8352I0 15 16 7 13 14 17 18 Ii 9 12 EBRI L J 3 REGULATING EMPLOYEE TABLE HEALTH OFANDCONTENTS WELFARE PLANS POST-ERISA: This an earnings areas employer protection .of Some concern contribution Asbasic cana are belife resul provided discussed to tinsurance , their empl through oyincluding: coverage. plans er-provided analso insurance Workers provide (I)health tarrangement hewith a form effects insuran employer ofcor edisability ofthrough group is ERISAa example, employers In general,mayADEA require has probably ten to been fifteen effecti years ve of in service equalizing for employee retiree high all workers interestin these rates es have tablishments raised the had value all ortosome emplof oyers theirofheal retthaining insurance the many small cost employers and adminis by trshifting ative probstate lems thexcise at have tanxes ot been and expl the oredcost . T-of 39 state particular, Plans their which health simply benefits.group current employees and retirees and pay HISTORY AND DIRECTIONS Table 2 FOR CHANGE Most recently, the 1984 Deficit Reduction Act (DEFRA) Table 3 Table I Section Title PaKe established nondiscrimination standards for health, health the protection preemption; partiworker's cularly coverage by(2) pension vacontinuing luable accounted the pl effects benefit an.coverage forInof nearly for 1982, retiree or low- 78 pabout aying percent and health 43 middle-income immediate percent of plan the regulation; benefits nation's of workers: full-time to total and workers permanent for civilian (3)these the who benefit benefits eligibility; among workers active of employees, all ages. by With comparison, respect are to typically health insurance eligible benefits reserves provided against unreported by a self-funded claimsplan. that are imbedded in insurance premiums. catastrophic claims onWith a assigned current respect basis to riskchamay nges poolsbeintothe rules employers more affeprevalent cting for employee whomformself-insurance health of retiree insuran life cis e This incentive arises in several ways. First, by self-funding DISTRIBUTION Statement OF of WORKERS disability, life insurance, legal services, dependents care PERCENT OF FULL-TIME EMPLOYEES PARTICIPATING DISTRIBUTION OF WORKERS COVERED BY AN EMPLOYER GROUP COVERED BY AN EMPLOYER GROUP HEALTH INSURANCE PLAN I. Employer-Provided Health and Welfare Benefits ......................... 2 and other benefits if they are financed through a tax-exempt workers nonagricultural benefits, become lack for coverage ofdisabled. in ERISA ADEA medium-size immediately guidance does workforce Life not and in insurance recognize or inplan within large 1982 termination. (See establishments plans three any Table reduction months mayI). pay Finally, ofin participated disability service. totaseveral l health In benefits inconsiderations addition, benefits an employer in most two for workers,IN employer EMPLOYER cHEALTH, ontributions LONG-TERM to cover DISABILITY, age represent AND LIFE a proportion INSURANCEately PLANS,larger Some insurers have responded to the self-insurance incentives implicit in high unfeasible. benefits, health benefits, B. sever This Other alemployers additional cautions Re5ulation areare cost able Affectin5 infor toorder. small avoid Health the employers Emploburden yerand may liability ofWelfare state contribute excise for Plans--Most retiree totaxes the insurance plan. Employers do not contribute to these plans to cover accruing HEALTH trust. INSURANCE DEFRA established Deborah PLAN BY J. LEVEL Chollet, maximum OF WORKFORCE levels Ph.D.* for ACTIVITY, reserves1982held a in A. Employer-Provided BYHealth PERSONALBenefits EARNING ................................. S, 1982 a 2 MEDIUM-SIZE AND LARGE ESTABLISHMENTS, 1982a B. Employer-Provided Disability and Life Insurance Benefits .......... 7 trusts or contributed to an experience-rated insurance plan ways. First, some plans provide a lump-sum or periodic distribution of the group that incomewould disability supplement Rates adviseofplan; than caeution mployer they _9 in percent dogroup formulating for higher-in hparticipated ealth new ins come uregulation rance wor in kaers. copension verage of health ar plan e particularly and thatwelfare would older employers workers require without that sound the reticee and specific be eligible cost for datapension _ustifyin benefits S the to reduction. qualify he interest alth benefits rates habve y begun offeringto aem ccprue loyers at andelacc ayed elerated premium rate aas rrantge hement work s. force By regulation lower liabilities. rate ofofRather, employee health clhealth ainsurance ims that and arise coverage welfare are plans simply observed occurs paidamon against outside 5 workers current of ERISA. inassets. small Two on insurance premiums. As health care costs and, consequently, health (i) Disability Benefits .......................................... 7 for disability, severance pay and supplemental unemployment Mr. (ii) Chairman, Employer-Provided Workers IEmployer amwithpleased LifeCoverage Insurance to present ............................. this testimony Percent No ofon 8 the benefits. These limits are based on employee earnings, or for high plans policy's This among provision are face described. Similar workers value supplements to whoto the are workers distribution employed ERISA's who full-time (earnings-related) become of all disabled. throughout workers nondiscrimination Second, inthethe year--the United some plans largest States, rules pay pro est forv ablishments. ideretiree immediate health retirement benefits. benefits Employees if the Participants who workerterminate became as adisabled Percent employment (See before Table delaying premium payments for as long as 90 or 120 days, insurers allow asources ges and ofhearegulation lth care chave ost inflation been particularly continues. import Theant: age distribution (I) regulation of insurance premiums National hsur aveveyrisen, data do avoiding not distinguish state taxesbetween on insuran worker ce participation premiums has Workforce II. Regulation some benefits, of Employee the Health Direct maximum and Welfare that Indirect would Plans ...................... be allowed Employer under a Ii Employer Percent of All Workers Employee Benefit Plan of All Full-Time Employees Activity A. ERISA Regulation Total ................................................. Coverage b Coverage b Coverage II regulation of employee health and welfare plans. In 1974, the Employee defined benefit Coverage pension b plan. Workers DEFRA awithin lso affects with employer Employer mos segment 3). thet face In workers of total, value, thecovered or about workforce. a multiple 92by percent anIn ofemployer the 1982, of face allmore group value, full-time thanhealth of 90 the workers percent policy plan have are for of disability accident full-time low- aand l retirement, for self-funded even health though insurance they are vested plans by in discouraging the pension plan, age-discriminatory may also be employers in Retired toLives retainReserve and acpl crue ans and interest other onforms reserves. of retiree There life are insurance no data, workers authorizedby industry, by the Age however, Discrimin is aquite tion uneven. in Employment The averaAct ge age (ADEA); of workers and (2) in become an Second, increasingly DEFRA's important limits on consider funded ation retiree in health employers' insurancedecisions plans come to B. Other Regulation Affecting Health and Welfare Plans .............. 14 Personal Earnings contributions(in to millions) post-retirement Earnings health Group and life Coverage insurance REGULATING EMPLOYEE HEALTH AND WELFARE PLANS POST-ERISA: (i) The Age Discrimination in Employment Act .................... 14 Retirement plans Income for Security key employees. Act (ERISA) established participation, funding and full-year coverage middle--income death I. Health ineligible Employer-Provided or Insurance provided dismemberment; workers for workers. retiree for by wereaHealth Employee disability covered health In in these and 1982, binsurance byWelfare an or more cases, pension employer th Benefits benefits. permanent an plan. 80 group percent disability health97 of plan. all isworkers 2 presumed. covered In benefit provision in insured health plans. Similarly, for insured welfare self-insure. however, that indicate the prevalence of these arrangements or their ultimate manufa at plans. regulation a ctime turing In under when 1982, firms, employers v66 arious percent for HISTprovisions ORY example, areofAND increasingly workers DIREC is ofTIONS signifi in themedium-size tax awFOR caantly recode CHANGE of that greater accruing and define large than liestablishments at bilities athe x-qualified averafor ge (Persons in millions) (ii) Tax-Related Regulation of Health and Welfare Plans .......... 15 Noncontributory c 71 (a) Nondiscrimination ....................................... 15 Loss termination standards for 0private .4 pension plans. 43.4Few of ERISA's provisions, 0.5 (b) FundinK. Under DEFRA, deductable employer contributions to by 1982, an nearly employer Employer Most Employer allworkers group full-time contributions group he(60 althpermanent disability percent) insurance to group workers participate plans planhealth e(99 ausually rned percent) in andless awelfare health require th who an participated benefits insurance $30,000; an employee are aplan bout ina plans generally, These ADEA restrictions may be anonimportant employeefactor eligibility in the apparently for retiree widespread, health pl effe ans ct and on employers' funding arrangements. decisions to self-fund benefits. age retiree of workers health benefits. in most other Under industries. rules proposed The proportion by the Finaof ncialmanufa Standards cturing who participated Second, in somean st employer-provided ates (now approxim basic ately life eight insurance states)plan hahad ve All workers 83.7 65.3 18 4 24.2 $ I-$ 4 999 (b) Funding 15.2 ................................................. 56.2 18.2 16 funded welfare benefit plans are limited. DEFRA established Health Insurance for Dependents b 93 Statement of Full-time 5 000- workers 7 499 (c) Plan65.1 Termination 6.6 ........................................ 58.3 65.96 8 11.8 7.9 16 however, apply safe to harbor healthrules and for welfare funding plans. short-term Instead,disability, federal regulation medical of an employer-sponsored basic life insurance plan were entitled to extended sponsored nondiscriminatory contribution. steadilyNoncontributory growing by their Since component participation ownearnings employer. of replacement total andRates benefits employee of is direct among goal compens coverage older ofation. disability 44workers. areInvery 1983, coverage, high employer among the hcoverage alf (53 may percenexclude t) earned manyless workers than from $15,000eventually (see Tablereceiving 2). Only post-retirement 5 percent of Accounting A Board second(FASB), factor firms in the wouldgrowing be required rate ofto self-funded list unfundedhealth retiree and workers coverage covered that (i) The continued byAKe heaDiscrimin lth after plans ation retirement. that inoffer Employment retiree In nearly Act benefits (ADEA). all is cases, Responding also gre retiree ater to established catastrophic health insurance pools which, on an assigned-risk III. Full-ye 7 500-Directions ar 9 999 for 49.4 Change6.6 ............................................... 46.1 74.83 3 5.3 7.9 16 plans, severance pay or supplemental unemployment benefit health I0Part-ye 000- aand r14 999 welfare plans 15.8 15.8 has evolved 12.3 mainly as 85.13the5 result of 6.5 18.9 legislation plans and long-term disability and death benefits. In coverage or distribution of the policy's face value if they became disabled. full-time contribution health Long-Term contributions all workers benefits, Disability (ii) full-year covered amounts--and to Tax-Rel evenhe workers by Insurance aated though lth an emplo the ReKulation (85 insurance, they yer amount percent), currently groupof oflife heand aplan Health lth participate lower insurance, insuran benefits--vary and among c43 ein Welfare plan aworkers and plan inby Plans supplemental 1982 that with employee . offers eamore rned The than in most other industries. The uneven distribution of both older welfare plans has been the emergence of a market offering support services for health charges coverageinsurance ofiswidespread continued benefits discrimin forDe aslife, borah aation corporate generally J. Cbased hollet, liability. on with Ph age, .Dat .* Cleast ongress The one prospect legislated reduction of Medic ADEA inare the in basis, underwrite health insurance coverage for persons without proof of Part-time workers 13.6 4.1 9 5 8.1 15 000- 19 999 12.7 90.4 15.2 addition, DEFRA redefines all earnings on employer Noncontributory 33 enacted 20Full-year 000- for 24 999 some purpose5.1other 9.6 than the 2.1 protection 92.8of 3 0plan participants. 11.4 2.5 Most contributions to a funded retiree health plan as taxable more Nearlythathree-quarters n $40,000. (72 percent) had coverage that provided accidental death unemployment earnings. fragmented work In insurance 1982, patterns. two-thirds equaled Many of 4.5 workers full-time percent who are of permanent total employed compensation. workers part-time in medium-size orEmployer during that regulation coverage. of employee Currently, health no survey and welfare data exist plans that authorized documentbythe theprevalence tax code reform self-funded that pl might ans. reduce These theservva iclue es of include Medicare"administrative benefits for servi somecesretirees only" employees 1967. value ofAsinsurance amended and retiree in coverage 19health 78, ADEA during insur prohibits the anceretirement plaans ny employee among period. industries benefit pr suggests actices th thaatt insurability. The underwriting losses borne by insurers who participate in 25 000- 29 999 6.3 93.9 7.6 Part-year 8.5 1.9 6 5 5.6 unrelated business income; earnings on excess reserves held in Retirement pension with immediate Self-employed recently, 30 000- 34Congressional 999 5.0concern 3.9 with2.9 federal 93.3 tax 2 revenues 1 has 4.3 4.6 guided new or dismemberment a funded benefits. retiree life insurance plan are also taxable as and only of contributions disability employer-based large part In of establishments retirement the addition to year health healthhave to provision insurance insurance with cover coverage agroup ge coverage were ofonly disability active the asamong the largest employees, dependent retirees. coverage single 49 man of contributed yanother benefit employerworker's in togroup this the pertains, variously, to both insured and self-funded plans. Various parts of would (ASO) contra also craise ts andcorporate stop-loss licaoverage bility offered for retiree by commer health cial benefits. insurers and DEFRA's Blue would publi II. ReKulation c discrimin policy atoward of te Employee against theseHealth workers benefits and on Welfare maythe havebasis Plans strong of age. sectoralADEAeffects. protections Any these pools are shared by insured Hearingplans before in the the form of higher average premium unrelated business income. 35 000- 39 999 2.1 93.6 2.5 Noncontributory d 40 000- 49 999 2.1 91.7 2.5 regulation of welfare plan funding practices and the establishment of plan. plan. health group, In equaling Employee In insurance 1982, addition 4.1 29.4 contributions, percent to million plans--particularly current of part-time total life however, insurance compensation--more or were part-year those coverage, low--usually workers offered some thanwere less employers 90bypercent cothan vered larger offer one by of the tax code B. define Employer-Provided nondiscrimination, Disability fundingandandLife plan Insurance termination Benefits-- rules by public Cross incentives and policy Blue to provide initiati Shield vplans. e unfunded toward ASOretiree retiree contracts health health provide insurance or cl welfare aims benefits handling benefits should andshould other be apply, in The particul 1974ar,Employee to workers Retirement aged 40 Income to 69. Security As interpreted Act (ERISA) in Department and its levels. Because ERISA United preempts States House stateof regulation Representativesof self-funded employee (Percents) 50 000- 59 999 1.0 92.3 1.2 (c) Plan Termination. General rules for terminating funded health Life Insurance 96 Committee on Education and Labor nondiscrimination standards for some plans. The current patchwork of 60,000- 74and 999 welfare benefit 0.6 plans are specified 89.4 in the tax0.7code life insurance benefits that provide insurance protection after the worker percent employer employers--continue employerNoncontributory ofgroup contributions employee health health earnings. plans; all insurance 44 By non-pension percent comparison, coverage ofvoluntary these priv to retirees. ateworkers pension 82 benefits, In (13 plans 1982, million) other are moreseldom were than than which Employerstatutory group disability benefits quand alifylifeforinsurance tax preferences. plans provide Recentincome legislation replacement has reev administrative aluated in terms services of responsible for self-funded public plpolicy ans. toward Stop-loss retiree coverage health limits care anti subsequent of cLipate abor regulations, these amendments effects, ADEA establish providing requires participation, for thatgraemployee dual funding implementation benefitandplans termination andobserve ample health plans, self-funded plans do not participate in state catastrophic All workers 77.6 60.5 17.1 22.5 75,000 or more 0.7 86.9 0.9 governing voluntary employee benefit associations (called Labor/Management Relations Subcommittee I regulation 501(c)(9) lacks a naplans tional orpoli VEBAs). cy focus:In gener it does al, not plannecassets essarilymustserve be the covered contributory. retirees. compensation onlyEmployers for as dependents time can not provide worked. of other and fund workers thiswhocoverage directlyin participated a variety of in ways; an 60 contributed for percent workers and of importantly their all plan dependents toparticipants the in the level event employed ofof regulation theinworker's medium-size associated total disability or large with transition employer several general liability periods printo for cipdis les individual c:ourage plan and terminations. aggregate claims in excess of a specific costs, not simply as revenue enhancement. Furthermore, some have argued that health standardsinsur for anceprivate pools pensions and, therefore, and other do retirement not shareincome the underwriting plans. The general losses Full-time workers 84.7 75.8 8.9 15 3 Total, All Workers distributed c in 83.7 the interest of participation 77.6 employees. I00.0 No SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Employee 26 September 1984 interests Full-year of suchplanrules parti 90.4 cexist ipants, fornorunfunded 84.3 does ithealth represent 6 and 1 cwelfare lear nation benefit 9 a6l policy two general types of plans, however, are prevalent: (I) retired lives reserve employer-sponsored The (ii) growth Employer-Provided health of health plan. and welfare Life Insurance. benefits as Nearly a share of allcompens full-time ation tax-qualification, or establishments death.Benefits Although had in particularly Medium nocoverage population and Larse that for survey self-insured would Firms, datacontinue 1982, existBulletin plans. toafter document The 2176 early discussion (August the or prevalence 1983), normal that DEFRA's level. tax Byo treatment facBenefi ilitating t of cutbfunded plan acks administr in retiree welfaare tion health plans and plans that limiting mayarebeunemployer appropriate, justified liability bysince goal associated of ERISA with legisl theseation pools.has In beenstates to protect where athe large interests proportion of pension of employee plan Part-year 70.7 55.0 15 7 29 3 plans, including those which offer continued coverage to pp. 6 and 16. cost increases for older employee are impermissable. In 4 Part-time workers 62.3 18.8 43 8 37 4 retirees. toward employee health and welfare plans. Summary: permanent plans; has resulted andEmployer employees (2)from plansgroup (i) which in the medium-size health simply growthinsurance group ofand employee workers large is possibly and and establishments retirees retiree the and most participation pay (96 egalitarian claims percent) on in follows and retirement. distribution is intended In general, oftodisability illustrate plans which and the nature life provide insurance of retiree regulation benefits coverage associated among eitherwith workers, "carve the restrictions for large oron pca arti tastrophic eligibility cular, this claims, forprin these ciple these benefits implies arrangements may that effectively complete may make removal exclude self-funding of rank he participants; alth insurancefew is of provided ERISA's protections on a self-funded apply to basis, healththeandcost welfare of a plans. state Full-year 66.7 27.9 38 8 33 3 Loss-S14,999 44.7 68.2 53.4 aparticipation is defined as coverage by a time off, insurance, or pension coverage on the basis of either entry age or attained age $15,000- Part-year24,999 This testimony60.3 describes 28.6 13.8 the prevalence 91.9 46and5 importance 3934of .72 employee a current basis. participate health employeeandbenefit welfare in an provided plans employer-sponsored commensur to workers ate with in basic the theUnited growth life States. of insurance total Employer employment; plan. health Like and out" tax published plan qualific Medicare to which data ationbenefits from theof aemployer statutory national (that contributes. is, employee survey integrate ofbenefit medium-size Medicare Employees plans; and coverage it subject by large no as means establishments to first-payer a intended minimum feasible for even is impermiss relatively able.small employee groups. and file employees; research is needed to evaluate this argument. aInstead, ssigned-risk most regulation pool for of catastrophi employee c health coverage and welfare can represent plans is aauthorized significantby Self-employed 25,000- 39,999 53.6 6.0 30.8 93.4 22 8 46 7.2 4 III. Directions for Change service requirement before they are eligible for a benefit are counted as The views expressed in this statement are solely those of the author and health and welfare benefits, as a part of employee compensation and as a 40,000 or more 4.4 90.7 5.3 insurance disability (2) the rising Aplans insurance, retired cost Employer lives basic of health providing, reserve life plans insurance plan ininclude particular, is benefits a group the spectrum are life health generally insurance of benefits workers intended plan toatplan that all to participants to suggest forbethe an exhaustive that, same even coverage among iflisting they full-time offered have of tax-related to not full-year active met the regulation. workers), workers requirement inor these provide at the establishments, supplement time of athe l oThe Older importance employees of ERISA may preemption not be required, relative ato s aother condition factorsofas an Finally, clearer specification of plan termination rules for legislation increment indirected insured toward plan premiums. some otherThe goal--generally, incentive to self-fund nondiscriminatory employee should not be attributed to the Employee Benefit Research Institute, its The various regulations affecting employee health and welfare survey. In contributory plans, only employees who elect and contribute to officers, trustees, employment, sponsors,to or make other greater staff.contributions to a benefit plan source of income security for workers. ERISA regulation of welfare benefits provide levels funds particippost-retirement aof nts. income earnings; to replace rates life ofinsurance lost coverage earnings. benefits among all The for workers amount employees except of basic prior thoseto coverage attheir the coverage disability coverage are forprotection services counted as not and participants. covered life insurance by their Benefits active are about toworkers' which as widely the health employer held plan.asdoes health not compensation for older workers or federal revenue enhancement. incentive for plans to self-fund employee health and welfare benefits has not unfunded health benefits plans--particularly, thanina these youngerstaemployee. tes, unfunded therefore, Inretiree plansmaythat health be are substanti not plans--is amand l, atory, even needed. for SOURCE: EBRI tabulations of the March 1983 Current Population Survey (U.S. SOURCE: EBRI tabulations of the March 1983 Current Population Survey (U.S. benefit plans raise several issues that require further consideration by the (a) Nondiscrimination. Various amendments to the tax code have contribute are outside the scope of the survey. Only current employees are however, older employees may be required to contribute 5 Deborah J. Chollet is a Research Associate of the Employee Benefit Research Department of Commerce, Bureau of the Census). is described, Department and other of Commerce, federal Bureau legislaof tionthe Census). that provides for the regulation insurance. provided very retirement. lowest by Eligibility established employer That annual is,plans, for nondiscrimination the earnings therefore, retiree employerlevel--generally health reserves is standards usually insurance against a for multiple withpost-retirement self-funded benefits fragmented of theisworker's oroften work life counted asA.participants; Employer-Provided retirees Health who participate Benefits--Health in theinsurance benefit is program probably are Workers' rights to a retiree benefit is unclear when the benefit is financed been established. more, but Further, not more despite than ERISA's is justified preemption by age-rel of state ated mand costatory relatively A.smaERISA ll emplo Regulation--Possibly yers. the most important provision of ERISA Institute (EBRI). EBRI is a non-profit, non-partisan public policy research Note: Items may not add to totals because of rounding. public policy community. excluded. differences. insured health and welfare plans. ERISA, for example, organization. of welfare plan participation, funding and termination is summarized. (State alncludes nonagricultural civilian workers who reported employer group patterns--are earnings. insurance the most common costs established In 1982, high employee during and about tax-qualification the benefit roughly two-thirds employee's provided equal. of working standards plan to Furthermore, workers participants career. forinself-funded the the Funds in United value medium-size arehealth Stof awithdrawn tes. health and In determined differently than eligibility for active employee coverage. For (i) Disability Benefits. Long-term disability benefits provide benefits laws, it is not clear that self-funded benefits, as regulated under affecting as a current employee labor hecost. alth and Somewelfare have suggested plans has th been at this ERISA's problem preemption might be of Although ERISA's preemption is generally presumed to be a strong aIncludes civilian nonagricultural workers, except those living in families health insurance coverage at any time during 1982; excludes workers in First, ERISA preemption of state insurance laws may be a strong bThe employee insurance or dependents plans aimedmayatbeeliminating covered byplans a working which serve spouse's only plan o With important exceptions, ADEA's nondiscrimination tests in which the greatest earner is a member of the Armed Forces or an fregul amilies ation in ofwhich insured the greatest health and earner welfare is aplmember ans isofnotthepresented.) Armed Forces Sever or alan large insurance establishments benefits shows belonged no significant, to plans thatsystematic paid I00 percent variation or 200 withpercent workers' of 1982, from the 84 million plan to civilian purchase nonagricultural term life coverage workers for reported workers coverage only after fromthey an instead earnings of, replacement "highly or in addition compensated" for workers to, particip individuals. who become ation permanently in the The surveyed 1982and Taxemployer totEquity ally disabled. plan. and addressed by establishing reasonable funding rules for retiree health state ERISA and insurance other mustlegisla laws be tmet ion, and for aregulation re ein achanybenefit wawith y contrary respect individuall to the to y. interests self-insured That is, of plan or factor in the increasing number of self-funded employee health plans, economic agricultural worker. agricultural worker. incentive for employers to self-insure benefits, particularly health insurance Fiscal Responsibility Act (TEFRA) established similar 3 Gail R. Wilensky and Amy K. Taylor, "Tax Expenditures and Health employers may not justify discrimination with respect to retire, or in some cases, when the worker becomes disabled. The tax employer group health insurance plan; virtually all of these workers received CAll the deceased coverage worker's in the annual benefit earnings. program isOneprovided third of at plan no cost participants to the Insurance: participants.nondiscrimination Limiting In 1983, Employer-Paid 24 percent rules of for all Premiums," employee covered life workers Public insurance inHealth medium-size plans, Reports and one benefit in terms of a nondiscriminatory total package benefits, self-funded factors independent or plans. simply by of Although forbidding ERISA hERISA ave employers also defines encour from nondiscrimination aged asserting the growth termination of rules self-funded for, rightsin bDirect coverage is defined as coverage provided by the worker's own benefits. Commercial insurers and Blue Cross and Blue Shield plans claim that blncludes coverage from the worker's own employer group plan or from the (July/August 1982), table 2. 2 By comparison, of benefits. 56 percent 6 of all workers, and 70 percent of the ERISA employee. 5 Data onaimed Supplemental disability at eliminating and life life insurance special insurance treatment plans,plannotfor coverage tabulated "key employees." arehere, takenmayfrom be plan employer *Researof ch another plan Associat ate, worker. any Employee time during Benefit 1982;Reseindirect arch Institute, coverage Wais shington, coverage D.received C. advantages belonged contributory. to plans associated that paid with a these flat dollar plansamount, and usually other similar between $2,000 kinds and of workforce, participated in an employer pension plan in 1983. Employee Benefit published tabulations In addition of TEFRA the amended Level ofADEA Benefits to makeSurvey, employer conducted health annually plans, by particular, large establishments self-fundedhadhealth majorplans, medicaERISA's l benefits unevenprovided treatmentby of a self-funded self-funded that plans. are Two not disclosed factors, under in parti ERISA cular,reporting have requirements. encouraged greater Defining rates fundingof as the dependent of another worker in 1982. ERISA's incentive for self-insurance poses an unfair burden by impairing their the U.S. Department of Labor, Bureau of Labor Statistics. See: U.S. Research I By comparison, Institute, employer "New Survey contributions Findings on to Pension private Coverage and public and employee Benefit 4 EBRI tabulation at the of employee's the 1983 election, Level of Benefits first payer Survey, for U.S. health Department care of 6The "benefit package" approach can be used, however, if (i) pension Cltems may not add to totals because of rounding. dpublished tabulation not available. advance-funded Labor, $15,000. Bureau of plans Laborhave Statistics. encouraged their popularity in recent years. Entitlement," pension plans represented EBRI Issue 5.1 Brief, percent No. of 33 total (Washington, compensation D.C.: in Employee 1983. Benefit Department services of Labor,covered Employeeby Benefits the regular in Medium employee and plan LarKe when Firms,the 1983, stand benefits plan,ardsrather are or vnot esting thanincan luded; rules insured for(2)retiree pl heaan; lth another hebenefits alth insur 16are apercen ncenotplans, t affe hadcted; however, basic(3)hospi it raises ta "is l and self-funded insured plans benefitsbeenfor a significant both health incentive and welfare for employers plans. First, to self-fund, persistentin ability to compete. ERISA's preemption may also impose an unfair burden on Research Institute, August 1984). Bulletin 2213 employee (Washington, is otherwise D.C.: covered U.S. Government by Medicare. Printing Office, 1984). not used to reduce costs to the employer;" and (4) the favorability of overall benefits to older employees is not reduced. benefits provided by a self-funded plan. In total, as many as 40 percent of EMPLOYEE BENEFIT RESEARCH INSTITUTE 211! K _trcet, N\\" Suite _00 Washington, DC 200_7;Tclcphone(202) 659-0670 i