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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
from Spencer’s Benefits Reports: The Bureau of Labor Statistics (BLS) recently released detailed statistics regarding the types of health care and retirement benefit plans provided in private industry. The data for the report, National Compensation Survey: Employee Benefits in Private Industry in the United States, 2005, was compiled from June 2004 through December 2005; thus, the data has a 2005 reference date. The BLS separately publishes more recent statistics on the availability of specific employee benefits.
The 2005 BLS survey reported on a variety of health care benefits, including medical, prescription drug, dental, and vision care.
In 2005, the BLS found that 100% of private industry workers with health insurance had coverage for hospital room and board, 97% were covered for inpatient and outpatient surgery, 81% had access to home health care, and 76% had coverage for well-baby care. Fewer workers had access to hearing care (25%) and home hospice care (13%). These levels of coverage were relatively consistent through occupational group, industry, establishment size, and union status.
The average annual health care deductible for all private industry workers was $460 for individual coverage and $1,128 for family coverage in 2005. Union workers had a lower average deductible than nonunion workers. For union workers, the average deductible was $334 for individual coverage and $658 for family coverage, compared with $482 for individual coverage and $1,208 for family coverage for nonunion workers. The survey also found that the average deductible was higher for those who make an average wage of less than $15 per hour, compared with those who make more than $15 per hour. In 2005, the average deductible for those making less than $15 per hour was $485 for individual coverage and $1,204 for family coverage. For those making more than $15 per hour, the average individual deductible was $438 and the family deductible was $1,067.
The BLS found that the average annual out-of-pocket maximum for all workers was $1,898 for individual coverage and $3,892 for family coverage. The annual out-of-pocket maximum was lower for union workers than for nonunion workers. For union employees, the annual out-of-pocket maximum was $1,571 for individual coverage and $3,170 for family coverage, compared with $1,952 for individual coverage and $3,988 for family coverage for nonunion workers.
In examining outpatient prescription drug benefits, the BLS found that 100% of workers with prescription drug plans received coverage for brand-name drugs, but only 1% were provided full coverage. Sixty-five percent had to pay a copayment per prescription, and the average copayment for brand-name drugs was $20. The BLS also found that 89% of private industry workers had a higher reimbursement for generic drugs, and 77% had coverage for mail-order drugs.
In 2005, 73% of workers were subject to a separate dental deductible. The average annual employee dental deductible was $51. The survey also noted that 56% of workers had different deductibles for individual and family coverage. The family dental deductible was twice the individual deductible in 12% of the plans, while the family deductible was three times the individual deductible in 42% of plans. In addition, 88% of dental plans specified a yearly maximum; the average yearly maximum was $1,321.
For private industry workers who participated in a vision plan, 29% received vision exams covered in full, 20% received a scheduled cash allowance for vision exams, and 48% were required to pay a copayment. Eyeglasses were covered in full by only 13% of plans, and contact lenses were covered in full by only 8% of plans. The majority of workers received a scheduled cash allowance for both eyeglasses (50%) and contacts (60%).
The BLS classified retirement benefits as either defined benefit or defined contribution plans.
In 2005, 53% of defined benefit plans provided benefits based on earnings, while 28% provided benefits based on an integrated formula. Twenty percent of defined benefit plans were subject to a maximum level of benefits. New employees were eligible to participate in 93% of defined benefit plans, but 72% of the plans had minimum age or service requirements. Nearly half (46%) of defined benefit plans had an age requirement of age 21, and 20% of plans had a service requirement of one year.
The BLS found that 82% of defined benefit plans allowed for early retirement, and 76% provided disability retirement benefits. More than 50% of defined benefit plans allowed lump sum benefits at retirement: 43% of these allowed a full lump sum, while 9% provided a partial lump sum distribution with a reduced annuity.
Immediate full vesting was available in only 2% of defined benefit plans. Seven percent of defined benefit plans used a graded vesting schedule. In contrast, 89% of plans used a cliff vesting schedule; of the plans that used cliff vesting, 2% vested in fewer than five years, 84% vested in five years, and 2% vested in ten years.
The BLS found that 23% of workers participated in cash balance plans. Seventeen percent of plans received a flat percentage contribution. The average flat percentage contribution was 4.5%. For the remaining cash balance plans, the contributions were based on age (58%), service (41%), earnings (14%), or the Social Security wage base (10%).
Although the BLS survey notes that 92% of workers were covered by a 401(k) plan, the defined contribution portion of the BLS report divided 401(k) participants into several different defined contribution categories, including savings and thrift plans and deferred profit-sharing plans.
Savings and thrift plans were defined by the BLS as plans where “employees may contribute a predetermined portion of earnings of which the employer matches all or part.” Deferred profit-sharing plans were defined as plans in which “a company credits a portion of company profits to employees’ accounts. Plans may establish a formula for sharing profits, but this is not a requirement. Most plans hold money in employee accounts until retirement, disability, or death.”
Most of the BLS defined contribution data focused on savings and thrift plans. The BLS found that 65% of private industry workers participated in a savings or thrift plan, and the average maximum employee contribution to a savings or thrift plan was 18.4% of earnings. Most employers specified a matching percentage (67%).
The BLS found that for private industry workers in 2005, pretax contributions were allowed in 99% of savings or thrift plans, transfers/rollovers of contributions were allowed in 80% of plans, immediate full vesting was available in 22% of plans, and automatic enrollment was a feature of 6% of plans.
The BLS also found that 30% of private industry workers participated in a deferred profit-sharing plan. In 62% of these plans, the allocation of employer contributions to individual accounts was done proportional to earnings. In 64% of the cases, the employer contribution was based on a stated formula.
For more information on the BLS report, visit http://stats.bls.gov/ncs/ebs/sp/ebbl0022.pdf.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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