A hd evi r tha sory n for Council, U.S. The impact Resear Research ch Fund, Fu of ture Insti Y each o ear or their s tute, July of Df C staffs. th Eligibilit ese Nothin 2011): y factors was g her2–6. ein is to be co examined, nstrued as an attem and RSPM results pt to aid or sh hinder ow re the adoption ductions in of anRRR y pending le values c gislat as lar ion, r gee as gulation, However, recent studies by other organizations suggest Gen Xers will fare much worse than the Boomers. centage ? A March retireme points in the nt Ba 2012by Boomer EBRI N highT T est- otes r radi aditi ti an w ona ona ar alld gaticle eGen qu(Va artile Xer 0n hou Der . h sei, March eholds ar 2012) used new s e si HDH HDH 1mulated to r -9 P P u n short o u rv ey results t 10 -19 f money, by oCDH CDH update P P pr 2ereti 0 or the morerement analysis of t incom he e to 48 ? retirement inc Indivi percent dual betw retir een ome adequacy ement a 2010 Tradi ccoun and 2 tional un t (IRA 01der 2 an ) al bala d wer terna ncees. t statistic ive-risk-man ally unc HDH aP g bement hange treat d in 2 m 0ents (Van 13. Overall satisfact Derhei, S CDHc P ept ion rates ember 2006). have been Future Contributions E Tlriadi minate tiona dl 19.6% HDHP 41.7% 54.7% CDHP 68.5% confidence) of what the result 3.2 perc .entage points, to “The Impact of P54.5 percent. PA on R s would be etirem if the entire population ages 21– In en contrast, if fut t Income for 4u 01(k re contr ) Partici ibutp io 64 with an nts s are .” EBRI private health insur assumed to Issue Brbe 50 ief, no. 3 aper nce coverage was 18 (Employ cent higher th ee an by 50 or interpretative percent. fu Th tureru cole, or as e R ntributioRR val ns elimin legal, atedue acco s increase by unting, 17% actuarial, o 44% 3.6 percenta 57% r other such prof 72% 24% ge poi 42% essional advice. n 57ts for % 70% those with 25% 44% one t 60% o74 nin % e years 27% 46% of future eli 61% 74% gibility. In view of the complexities—and uncertainty—associated with estimating future DB pension streams and the positive 7 prescript 34.9Departm percent ion dr f eo nt ugs), r those of Labor. whi with le 20 H 20 or e perc aring more ent o on: f ye Lifet HD ars of e HP e ime Participat nrolle ligibil es and ity whe ion I31 n n Pla broke percent of CDHP ns, n Jun out e by 17, prer 2014b. pa erticipants tirement wa wer ge e quart extremely ile. or very However, mos Futut re Co puntr blicly ibutions avail Decrea able sed b data y 50% sets have only 20.3% limited informatio 47.1% n on current 63.5% employee contr 77ibutions .4% to DC At year-end 2 Unfortunately, these studies quartil potential e. im 012, more than pact of various t 50 percent of large Va y appear to pes of tax-reform options o be plag nguard ued by plans eitn her e retir had an a xe pment licitly utomatic iin gcome. norin enrollme g futurent feature, c contributions ompared with to defined trending upwa Sources: EBR furd for ture contribu CDH I/C tion ommonw s decreP e aseealth Fund C d by n 5rollees 0% 17% onsumerism an 44d downwar % in 57H %ealth 72 C% are d Surv for t 26% ey, raditiona 2005–2007; EBR 45% 61% l e I/G 76 n% reenw rollees. 31 ald % & Associates C 54% 73% onsumer 86% Engagement i 33% 62n %Health 78% 90% surveyed with complete accuracy. There are also other possible sources of error in all surveys that may be more serious current Bene . projec “R fit Resear etir ted l ement I e ch vels, th Institut ncom ee RRR e, Ad June 20 equ value acy: A inc 08). lternative reases by Th 2.8 resholds an percentage d th poe Importanc ints, to 60.5e p o efrcent. Future Eli gibility in Defined Sources: EBR Sources: EBR I/CI/C ommonw ommonw ealth Fund C ealth Fund C onsumerism onsumerism in H in ealth Health Care Care Surv Surv ey, ey 2005 , 2005–2007; EBR –2007; EBRI/G I/G reenw reenw ald ald & Associates C & Associates C onsumer onsumer Engagement in Engagement iH n ealth In sum, i ? RSPM gnori was significant ng future cont ly e ributions nhanced for exag the gerates t May 20 he 08 perc EBRI entage of Policy Forum Gen-X workers by allowin simulated to r g automatic enrol un short o lment of f m oney impact t The RRRh valu ese c Base es increase by baan have lse inle ine on ret 4.9 perc irement 17% enta incom 44% ge points for 57 e adequacy, t %21.3% 72% 27 those with 10 % h 48e tr % e 65 51 a %tment .5% 80 ? %1 9 of D years o 36% B accr 62%f 68 uals fut 80 .3% %u is part re e 91%ligibil 36 icularly %ity, 71% and 81 pro .4% 88for t %blematic 95 h%ose if with the Sources: EBR Care Survey, 2008 I/Greenw –2013. ald & Associates Consumer Engagement in Health Care Survey, 2009–2013. satisfied (Figure 4). Satisfaction rates have been trending upward among individuals with a CDHP or HDHP. In plans, a ? DB a nd em nnuiti ployer co es and/or ntribution i lump-sum distri nformatbution ion (if availa s. ble at all) typically is not divided into matching vs. nonelective about 40 perce contributio Hn ealth C t in 2007 (Utkus and Young, n pl aans or f re Survey, 2008–2013. ailing to account 2014) for the recent changes in many defined contribution plans to incorporate aCare Survey, 2008–2013. EBRI Notes a is futr ue register contribued in the U. tions increased by 5 S. 0% Patent and T 17% 44% rade 57m % ark Office. 72% 29 I %SSN: 52%1085 69 ? %4452 1085 83% 39% ?4452/9 68% 0 $ . 86% 50+. 945 %0 43% 80% 93% 97% T Tr raditional = aditional = H Health ealth plan w plan wiith th no no deductible deductible or or <$1,000 (indiv <$1,000 (indiviidual), <$2,000 (family dual), <$2,000 (family). ). than theoretical calculations of . “’Sho Futur re Co t’ Fntr alls ibuti : ons Who’ Increa s sampling e se Mos d byt 5 Likely 0% rro to r. These include Come 21.5% up Short refusals to in Retir 56.3%ement, be interviewed an and Wh 72.9% en?” d o EBRI ther fo No rms o tes, 84 .1% no. f nonrespo 6 (Emp nse, loyee the Contributio a n Retirement Plans.” EBRI Notes, no. 4 (Employee Benefit Research Institute, April 2011): 10–19. Traditional = Health plan with no deductible or <$1,000 (individual), <$2,000 (family). in reti ? Trement he May 20 a by rou 12 g EBRI N hly 10otes to 12 ar percenta ticle (Van ge Depoints amo rhei, May 20 ng a 12)ll p but t rovid he ed l 2 owest-inc 012 updat omee group. s for the previously pu blishe d 20 or401(k) pa more ye b b Trars of aditional = rticipants with the future Health plan w eligi ith no bility, t deductible potential for hor e <$1,000 (indiv increase is automatic esca idual), <$2,000 (family 4.8 percenta lation of ). ge poi contri nts. butions to be included (VanDerhei and mod While these el simply numbers ar assumes that e instructive with a survey resp ond respect to ent has an the inform types of biases that may ed estimate of his or be her introduc future ed int benefit. o retirem ent HDHP = High-deduc HDHP = High-deductib tiblle e health health plan plan w wiith th deduc deductible tible $1,000+ (indiv $1,000+ (indiviidual), $2,000+ (fam dual), $2,000+ (family ily), no ), no ac acc count. ount. ? The . “ERI simulatio bSA At 3 n results 0: The for t Declin he Ju e one f Pr20 ivate-Se 14 ERISA Adviso ctor Defined Be ry Council nefit P testi romises and A mony (VanD nnuity erhei, Ju Payme ne 20 nts: Wh 14b) suggest at Will It contrast, they have been mostly flat for individuals with traditional coverage. contributions. b Moreover, th HDHP = High-deductib el matchin e health plan wg ith for deduc m tible ulas that $1,000+ (indiv pro idual), $2,000+ (fam vide incentive ily), no s for em account. ployees to contribute to at least a automatic enrollment features (including automatic escalation of contributions). It is important c cSource: Employ HDHP = High-deduc to note ee that Benefit R tib t le health h esearch Institute e mo plan del with ex deduc Retirem pli tible citly assumes ent Security $1,000+ (indiv Projection idual), $2,000+ (fam th Mere are no odel® Versions ily), no 1995, 2064–2078. ac ocffsetting beha ount. vioral modifications by either the CDHP = Cons CDHP = Consum umer-driv er-driven en health health plan plan w wiith th deduc deductible tible $1,000+ (indiv $1,000+ (indiviidual), dual), $2,000+ (fam $2,000+ (family ily), w ), wiith th ac acc count. ount. effects of question wording and question order, and screening. While attempts are made to minimize these factors, it is Benefit Resear c ch Institute, June 2014a): 2–18. CDHP = Consumer-driven health plan with deductible $1,000+ (individual), $2,000+ (family), with account. RRRs as well c as the RSS. ® CopelaSource: Employ nd a CDHP = Cons , 2008)ee um . Benefit R er-driven esearch Instit health plan wute R ith deduc etirement tible $1,000+ (indiv Security Projection M idual), $2,000+ (fam odel Versions 2064–2078. ily), with account. income a ? Net housin dequacy models g equity. that completely ignore future contributions, it is more difficult to speculate as to the errors * * Differenc Differenc Defined e e contributon. betw between HDHP/CDHP een HDHP/CDHP and T and Tr raditional aditional is is s st tatis atistic tica ally lly s siignific gnificant ant at at p p = = 0.05 0.05 or better. or better. that, assuming no participant behavior change for parti 13 cipation, contribution or asset allocation resulting from Mean?” EBRI Issue Brief, no. 269 (Employee Benefit Research Institute, May 2004). a * Difference between HDHP/CDHP and Traditional is statistically significant at p = 0.05 or better. b* D Differenc efined contributon. e between HDHP/CDHP and Traditional is statistically significant at p = 0.05 or better. workers or t ^ ^h Estimate Estimate e plais is n sponsors statistica statistically lly different different as a r from the prior y from the prior y esult o ear show ear show f these ch n n at the p at the p anges. = = 0.05 or better. 0.05 or better. impossible to q Defined uantify the as birth cohorts err from 1965 to 1974, currently ors that may result from them. ages 40 ?49. ^ Estimate is statistically different from the prior year shown at the p = 0.05 or better. ? Ignorin bg future contributions exaggerates the percentage of Gen-X workers simulated to run short of money in ^D Estimate efined as birth cohorts is statistically different from 1965 to 1974, currently from the prior year show ages 40 n at the p ?49. = 0.05 or better. © 2014, Employee Benefit Research Institute ?Education and Research Fund. 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A monthl y newsletter from the EBRI Education and Research Fund © 2014 Employee Benefit Research Institute ebri.org Notes • August 2014 • Vol. 35, No. 8 ebri.org Notes • August 2014 • Vol. 35, No. 8 ebri.org Notes • August 2014 • Vol. 35, No. 8 ebri.org Notes • August 2014 • Vol. 35, No. 8 ebri.org ebri.org Notes • August 2014 • Vol. 35, No. 8 ebri.org Notes Notes • • August August 2014 2014 • • Vol. Vol. 35, 35, No. No. 8 8 16 18 27 8 4 5 7