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EMPLOYEE BENEFITS IN VARIOUS INDUSTRIES 7 6
92
63
QI: Employee benefits have gotten a lot Tableof 4 publicity since Treasury One was
6
EB EBRI RI
released in November. How many workers actually have employee benefits?
L I
Table Table I2
therefore tax health insurance heavilyTABLE at lower 3 income levels while leaving it
Table Table Table 82I
To This insurance produce the is probably upper such reliable earning asdue that estimates to1proposed /the 3 offact workers of by the that the effects Table contribute health administration, 5 of insurance alternative an average premiums, employees of limits 6.46which with on percent employee make incomesup
virtually untouched at higher income levels.
benefits, value of impro it would ved coverage be necessary to all toworkers. have data To maximize on the value employee of employee participation PaKebenefit
below the largest $i0,000 portion would pay of health almost and sevenwelfare times as planlarge contributions, a share of income do not in vary added by
AI: Out of approximately 88 million non-agricultural employees in 1983:
BENEFITS I1||111|11 AS A SHARE |1OF _ TOTAL COMPENSATION a
WAGES EMPLOYERAND BENEFIT SALARIES,OUTLAYS BENEFITS, PER EMPLOYEE, AND EMPLOYMENT
ROUGHLY IRA AND CCNT_L_]O_S PROJECTED SPOUSALTO STAT£ IRATAX ['_I,C'Y[F PARTICIPATION CAP HREVENUES [ALTH ]}_£UKA_CEIN P_S! 1982 ]9_3 _D ]984
packages taxes income.ovon er health at In 50k various contrast, insurance PERCENT income retirement as levels. OF employees HOUSEHOLDS average programs, Such with would (PERSONS) data incomes which be are $3,230 aim abo AFFECTED not vetoavailable. $I00,000. replace a Employees share Instead,of
401(k) AND IRAs
Table 3: Pe_-centage Ol _'ockers With Health Insurance Coverage_ 19$3
A Floor on Nontaxable Benefits BY INDUSTRY, 1983
estimates of the effects of alternative BY INDUSTRY, tax 1983caps a have to rely on benefits
in QI:theEmployee plan, andbenefits to enhance NONAGRICULTURAL haveBY the gotten A plan's TAX aCAP WAGE lot cost-efficiency, VS.of ANDApublicity TAX SALARY FLOORWORKERS however, since employee I
preretirement would be taxedincome, according AND are EQUAL-REVENUE generally to various 83 percent based factors LEVELS oncontributed income-related OF having A TAXlittle FLOOR less formulas. than or nothing this amount to do
Health Insurance- 162 million persons at all ages with primary or secondary;
Z,'_!O_'ZE CCVZ_CE O_CLY Z_PLO_ZE AI_D FAMILY CO_'ZRAGZ
Industry Treasury One was PERCENTAGE released ON EMPLOYEE inDISTRIBUTION November. HEALTH MandatedHow WITHIN INSURANCE many Voluntary EARNINGS workers BENEFITSGROUPS Total
Rank provided with State incometo or theability Percentage average to worker pay. Rank Ccst To D-_]¢_ee in Statevarious CostPercenIage 7oindustries. State Co_t Rank To ZF._] If c'_eee State employee Ccst To Stste benefits Percentage
82 million workersPrivate with Wkrs primaryTot or401(k) secondCont ary; and Avg 62 million Tot IRA Cont workers Awith vg
19S3 ]964 ]_63 ]984 ]983 19$4 1983 ]984
As ALTERNATIVE contributions an alternati WAYS veto TO the toSET plan a Average cap LIMITS are beyond generally ON BENEFIT which Average kept benefits GROWTH Annual low. would be taxable, it has been
actually have employee AND CUMULATIVE Average benefits? DISTRIBUTION 198Legally 7 ACROSS 1988 Pensions EARNINGS 1989 GROUPS 1990 Health
vary Q8: little How many within employers industries, "match" thetheeffect employee on tile 401(k) average contribu worker tion? in an industry
primary coverage
1 Nevada 66./4 1$ g'isconsin 60.8 34 Alaska 55.0
Annual Annual Employer Total Full-Time
suggested is Agricaultgood ure, that measure A]ahama a taxable ofWages the "floor" and effects 0 0could on Requir thee 75.00 be d industry set94.32above Thrift as 65.00which a and whole. 77.00 benefits 75.00 If and they would 94.32 vary be
If the tax cap resulted instead in leaner health insurance plans, its
$1800Appendix Tax "Cap" II _ $300 Tax "Floor" a/
Total 711,565(100%) _1.2 bil $1,710 $1.2 bil _i,642
2 Delaware 66.0 19 California 60.6 3.5 Kansas .55,0
A!a_ka 0 0 165.70 ]84.57 O 0 365.70 3B_.57
nontaxable. Such a floor would tax all health-insurance recipients, not just
forestry, Greater fisheries participation Wages andin employer Benefit 7 health Outlaysinsurance 5 Benefits plans 12 hasas alsoEquivalent
considerably, Industry Limits Q2: Treasury on benefit data One growth proposed onSalaries the could average a capbeonworker set Payments the asamount provide a dollar ofProfit-Sharing only health figure a rough or asmeasure aWelfare percent I of the of
regressivity AS: 84 percent as a(Hewitt revenue Sursource vey) could be reduced or eliminated. Evidence on
Life Insurance- 72 million persons PercentageAverage Distribution Within Earnings Average Groups
0 0 205C8 234.84 0 0 205.08 234.84
3 ]L1]nols 65.8 20 Kentucky 60.0 36 AJabama 30.g
llllllll
Salaries Percent of Employees
those Mining with costly plans. Such a floor6 %would of beIIa more reliable 17 % Cmeans ontri- of
industry compensation. insuranceeffects. that Arizona Either could be method, provided 1.00in turn, tax ].00 free. could 55.56 The set 67.90Reagan one50.90limit package 61.44on all ]04.74benefits 128.]4 or
the likelihood of such an effect is Additional mixed. Research currently inAdditional progress
Tax Cap Revenue Estimates al ApPendix I
1-20,000 161,689(23%) $.2 bil $1,227 $.2 bil $1,320
Construction New York ArkansaI 65.6 21 ]7.38 Rh__d 20.84 e IsJand 84].00 48.00 60.0 733.0637 44.74 Utah 14 4].00 48.00 53 6
been encouraged by the rising cost of individual coverage. As preferred
raising Industry revenue through employee benefits MandatorythanVoluntary a tax cap.Compensation Employees would (in millions) be
Manufacturing could replaces (in set billions) this separate "cap"limits $20,938 with what on various has$ been 4.6 $2,124 benefits. referred $ 8.0to$1,267 as a$ "floor." 9.8 $11.9 $2,046
under Qg: contract The Reagan to the package Department Percent would Employ- ofoftighten Health Taxes employed and the as aHuman loan Services Eligible Percent and eliminate of for suggests buting Taxes hardship that of as aa
Disability Insurance- 51 million
20,000-25,000 89,780(13%) .06 652 .14 1,530
62.32 70.28 4].00 48.00
able to avoid tax under a tax cap by negotiating more cost-effective plans
5Manufacturing Public Penns)Ivania Utilities 6t4.25,341 5 U.S. Average2,030 6 59.7 2,399 13 3g Washington 20 2,047 52 g
The How value do the of effects California benefits of these pet"].38 proposals worker 9.19 vdiffer? aries 7].00 consider 76.00 20.08 ably 30.97across]68.00industries. 185.00
cap withdraw of althe provisions size proposed of Households 401(k) by ment the plans.administration Percent How withmany IRA of planswould Spousal have Persons result these IRA provisions? in Eligible Percent a large of
25,000-30,000 91,755(13%) .09 1,537 .16 1,780
24.06/" _4,26 71.00 ?6.00 50.58 5].79 168,00 185.00
General health insurance Considerations risks (prime-age working adults and their dependents) have
with 6Agriculture, Transportation Newtheir 3c_seyemployers 6_.3or by 22reducing Georgia cov8erage 5for 9.6 I0 certain 39 Colorado benefits. 18 If a 52tax 4
According Department tostores Department ll,of 701 Commerce data 1,122 on the entire312work force, the618average
decrease Dental Annual/Vision- Family in employer Income 30 million expenditures, Affected butIncome other studies Affectedsuggest b/ that Incomethe
Employee Benefit Research Institute
30,000-50,000 204,946(29%) .5 2,358 .36 1,730
Co!crado 22.]5 12.00 42.12 53.12 117.81 ]21.00 42.12 53.]2
Communication 5 20 25
U.S. 7reduction Trade floor forestry, O_fioworker (wholesale werewould fisheries implemented, recei bevedmuch &.l$11,014 $2,031 smaller. however, 23 in Oregon voluntary taxes 8]8 could or 59.3 discretionary 646 only 00 be a Florida voided 12% employer by dropping benefit 51 1 5 8
Q3: Does the Connectl availability cut and O cost '0 of health 66.88 79.98 insurance 4].22 vary 20.01 93.68 86.68 2
Total Ag: _Equal-Revenue Loan NonfaFmprovisions Employees Tax Floorare in 3588,214 percent 14,9 and 72hardship provisions 2,988 (number) in1,87 718percent
over 50,000 111,663(22%) Employee Benefit .3Expenditures 2,261 .23 2,020
C_]a_ale 0 0 56.08 64.32 0 0 137.92 158,18
Public been absorbed Utilitiesinto employer group plans, 6the cost ofI/individual 22private health
Mining contributions coverage and by state? otherentirely. retail) in 1983Some 17,095 (Table 29,973 employees I). Industry 2would 1,501 104 probably totals 3,951 doranged 727 so, but fromfor 17$646 the1,047 per remainder worker 0 9
gA cap Conr,ecticut (monthly on benefits contribution) that 63.1 was 24set Nehigh w$25Har.enough ?shire $42 to .59.1 affect 01 relatively $52 Minnesota few $63 employees 51 2
(Hewitt (000's) Survey).
Dependent Care- 2 million
]4.46 16._2 56.C8 64.32 34.76 40.74 ]37.92 ]58.]8
Wholesale trade 6 7 14
Banks the Construction tax and floor other would be 21,968 even more1 924 regressive 1.680 than the tax 14cap since more 3 7
9in could t,*, agriculture a4_,ach increase usetts Floridand incentives a 63.0 $926 into 2 !3. .5retail 28employers idaho ]5.]8trade--about to ]9.88 contain 65.20 58.9half benefit 48,46or 4'2 55.64 less h'ccosts, w tof ,',e>:ico 75.06 the as employers ]2national 2.80 51 1
A dollar0 -cap$I0,000 would limit the income 2 replacement 2.76 potential 18(4.4m) of benefits that 0.2 are
Retail insurance tradecoverage C_o:_la has risen.10.00 Recent 13.]0 changes 7 51.10 in56,2the 0 tax 6 30,00 code 39.30have 13 93.90 further 101.65
financial in-
Manufacturing employees would be affected. 22,170 A tax 1 713 floor, particularly 3,649 if it 20 were set 1at 7 8a
J0average and Q4: North employees How C__roJJna tomuch$7,342 would is spent 63.0 probably per onworker health 26 try 5outh in insurance? notCcommunication, ;:ro]ina to let benefit 5g.7 or costs 03 more Io'approach wa than three the4 limit. _9and 7
keyed QII0,001 0: to Are-the such 15,000 employee's provisions income impor 9tant level, to enc such 1.34 ourage as life 401(k)and 52(Ii. pladisability n7m)participatiinsurance on?0.4
$1-4,999 Group Legal--2 million Questions 100.0% and 6.7% Answers a/ a/
H_aii 15.98 15.98 ]5.98 15.98 49.]4 72.46 49.14 49.]4
one-half Transportation Finance, relatively situations insurance, times low le the vel,national 17,641 would 24,292 not average. encourage 2 385 1,438 The employers lower 3,067an1,282 and industry's employees 18 average to1,047 seekannual more 2 6
By the same Idtoken, aho however, 0 it 0is possible 75.]0 73that .]0 66.74 such a66.74cap would 73.]0 become 73.]0 a
11and $5,000-9,999 SOURCE: 15,001 Tte,_,c-_ retirement ,see-U.S. 20,000 Department and 62. savings 7 of 27plans. 14the Texas i00.0 Treasury; Depending 0.84 8.1 and 3on 7.5the the Employee level L100.0% 64(14.4m) ._ Nebra.ska of Benefit the cap a/Research and 0.t9.2 3 the
Q6: Do you have a better breakdown on how dual IRA and 401(k) use varies by
reinforced the I]l!nc_s attractiveness 0 of employer 0 67,]0 plan participation 75.56 79,44 76.44 relative 74.]0 to 8the 2.56
real estate 6 ]i 17
Communication 27,647 1 915 7,342 25 1 3
cost-efficient Insurance Institute. coverage, 19,089 and could1,47instead 3 encourage 1,315 health 1,533 care cost
wages target Q5: 20,001 The and forReagan salaries, employees 30,000packagein thewould firms lower 23also withalso change lower the 0.the 7benefits. 6 value tax provisions of 77 If(34.4m) itsit benefit for became a4 package. target, 0.3
provisions, AI0: Educational income. A Hewitt if Assistance any,survey for indexing 5sho million ws noit significant for inflation,variation such a cap in could participation reduce theor
12 Hawaii 62.4 2S !,:i-_i_,sippi 57.1 05 Wyoming 4g.7
134,20 ]29,62 74.]0 52.56
Services 6 7 13
Public Utilities 28,570 2 123 6,319 22 0 8
increases IRA and so-called if employees 401(k) sought programs richerthat coverage allow workers to compensate to set for asidethe taxes paid
Agriculture, Hospitals then amounts 30,001 totalcontributed benefit 50,000 ]rret d_anaail costs trade, based 18,034would upon 1.and _833 plan ser probably ].58vices provisions. 1,375 [E.£_0.68 grow are 62.6_ the considerably lowest_Lpaid 26._6 /5283(41.9m) 36,66before sectors ]29,63 1,163 stabilizing ]50.37of 0.2 the
incentive $10,000-14,999 for employers, particularly I00.0 in smaller 10.7 firms,I00.0 to establish 36.1% new plans
Regarding
13 t,;aryJand 62.1 29 L1_ne 56.g 06 Arkansas _g.3
purchase of individual !c_a coverage. ][.64 19While .60 employer 66.60 7!.32contributions 130.C2 128.76 to health 66.00 80.]4
Government 4 12 16
Wholesale below the floor. trade 22,687 1 708 1,897 14 5 0
Miscellaneous 22,912 1,890 1,501 1,591
economy; atfunds 50,000 the pre level +these taxofuntil thesectors cap. they withdraw also 35 provide them. How 0.43 the many lowest people 82(18.9m) benefits have per worker. 0.I
that $15,000-19,999 a/ offer Based on income a monthly replacement, tax exemption I00.0 since limit the17.2 vof alue$I0offorI00.0 theindividual benefits c49.1 overage at higherand
Cafeteria or Section 125 plans- EBRI estimate is 5 miIIion-LECFC estimate 5.4
lZi A6: Ir_dianaYes. Table 61.# 6 presents 30 Vermont that information. 56.g Dual 07 Oklahoma use is very much tg.1 a
............................................................................ K:r,Lma 0 0 (6.70 84.7£ 112.64 ]_9.71 £6.70 84.78
...................................................................................
Retail trade 12,914 1 050 926 13 12 5
both an IRA and a 401(k) plan?
Cincome ommunication fuTotal nction $175 levels offorincome. could and family public becoverage. veryutilities, small. na Under in turn, naa dollar are cap, two (125. of federal 7m) the highest-paying revenue na losses
million QII: $20,000-24,999 How many 401(k) plans I00.0 are there 19.9 and how manyI00.0 people parti62.5 cipate in
Eertucky 0 0 46.]0 49.2U 69.26 73.66 46,]0 49,00
15 Virginia 6].2 31 Lc:ub:iana 56.7 _g 5o_.':h Da_-:ota L5.9
insurance remain tax-exempt, the 1982 Tax Equity and Fiscal Responsibility Act
• -_ i 4 I,
RECENT All industries PROPOSALS 8 9 16
All Finance, them? industries insurance, Lcu!£_ana $20,704 2(.92 3_.$2 $1,859 7{._2 29.52 $1,340 63.04 50.96 63,04$1,736 90.96
sectors Benefits andvary alsobyproindustry, vide the highest and they benefits. would vary even more if all industries
would only grow as benefit coverage grew. (64.1m workers)
The Reagan Tax Reform Package
.6 _,1,, _;gen 6].0 _'z -'ri:'c,r;a 56.1 09 :,c_rth F'c_,o,a _1.2
Wl_n e 0 0 [[I.[0 67.08 42.28 48.58 ]64.04 I]9.66
real estate 20,725 1,412 2,827 17 5.3
were Q6: staffed Do you have by thea better same type breakdown of workonforce. how dualTheIRAconcept and 401(k) of a cap on 6employee
$25,000-29,999 I00.0 28.6 I00.0 50.5
401(k) plans- EBRI estimate is 19 million
_:]/and .... [.68 :£]C. 3c.20 url [1.]0 57.88 16.20 29.... .08 .; ,cza1