Innovations in Employment-Based Health Benefits
EBRI POLICY FORUM: Nearly a hundred health policy experts, senior private-sector HR representatives, and insurance and health officials examined some innovative employer-driven programs during a daylong policy forum held by the nonpartisan Employee Benefit Research Institute (EBRI) in Washington, DC, on Dec. 9, 2010. The discussion also considered the future of employment-based health programs in the wake of the November election results and enactment of the Patient Protection and Affordable Care Act (PPACA). This article summarizes the presentations and debate during that forum.
Retirement Income Adequacy: Alternative Thresholds and the Importance of Future Eligibility in Defined Contribution Retirement Plans
NEW RSPM ANALYSIS: This article introduces a new method of analyzing the results from the EBRI Retirement Security Projection Model (RSPM®). Instead of simply computing an overall percentage of the simulated life paths in a particular cohort that will not have sufficient retirement income to pay for the simulated expenses, the new method computes what percentage of the households will meet that requirement more than a specified percentage of times in the simulation.
IMPORTANCE OF ELIGIBILITY IN A RETIREMENT PLAN: This article also analyzes the importance of future eligibility for a defined contribution plan, whether or not the employee actually chooses to participate. In essence, this focuses on the public policy implications of having employers sponsor defined contribution plans.
PARTICIPATION IN A 401(K) PLAN: Although the relative impact of future eligibility in a defined contribution plan will depend on several factors, it is clear from the results that there are different percentage levels for each income cohort where these plans make the most difference. For example in the lowest income cohort, the major difference is seen at levels where the households are likely to have insufficient retirement income either 30 or 50 percent of the time. The larger income cohorts also experience a major impact at these levels but the beneficial effect of defined contribution plan eligibility has a much wider range for these individuals. Phrased another way, a crucial factor in the ability of both low- and higher-income workers to achieve future retirement income adequacy is their eligibility to participate in a defined contribution retirement plan.