Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

Papers – Cost of Spousal Health Coverage, and Measuring retirement income adequacy

The Cost of Spousal Health Coverage, and The Role of Social Security, Defined Benefits, and Private Retirement Accounts in the Face of the Retirement Crisis. January 2014, Vol. 35, No. 1. Employee Benefit Research Institute.

  • “As of 2012, 7 percent of employers did not cover spouses when other coverage was available to them and 4 percent of employers with 1,000 or more employees reported not providing such spousal coverage. As of late 2012–early 2013, another 8 percent of large employers were reporting that they planned to exclude spouses from coverage when other coverage was available.
  • A recent decision by United Parcel Service to eliminate health benefits for spouses who were eligible for coverage through their own employer may be a tipping point in employment-based health benefits, in part due to provisions in the Patient Protection and Affordable Care Act (PPACA).
  • This study documents that spouses, on average, cost more to cover than otherwise comparable policyholders. This, in conjunction with the latitude offered by PPACA, makes spousal coverage a target for employers seeking ways to lower their health care expenditures. However, this analysis finds that working and non-working spouses are likely quite different in their use of health services. Therefore, the strategy of not covering spouses who are employed may have unintended consequences for employers.
  • For years, EBRI research has documented and quantified the role of Social Security, defined benefit and private retirement accounts on retirement income adequacy for Baby Boomers and Gen Xers in the United States. This report summarizes that research and presents new evidence on the importance of 401(k) plans for workers currently entering the workforce.
  • EBRI’s modeling shows a substantial improvement in in the probability of attaining a financially successful retirement if workers are eligible for automatic enrollment in a 401(k) plan, compared with voluntary enrollment.
  • Assuming current Social Security benefits are not reduced, between 83 and 86 percent of workers with more than 30 years of eligibility in a voluntary enrollment 401(k) plan are simulated to have sufficient 401(k) accumulations that, combined with Social Security retirement benefits, will be able to replace at least 60 percent of their age-64 wages and salary on an inflation-adjusted basis. The same analysis under automatic enrollment shows the probability of success increases substantially: 88–94 percent would be successful.”

Leave a reply