EB BL 04/01/96 EE BEN SMALL PRIV ESTAB 1994

Employee Benefits in Small

Private Establishments, 1994

U.S. Department of Labor

Robert B. Reich, Secretary

Bureau of Labor Statistics

Katharine G. Abraham, Commissioner

February 1996

Bulletin 2475
Preface

This bulletin presents results of a 1994 Bureau of

 Labor Statistics survey of the incidence and detailed provisions of selected employee benefit plans in small private

establishments. The survey provides representative data for

49 million employees in the Nation’s private nonagricultural

industries. Appendix A provides a detailed description of

the coverage and statistical procedures used in the survey.

The 1994 Employee Benefits Survey reports on benefits

provided to employees in establishments with fewer than

100 workers in all private nonfarm industries. This is the

third time this survey was conducted; the first small establishment survey was conducted in 1990 and another in 1992.

Between 1979 and 1986, the survey provided benefits data

on full-time employees in medium and large establishments,

those with either 100 or 250 employees or more, depending

on the industry; coverage in the services industries was

limited. The 1987 survey examined benefits provided to fulltime employees in State and local governments with 50 employees or more. In 1988, 1989, 1991, and 1993, expanded

surveys of medium and large establishments covered fulltime employees in establishments employing 100 workers

or more in all private industries.

Beginning in 1990, the Employee Benefits Survey included both full-time and part-time employees in all private

industries (regardless of employment) and State and local

governments. In that year, the survey covered small private

establishments and governments. At the present time, small

private establishments and State and local governments are

surveyed in even-numbered years, and medium and large

private establishments are surveyed in odd-numbered years.

The 1994 Employee Benefits Survey provides a “survey

highlights” section (chapter 1) with a number of key findings for major benefits, such as time-off benefits; disability

benefits; medical, dental, and vision care; life insurance;

and defined benefit pension and defined contribution plans.

Individual chapters, with general information and details

describing the benefit provisions, follow along with the respective tables for each benefit.

Data for this bulletin were compiled and analyzed in the

Division of Occupational Pay and Employee Benefits

Levels by Cathy Baker, Iris Díaz, Kenneth Elliott, Ann

Foster, John Foster, Avy Graham, Robert Grant, Jake Kane,

Jonathan Kelinson, Natalie Kramer, Marc Kronson, James

Moore, Laura Scofea, Patrick Seburn, Cynthia Thompson,

Jerline Thompson, and Arthur Williams, under the direction of Allan Blostin, James Houff, and John Morton. Text

was prepared for publication by Mahin Eslami.

Computer programming and systems design for the survey were provided by Mary Constable, Mohamed Elzein,

Aholivah Maier, Lien Nham, Pat O’Brien and Cheryl Sims

of the Division of Directly Collected Periodic Surveys,

under the direction of Leslie Chappel. Thomas Kelly and

Charlotte Mueller of the Statistical Methods Group (Office

of Compensation and Working Conditions) were responsible

for the sample design, nonresponse adjustments, sample error

computations, and other statistical procedures, under the direction of Terry Burdette. Fieldwork for the survey was directed by the Bureau’s Assistant Regional Commissioners

for Operations.

The public may access a wide range of Bureau of Labor

Statistics data and information, including Employee Benefits Survey data, through the Bureau’s World Wide Web

site at: http://stats.bls.gov./blshome.html

Bureau of Labor Statistics data are also accessible on the

Internet through Anonymous FTP or Gopher at: stats.bls.gov

Questions on the data in this publication should be referred to the staff of the Employee Benefits Survey at (202)

606-6222. Sensory impaired individuals may obtain information in this publication upon request. Voice phone: (202)

606-7828; TDD phone: (202) 606-5897; TDD message referral phone: 1-800-326-2577. Material in this publication

is in the public domain and, with appropriate credit, may be

reproduced without permission.

Pictured on the cover of this bulletin is Shuffleton’s Barbershop by Norman Rockwell, (c) 1950, The Curtis Publishing Company.
Contents

Chapter 1. Results of the 1994 survey ..................................................................................................................... 1

Work schedules, paid time off, and parental leave................................................................................................ 1

Disability benefits .................................................................................................................................................. 2

Health care ............................................................................................................................................................. 2

Life insurance ......................................................................................................................................................... 2

Defined benefit and defined contribution plans .................................................................................................... 3

Flexible benefits plans and reimbursement accounts ............................................................................................ 3

Other benefits ......................................................................................................................................................... 3

Chapter 2. Work schedules, paid time off, and parental leave ................................................................................ 11

Work schedules ...................................................................................................................................................... 11

Paid time off ........................................................................................................................................................... 11

Paid holidays .................................................................................................................................................... 11

Paid vacations ................................................................................................................................................... 11

Paid personal leave ........................................................................................................................................... 11

Paid funeral leave, jury-duty leave, and military leave .................................................................................. 11

Family leave ........................................................................................................................................................... 12

Chapter 3. Disability benefits .................................................................................................................................. 20

Paid sick leave ........................................................................................................................................................ 20

Sickness and accident insurance ............................................................................................................................ 21

Long-term disability insurance .............................................................................................................................. 21

Chapter 4. Health care ............................................................................................................................................. 35

Medical care ........................................................................................................................................................... 35

Employee contributions ................................................................................................................................... 35

Type of medical care plans .............................................................................................................................. 36

Fee-for-service plans ........................................................................................................................................ 36

Preferred provider organizations ..................................................................................................................... 36

Health maintenance organizations ................................................................................................................... 36

Cost containment ............................................................................................................................................. 37

Hospital coverage ............................................................................................................................................. 37

Alternatives to hospitalization ......................................................................................................................... 37

Surgical coverage ............................................................................................................................................. 38

Outpatient physicians visits and diagnostic services ...................................................................................... 38

Prescription drug benefits ................................................................................................................................ 38

Mental health coverage and substance abuse treatment ................................................................................. 39

Other medical beneifits .................................................................................................................................... 39

Pre-existing condition limitation ..................................................................................................................... 40

Coverage for retired workers ........................................................................................................................... 40

Dental care ............................................................................................................................................................. 40

Vision care .............................................................................................................................................................. 41
Contents—Continued

Chapter 5. Life insurance ......................................................................................................................................... 47

Types and amounts of benefit formulas ................................................................................................................. 47

Coverage for older active workers and retirees ..................................................................................................... 47

Related protection .................................................................................................................................................. 48

Service requirements.............................................................................................................................................. 49

Accidental death and dismemberment .................................................................................................................. 49

Survivor income benefits ....................................................................................................................................... 49

Chapter 6. Defined benefit plans ............................................................................................................................. 56

Benefit formulas ..................................................................................................................................................... 56

Private benefits and Social Security payments...................................................................................................... 57

Maximum and minimum benefit provisions ......................................................................................................... 57

Methods of payment .............................................................................................................................................. 57

Survivor annuities .................................................................................................................................................. 57

Preretirement survivor benefits .............................................................................................................................. 58

Normal retirement .................................................................................................................................................. 58

Early retirement ..................................................................................................................................................... 58

Disability retirement .............................................................................................................................................. 59

Vesting .................................................................................................................................................................... 59

Portability ............................................................................................................................................................... 60

Preretirement pension increases ............................................................................................................................ 60

Employee contributions ......................................................................................................................................... 60

Chapter 7. Defined contribution plans..................................................................................................................... 61

Plan types ............................................................................................................................................................... 61

Savings and thrift plans.......................................................................................................................................... 61

Employer contributions .................................................................................................................................... 62

Employer-matching contributions ................................................................................................................... 62

Investment decisions ........................................................................................................................................ 62

Withdrawals and loans ..................................................................................................................................... 62

Distribution....................................................................................................................................................... 62

Participation requirements ............................................................................................................................... 63

Vesting .............................................................................................................................................................. 63

Deferred profit-sharing plans ................................................................................................................................. 63

Money purchase pension plans .............................................................................................................................. 63

Stock plans ............................................................................................................................................................. 63

Simplified employee pension plans ....................................................................................................................... 63

Cash or deferred arrangements .............................................................................................................................. 63

Chapter 8. Flexible benefits plans and reimbursement accounts ............................................................................ 65

Chapter 9. Benefits by selected characteristics ....................................................................................................... 67

Benefits in small independent businesses.............................................................................................................. 67

Benefits by geographic region ............................................................................................................................... 68

Benefits by industry ............................................................................................................................................... 68

Benefits by union status ......................................................................................................................................... 68

Benefits for part-time employees .......................................................................................................................... 68

Appendixes:

A. Technical note ................................................................................................................................................... 81

B. Survey response ................................................................................................................................................. 84

C. Availability of survey data ................................................................................................................................ 93
Contents—Continued

Tables:

Page

Full-time employees in small private establishments, 1994:

1. Selected benefits: Percent participating .......................................................................................................... 4

2. Selected benefits: Number participating ......................................................................................................... 5

3. Other benefits: Percent eligible ....................................................................................................................... 6

4. Other benefits: Number eligible ...................................................................................................................... 7

5. Insurance and retirement plans: Type of plan sponsor.................................................................................... 8

6. Insurance and retirement plans: Type of plan financing ................................................................................. 9

Work schedules:

7. Hours scheduled per week and per day ........................................................................................................... 13

8. Type of work schedule ..................................................................................................................................... 13

Paid time off:

9. Holidays and vacations: Average number of days........................................................................................... 13

10. Holidays: Number of days provided each year ............................................................................................... 14

11. Holidays: Policy on holidays that fall on a regularly scheduled day off........................................................ 14

 Vacations:

12. Amount provided for selected periods of service .................................................................................... 15

13. Length of service required to take vacation ............................................................................................. 16

14. Unused vacation policy ............................................................................................................................. 16

15. Average number of days by length of service and unused vacation policy............................................. 17

16. Personal leave: Number of days provided per year ........................................................................................ 17

17. Funeral leave: Number of days available per occurrence ............................................................................... 18

18. Jury-duty leave: Number of days available per occurrence ............................................................................ 18

19. Military leave: Number of days available per year ......................................................................................... 19

Family leave:

20. Unpaid family leave: Duration of benefits ...................................................................................................... 19

Short-term disability coverage:

21. Participation in sickness and accident insurance plans and paid sick leave plans ......................................... 23

Paid sick leave:

22. Type of provision ............................................................................................................................................. 23

 Annual plans:

23. Number of days ......................................................................................................................................... 24

24. Average number of days at full pay ........................................................................................................... 25

25. Unused sick leave policy and carryover provisions ................................................................................. 25

26. Average number of days at full pay by unused sick leave policy ............................................................ 26

27. Length-of-service requirements for participation ......................................................................................... 26

28. Other uses of sick leave ................................................................................................................................. 27

Sickness and accident insurance:............................................................................................................................. 27

30. Fixed percent of earnings amounts .................................................................................................................. 28

31. Maximum benefits based on percent of earnings formulas ............................................................................ 28

32. Minimum benefits based on percent of earnings formulas ............................................................................. 29
Contents—Continued

Tables—Continued

Page

33. Type of waiting period ..................................................................................................................................... 29

34. Duration of benefits ......................................................................................................................................... 30

35. Eligibility requirements ................................................................................................................................... 30

Long-term disability insurance:

36. Summary of provisions .................................................................................................................................... 31

37. Benefit waiting period .................................................................................................................................... 31

39. Maximum benefits based on percent of earnings formulas ............................................................................ 32

40. Limits on disability income ............................................................................................................................. 33

41. Duration of payments ...................................................................................................................................... 33

42. Eligibility requirements ................................................................................................................................... 34

43. Survivor benefits .............................................................................................................................................. 34

44. Coverage for mental illness ............................................................................................................................. 34

Medical care:

45. Contributory status by funding arrangement................................................................................................... 42

46. Amount and type of employee contributions for individual coverage ........................................................... 43

47. Amount and type of employee contributions for family coverage ................................................................. 44

48. Fee arrangement ............................................................................................................................................... 45

49. Effect of retirement on coverage ..................................................................................................................... 45

50. Source of plan funding on retiree medical care benefits ................................................................................ 46

Dental care:

51. Fee arrangement ............................................................................................................................................... 46

Vision care:

52. Fee arrangement ............................................................................................................................................... 46

Life insurance:

53. Summary of provisions .................................................................................................................................... 49

54. Method of determining basic coverage ........................................................................................................... 49

55. Flat dollar benefit amounts .............................................................................................................................. 50

56. Multiple of earnings benefit amounts.............................................................................................................. 51

57. Maximum benefits placed on multiple of earnings formulas ......................................................................... 52

58. Minimum benefits placed on multiple of earnings formulas.......................................................................... 53

59. Retiree coverage............................................................................................................................................... 53

60. Reduction in benefits for retirees .................................................................................................................... 53

61. Methods of reducing benefits for retirees ....................................................................................................... 54

62. Supplemental coverage .................................................................................................................................... 54

63. Availability of supplemental coverage by type of basic plan ......................................................................... 54

64. Dependent coverage ......................................................................................................................................... 55

65. Accidental death and dismemberment: method and amount of coverage ...................................................... 55

66. Eligibility requirement..................................................................................................................................... 55

Flexible benefits plans:

67. Flexible benefits plans and reimbursement accounts: Eligibility ................................................................... 66

68. Reimbursement accounts: Eligibility by expenses covered............................................................................ 66
Contents—Continued

Table—Continued

Page

Full-time employees in small independent businesses, 1994:

69. Summary: Participation in selected employee benefits programs ................................................................... 69

70. Other benefits: Eligibility for specific benefits................................................................................................ 70

Benefits for full-time employees by geographic region:

71. Summary: Participation in selected employee benefit programs ................................................................... 71

72. Other benefits: Eligibility for specified benefits............................................................................................. 72

Benefits for full-time employees by industry:

73. Summary: Participation in selected employee benefit programs, goods-producing

 industries ........................................................................................................................................................ 73

74. Other benefits: Eligibility for specified benefits, goods-producing industries ............................................... 74

75. Summary: Participation in selected employee benefit programs, service-producing

 industries ....................................................................................................................................................... 75

76. Other benefits: Eligibility for specified benefits, service-producing industries ............................................. 76

Benefits for full-time employees by union status:

77. Summary: Participation in selected employee benefit programs ................................................................... 77

78. Other benefits: Eligibility for specified benefits............................................................................................. 78

Part-time employees in small private establishments, 1994:

79. Summary: Participation in selected employee benefit programs ................................................................... 79

80. Other benefits: Eligibility for specified benefits............................................................................................. 80

Appendix tables:

A1. Survey scope: Full-time employees ................................................................................................................ 87

A2. Survey scope: Part-time employees ................................................................................................................ 88

Variances: Average number of–

A3. Holidays and vacation days ..................................................................................................................... 89

A4. Vacation days by unused vacation policy ................................................................................................ 90

A5. Annual sick leave days............................................................................................................................. 91

A6. Annual sick leave days by accumulation policy ..................................................................................... 92
Chapter 1. Results of the 1994 Survey

The Bureau’s 1994 survey of small private industry

establishments provides data on employee work schedules

and develops information on the incidence and detailed

characteristics of employee benefits paid for, at least in part,

by the employer.1 These benefits include holidays, vacations, and personal, funeral, jury-duty, military, family, and

sick leave; sickness and accident, long-term disability, and

life insurance. Limited data also were provided for medical, dental, and vision care, and private retirement plans.

Because the survey data are limited to formal plans, this

bulletin may understate the extent of certain benefits.

More detailed data for medical, dental, and vision care

and private retirement plans were also collected; however,

they did not meet publication standards. For a discussion on

publication standards, see appendix B.

Data also are collected on the incidence of several other

benefits, including severance pay, child-care assistance,

wellness programs, employee assistance programs, and educational assistance. In addition, information was obtained

on flexible benefits plans, reimbursement accounts, and

unpaid family leave.

The 1994 survey collected information on full- and parttime employees who were so classified in accordance with

their employers’ practices. Part-time workers typically are

scheduled to work fewer hours per week than full-time workers engaged in the same type of work activity. In addition,

data were also collected on the incidence of employee benefits by union status, broad industry grouping, and broad

geographic regions.

Major highlights of the survey for full-time employees in

small private establishments are reported later in this chapter. Detailed information on the provisions of the benefits

studied appears in chapters 2-8.

Among the most frequently observed benefits provided

to full-time employees in small private establishments

in 1994 were medical care, life insurance, holidays, vacations, and paid sick leave; each of these benefits was provided to the majority of full-time workers (tables 1-2). Incontrast, such benefits as paid family leave, personal leave,

dental care, defined benefit pension plans, sickness and accident insurance, and long-term disability insurance were

less prevalent among full-time workers.

Paid time off, and family leave

More than three-quarters of full-time employees covered by the survey had weekly work schedules of 40 hours,

based on five 8-hour days. The remainder predominantly

worked 7 or 71⁄2 hours a day for 5 days a week. (See chapter

2.)

Vacation leave was the most prevalent type of paid timeoff benefit. Paid vacations, provided to 7 out of 8 full-time

employees, averaged 8 days after 1 year of service, 13 days

after 10 years of service, and 15 days after 25 years of service. Virtually all employees covered by vacation plans were

required to work a specified minimum period of time before being able to take a vacation. For just over three-fifths

of the workers, the minimum was 1 year. One-fourth of the

workers were allowed to carry-over at least some of their

unused vacation days into the following year; slightly over

one-fifth could cash in some or all of their vacation days at

the end of the year.

When other types of leave were provided, data revealed

the following:

· Four holidays, with an average of 8 days per year;

· One-half of workers were eligible for paid leave to

attend funerals for family members (usually 3

days); eligibility for funeral leave was more

common among white-collar workers than among

blue-collar workers;

· Nearly three-fifths of the workers were covered by

jury duty leave, virtually always on as-needed

basis;

· Just over one-tenth of the workers were provided paid

personal leave, with the average being 3 days per

year;

· Just under one-fifth of the workers were provided

coverage for military leave, with an average of 7

days per year.

The Employee Benefits Survey measured the incidence

of formal family leave benefits for the first time in 1994.

Previously, the survey generally reported only on maternity

and paternity leave. The passage of the Federal Family and

Medical Leave Act of 1993 requires employers to provide

1

There are a few exceptions to this general rule. The survey provides

estimates on the availability of postretirement medical care and life insurance, dependent life insurance, supplemental life insurance, and long-term

care insurance even if an employee or retiree must pay for such coverage

fully. This is because the guarantee of insurability and availability of coverage at group premium rates can be considered a benefit. In addition, reimbursement accounts, salary reduction plans, and family leave plans are tabulated even if the employer bears no cost beyond administrative expenses.
the benefit formula was 60 percent of monthly pay. Eightythree percent of workers with percent of earnings benefits

were subject to a monthly dollar maximum, averaging $6,400

per month. Twenty-eight percent of workers with LTD benefits were subject to a maximum imposed on all sources of

disability income. Such maximums were generally 70 percent or more of predisability earnings.

Other LTD features included the following:·

· Four-fifths of participants had their coverage wholly

employer financed;

· Just over two-thirds were in plans that included

coverage for disabilities due to mental illness,

genrally with limits restricting the duration of

benefits to 24 months.

Health care

Medical care was among the most widespread benefits

for full-time employees in small private establishments__66

percent of workers participated in such plans. Participation

in medical plans varied widely across occupational

groups__80 percent of professional, technical, and related

employees were in medical plans compared with 57 percent of blue-collar and service employees.

Other health-related benefits were less widespread__28

percent of full-time employees participated in a dental care

plan, and 10 percent had vision care coverage. (See chapter

4.)

Between 1992 and 1994, both the percentage of workers contributing to medical plans and the amount of their

monthly contributions continued to rise.

Just over one-half (52 percent) of all medical care participants had to contribute to the cost of their individual

coverage, compared to 47 percent in 1992. Three-fourths

paid at least part of the cost for family coverage, about the

same as in 1992. When workers contributed, their fixed

monthly premiums averaged $41 for individual coverage

and $160 for family coverage ($37 and $151, respectively

in 1992). Just over one-half of dental participants had to

contribute toward the cost of individual coverage, and

almost three-fourths had to contribute to their family coverage.

Just over two-fifths of medical care participants were

covered by non-traditional plans, almost always health maintenance organizations (HMO’s) or preferred provider organizations (PPO’s). The remainder of the participants were

in traditional fee-for-service plans. In 1992, the last time

the small private establishment survey was conducted, onethird of workers were enrolled in non-traditional plans.

Life insurance

Life insurance protection was available to 61 percent of

full-time employees in small private establishments in 1994.

(See chapter 5.) Employers paid the full cost of basic life

insurance for 4 out of 5 full-time employees with the

employees with up to 12 weeks of unpaid leave for the birth

or adoption of a child and family illness (employee, child,

spouse, or parent). For the most part, these provisions apply

to employees with 1 year of service who work 1,250 hours

during the year, and who are employed by companies with

50 or more workers. There is no mandate to provide paid

leave. In 1992, prior to passage of the Family and Medical

Leave Act, 18 percent of full-time employees in small private establishments had unpaid maternity leave and 8 percent had paternity leave benefits available to them. In 1994

after passage, 47 percent had an unpaid family leave benefit. In both years, paid benefits were rare.

Disability benefits

Employees may be protected from loss of income during

illnesses or injuries by sick leave, sickness and accident insurance, and long-term disability insurance. (See chapter

3.) Short-term disability protection, through sick leave, sickness and accident insurance, or both, was provided to 61

percent of full-time employees. Fifty percent of employees

were covered by paid sick leave and 26 percent were in

plans with sickness and accident coverage. Twenty percent

of full-time employees were covered by long-term disability (LTD) insurance. Although sick leave and LTD insurance were more prevalent among white-collar workers compared to blue-collar and service workers, there was little

variation among occupational groups for sickness and accident insurance.

Survey data on paid sick leave indicate that four-fifths

of covered workers were allowed a fixed number of paid

sick days per year, with the average being 8 days after 1

year of service, 10 days after 5 years, 12 days after 15 years,

and 13 days after 25 years. Two-fifths of full-time employees covered by annual sick leave plans were allowed to carry

over and accumulate unused sick leave from year to year,

but most of these workers had limits on the amount of sick

leave that could be carried over.

Twenty-six percent of all workers were covered by sickness and accident insurance, and among them:

· One-half had to meet an eligibility requirement

before being able to join the plan, generally 3

months or less;

· Three-fifths had their benefits fully paid by their

employer;

· Four-fifths had their benefits determined by a fixed

percentage of earnings, usually 50, 60, or 67

percent; these benefits typically had a dollar limit

on the amount of the weekly benefit, with the

average maximum being $374;

· Most others had their benefits defined as a flat dollar

amount per week that averaged $137.

Almost all (97 percent) of full-time workers with longterm disability insurance protection received their benefit

as a fixed percent of predisability earnings. For 72 percent,
Reimbursement accounts and flexible benefits

plans

Reimbursement accounts allow employees to use pretax

dollars to pay for certain expenses not covered by benefit

plans (for example, employee premium costs and plan

deductibles). One-fifth of full-time employees were covered by employer-sponsored reimbursement accounts.

· Three-quarters of employees with reimbursement

accounts could use them to pay for health plan

premiums;

· One-half of employees with reimbursement accounts

could allocate funds for medical care deductibles,

coinsurances, and other health expenses not

covered by their medical plan or for dependent care

expenses.

Employees in small private establishments occasionally

received their benefits as part of a package, complete with

options. These benefit packages are known as flexible benefits or cafeteria plans. (See chapter 8.) Three percent of

full-time employees had flexible benefits plans.

Other benefits

In addition to the major benefit areas just described, the

survey estimated the incidence of 16 other benefits (tables

3-4). These data show the percent of workers eligible for a

specific benefit, but not the proportion of employees actually taking advantage of that benefit.

Of note, in small private establishments:

· About 1 out of 2 employees were eligible for cash

nonproduction bonuses, the most common other

benefit studied;

· Three out of 8 employees were eligible for jobrelated educational assistance; assistance from nonjob-related training was rare;

· One out of 7 employees were eligible for employee

assistance programs (referral and/or services for

alcohol and drug abuse, marital difficulties, and

financial, legal, and emotional problems);

· One out of 3 employees were eligible for eldercare

benefits, an 11-fold increase from 2 years earlier,

attributable to passage of the Family and Medical

Leave Act of 1993

. Employee wellness programs, long-term care

insurance, and child care benefits were very rare.

benefit. Life insurance benefits for full-time employees included the following:

· Two-thirds of participants had a flat dollar amount

of insurance; this type of benefit was more

common among blue-collar workers than among

white-collar workers, with the average flat dollar

amount being $15,900;

· One-third of participants were covered by a multipleof-earning formula, most often one or two times

earnings; this formula for life insurance benefits

was more common for white-collar workers than

blue-collar workers; 

· Three-tenths had life insurance benefits supplementing their basic benefit; the employee almost

always paid the full cost of supplemental life

insurance;

· Three-tenths had dependent life insurance protection.

Accidental death and dismemberment insurance was available to almost one-half of full-time employees. This insurance provides additional benefits if a worker dies or loses

an eye or a limb in an accident.

Defined benefit and defined contribution plans

Two-fifths (42 percent) of all full-time workers in small

private establishments were covered by at least one retirement plan. Defined benefit plans, which specify a formula

for determining future benefits, were available to 15 percent of full-time employees. (See chapter 6.)

Defined contribution plans specify employer and employee contributions but do not guarantee future benefits.

Such plans are considered as vehicles for financing retirement benefits because funds usually can not be withdrawn

easily; those funds that may allow periodic withdrawals also

furnish retirement income because early withdrawals of the

employer’s contributions are discouraged. Defined contribution plans were available to one-third of the full-time

workers and were more prevalent among white-collar than

blue-collar workers. (See chapter 7.)

The most frequently observed types of defined contribution plans were savings and thrift plans and deferred profitsharing plans. Seventeen percent of full-time workers were

enrolled in a savings and thrift plan; 13 percent were covered by a deferred profit-sharing plan. Other less common

types of defined contribution plans were money purchase

pension plans (5 percent of employees), employee stock

ownership plans (1 percent of employees) and simplified

employee pension plans (1 percent of employees).
Table 1. Summary: Participation1 in selected employee benefit programs, full-time employees, small private establishments, 1994

(In percent)

Benefit All employees

Professional, technical,

and

related employees

Clerical and sales

employees

Blue-collar and

service employees

Paid time off:

Holidays ........................................................ 82 91 89 75

Vacations ...................................................... 88 92 93 83

Personal leave .............................................. 13 21 17 7

Funeral leave ................................................ 50 58 55 45

Jury duty leave ............................................. 58 74 66 48

Military leave ................................................. 17 23 19 13

Family leave ................................................. 2521

Unpaid family leave .......................................... 47 53 50 43

Disability benefits:

Short-term disability protection ..................... 61 75 69 50

Paid sick leave ............................................ 50 69 61 36

Sickness and accident insurance ............... 26 27 27 25

Long-term disability insurance ...................... 20 36 27 10

Survivor benefits:

Life insurance ............................................... 61 73 68 52

Accidental death and dismemberment ......... 48 60 52 40

Survivor income benefits .............................. 1 1 2 ( ) 1

Health care benefits:

Medical care ................................................. 66 80 70 57

Dental care ................................................... 28 40 31 22

Vision care .................................................... 10 11 11 10

Outpatient prescription drug coverage ......... 60 75 64 51

Retirement income benefits:

All retirement3 ............................................... 42 53 47 35

Defined benefit ........................................... 15 16 16 15

Defined contribution ................................... 34 45 39 26

Savings and thrift .................................... 17 23 20 13

Deferred profit sharing ............................ 13 16 17 10

Employee stock ownership ..................... 1211

Money purchase pension ........................ 5954

Simplified money purchase ..................... 1111

Cash or deferred arrangements:

With employer contributions ...................... 20 28 23 15

Salary reduction ...................................... 20 28 23 15

Savings and thrift ................................... 17 22 19 13

Deferred profit sharing ........................... 2422

Money purchase pension ...................... 1 2 1 2 ( )

Deferral of profit sharing allocation ......... 2 ( ) 2 ( ) 2 ( ) –

Other4 ...................................................... 2 ( ) 2 ( ) 2 ( ) 2 ( )

No employer contributions ......................... 3532

Other benefits:

Stock option .................................................. 2 ( ) 2 ( ) 2 ( ) 2 ( )

Stock purchase ............................................. 2 ( ) 2 ( ) 1 2 ( )

Cash profit-sharing only ................................ 2 ( ) 2 ( ) 2 ( ) 2 ( )

1 Participants are workers covered by a paid time off, insurance, or retirement

plan. Employees subject to a minimum service requirement before they are

eligible for benefit coverage are counted as participants even if they have not met

the requirement at the time of the survey. If employees are required to pay part

of the cost of a benefit, only those who elect the coverage and pay their share are

counted as participants. Benefits for which the employee must pay the full

premium are outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded.

2 Less than 0.5 percent. 3 Includes defined benefit pension plans and defined contribution retirement

plans. The total is less than the sum of the individual items because many

employees participated in both types of plans. 4 Includes required contributions made to plans on a pretax basis.

 NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dashes indicate no employees in this category.
Table 2. Summary: Participation1 in selected employee benefit programs, full-time employees, small private establishments, 1994

Benefit All employees Professional, technical,

and related employees

Clerical and sales

employees

Blue-collar and service

employees

Total number of employees ......................... 35,909,558 6,571,919 11,629,051 17,708,589

Paid time off:

Holidays ........................................................ 29,554,514 5,978,289 10,313,608 13,262,617

Vacations ...................................................... 31,610,884 6,075,038 10,839,646 14,696,200

Personal leave .............................................. 4,556,591 1,407,964 1,923,672 1,224,955

Funeral leave ................................................ 18,051,479 3,786,748 6,360,946 7,903,784

Jury duty leave ............................................. 20,967,765 4,861,114 7,620,434 8,486,217

Military leave ................................................. 6,012,670 1,489,258 2,241,670 2,281,741

Family leave ................................................. 797,932 307,601 280,567 209,764

Unpaid family leave .......................................... 17,017,951 3,514,768 5,811,929 7,691,254

Disability benefits:

Short-term disability benefits ........................ 21,882,807 4,928,301 8,040,044 8,914,462

Paid sick leave ........................................... 17,976,283 4,510,963 7,112,615 6,352,705

Sickness and accident insurance .............. 9,394,392 1,789,388 3,111,026 4,493,978

Long-term disability benefits ......................... 7,326,421 2,383,331 3,084,701 1,858,389

Survivor benefits:

Life insurance ............................................... 21,955,471 4,829,601 7,903,604 9,222,265

Accidental death and dismemberment ......... 17,189,180 3,968,125 6,087,279 7,133,775

Survivor income benefits .............................. 209,563 44,040 48,058 117,465

Health-care benefits:

Medical care ................................................. 23,536,498 5,262,484 8,167,535 10,106,479

Dental care ................................................... 10,134,942 2,635,308 3,643,540 3,856,094

Vision care .................................................... 3,650,838 723,380 1,244,228 1,683,230

Outpatient prescription drug coverage ......... 21,520,983 4,929,618 7,482,310 9,109,055

Retirement income benefits:

All retirement2 ............................................ 15,151,741 3,496,923 5,482,836 6,171,983

Defined benefit pension .......................... 5,479,569 1,074,348 1,831,678 2,573,544

Defined contribution ................................ 12,130,237 2,927,853 4,569,714 4,632,670

Savings and thrift .................................. 6,101,767 1,491,827 2,339,535 2,270,405

Deferred profit sharing .......................... 4,798,811 1,046,315 1,925,091 1,827,405

Employee stock ownership ................... 490,275 100,476 166,074 223,725

Money purchase pension ...................... 1,795,501 563,625 537,871 694,005

Simplified employee pension ................ 373,407 91,772 92,319 189,316

Cash or deferred arrangements:

With employer contributions ............ 7,104,804 1,826,616 2,659,924 2,618,264

Salary reduction ............................ 7,089,659 1,816,529 2,657,841 2,615,289

Savings and thrift ........................ 5,953,415 1,459,700 2,243,429 2,250,286

Deferred profit sharing ................ 807,810 237,977 267,607 302,226

Money purchase option .............. 328,435 118,851 146,806 62,778

Deferral of profit sharing

allocation ................................. 46,475 6,546 39,929 –

Other3 ............................................ 15,145 10,087 2,082 2,975

No employer contributions .............. 933,220 298,674 347,877 286,669

Other benefits:

Stock option .................................................. 26,733 1,864 6,667 18,201

Stock purchase ............................................. 90,179 18,899 65,856 5,424

Cash profit sharing only ................................ 147,571 15,781 57,943 73,847

1 Participants are workers covered by a paid time off, insurance, or retirement

plan. Employees subject to a minimum service requirement before they are

eligible for benefit coverage are counted as participants even if they have not met

the requirement at the time of the survey. If employees are required to pay part

of the cost of a benefit, only those who elect the coverage and pay their share are

counted as participants. Benefits for which the employee must pay the full

premium are outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded.

2 Includes defined benefit pension plans and defined contribution retirement

plans. The total is less than the sum of the individual items because many

employees participated in both types of plans. 3 Includes required contributions made to plans on a pretax basis.

 NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 3. Other benefits: Eligibility for specified benefits, full-time employees, small private

establishments, 1994

(In percent)

Benefit All

employees

Professional,

technical,

and related

employees

Clerical and

sales

employees

Blue-collar

and service

employees

Income continuation plans:

Severance pay ...................................... 15 24 22 8

Supplemental unemployment benefits 1 ( ) 1 ( ) 1 ( ) 1 ( )

Family benefits:

Employer assistance for child care ....... 1 2 1 1

Employer-provided funds ................... 1 1 1 1 ( )

On-site child care ............................... 1 1 1 ( ) 1

Off-site child care ............................... 1 ( ) – 1 ( ) 1 ( )

Eldercare .............................................. 33 38 35 29

Long-term care insurance ..................... 1 1 1 1 ( )

Health promotion programs:

Wellness programs ............................... 6 8 8 3

Employee assistance programs ........... 15 19 18 11

Miscellaneous benefits:

Employer-subsidized recreation

facilities ........................................... 5 7 5 4

Job-related travel accident insurance ... 13 18 14 10

Nonproduction bonuses ........................ 47 48 49 46

Financial counseling ............................. 2 3 2 2

Subsidized commuting ......................... 1 2 1 ( ) 1 ( )

Sabbatical leave ................................... 1 3 1 1

Education assistance:

Job-related .......................................... 37 49 46 27

Not job-related .................................... 6 7 8 4

Flexible benefits plans .............................. 3 2 5 2

Reimbursement accounts ......................... 19 28 23 13

1 Less than 0.5 percent.

 NOTE: Because of rounding, sums of individual

items may not equal totals. Where applicable, dash

indicates no employees in this category.
Table 4. Other benefits: Eligibility for specified benefits, full-time employees, small private establishments, 1994

Benefit All employees Professional, technical,

and related employees

Clerical and sales

employees

Blue-collar and service

employees

Total number of employees ......................... 35,909,558 6,571,919 11,629,051 17,708,589

Income continuation plans:

Severance pay .............................................. 5,511,001 1,554,248 2,563,704 1,393,049

Supplemental unemployment benefits ......... 84,315 4,906 10,757 68,651

Family benefits:

Employer assistance for child care ............... 429,796 128,827 166,990 139,979

Employer provided funds ........................... 250,509 84,178 108,142 58,190

On-site child care ...................................... 182,802 60,082 33,240 89,480

Off-site child care ...................................... 37,747 – 26,966 10,782

Eldercare ....................................................... 11,698,608 2,490,222 4,118,992 5,089,394

Long-term care insurance ............................. 216,163 89,419 106,582 20,162

Health promotion programs:

Wellness programs ....................................... 2,045,727 508,568 946,556 590,603

Employee assistance programs ................... 5,357,347 1,257,044 2,129,291 1,971,012

Miscellaneous benefits:

Employer-subsidized recreation facilities ..... 1,740,738 451,486 609,881 679,371

Job-related travel accident insurance ........... 4,612,286 1,193,188 1,650,754 1,768,344

Nonproduction bonuses ................................ 16,913,698 3,125,203 5,695,929 8,092,567

Financial counseling ..................................... 723,833 221,510 195,093 307,229

Subsidized commuting ................................. 209,594 120,003 26,561 63,031

Sabbatical leave ........................................... 479,782 164,856 98,044 216,882

Education assistance:

Job-related ............................................ 13,396,251 3,198,088 5,332,846 4,865,317

Not job-related ....................................... 2,032,907 485,961 872,382 674,564

Flexible benefit plans ........................................ 952,485 128,975 526,602 296,907

Reimbursement accounts ................................. 6,664,174 1,814,055 2,620,128 2,229,990

 NOTE: Because of rounding, sums of individual items may not equal totals. Where applicable, dash indicates no employees in this category.
Table 5. Plan administration: Type of plan sponsor for selected employee benefit programs, full-time employees,

small private establishments, 1994

(In percent)

Plan sponsor Medical care1 Life

insurance

Sickness and

accident

insurance

Long-term

disability

insurance

Defined

benefit

pension1

Savings and

thrift1

All participants

Total ............................................ 100 100 100 

Single employer ................................ 95 51 98 

Multiemployer2 .................................. 5 3 1 

Mandated benefits3 .......................... 4 ( ) 46 4 ( ) 

Employer association5 ...................... 4 ( ) 4 ( ) 1 

Professional, technical, and

related

Total ............................................ 100 100 100 

Single employer ................................ 98 56 98 

Multiemployer2 .................................. 1 4 ( ) 1 

Mandated benefits3 .......................... 4 ( ) 43 – 

Employer association5 ...................... 4 ( ) 4 ( ) 1 

Clerical and sales

Total ............................................ 100 100 100 

Single employer ................................ 98 54 97 

Multiemployer2 .................................. 1 2 1 

Mandated benefits3 .......................... 4 ( ) 44 4 ( ) 

Employer association5 ...................... 4 ( ) 4 ( ) 2 

Blue-collar and service

Total ............................................ 100 100 100 

Single employer ................................ 90 47 100 

Multiemployer2 .................................. 10 5 4 ( ) 

Mandated benefits3 .......................... 4 ( ) 48 – 

Employer association5 ...................... 4 ( ) 4 ( ) – 

1 Response to the request for these data was insufficient to show

estimates for medical care, defined benefit pensions, and savings and

thrift plans. 2 Individual employers in the same or in a related industry

contributing a negotiated amount to a trust fund providing benefits for

employees covered under a collective bargaining agreement. 3 The majority of participants with mandated sickness and

accident insurance benefits were covered by State temporary

disability insurance plans. The remaining employees were covered by

the Railroad Unemployment Insurance Act. 4 Less than 0.5 percent. 5 Band of employers in a common trade or business, for example,

savings and loan associations. The plan sponsored by the

association is not negotiated with the employees.

 NOTE: Because of rounding, sums of individual items may not

equal totals. Where applicable, dash indicates no employees in the

category.
Table 6. Plan financing: Source of contributions for selected employee benefit programs, full-time employees, small

private establishments, 1994

(In percent)

Plan financing All employees

Professional,

technical,

and related

employees

Clerical and sales

employees

Blue-collar and

service

employees

Medical care for employees ...................... 100 100 100 100

Wholly employer financed .................... 46 48 43 47

Partly employer financed ..................... 52 50 55 51

Not determinable .................................. 2322

Medical care for family .............................. 100 100 100 100

Wholly employer financed .................... 18 16 14 22

Partly employer financed ..................... 76 78 80 72

Not determinable .................................. 6666

Dental care for employees ........................ 100 100 100 100

Wholly employer financed .................... 44 43 43 46

Partly employer financed ..................... 54 54 55 52

Not determinable .................................. 2322

Dental care for family ................................ 100 100 100 100

Wholly employer financed .................... 23 19 20 29

Partly employer financed ..................... 72 76 75 67

Not determinable .................................. 5554

Life insurance ........................................... 100 100 100 100

Wholly employer financed .................... 82 86 82 79

Partly employer financed ..................... 18 13 17 20

Not determinable .................................. 1 1 1 ( ) 1

sickness and accident insurance .............. 100 100 100 100

Wholly employer financed .................... 63 64 57 68

Partly employer financed ..................... 36 36 42 32

Not determinable .................................. 1 1 ( ) 1 1 ( )

Long-term disability insurance .................. 100 100 100 100

Wholly employer financed .................... 83 86 79 84

Partly employer financed ..................... 17 13 20 16

Not determinable .................................. 1 ( ) 1 1 ( ) 1 ( )

Define benefit pension .............................. 100 100 100 100

Wholly employer financed .................... 97 96 99 96

Partly employer financed ..................... 3414

1 Less than 0.5 percent. NOTE: Because of rounding, sums of individual items may not equal

totals. Where applicable, dash indicates no employees in this category.
A Note on the Tables

The majority of the tables presented throughout this bulletin indicate the percent of all employees, or of a

selected group of employees, covered by particular benefits and benefit features. The survey looks at three

occupational groups: Professional, technical, and related employees; clerical and sales employees; and bluecollar and service employees. Some tables indicate the percent of all employees covered by the survey who

have a certain benefit; other tables show the percent of employees covered by a certain benefit who have a

certain plan feature. Rows where there are no participants reported are deleted from the tables.

For example, table 1 indicates that 66 percent of all full-time employees were covered by a medical care

plan. In chapter 4, most of the tables present data on the percent of workers with medical care who have

certain provisions. Workers with medical care equal 100 percent in these tables, with smaller percentages

indicating the availability of plan features. For example, in table 48, 100 percent refers to those workers with

medical care plans, and 55 percent indicates those workers with medical care covered by a fee-for-service

plan.

 Another type of table estimate presented throughout the bulletin displays average benefit values rather

than percentages of workers. These averages are presented for all covered workers; averages exclude workers

without the plan provision.

The methods used to calculate the average number of paid holidays (table 9) have been revised from those

used in the 1990 and 1992 surveys of small private establishments which overestimated the averages. In 1994,

partial holidays are counted in the average more precisely. Overall, the 1994 average number of paid holidays

is approximately 11⁄2 days less than in the earlier years.

Appendix A discusses all these data calculations in more details.
Chapter 2. Work Schedules, Paid Time Off,

and Family Leave

The majority of full-time employees work a 40-hour week.

Time off with pay is available to employees in several different forms__from a few days of personal leave to annual

vacations of several weeks. The EBS covers the following

paid time-off benefits: Holidays and vacations; and personal,

funeral, jury-duty, and military leave. Paid and unpaid family leave also are surveyed. (Information on paid sick leave

is discussed under disability benefits and appears in

chapter 3.) 

Work schedules

Weekly work schedules of 40 hours are predominant

among the full-time employees covered by the survey of

small private establishments. However, alternatives, such as

35 or 371

/

2

 hours per week, are found among white-collar

workers. A large majority of the workforce covered by the

survey works five 8-hour days (table 7).

Only a small number of workers studied have formal flexible work arrangements, which give employees the opportunity to begin and end work within a range of hours (table

8). Limits on the amount of flexibility vary from plan to

plan but, generally, employees have to be at work during

midday core hours. White-collar workers are more likely to

have flexible work schedules than are blue-collar workers.

Paid time off

Paid holidays. Paid holidays, commonly 6 to 10 days per

year, are provided to most full-time employees. Floating

holidays and “personal holidays,” such as employee birthdays, are included in the holiday plans reported (tables 9-

11). Paid holidays generally commemorate patriotic, cultural, or religious events. Among the paid holidays commonly received are: New Year’s Day; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. Employers may provide additional days for some

holidays, such as the day after Thanksgiving.

When a holiday falls on a scheduled day off, such as a

Saturday or Sunday, another day off is regularly granted to

most employees receiving paid holidays. The remaining

workers usually receive either another day off or an additional day’s pay, depending on when the holiday falls.

Paid vacations. Paid vacations are provided to a large majority of full-time employees in small private establishments

(table 12). Common vacation pay provisions for all employees are 5 or 10 days at 1 year of service, 10 or 15 days at

10 years, and 15 or 20 days at 20 years or more. Plans covering white-collar employees, on average, provide slightly more

vacation days than those for blue-collar employees.

In cases when holiday, vacation, sick, or personal leave

are combined under one leave category and can not be shown

separately, the total amount of leave is reported as vacation

time. For small employers, this was relatively rare. These

consolidated leave plans or “leave banks” have been adopted

by a number of establishments, most notably those that must

always remain open, such as hospitals and nursing homes.

Almost all white-collar employees receive their regular

salaries or earnings during vacation periods. Most blue-collar employees also receive their regular pay; the remainder

receive either a flat-sum payment or payments based on a

percentage of regular earnings. Anniversary-year bonus vacation days, such as an extra week of vacation at 10 and 20

years of service, are included in the count of regular vacation time.

Virtually all vacation plans require workers to complete

a specified period of time before being able to take a vacation (table 13). The most prevalent length-of-service requirement is 1 year.

The survey also examines carry over and cash-in provisions for unused vacation time (tables 14-15). Many fulltime workers are allowed to carry over at least some of their

unused vacation days into the next year; others can cash in

some or all of their vacation days at the end of the year.

However, the majority of workers do not have carryover or

cash-in coverage and lose unused vacation days at the end

of the year. White-collar workers are more likely to have

carryover provisions than blue-collar workers, who, in turn,

often are more likely to receive cash-in provisions.

Paid personal leave. Although most small employers provide paid vacations, relatively few provide formal personal

leave and when they do a large majority provide 3 days or

less (table 16). Such leave allows employees to be absent

from work with pay for a variety of reasons not covered by

other specific leave plans.

Paid funeral leave, jury-duty leave, and military leave. Approximately half of full-time workers in small private establishments are eligible for paid leave to attend funerals of

family members (table 17). Eligible employees usually receive a set number of days off per occurrence. However,
plans vary the number of days off by family relationship to

the deceased. For example, a plan may provide 3 days off

for the death of a spouse, parent, or child, and 1 day off for

the death of other relatives. For employees who do not have

a funeral leave plan, some employers may provide an informal benefit or allow employees to use other types of paid

leave, sick leave to attend a funeral. Most workers are eligible for paid leave while serving as a juror (table 18). Paid

time off for jury duty is usually provided “as needed”; employer payments commonly make up the difference between

the employee’s regular pay and the court’s jury allowance.

Military leave, pay for absence from work to fulfill military

training or duty commitments, often is not available in small

private establishments (table 19). A common provision is 2

weeks per year, but some establishments provide paid military leave as needed. Pay for military leave is either regular

pay or the difference between regular pay and military pay.2

2 For further information on leave items in all sectors, see “Time-off

Benefits in Small Establishments,” Monthly Labor Review, March 1992, pp.

3-8.

Family leave

The Employee Benefits Survey measures the incidence

of formal family leave benefits (table 20). Previously, the

survey estimated parental leave, generally in the form of

maternity and paternity leave. The passage of the Federal

Family and Medical Leave Act of 1993 requires employers

to provide employees with up to 12 weeks of unpaid leave

during any 12-month period for various family matters, including the birth or adoption of a child and for family illness (employee, child, spouse, or parent).3 Generally, these

provisions apply to employees with at least 1 year of service who work 1,250 hours during the year and who are

employed by companies with 50 or more workers. In addition, various States require employers to provide a minimum amount of unpaid parental leave, such as 6 weeks in

Minnesota and 4 months in California.

Paid family leave in small establishments in rare.

3 For more information, see “Parental Leave Benefits Provided by Employers,” Issues in Labor Statistics, Summary 93-1, Bureau of Labor Statistics,

1993.
Table 7. Work schedule: Percent of full-time employees by

hours and days scheduled per week, small private

establishments, 1994

Work schedule

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

work schedule ..................... 35,910 6,572 11,629 17,709

Percent

All types .............................. 100 100 100 100

Hours per week

Under 35 ............................... 4 3 4 5

35 .......................................... 5 5 7 3

Over 35 and under 37.5 ........ 2 2 2 2

37.5 ....................................... 5 7 8 2

Over 37.5 and under 40 ........ 1 1 2 1

40 .......................................... 77 73 70 83

Over 40 ................................. 6 9 7 3

Hours per day

Under 6 ................................. 1 1 1 1

6 ............................................ 1 1 1 1

Over 6 and under 7 ............... 2 1 1 2

7 ............................................ 5 5 7 3

Over 7 and under 8 ............... 8 9 12 4

8 ............................................ 77 73 71 82

Over 8 and under 9 ............... 2 2 2 1

9 ............................................ 1 3 2 1

Over 9 and under 10 ............. 1 1 1 1 ( )

10 .......................................... 2 3 2 3

Over 10 ................................. 1 2 1 ( ) 1

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 8. Work schedule: Percent of full-time employees by

existence of flexible work arrangement, small private

establishments, 1994

Work schedule

All

employees

Professional ,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

work schedule ..................... 35,910 6,572 11,629 17,709

Percent

All types .............................. 100 100 100 100

With fixed work schedule .......... 94 93 92 95

With flexible work schedule ...... 2 3 3 1

With rotating work schedule ..... 1 ( ) 1 ( ) 1 ( ) 1 ( )

With non-fixed work schedule ... 4 3 4 3

Other ......................................... 1 ( ) - - 1 ( )

Data not available ..................... 1 ( ) 1 ( ) 1 ( ) 1 ( )

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 9. Paid holidays and vacations: Average number of

days for full-time employees, small private establishments,

1994

Item

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Paid holidays ............................ 7.5 8.3 7.7 7.1

Paid vacation by minimum

length-of-service

requirement:1

At 1 year2 .............................. 7.8 9.7 8.0 6.9

At 3 years ............................. 9.9 11.3 9.9 9.2

At 5 years ............................. 11.5 13.1 11.6 10.6

At 10 years ........................... 13.4 15.4 13.6 12.5

At 15 years ........................... 14.3 16.3 14.6 13.3

At 20 years ........................... 14.8 16.8 15.2 13.7

At 25 years3 .......................... 15.1 17.0 15.5 14.0

1 Employees are either granted a specific number of days after

completion of the indicated length of service, or accrue days during the next

12-month period. The total number of days are assumed available for use

immediately upon completion of the described length-of-service interval. 2 Employees receiving vacation days, but none at 1 year of service, were

included only for the service periods for which they receive vacations. 3 The average (mean) was essentially the same for longer lengths of

service.

NOTE: Computation of average included partial days and excluded workers

with zero holidays or vacation days. Methods used to calculate the average

number of paid holidays have been revised, to count partial holidays more

precisely. The average holidays in this table are not comparable to those

reported in the 1990 and 1992 surveys of small private establishments.
Table 11. Paid holidays: Percent of full-time employees by

policy on holidays that fall on a regularly scheduled day off,

small private establishments, 1994

Holiday policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid holidays ....................... 29,555 5,978 10,314 13,263

Percent

Total with paid holidays ............ 100 100 100 100

Holiday is not observed ........ 8 6 7 9

Another day off is granted .... 76 86 77 72

Additional day’s pay in lieu

of holiday ........................ 4 3 3 6

Another day off or day’s pay,

depending on when

holiday falls ..................... 7 3 7 8

Another day off or holiday

not observed, depending

on when holiday falls ...... 1 1 1 1

Other provision applies1 ....... 1 2 ( ) 1 1

Holiday policy not

determinable ................... 3 1 3 3

1 Includes plans where the policy differs by holiday. 2 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 10. Paid holidays: Percent of full-time employees by

number of paid holidays provided each year, small private

establishments, 1994

Holiday policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Numbers (in thousands) with

paid holidays ....................... 29,555 5,978 10,314 13,263

Percent

Total with paid holidays ............ 100 100 100 100

Under 5 days ........................ 7 2 5 11

5 days ................................... 5 3 6 6

5.1 - 5.9 days ........................ 1 ( ) 1 ( ) 1 ( ) 1 ( )

6 days ................................... 26 18 27 28

6.1 - 6.9 days ........................ 1 1 1 1

7 days ................................... 16 16 14 18

7.1 - 7.9 days ........................ 1 2 1 1

8 days ................................... 10 12 11 8

8.1 - 8.9 days ........................ 1 1 1 1 ( )

9 days ................................... 8 12 10 5

9.1 - 9.9 days ........................ 1 2 1 1

10 days ................................. 10 13 9 8

10.1 - 10.9 days .................... 1 1 1 ( ) 1 ( )

11 days ................................. 8 9 8 7

11.1 - 11.9 days .................... 1 1 1 1 ( )

12 days ................................. 2 2 2 2

12.1 - 12.9 days .................... 1 ( ) - 1 ( ) -

13 days ................................. 1 1 1 1

Over 13 days ........................ 1 3 1 1

Number of days not

available ......................... 1 1 ( ) 1 ( ) 1

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 12. Paid vacations: Percent of full-time employees by

amount of paid vacation provided at selected periods of

service, small private establishments, 1994

Vacation policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid vacations ..................... 31,611 6,075 10,840 14,696

Percent

Total with paid vacations1 ......... 100 100 100 100

Vacation days by minimum

length-of-service

requirement2

After 1 year of service:

Under 5 days ................ 1 1 1 1

5 days ........................... 50 29 46 62

Over 5 and under 10

days ........................ 2 2 1 3

10 days ......................... 36 50 44 25

Over 10 and under 15

days ........................ 3 6 4 2

15 days ......................... 2 6 1 1

Over 15 and under 20

days ........................ 1 1 1 3 ( )

20 days ......................... 1 2 1 3 ( )

Over 20 days ................ 1 3 1 1

After 3 years of service:

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 15 6 12 22

Over 5 and under 10

days ........................ 3 3 2 5

10 days ......................... 66 63 75 61

Over 10 and under 15

days ........................ 4 7 5 3

15 days ......................... 6 11 4 5

Over 15 and under 20

days ........................ 1 2 1 3 ( )

20 days ......................... 1 3 1 3 ( )

Over 20 days ................ 1 4 1 1

After 5 years of service:

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 11 5 8 15

Over 5 and under 10

days ........................ 2 3 1 3

10 days ......................... 50 39 52 53

Over 10 and under 15

days ........................ 4 5 4 4

15 days ......................... 27 36 30 22

Over 15 and under 20

days ........................ 1 2 1 3 ( )

20 days ......................... 2 4 2 1

Over 20 days ................ 2 6 1 1

See footnotes at end of table.

Table 12. Paid vacations: Percent of full-time employees by

amount of paid vacation provided at selected periods of

service, small private establishments, 1994 — Continued

Vacation policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Percent

After 10 years of service:

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 10 4 8 14

Over 5 and under 10

days ........................ 1 1 3 ( ) 1

10 days ......................... 26 16 26 30

Over 10 and under 15

days ........................ 3 4 2 2

15 days ......................... 44 46 48 40

Over 15 and under 20

days ........................ 3 4 2 3

20 days ......................... 10 17 10 6

Over 20 days ................ 3 8 2 2

After 15 years of service:

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 10 4 8 14

Over 5 and under 10

days ........................ 1 1 3 ( ) 1

10 days ......................... 24 15 24 28

Over 10 and under 15

days ........................ 2 2 2 1

15 days ......................... 34 38 36 32

Over 15 and under 20

days ........................ 2 2 2 1

20 days ......................... 22 28 25 17

Over 20 and under 25

days ........................ 2 3 1 2

25 days ......................... 1 2 1 3 ( )

Over 25 days ................ 3 6 2 1

After 20 years of service:

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 10 4 8 14

Over 5 and under 10

days ........................ 1 1 3 ( ) 1

10 days ......................... 24 14 24 27

Over 10 and under 15

days ........................ 1 2 2 1

15 days ......................... 29 32 29 28

Over 15 and under 20

days ........................ 2 2 2 1

20 days ......................... 24 29 28 18

Over 20 and under 25

days ........................ 2 4 1 3

25 days ......................... 4 5 4 3

Over 25 days ................ 6 10 6 4

See footnotes at end of table.
Table 12. Paid vacations: Percent of full-time employees by

amount of paid vacation provided at selected periods of

service, small private establishments, 1994 — Continued

Vacation policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Percent

After 25 years of service:

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 10 4 8 14

Over 5 and under 10

days ........................ 1 1 3 ( ) 1

10 days ......................... 24 14 24 27

Over 10 and under 15

days ........................ 1 2 2 1

15 days ......................... 29 32 28 27

Over 15 and under 20

days ........................ 2 2 2 1

20 days ......................... 21 27 24 16

Over 20 and under 25

days ........................ 2 3 1 2

25 days ......................... 7 8 9 5

Over 25 and under 30

days ........................ 1 1 3 ( ) 1

30 days ......................... 1 2 1 1

Over 30 days ................ 1 2 1 1

After 30 years of service4

Under 5 days ................ 3 ( ) 1 3 ( ) 3 ( )

5 days ........................... 10 4 8 14

Over 5 and under 10

days ........................ 1 1 3 ( ) 1

10 days ......................... 24 14 24 27

Over 10 and under 15

days ........................ 1 2 2 1

15 days ......................... 28 32 28 27

Over 15 and under 20

days ........................ 2 2 2 1

20 days ......................... 21 27 24 16

Over 20 and under 25

days ........................ 2 3 1 2

25 days ......................... 7 7 9 5

Over 25 and under 30

days ........................ 3 ( ) 1 3 ( ) 3 ( )

30 days ......................... 2 4 1 1

Over 30 days ................ 2 2 1 1

1 Employees receiving no paid vacations in their early years of service

are included in the overall percentage of workers provided paid vacations;

however, they are disregarded in computing the distributions by

length-of-service up to the service period at which they become eligible for

vacations. 2 Employees either are granted a specific number of days after

completion of the indicated length-of-service, or accrue days during the next

12 month period. The total number of days are assumed available for use

immediately upon completion of the described length-of-service interval. 3 Less than 0.5 percent. 4 Provisions were virtually the same after longer years of service.

NOTE: Because of rounding, sums of individual items may not equal totals.

Where applicable, dash indicates no employees in this category.

Table 13. Paid vacations: Percent of full-time employees by

length of service required to take vacation, small private

establishments, 1994

Length-of-service requirement

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid vacations ..................... 31,611 6,075 10,840 14,696

Percent

Total with paid vacations .......... 100 100 100 100

With service requirement ...... 92 90 92 92

1 month ............................. 4 5 3 4

2 months ........................... 1 ( ) 1 1 1 ( )

3 months ........................... 4 6 5 4

4-5 months ........................ 1 ( ) 1 1 1 ( )

6 months ........................... 17 25 22 10

7-11 months ...................... 1 1 ( ) 1 1

1 year ................................ 64 52 59 73

Over 1 year ....................... 1 1 ( ) 1 2

Without service requirement 7 10 7 6

Service requirement not

determinable ................... 1 1 ( ) 2 2

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals.

Where applicable, dash indicates no employees in this category.

Table 14. Paid vacations: Percent of full-time employees by

unused vacation policy, small private establishments, 1994

Policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid vacations ..................... 31,611 6,075 10,840 14,696

Percent

Total with paid vacations .......... 100 100 100 100

Carryover only ...................... 17 27 19 13

Cash-in only .......................... 14 10 14 15

Carryover and cash-in .......... 9 9 7 10

Unused benefit lost ............... 58 53 59 59

Data not available ................. 2 1 1 4

NOTE: Because of rounding, sums of individual items may not equal totals.

Where applicable, dash indicates no employees in this category.
Table 15. Paid vacations: Average number of days by length of service and cash-in/carryover provisions,

full-time employees, small private establishments, 1994

Vacation days by minimum

length-of-service

requirement1

All plans

Cash-in,

carryover,

or both

Carryover

only Cash-in only Cash-in andcarryover

No cash-in or

carryover

After 1 year ............................. 7.8 8.3 9.5 6.5 9.0 7.5

After 3 years ........................... 9.9 10.3 11.2 8.7 11.2 9.6

After 5 years ........................... 11.5 12.1 13.4 10.1 12.9 11.0

After 10 years ......................... 13.4 14.3 16.0 12.1 14.4 12.8

After 15 years ......................... 14.3 15.3 17.2 12.9 15.1 13.7

After 20 years ......................... 14.8 15.9 18.1 13.3 15.5 14.1

After 25 years2 ........................ 15.1 16.2 18.5 13.5 15.9 14.4

1 Employees either are granted a specified number of days

after completion of the indicated length of service or accrue days

during the next 12-month period. The total number of days are

assumed available for use immediately upon completion of the

described length-of-service interval.

2 The average (mean) was essentially the same for longer

lengths of service.

NOTE: Computations of average excluded workers with zero

vacation days.

Table 16. Paid personal leave: Percent of full-time

employees by number of paid personal leave days provided

per year, small private establishments, 1994

Number of days

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid personal leave ............ 4,557 1,408 1,924 1,225

Percent

Total with paid personal leave .. 100 100 100 100

1 day ..................................... 13 11 11 17

2 days ................................... 37 40 43 27

3 days ................................... 18 20 16 20

4 days ................................... 5 4 6 3

5 days ................................... 9 6 9 12

More than 5 days .................. 2 1 3 1

No maximum specified1 ........ 16 18 12 19

Varies by length of service2 .. 6 4 8 5

Number of days not

available ......................... 3 ( ) _ 1 3 ( )

Average

Average days per year ............. 2.62 2.51 2.68 2.65

1 Personal leave provided as needed. 2 The maximum number of days provided was included in the distribution

of personal leave days. 3 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 17. Paid funeral leave: Percent of employees by number

of paid funeral leave days available per occurrence, small

private establishments, 1994

Number of days

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid funeral leave ............... 18,051 3,787 6,361 7,904

Percent

Total with paid funeral leave ..... 100 100 100 100

1 day ..................................... 4 3 4 4

2 days ................................... 9 8 7 10

3 days ................................... 61 59 61 61

4 days ................................... 2 3 2 1

5 days ................................... 8 10 9 7

More than 5 days .................. 1 1 ( ) 1 ( ) 2

No maximum specified2 ........ 15 17 17 14

Number of days varies by

relationship to

deceased3 ...................... 20 20 21 18

Number of days not

available ......................... 1 ( ) 1 ( ) 1 ( ) 1 ( )

Average

Average days per occurence .... 3.08 3.15 3.06 3.07

1 Less than 0.5 percent. 2 Workers were provided as much funeral leave as needed. 3 The maximum number of days provided for any occurence was

included in the distribution of funeral leave days.

NOTE: Because of rounding, sums of individual items may not equal totals.

Table 18. Paid jury-duty leave: Percent of full-time employees

by number of paid jury duty leave days available per

occurrence, small private establishments, 1994

Number of days

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid jury-duty leave ............ 20,968 4,861 7,620 8,486

Percent

Total with paid jury-duty leave .. 100 100 100 100

Under 10 days ...................... 7 4 5 11

10 days ................................. 5 5 6 4

11 - 19 days .......................... 1 1 1 1 ( )

20 days ................................. 1 1 2 1

More than 20 days ................ 1 1 2 1

No maximum specified2 ........ 84 87 85 83

Number of days not

available ......................... 1 ( ) 1 ( ) 1 1 ( )

1 Less than 0.5 percent. 2 Jury-duty leave is provided as needed.

NOTE: Because of rounding, sums of individual items may not

equal totals. Where applicable, dash indicates no employees in this

category.
Table 20. Unpaid family leave: Percent of full-time employees

by duration of benefits, small private establishments, 1994

Duration

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

unpaid family leave ............. 17,018 3,515 5,812 7,691

Percent

Total with unpaid family leave .. 100 100 100 100

4 weeks and under ............... 1 1 ( ) 1 1

Over 4 but under 8 weeks .... 4 3 2 5

8 weeks ................................ 2 3 2 2

Over 8 but under 12 weeks .. 1 1 ( ) 1 ( ) 1

12 weeks .............................. 79 76 79 81

Over 12 but under 16 weeks 4 6 5 2

16 weeks .............................. 1 1 1 1

Over 16 but under 26 weeks 3 5 4 2

26 weeks .............................. 3 3 2 3

Over 26 but under 52 weeks 1 ( ) 1 ( ) 1 1 ( )

52 weeks .............................. 1 1 1 1

Over 52 weeks ...................... 1 1 1 ( ) 1

Varies2 .................................. 2 1 3 1

Average

Average weeks ......................... 13.2 13.8 13.0 13.0

1 Less than 0.5 percent. 2 The maximum number of weeks available was included in the

distribution of unpaid family leave weeks.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 19. Paid military leave: Percent of full-time employees

by number of paid military leave days available per year, small

private establishments, 1994

Number of days

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid military leave ............... 6,013 1,489 2,242 2,282

Percent

Total with paid military leave .... 100 100 100 100

Under 10 days ...................... 2 1 2 3

10 days ................................. 45 47 49 39

11-19 days ............................ 8 6 9 9

20 days ................................. 3 - 1 6

More than 20 days ................ 3 2 3 3

No maximum specified1 ........ 37 42 34 36

Number of days not

available ......................... 3 2 3 3

Average

Average days per occurance .... 12.0 11.5 11.8 12.6

1 Military leave is provided as needed.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
This chapter discusses three types of disability benefits:

Sick leave, sickness and accident insurance, and long-term

disability insurance. Paid sick leave and sickness and accident insurance protect workers against loss of income during temporary absences from work due to illness or accident. During more extended periods of disability, workers’

incomes may be continued through long-term disability insurance plans. (See tables 21-44 at end of this chapter.)

Among the disability benefit provisions included within the

Employee Benefits Survey are:

Waiting periods before benefits begin,

· Amount of benefits,

· Duration of benefits,

· Plan eligibility requirements.

Short-term disability protection, through sick leave, sickness and accident insurance, or both, is provided to a majority of full-time employees in small private establishments

(table 21). Sick leave usually provides 100 percent of the

worker’s normal earnings, whereas sickness and accident

insurance usually replaces 50 to 67 percent of pay. (Some

sick leave plans may provide days off at partial pay in addition to those at full pay. All sick leave tables shown at the

end of this chapter exclude days paid at partial pay.)

Paid sick leave is the principal medium for providing

short-term disability benefits to employees in small private

establishments. Sick leave is provided to the majority of

full-time employees and sickness and accident insurance to

a significant but smaller number of full-time workers. A large

proportion of workers with sick leave also have sickness

and accident insurance, with the two benefits coordinated.

Coordination can take two forms: Starting insurance benefits after sick leave pay has ended, or paying both benefits

concurrently. When payments are made from both sources,

sick leave pay is reduced by the amount of the insurance

benefits so that the total benefit does not exceed full salary.

Regardless of the method of coordination, employers offering sickness and accident insurance tend to allow fewer sick

leave days than those without such insurance.

Long-term disability insurance (LTD), which typically

pays 60 percent of earnings, is only available for a small

minority of full-time employees in small private establishments. LTD insurance payments usually begin after 3 or 6

months of disability and continue until retirement age or

for a specified number of months, depending on the worker's

age at the time of disability.

Paid sick leave and LTD insurance are more prevalent

Chapter 3. Disability Benefits

among white-collar workers compared to blue-collar and

service workers, but sickness and accident insurance did not

vary by occupation. For each form of disability protection,

however, workers in small private establishments are less

likely to be covered than their counterparts in medium and

large private establishments.

Paid sick leave

Of the employees covered by paid sick leave plans, the

vast majority are allowed a fixed number of days, such as 8

per year (annual sick leave plans). Only a small number of

participants receive sick leave benefits for each illness, for

example, 30 days (per disability sick leave plans). Even fewer

are covered by both annual and per disability benefits; they

generally use annual sick leave for occasional absences and

per disability sick leave for longer absences (tables 22-28).

Employees having annual sick leave plans can usually

expect an increase in the number of days granted as their

length of service increases, such as 8 days after 1 year of

service, 9 days after 5 years, and 10 days after 10 years.

Nearly all workers covered by annual plans receive full pay

while they are sick and are not subject to a waiting period

before benefits begin.

Annual sick leave plans also allow many employees to

carry over and accumulate unused sick leave from year to

year. However, these cumulative plans have limits on the

amount of sick leave, often 30 days, that can be carried over

to the next year. Other cumulative plans allow workers to

accumulate an unlimited amount of sick leave. Noncumulative plans commonly provide a greater number of days

per year than cumulative plans. This difference increases at

longer years of service.

Benefits provided from a per-disability sick leave plan

frequently include some days off at full pay and some at

partial pay, for example, 50 percent. Total days available

for each disability and the mix of full and partial pay days

often becomes more generous as service increases. The following is an example of a per-disability sick leave plan:

1 year 20 45

3 years 40 25

5 years 65 65

 10 years 100 30

 20 years 130 0

Because per-disability benefits are renewed for each new

disability, provisions to carry over unused days are not included in such plans.

·

Days at

50 percent

of pay

Days at

of pay

 Length of

service
Workers often are not eligible for sick leave benefits when

first beginning to work for small private employers. A majority have to meet length of service requirements, frequently

3 months, before qualifying for sick leave benefits.

Although sick leave is commonly thought of as replacing

lost income while an employee is ill or injured, many workers can use their benefits for other reasons. For example,

frequently observed provisions include using sick leave to

take care of a sick child or to take care of personal business.

Sickness and accident insurance

Sickness and accident insurance plans protect employees

against income losses due to short-term disabilities. Most

participants in small private establishments have their benefits fully paid by their employer. The remainder had to

contribute toward the cost of their benefits, often a percent

of earnings up to a specified maximum contribution4

(tables 29-35).

Benefit payments under sickness and accident insurance

plans are either a percent of employee earnings or a flat

dollar amount. White-collar participants are more likely to

be covered by plans with earnings-based formulas than are

blue-collar participants.

Under earnings-based formulas, the percent of earnings

is usually fixed—typically 50, 60, or 67 percent—although

some plans may vary the percent by length of service or

length of disability. A large majority of the participants in

earnings-based plans have dollar limits on the amount of

the weekly benefit.

Blue-collar workers are the most frequent recipients of

scheduled dollar benefits, which provide either a fixed

weekly amount, for example, $150 or $200, or varying

weekly benefits (usually based on earnings).

Virtually all participants were in plans that place a fixed

maximum on the number of weeks of coverage, commonly

26 weeks.

Most of the employees with sickness and accident insurance have to be on the job for a specified time before the

plan will cover them. This service requirement is typically

5 months or less.

Sickness and accident insurance, unlike sick leave, usally requires a waiting period before benefits begin, most

commonly 1 to 7 days. Waiting periods may be shortened

or eliminated entirely for employees involved in an accident or who are hospitalized. The waiting period is effectively dropped when sickness and accident insurance is coordinated with sick leave, because insurance payments typically start immediately after sick leave pay has ended.

Workers in two States, New Jersey and New York, are

covered by mandatory temporary disability insurance plans

that are at least partially employer financed. Both of these

State plans pay benefits based on a proportion of the

4 The prevalence of such contribution formulas is influenced in large part

by the mandatory sickness and accident insurance plans in New York and

New Jersey, discussed later in this chapter.

earnings for up to 26 weeks with a limit on the weekly benefit.5 The State of Hawaii requires that employers provide a

minimum level of temporary disability income protection

for up to 26 weeks.

Long-term disability insurance

Long-term disability insurance provides a monthly benefit to employees who, due to illness or injury, are unable to

work for an extended period of time. Generally, LTD benefit payments begin after 3 or 6 months of disability and

continue until retirement age, or for a specified number of

months, depending on the employee’s age at the time of

disability (table 36). In most instances, the LTD payments

equal a fixed percent of predisability earnings. Most of the

LTD participants in small private establishments have their

coverage fully provided by their employers. Of those who

have to contribute towards the cost of their LTD plan, many

are charged a monthly amount per $100 of covered earnings, for example, $0.20 per $100 of coverage.6

The degree of participation, low overall, varies widely

among employee groups, with white-collar workers more

likely to have LTD insurance than blue-collar workers. However, some employees not covered under LTD insurance are

eligible for an immediate disability pension through their

retirement plan (see chapter 6).

Full-time participants often have to wait 3 or 6 months

after the onset of disability before beginning to receive LTD

payments. For some participants, LTD benefits commence

after the expiration of sick leave and sickness and accident

insurance benefits (table 37).

A large majority of LTD plan participants receive their

LTD benefit as a fixed percent of predisability earnings. The

benefit commonly yields 60 percent of monthly pay (tables

38-40). Most of these plans set a limit on monthly payments,

for example, between $4,000 and $10,000.

Most LTD plans have a monthly maximum limit, either a

dollar maximum in plans that pay a fixed percent of earnings, a disability income ceiling, or a combination of both

methods. Disability income ceilings affect benefits only if

the amount payable from the LTD plan plus income from

other outside sources, such as family Social Security payments, exceed a specified percentage (for example, 70 or

75 percent) of predisability earnings.

Participants in long term disability plans usually have their

benefits continued until retirement or a specified number of

months, depending on the employee’s age at the time of

disability. The duration of benefits may be reduced gradu5Both States permit an employer to substitute a private plan for the State

plan if the benefits provided are at least equivalent. In New York, many employers agree to pay the employee’s share of plan costs. California and Rhode

Island also have mandated temporary disability insurance plans, but these

plans require no employer contribution and, thus, are not included in this

survey. 6 Covered earnings are that portion of a worker’s earnings to which the

replacement rate formula is applied. For example, if an LTD plan pays 60

percent of earnings with a maximum monthly benefit of $3,000, covered

earnings would be $5,000 ($3,000 is 60 percent of $5,000).
ally according to an age schedule or reduced once at a specified age (table 41).

Many plans impose service requirements before LTD coverage begins, often 1 to 3 months (table 42).

Some plans provide survivor benefits, payable to an

eligible dependent upon the death of a disabled employee

(table 43). These benefits usually take the form of a lumpsum payment, often equal to 3 times the monthly LTD

benefit or a percent of the monthly LTD benefit paid for a

fixed number of months (generally not more than 6 months).

Most participants are in plans that include coverage for

disabilities due to mental illness (table 44). However, these

participants often have limits placed upon such coverage.

For example, benefits are provided for a specified period,

such as 24 months, and then cease unless the participant is

institutionalized at the end of the limiting period.
Table 21. Percent of full-time employees by participation in

sickness and accident insurance plans and paid sick leave

plans, small private establishments, 1994

Type of plan

All employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

short-term disability

protection ............................ 21,883 4,928 8,040 8,914

Percent

Total with short-term disability

protection ............................ 100 100 100 100

Sickness and accident

insurance only ................ 18 8 12 29

Paid sick leave only .............. 57 64 61 50

Combined sickness and

accident insurance/paid

sick leave ........................ 25 28 27 22

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 22. Paid sick leave: Percent of full-time employees by

type of provision, small private establishments, 1994

Provision

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid sick leave .................... 17,976 4,511 7,113 6,353

Percent

Total with paid sick leave .. 100 100 100 100

Sick leave provided on:

An annual basis only1 ........... 83 78 82 87

A per disability basis only2 .... 6 8 7 5

Both an annual and per

disability basis ................ 2 3 2 1

As needed basis3 ................. 8 10 8 6

Other basis4 .......................... 1 5 ( ) 1 5 ( )

1 Employees earn a specified number of sick leave days per year. This

number may vary by length of service. 2 Employees earn a specified number of sick leave days for each illness

or disability. This number may vary by length of service. 3 Plan does not specify a maximum number of days. 4 Includes formal plans with provisions that change from a specified

number of days per year to a specified number of days per absence after a

certain service period. 5 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 23: Paid annual sick leave: Percent of full-time

employees by number of days, small private establishments,

1994 — Continued

Sick leave policy1

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Percent

After 20 years of service:

30 and under 60 days ....... 1 2 1 1

60 and under 120 days ..... 1 2 2 3 ( )

120 and under 180 days ... 2 2 2 3

180 days or more .............. 3 ( ) 3 ( ) 1 -

After 25 years of service4

Under 5 days .................... 11 6 10 15

5 and under 10 days ......... 53 48 59 50

10 and under 15 days ....... 25 33 20 24

15 and under 30 days ....... 4 5 5 4

30 and under 60 days ....... 1 2 1 1

60 and under 120 days ..... 1 1 2 3 ( )

120 and under 180 days ... 3 3 2 3

180 days or more .............. 3 ( ) 3 ( ) 1 -

1 Employees receiving partial pay only or no sick leave in their early

years of service are included in the overall percentages of workers provided

sick leave; however, they are disregarded in computing the distributions by

length of service up to the service period at which they become eligible for full

sick leave pay. 2 Employees are either granted a specific number of days after

completion of the indicated length of service, or accrue days during the next

12-month period. The total number of days are assumed available for use

immediately upon completion of the described length-of-service interval. 3 Less than 0.5 percent. 4 Provisions were virtually the same after longer periods of service.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 23: Paid annual sick leave: Percent of full-time

employees by number of days, small private establishments,

1994

Sick leave policy1

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid annual sick leave ........ 15,286 3,678 5,997 5,611

Percent

Total with paid annual sick

leave2 ................................. 100 100 100 100

After 1 year of service:

Under 5 days .................... 13 7 11 17

5 and under 10 days ......... 56 50 62 53

10 and under 15 days ....... 25 34 21 23

15 and under 30 days ....... 2 5 2 1

30 and under 60 days ....... 1 2 2 1

60 and under 120 days ..... 3 ( ) 3 ( ) 3 ( ) 3 ( )

120 and under 180 days ... 1 3 ( ) 3 ( ) 1

After 5 years of service:

Under 5 days .................... 11 6 10 16

5 and under 10 days ......... 55 49 61 53

10 and under 15 days ....... 25 33 21 24

15 and under 30 days ....... 3 4 2 2

30 and under 60 days ....... 2 4 2 1

60 and under 120 days ..... 2 2 3 1

120 and under 180 days ... 1 1 3 ( ) 1

180 days or more .............. 3 ( ) 3 ( ) 3 ( ) -

After 10 years of service:

Under 5 days .................... 11 6 10 15

5 and under 10 days ......... 53 49 59 50

10 and under 15 days ....... 26 33 22 25

15 and under 30 days ....... 3 5 3 3

30 and under 60 days ....... 1 3 1 1

60 and under 120 days ..... 2 3 2 2

120 and under 180 days ... 1 1 1 1

180 days or more .............. 3 ( ) 3 ( ) 3 ( ) -

After 15 years of service:

Under 5 days .................... 11 6 10 15

5 and under 10 days ......... 53 49 59 50

10 and under 15 days ....... 25 33 20 24

15 and under 30 days ....... 4 5 5 4

30 and under 60 days ....... 1 3 1 1

60 and under 120 days ..... 2 2 2 1

120 and under 180 days ... 2 2 2 2

180 days or more .............. 3 ( ) 3 ( ) 1 -

After 20 years of service:

Under 5 days .................... 11 6 10 15

5 and under 10 days ......... 53 49 59 50

10 and under 15 days ....... 25 33 20 24

15 and under 30 days ....... 4 5 5 4

See footnotes at end of table.
Table 24. Paid sick leave 1: Average number of days at full

pay for full-time employees by type of plan, small private

establishments, 1994

Sick leave policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Paid annual sick leave days2

by minimum

length-of-service:

After 1 year of service ........... 8.2 9.0 7.4 8.7

After 3 years of service ......... 9.1 10.3 8.3 9.0

After 5 years of service ......... 10.1 11.4 9.7 9.6

After 10 years of service ....... 11.3 12.8 11.2 10.4

After 15 years of service ....... 12.0 13.5 12.1 10.9

After 20 years of service ....... 12.4 13.9 12.5 11.3

After 25 years of service3 ..... 12.6 14.2 12.7 11.3

1 Paid sick leave plans with a specified number of days available each

year. 2 Employees are either granted a specific number of days after

completion of the indicated length of service, or accrue days during the next

12-month period. The total number of days are assumed available for use

immediately upon completion of the described length-of-service interval. 3 The average (mean) was virtually the same after longer years of

service.

NOTE: Computation of average excluded days at partial pay and workers

with only partial pay days or zero days of sick leave.

Table 25. Paid annual sick leave 1: Percent of full-time

employees by unused sick leave policy and carryover

provisions, small private establishments, 1994

Unused sick leave and

carryover provisions

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid annual sick leave ........ 15,286 3,678 5,997 5,611

Percent

Total with unused sick leave

policy ................... 100 100 100 100

Carryover only .......................... 34 39 34 31

Cash-in only .............................. 13 11 12 17

Carryover and cash-in .............. 7 10 6 6

Unused benefit lost ................... 46 41 49 46

Data not available ..................... 2 ( ) 2 ( ) 2 ( ) 2 ( )

Total with carryover provisions 100 100 100 100

Unlimited accumulation ............ 35 26 36 40

Limit on total number of days

accumulated

Total ...................................... 63 71 61 57

Under 10 days ...................... 4 4 3 6

10 days ................................. 2 3 2 2

11-19 days ............................ 8 6 8 10

20 days ................................. 5 4 5 5

21-24 days ............................ 1 1 1 1

25 days ................................. 1 3 1 2 ( )

26-29 days ............................ 2 ( ) 1 1 -

30-39 days ............................ 13 17 12 11

40-49 days ............................ 3 7 2 1

50 days ................................. 2 ( ) 1 2 ( ) 2 ( )

51-64 days ............................ 10 13 8 11

65 days ................................. 1 1 1 1

66-79 days ............................ 1 - 3 -

80-89 days ............................ 1 - 2 -

90-99 days ............................ 4 4 5 4

100-109 days ........................ 2 ( ) 1 - -

120-129 days ........................ 2 2 2 1

130 days ............................... 2 2 2 2

Over 130 days ...................... 2 2 2 1

Days not available ................ 2 ( ) 2 ( ) 1 2 ( )

Other3 ....................................... 2 ( ) - 2 ( ) -

Data not available ..................... 3 2 2 3

1 Paid sick leave plans with a specified number of days available each

year. 2 Less than 0.5 percent. 3 Carryover provisions vary by length of service.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 26. Paid annual sick leave 1: Average number of days at

full pay for full-time employees by accumulation policy, small

private establishments, 1994

Sick leave policy

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Sick leave days by minimum

length-of-service

requirement2

After 1 year of service:

Cumulative plan ................ 8.3 9.3 7.7 8.2

Noncumulative plan .......... 8.2 8.7 7.2 8.9

After 3 years of service:

Cumulative plan ................ 8.5 9.5 7.9 8.4

Noncumulative plan .......... 9.5 11.1 8.6 9.4

After 5 years of service:

Cumulative plan ................ 9.0 9.7 8.7 8.6

Noncumulative plan .......... 10.9 13.1 10.4 10.2

After 10 years of servcie:

Cumulative plan ................ 9.3 9.8 9.2 8.9

Noncumulative plan .......... 12.7 15.6 12.5 11.2

After 15 years of service:

Cumulative plan ................ 9.5 9.9 9.4 9.1

Noncumulative plan .......... 13.8 16.9 13.8 12.0

After 20 years of service:

Cumulative plan ................ 9.6 10.0 9.7 9.2

Noncumulative plan .......... 14.4 17.7 14.4 12.5

After 25 years of service3

Cumulative plan ................ 9.7 10.1 9.8 9.3

Noncumulative plan .......... 14.6 18.1 14.7 12.5

Data not available ..................... 4 ( ) 4 ( ) 4 ( ) 4 ( )

1 Paid sick leave plans with a specified number of days available each

year. 2 Employees are either granted a specific number of days after

completion of the indicated length of service, or accrue days during the next

12-month period. The total number of days are assumed available for use

immediately upon completion of the described length-of-service interval. 3 The average (mean) was virtually the same at longer years of service. 4 Less than 0.5 percent.

NOTE: Computation of average excluded days paid at partial pay and

workers with only partial pay days or zero days of sick leave.

Table 27. Paid sick leave 1: Percent of full-time employees by

length of service requirements for participation, small private

establishments, 1994

Length-of-service requirement

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid annual sick leave ........ 15,286 3,678 5,997 5,611

Percent

Total with paid annual sick

leave ................... 100 100 100 100

With service requirement .......... 67 61 70 67

1 month ................................. 13 17 13 11

2 months ............................... 4344

3 months ............................... 23 22 27 19

4-5 months ............................ 1211

6 months ............................... 12 9 13 12

7-11 months .......................... 2 ( ) 2 ( ) - -

1 year .................................... 13 9 11 19

Over 1 year ........................... 1 2 ( ) 1 2

Without service requirement ..... 31 37 28 30

Data not available ..................... 2222

1 Paid sick leave plans with a specified number of days available each

year. 2 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 28. Paid annual sick leave 1: Percent of full-time

employees in plans allowing use of sick leave for other

purposes, small private establishments, 1994

Other purposes

All

employees

Professional,

technical,

and related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

paid annual sick leave ........ 15,286 3,678 5,997 5,611

Percent

Total with paid annual sick

leave ................... 100 100 100 100

Other purposes allowed2 .......... 76 81 75 74

Funeral ................................. 23 22 24 23

Post-disability maternity ........ 43 48 42 41

Paternity ............................... 22 25 21 21

Doctors’ appointments .......... 66 67 63 68

Personal business ................ 23 23 23 24

Care of sick child .................. 58 61 58 56

Other ..................................... 2221

Other purposes not allowed ...... 21 17 23 22

Data not available ..................... 3224

1 Paid sick leave plans with a specified number of days available each

year. 2 This total is smaller than the sum of the components because some

employees could use sick leave for more than one other purpose.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 29. Sickness and accident insurance: Method of

payment, full-time employees, small private establishments,

1994

Method of payment

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

sickness and accident

insurance ............................ 9,394 1,789 3,111 4,494

Percent

Total with sickness and

accident insurance .............. 100 100 100 100

Flat dollar amount ................. 14 10 11 18

Flat percent of earnings ........ 82 87 85 78

Percent varies1 ..................... 2 3 1 2

Dollar amount varies1 ........... 1 1 1 2 ( )

Other ..................................... 1 - 1 2

Not determinable .................. 2 ( ) - 1 2 ( )

1 Benefits may vary by earnings, length of service, or length of disability. 2 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 30. Sickness and accident insurance: Fixed percent of

earnings amounts, full-time employees, small private

establishments, 1994

Fixed percent of earnings

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

fixed percent of earnings

benefit ................................. 7,709 1,555 2,652 3,502

Percent

Total with fixed percent of

earnings benefit .................. 100 100 100 100

Less than 50 percent ........... 1 ( ) - 1 ( ) 1 ( )

50 percent ............................. 45 38 38 53

51 - 59 percent ..................... 2 2 1 2

60 percent ............................. 15 18 18 12

61 - 69 percent ..................... 28 30 31 25

70 percent ............................. 8 11 10 6

71 - 79 percent ..................... 1 2 1 1

80 percent or more ............... 1 ( ) 1 ( ) 1 1 ( )

Average2

Average fixed percent of

earnings benefit .................. 58 60 59 57

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 31. Sickness and accident insurance: Maximum

benefits placed on percent of earnings formulas, full-time

employees, small private establishments, 1994

Maximum benefit per week

All

employees

Profes

sional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

percent of earnings benefit 7,857 1,603 2,673 3,581

Percent

Number with percent of

earnings benefit .................. 100 100 100 100

With maximum ...................... 64 67 69 59

Less than $200 ................. 21 19 21 21

$200 - $299 ...................... 5 2 7 5

$300 - $399 ...................... 22 21 23 22

$400 or more .................... 16 25 17 11

No maximum ........................ 33 30 27 38

Not determinable .................. 3 3 4 3

Average1

Average maximum benefit per

week ................................... $374 $501 $374 $308

1 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals.
Table 32. Sickness and accident insurance: Minimum benefits

placed on percent of earnings formulas, full-time employees,

small private establishments, 1994

Minimum benefit per week

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

percent of earnings benefit 7,857 1,603 2,673 3,581

Percent

Total with percent of earnings

benefit ................................. 100 100 100 100

With minimum ....................... 22 20 24 21

Less than $50 ................... 18 17 19 17

$50 - $99 .......................... 3 2 3 2

$100 - $149 ...................... 2 2 1 2

$150 or more .................... 1 ( ) - - 1 ( )

No minimum ......................... 75 77 73 74

Not determinable .................. 4 2 3 4

Average2

Average minimum benefit per

week ................................... $30 $29 $29 $31

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 33. Sickness and accident insurance: Type of waiting

period, full-time employees, small private establishments, 1994

Waiting period

provision

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

sickness and accident

insurance ............................ 9,394 1,789 3,111 4,494

Percent

Total with sickness and

accident insurance .......... 100 100 100 100

Waiting period not

dependent on sick

leave ........................... 92 93 89 92

Waiting period begins

after sick leave ............ 2 2 3 1

Later of waiting period or

sick leave1 .................. 2 2 3 2

Earlier of waiting period or

sick leave2 .................. 1 1 1 1

Not determinable .............. 3 3 3 4

1 Benefits begin when sick leave is exhausted or the waiting period is

completed, whichever is later. 2 Benefits begin when sick leave is exhausted or the waiting period is

completed, whichever is earlier.

NOTE: Because of rounding, sums of individual items may not equal totals.
Table 34. Sickness and accident insurance: Duration of

benefits, full-time employees, small private establishments,

1994

Duration of benefits

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

sickness and accident

insurance ............................ 9,394 1,789 3,111 4,494

Percent

Total with sickness and

accident insurance .............. 100 100 100 100

Fixed duration ....................... 79 85 84 74

Less than 13 weeks .......... 2 2 3 1

13 weeks .......................... 12 17 12 11

14 - 25 weeks ................... 3 5 4 3

26 weeks .......................... 58 56 61 57

27 - 51 weeks ................... 1 ( ) 1 1 ( ) 1 ( )

52 weeks .......................... 3 4 4 2

Greater than 52 weeks ..... 1 1 ( ) 1 ( ) 1

Duration varies ..................... 3 1 3 3

Not determinable .................. 18 15 13 23

 Average2

Average benefit duration (in

weeks) ................................ 25 24 25 25

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals.

Table 35. Sickness and accident insurance: Eligibility

requirements, full-time employees, small private

establishments, 1994

Eligibility requirement

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

sickness and accident

insurance ............................ 9,394 1,789 3,111 4,494

Percent

Total with sickness and

accident insurance .............. 100 100 100 100

With service requirement ...... 48 48 50 46

1 month ............................. 22 20 25 21

2 months ........................... 4 6 3 4

3 months ........................... 14 16 14 13

4 - 5 months ...................... 1 - 1 1

6 months ........................... 4 4 4 5

12 months ......................... 3 3 3 2

Greater than 12 months .... 1 ( ) 1 ( ) - -

No service requirement ........ 28 28 31 26

Not determinable .................. 24 24 18 28

Average2

Average service requirement

(in months) .......................... 2.8 3.1 2.8 2.8

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 36. Long-term disability insurance: Summary of

provisions, full-time employees, small private establishments,

1994

Provision

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

Benefits based on fixed

percent of earnings ......... 97 96 97 99

Benefits subject to disability

income limit ..................... 28 30 31 21

Duration of benefits varies

by age ............................. 60 62 65 48

With coverage for mental

illness .............................. 68 69 76 55

With survivor benefits ........... 41 43 45 34

With required employee

contribution ..................... 17 13 20 16

Table 37. Long-term disability insurance: Benefit waiting

period,1 full-time employees, small private establishments,

1994

Length of waiting period

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

Fixed duration ....................... 92 92 91 93

Less than 3 months .......... 5 7 6 2

3 months ........................... 44 47 45 39

4 - 5 months ...................... 2 1 3 1

6 months ........................... 37 32 33 49

Greater than 6 months ...... 4 5 4 2

Expiration of short-term

disability benefits ............ 3 2 4 3

Other ..................................... 3 4 2 1

Not determinable .................. 2 2 2 3

Average2

Average fixed duration (in

months) ............................... 4.5 4.4 4.4 4.7

1 Length of time between onset of disability and beginning of long-term

disability insurance payments. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 38. Long-term disability insurance: Method of payment,

full-time employees, small private establishments, 1994

Method of payment

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

Fixed percent of earnings ..... 97 96 97 99

Less than 50 percent ........ 1 ( ) 1 ( ) 1 1 ( )

50 percent ......................... 5 5 5 7

51 - 59 percent ................. 1 ( ) 1 ( ) 1 ( ) 1

60 percent ......................... 72 68 74 75

61 - 66 percent ................. 1 1 1 1 ( )

67 percent ......................... 16 16 15 15

68 - 69 percent ................. 1 ( ) 1 1 ( ) -

70 percent ......................... 3 4 2 2

Greater than 70 percent ... 1 ( ) 1 ( ) 1 ( ) -

Percent varies by earnings ... 1 1 ( ) 1 1 ( )

Percent varies by service ..... 1 ( ) 1 ( ) 1 -

Flat dollar amount ................. 1 2 1 ( ) 1

Dollar amount varies ............. 1 1 1 ( ) -

Average2

Average fixed percent of

earnings .............................. 60.9 61.3 60.8 60.5

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 39. Long-term disability insurance: Maximum benefits1

based on percent of earnings formulas, full-time employees,

small private establishments, 1994

Maximum benefit

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

percent of earnings benefit 7,215 2,306 3,064 1,845

Percent

Total with percent of earnings

benefit ................................. 100 100 100 100

With maximum ...................... 83 80 86 81

Flat maximum per month .. 83 80 86 81

$2,000 or less ............... 8 3 5 21

$2,001 - $3,000 ............ 11 13 13 7

$3,001 - $4,000 ............ 2 1 2 2

$4,001 - $5,000 ............ 27 28 29 22

$5,001 - $7,500 ............ 10 9 12 9

$7,501 - $10,000 .......... 18 21 19 15

$10,001 or more ........... 6 5 7 5

No maximum ........................ 17 20 14 19

Average2

Average flat maximum benefit

(per month) ......................... $6,417 $6,621 $6,838 $5,425

1 Excludes limits on all disability income, which restrict long-term

disability insurance payments if income from all sources exceeds a specified

amount. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 41. Long-term disability insurance: Duration of

payments, full-time employees, small private establishments,

1994

Duration

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

For life ................................... 2 2 3 2

Until a specified age ............. 16 15 12 25

Until retirement ..................... 6 7 4 7

Varies by age,1 one change 3 4 4 2

Varies by age,1 gradual

change ............................ 56 58 61 46

Varies by other than age ...... 2 ( ) - 1 -

Other ..................................... 2 5 2 -

Not determinable .................. 13 9 13 19

1 The duration of benefits may be reduced gradually according to a

schedule or once at a specified age. 2 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 40. Long-term disability insurance: Limits on all

disability income,1 full-time employees, small private

establishments, 1994

Disability income limit

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

With disability income limit .... 28 30 31 21

Fixed percent of earnings 12 12 15 6

Less than 70 percent .... 1 1 2 2 ( )

70 percent ..................... 5 3 7 3

Greater than 70

percent .................... 6 9 6 3

Benefits cease when they

exceed a specified

percent of earnings ..... 16 17 15 15

Flat dollar amount ............. 2 ( ) 1 2 ( ) -

No disability income limit ...... 40 43 42 34

Not determinable .................. 31 28 27 45

Average3

Average fixed percent of

earnings disability income

limit ..................................... 81.0 83.5 79.2 81.4

1 Limit on income during disability from all sources, including long-term

disability insurance, Social Security, and pension benefits. 2 Less than 0.5 percent. 3 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 42. Long-term disability insurance: Eligibility

requirements, full-time employees, small private

establishments, 1994

Length of service

requirement

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

With service requirement ...... 60 54 62 65

1 month ............................. 26 24 29 26

2 months ........................... 3 4 2 2

3 months ........................... 17 13 17 23

4 - 5 months ...................... 1 ( ) 1 ( ) 1 1 ( )

6 months ........................... 8 7 8 9

12 months ......................... 6 6 5 6

Greater than 12 months .... 1 ( ) - 1 ( ) 1

Other ..................................... 1 ( ) 1 ( ) 1 ( ) -

No service requirement ........ 30 33 30 26

Not determinable .................. 9 13 7 9

Average2

Average service requirement

(in months) .......................... 3.7 3.4 3.5 4.2

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 44. Long-term disability insurance: Coverage for mental

illness, full-time employees, small private establishments, 1994

Mental illness provision

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

With coverage for mental

illness .............................. 68 69 76 55

No limit .............................. 19 22 19 17

Coverage only if

institutionalized ........... 1 1 ( ) 1 -

Duration of coverage

limited unless

institutionalized ........... 44 44 51 34

Less than 24 months .... 1 1 ( ) 1 -

24 months ..................... 43 43 49 34

Greater than 24 months 1 1 1 -

Duration of coverage

limited ......................... 4 4 5 4

24 months ..................... 4 4 5 4

No coverage for mental

illness .............................. 1 1 1 1 ( )

Not determinable .................. 31 29 24 45

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 43. Long-term disability insurance: Survivor benefits,

full-time employees, small private establishments, 1994

Survivor provision

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

long-term disability

insurance ............................ 7,326 2,383 3,085 1,858

Percent

Total with long-term disability

insurance ............................ 100 100 100 100

With survivor benefits ........... 41 43 45 34

Lump sum payment .......... 33 38 37 23

Other ................................. 8 5 8 12

No survivor benefits .............. 29 31 32 23

Not determinable .................. 29 26 24 43

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Chapter 4. Medical, Dental, and Vision Care

Medical Care

Medical care benefits are provided to a large majority of

full-time employees in small private establishments. The

Employee Benefits Survey covers a number of medical care

benefit provisions including:

· Required employee contributions,

· Types of plans,

· Coverage for hospitalization and surgery,

· Plan cost containment features,

· Prescription drug benefits,

· Mental health and substance abuse treatment

benefits,

· Coverage for retired workers.

These topics are discussed throughout this chapter.

Employee contributions

Most full-time participants have to pay part of the cost

for their medical benefits—whether for individual or family coverage (tables 45-47). As tracked by the Employee

Benefits Survey, the percentage of participants required to

contribute toward their coverage, and the required contribution, have steadily increased over the past several years.

Employees required to contribute toward the cost of their

medical care coverage may be given the opportunity to do

so with pretax dollars. These employees have the advantage of reducing their taxable income when purchasing

medical coverage. Pretax contributions may be required or

optional, and they may be offered as part of a flexible benefits arrangement. (For definition, see chapter 8.)

Type of medical care plans

Full-time workers with medical benefits are covered by

one of three major types of plans—a traditional fee-for-service plan, a preferred provider organization (PPO), or a

health maintenance organization (HMO) (table 48). These

plans represent differences in fee arrangements, that is, the

method of selecting medical service providers and paying

for care.

Fee-for-service plans—this fee arrangement allows patients to choose any provider and pay for specific medical

procedures as expenses are incurred. There are generally

three arrangements for financing plan benefits: Self-insured

plans, commercially insured plans, and Blue Cross/Blue

Shield plans. Under self-insured plans, the plan sponsor—

typically the employer—bears the financial risk of paying

for covered medical services. Commercially insured plans

and Blue Cross/Blue Shield plans cover most of the other

fee-for-service participants. In addition, a small proportion

of fee-for-service participants have their benefits financed

by more than one source.

Establishments that self-insure their medical care benefits may enter into an “administrative services only” contract with a third party to pay claims and handle other administrative details. In such a case, the employer is still responsible for financing all medical care claims. Another arrangement available to self-insured plans is a minimum premium plan, which is insurance coverage to pay claims above

a specified amount. Such arrangements limit the employer’s

liability in the case of catastrophic expenses.

PPO’s, which have become widespread since first studied in the Employee Benefits Survey of medium and large

private establishments in 1986, offer a higher level of reimbursement for services rendered by designated health care

providers (such as hospitals and physicians), although participants are free to choose any provider. Designated providers agree in advance to a given fee schedule.

Financing arrangements for PPO’s are similar to those

used for fee-for-service plans. Typically, PPO’s are financed

through a commercial insurer, a Blue Cross/Blue Shield organization, or are self-insured.

PPO’s can be considered a type of fee-for-service plan

because care providers are not reimbursed until services are

performed. In this way, fee-for-service plans and PPO’s can

be contrasted with HMO’s (described below), which prepay

providers a fixed amount for services performed over a given

time period. Throughout this chapter, features found in

HMO’s are contrasted with those found in both fee-for-service plans and PPO’s.

HMO’s, another arrangement that increased enrollment

during the 1980’s, provide a prescribed set of benefits to

enrollees for a fixed payment. The HMO thus bears the risk

associated with delivering care.7 Commonly, HMO’s are

7 For a more detailed discussion on HMO's, see Thomas P. Burke and

Rita S. Jain, "Trends in Employer-Provided Health Care Benefits, "Monthly

Labor Review, February 1991, pp.24-30.
classified as either group/staff, with services provided in

central facilities, or as individual practice associations

(IPA’s), with providers working from their own offices.

HMO’s may be financed through independent organizations, commercial insurers, or Blue Cross/Blue Shield

organizations. Independent organizations, such as Kaiser

Permanente, are most prevalent.

An alternative method of categorizing medical care plans

is to determine whether or not participants have a “pointof-service” option. In such plans, participants can use care

providers within or outside a given network, although reimbursement of expenses is less if participants do not use network providers. “Point-of-service” plans include all participants in PPO’s and a few workers enrolled in HMO’s that

have an open enrollment option. Such an option allows patients to receive services from a non-HMO provider at a

lower reimbursement than if care is received from the designated HMO provider.

Fee-for-service plans

Fee-for-service plans allow patients to choose their own

providers and reimburse the patient or the provider after

services are received. Benefits are typically subject to limitations that apply to many or all services, including

deductibles, coinsurances, out-of-pocket expense limits, and

plan maximums. These limitations come under the major

medical coverage of the plan.

Generally, fee-for-service plans require a participant to

meet a specified deductible before eligibility for benefit payments. This approach is designed to discourage unnecessary use of medical services. Deductibles are typically specified as an annual flat-dollar amount, such as $100 or $200

per individual.

When medical care plans cover an employee and family,

a family deductible is often specified in addition to individual deductibles. There are two general types of family

deductibles. In the first type, the deductible is a flat-dollar

amount for the year. To satisfy this deductible, one family

member must meet an individual deductible, then another

family member or a combination of family members must

meet the remaining amount of the family deductible. In the

second type, the plan specifies the number of family members (usually 2 or 3) required to meet individual deductibles.

After the required number of family members meet individual deductibles, no additional individual deductibles are

required during that year.

Once the deductible has been met, a plan almost always

pays a specified percentage of covered medical expenses,

with the employee paying the remainder (coinsurance). Plans

usually pay 80 percent of expenses; other plans may pay 90

percent. Alternatively, plans may have a different coinsurance rate for certain services, such as hospital room and

board and outpatient surgery. For these services, the plan

usually pays a higher percent of expenses, often 100 percent.

Generally, full-time participants in fee-for-service plans

have their coinsurance increased to 100 percent after they

pay out a specified dollar amount for covered expenses, for

example, an annual out-of-pocket expense limit of $1,500

per individual. Frequently, out-of-pocket expense limits are

also specified for family expenses. As used here, the term

“out-of-pocket expense limit” refers to the coinsurance

amount paid by a plan participant. A deductible, if required,

is an additional expense the participant must pay.

A plan’s out-of-pocket expense limit protects the participant from catastrophic medical expenses. For example, assume a plan has a $250 annual deductible and then pays 80

percent of medical expenses up to an out-of-pocket expense

limit of $2,000, above which, the plan’s share of expenses

rises to 100 percent. In this case, the employee would pay

the first $250 of expenses—the deductible—and $2,000 (20

percent) of the next $10,000 of expenses—coinsurance.

Covered expenses above that amount would be paid in full

by the plan.

Fee-for-service plans typically place a ceiling on the

amount payable by the plan, usually a lifetime maximum.

A maximum of $1 million is common.

Preferred provider organizations

In a preferred provider organization, participants are provided medical services at a higher level of reimbursement if

they receive care from designated hospitals, physicians, laboratories, or dentists. Individuals may choose their own provider; however, typically the enrollee gets reimbursed at a

lower level.

In PPO’s, like fee-for-service plans, benefits are typically

subject to limitations including deductibles, coinsurances,

out-of-pocket expense limits, and plan maximums that apply to many or all services. These limitations can differ depending upon whether or not care is provided by a designated provider. For example, assume that an individual’s

total covered medical expenses are $3,600 in one year. When

care is provided within the PPO network, the plan pays 90

percent of expenses, or $3,240. When care is provided outside the PPO network, the plan imposes a $100 a year deductible and reimburses 80 percent of the remaining expenses. Thus, outside the PPO network the plan pays only

$2,800 of the expenses.

PPO’s may also vary the way payments are made, based

on the provider used. For example, services received from

non-network providers may be subject to a plan deductible

and coinsurance. Network services, alternatively, may be

subject only to a small copayment, such as $10 per office

visit or $5 per prescription. The remaining cost of such services is borne by the plan.

Health maintenance organizations (HMO’s)

Health maintenance organizations provide a fixed set of

medical benefits for a prepaid fee. Generally, medical services are either covered in full or require patients to pay a

minimal copayment. Typical copayments are $5 or $10 per

physician’s office visit or $5 or more per out-of-hospital

prescription drug.
including second surgical opinions, are automatically provided.

Hospital coverage

Medical plan enrollees covered by the survey routinely

have coverage for hospital room and board charges. (Coverage also extends to “miscellaneous” charges while hospitalized, such as routine nursing care, prescription drugs, and

surgical dressings.) Many plans cover hospital room and

board expenses at a percentage of the semiprivate room rate,

frequently 80 percent. In these types of plans, the individual

is typically subject to a yearly deductible before the percentage rate can go into effect. Other plans either have hospital room and board expenses covered at the full semiprivate room rate for a specified period of confinement (usually 365 days), followed by a percentage of the semiprivate

room rate, or reimburse expenses at the full semiprivate room

rate for an unlimited number of days without being subject

to either a deductible or dollar maximum.

Significant differences in hospital room and board coverage are evident by type of medical care provider. Although

HMO’s tend to cover hospital room and board in full without any limitations, non-HMO plans tend not to. When there

is a limit on room and board in HMO’s, it is usually a

copayment per admission, often between $100 and $300.

Variations in coverage by type of medical care provider

for hospital stays, as well as other categories of care, can

affect the enrollees’ out-of-pocket expenses. Non-HMO plan

participants generally pay a higher percentage of total health

care expenses than HMO participants.8

Alternatives to hospitalization

To help hold down the costs of medical care, plans most

often provide coverage for less expensive alternatives to a

hospital stay. These alternatives include extended care facilities, home health care, and hospices. Coverage patterns

typically differ between HMO and non-HMO participants.

Extended care facilities provide skilled nursing care,

rehabilitation, and convalescent services to patients requiring less intensive treatment than that provided in a hospital.

HMO’s and non-HMO’s can provide coverage for stays in

extended care facilities. Plans, especially non-HMO’s,

often limit the duration of stays in extended care facilities.

Under non-HMO’s, coverage commonly is limited to 60 or

120 days per confinement. When coverage is limited under

HMO’s, it is frequently 100 days per year.

Home health care provides skilled nursing and related

care to patients in their own homes. Home health care benefits are provided to virtually all HMO participants, less

often to non-HMO participants. The higher incidence of

coverage for home health care benefits in HMO’s relates

8 For more information regarding out-of-pocket expenses for medical services, see Allan P. Blostin, Robert B. Grant, and William J. Wiatrowski, "Employee Payments for Health Care Services, "Monthly Labor Review,

November 1992, pp. 17-32.

HMO’s are unique in that they encourage preventive care,

including physical examinations, vision screening, hearing

care, well baby care, and immunization and inoculation. A

large majority of HMO participants are in federally qualified plans; Federal qualification provides advantages when

soliciting new participants. HMO’s must provide a minimum

group of benefits, such as home health care, well baby care,

and hearing care, to become federally qualified.

Cost containment

In addition to data on the extent of coverage for specific

medical services, the survey captures the details of medical

plans with either benefit management programs, managed

care plans, or review boards. These programs help make

sure that the services rendered are medically necessary and

are provided in the most appropriate health care setting.

Generally, medical care participants have some “managed

care” provision available to them. This includes all participants in HMO and PPO plans, in which the plans manage

care by directing patients to specific providers or services.

In addition, many fee-for-service participants are in plans

with at least one managed care feature. These could include

preadmission certification for hospitalization, pre- admission testing, and mandatory second surgical opinion.

Some advanced managed care programs may consist of

four or more features. These often include preadmission

review of all hospital admissions for nonemergency or

nonmaternity care, concurrent review to monitor care while

hospitalized, discharge planning to coordinate a continued

course of treatment in more appropriate health care settings,

and mandatory second surgical opinions for selected procedures.

Among the features studied, some plans have their care

subject to utilization review. This is the process of reviewing the appropriateness and quality of care provided to patients. A higher level of reimbursement for prehospitalization

testing, a means of decreasing the length of hospitalization,

is a also evident.

Some managed care programs consist of only one or two

cost containment provisions, such as mandatory second surgical opinions and preadmission certification before being

admitted to a hospital (except in cases of emergency). Other

cost containment features in fee-for-service plans include

incentives for the employee to audit hospital bills and incentives for child deliveries in lower cost birthing centers,

rather than in hospitals.

Medical care plans can also require a separate deductible for hospital admission to discourage unnecessary hospitalization. These deductibles often are between $100 and

$300 per hospital admission.

In fee-for-service plans, second surgical opinion provisions generally apply to inpatient surgical benefits. Plan

enrollees frequently receive lower levels of reimbursement

if they do not obtain second opinions.

By their very nature, HMO’s emphasize preventive, cost

efficient medical care. Built-in forms of utilization review,
to the fact that federally qualified HMO’s must provide this

benefit. The vast majority of HMO participants in the survey belong to federally qualified plans. When home health

care benefits are provided in HMO’s, coverage is typically

unlimited. The most common type of restriction placed on

home health care is duration of visits, with 100 visits per

year a frequent limit.

Another expanding alternative to hospitalization is hospice care. A hospice offers nursing care and psychological

support to terminally ill patients__usually defined as having 6 months or less to live__and to their families. Plans

often place ceilings on maximum dollar amounts payable

during a hospice stay. Medical care plans cover hospice care

less often than other alternatives to hospitalization.9

Surgical coverage

Medical plans base payments for in-hospital surgery on

the “usual, customary, and reasonable” (UCR) charges for

the specific procedure performed.10 In-hospital surgical benefits, as is true with hospitalization, are typically covered at

a specified percentage rate, usually after any required overall plan deductible. Commonly, participants are covered at

80 percent of the UCR charges. Others are covered for the

full UCR charges or according to a schedule establishing a

maximum amount payable for each procedure. Charges exceeding the scheduled maximums, however, are generally

covered, subject to the plan’s overall deductible and coinsurance.

Medical plans usually cover outpatient surgery the same

way as in-hospital surgery, whether in full, a percent of UCR

charges, or subject to a schedule of maximum payments.

For HMO enrollees, both inpatient and outpatient surgery

normally are covered in full.

With the steady rise in costs of medical care, health care

insurers are encouraging enrollees to substitute less expensive outpatient services, such as outpatient surgery, for inpatient hospital services. To encourage the use of outpatient

surgery, non-HMO’s may provide higher reimbursement

rates over those provided for inpatient surgery.11

Plans with surgical benefits generally require enrollees to

satisfy a deductible for in-hospital procedures. When outpatient surgery is needed, however, a deductible requirement is somewhat less common. Generally, when deductibles

do not apply for in-hospital surgery, they do not apply for

outpatient procedures either.

Outpatient physicians visits and diagnostic services

Generally, health care participants have coverage for

physicians’ visits and diagnostic x-ray and laboratory tests

(DXL). Expenses for physicians’ office visits and DXL are

generally covered as a percentage of usual, customary, and

reasonable charges and are subject to an annual deductible

and a lifetime maximum benefit.

Notable differences in physicians’ office visits are evident by type of medical care provider. Although HMO’s

typically require copayments for office visits, copayments

are not the norm in non-HMO plans. When copayments are

required under non-HMO’s, they are usually under PPO’s.

Copayments for office visits in HMO and PPO plans are

usually minimal, such as $5 and $10 per visit.

Prescription drug benefits

Virtually all participants in medical plans have coverage for prescription drugs. Inpatient prescription drugs are

covered under hospital miscellaneous services, generally in

the same fashion as room and board charges. Outpatient

prescription drugs are covered under separate provisions of

the medical plan.

Coverage for outpatient prescription drugs differs by type

of medical plan. Usually, in non-HMO plans, outpatient prescription drugs are covered under the major medical plan

limitations; that is, before any benefits are provided, the

participant has to meet a yearly deductible. Services are

then covered at the applicable coinsurance rate. However,

in HMO’s, prescriptions are usually subject to a minimal

copayment, for example $5 or $10 per prescription. It is

rare to have prescription drugs covered in full by either

HMO’s or non-HMO’s.

Perhaps due to the rapidly rising cost of prescription

drugs, medical care plans are turning to a variety of alternatives to lower both plan and patient costs. These alternatives include:

· Encouraging patients to have pharmacies substitute

less expensive generic drugs for brand-name drugs;

· Setting up mail order programs for drugs needed on

a routine basis;

· Establishing relationships between plans and selected

pharmacies to provide drugs at lower cost.

Pharmacies can often fill a prescription using either a

brand name drug or a generic drug. Participants may receive higher reimbursement for obtaining generic rather than

brand name prescription drugs, when generic drugs are available. Generic drugs cost less than brand name drugs.

Mail order drug programs are also often available to

participants with prescription drug coverage. These programs

supply drugs for maintenance purposes, that is, drugs required on a continuous basis. In such arrangements, participants often receive a higher reimbursement or pay less

9 For a more detailed discussion on alternatives to hospitalization, see

Thomas P. Burke, “Alternatives to Hospital Care under Employee Benefit

Plans,” Monthly Labor Review, December 1991, pp. 9-15. 10The “usual, customary, and reasonable” charge is defined as being not

more than the physician’s usual charge; within the customary range of fees

charged in the locality; and reasonable, based on the medical circumstances.

11 For more information on incentive for outpatient surgery, see Robert

B.Grant, “Outpatient Surgery: Helping to Contain Health Care Cost,” Monthly

Labor Review, November 1992, pp. 33-36.
for mail order drugs than for drugs purchased directly from

a pharmacy.

Some participants may receive higher reimbursements if

prescriptions are filled at certain pharmacies with discount

policies. The plan providers negotiate the price of prescriptions with the pharmacies, usually at cost plus minimal dispensing fees. Group HMO plans normally have an in-house

pharmacy, where minimal copayments are required for prescriptions. IPA HMO plans, on the other hand, might be

affiliated with “discount” pharmacies, that also provide prescriptions with minimal copayments.12

Mental health coverage and substance abuse treatment

Mental health coverage, though available to nearly all

participants, generally is subject to more restrictive limitations than other illnesses. Medical care plans with mental

health benefits generally also have more restrictive hospital

coverage for mental illness than for other ailments. Plans

commonly limit the duration of hospital stays (often to 30

or 60 days per year for mental health care, compared to 365

days per confinement, or unlimited days for other illnesses)

and frequently impose a separate, lower dollar maximum

on covered hospital expenses (such as a lifetime maximum

of $50,000 on all mental health benefits).

Even more restrictive is coverage for mental health care

outside the hospital (psychiatric office visits). Limits for

outpatient care are the norm for participants with mental

health care coverage. Outpatient mental health care is commonly covered for fewer visits per year than other outpatient services, and it is subject to maximum dollar limits on

annual payments. Plans also frequently cover such care at a

coinsurance rate of 50 percent rather than the usual 80 percent paid by plans for other illnesses. In addition, expenses

for outpatient mental health care often cannot be used to

meet the employee’s maximum out-of-pocket expense limit.

Reimbursement for these expenses thus does not increase to

100 percent even when the out-of-pocket expense limit is

met.13

Alcohol and drug abuse treatment benefits are common

for medical participants. Generally, alcohol abuse treatment

benefits are the same as benefits for drug abuse treatment.

Benefits provided under substance abuse care include both

detoxification and rehabilitation. Detoxification involves

supervised care by medical personnel designed to reduce or

eliminate the symptoms of chemical dependency. Rehabilitation provides a variety of services (generally provided once

a person completes detoxification) intended to alter the behavior of substance abusers.

Virtually all participants covered by alcohol abuse treat

12 For a more comprehensive discussion on prescription drug coverage,

see Cathy Baker and Natalie Kramer, “Employer-Sponsored Prescription

Drug Benefits,” Monthly Labor Review, February 1991, pp. 31-35 13 A detailed examination of mental health care provisions in employerprovided health care plans is provided by Allan P. Blostin in “Mental Health

Benefits Financed By Employers,” Monthly Labor Review, July 1987, pp.

23-27.

ment benefits are eligible for inpatient (in-hospital) detoxification, and, can also receive inpatient rehabilitation coverage. Detoxification is considered medically necessary, and

thus nearly all medical plans include it. There is a greater

tendency to exclude inpatient rehabilitation, because it requires less constant and less immediate care. Outpatient alcohol abuse treatment, generally rehabilitative care, is available to most participants with alcoholism coverage. Coverage patterns are similar for drug abuse treatment benefits.

As is the case with mental health care, plans are more

restrictive in covering substance abuse treatment than other

illnesses.14 Participants are more likely to have inpatient

detoxification treated the same as any other inpatient confinement than to have inpatient rehabilitation or outpatient

care covered the same as any other illness. Limitations for

substance abuse treatment commonly include:

· Restrictions on the number of days of inpatient

hospital care per year;

· Restrictions on the number of outpatient visits per

year;

· Reduced coinsurance levels for outpatient treatment;

· Employee’s share of the cost of outpatient care not

included in out-of-pocket expense limit;

· Maximum dollar amounts per year or per lifetime.

A typical limit on inpatient care is 30 days per year.

Similarly, outpatient care might be restricted to 20 or 30

visits per year at a coinsurance rate of 50 percent. In nonHMO plans, payments often are limited to a dollar maximum for both inpatient and outpatient care, with $50,000

per lifetime a common limit. Limitations on days and dollars often are combined for alcohol and drug abuse care.15

For example, plans often limit coverage to 30 days per year

and to $50,000 per lifetime for both alcohol and drug abuse

treatment.

HMO’s frequently impose limits on the number of days

of both inpatient and outpatient substance abuse treatment.

In addition, an HMO may require a small copayment for

outpatient visits, such as $20 per visit.

Other medical benefits

The survey also captures data on the incidence of several other services provided through medical care plans. For

example, some plans cover at least part of the costs for routine physical examinations and for well-baby care. HMO’s

14 The designation of substance abuse coverage as more restrictive than

that for other illnesses results from a comparison of types of coverage. For

instance, if a plan limits inpatient substance abuse care to 30 days per year

but the limit oninpatient care of any other illness exceeds 30 days per year,

that plan contains separate, more restrictive, limit.

15 For more detailed discussion of employer-provided substance abuse coverage, see Marc E. Kronson, “Substance Abuse Coverage Provided by Employer Medical Plans,” Monthly Labor Review, April 1991, pp. 3-10. In

addition, see Substance Abuse Provisions in Employee Benefit Plans,

Bulletin 2412 (Bureau of Labor Statistics, August 1992)
When such plans require an employee contribution, that

contribution is typically a flat amount__for example, $5 per

month for individual coverage and $10 per month for family coverage.

Generally, participants covered by dental care plans receive benefits through a fee-for-service plan, which reimburses patients or providers only after services are received

(table 51). The remaining participants have their dental benefits provided through either a health maintenance organization or a preferred provider organization.

Dental plans cover preventive and restorative services.

Preventive care typically includes dental examinations, prophylaxis (cleaning), and x rays. Restorative procedures include fillings, periodontal care, endodontic care, prosthetics, and crowns. Periodontal care is the treatment of tissues

and bones supporting the teeth. Endodontics involves the

treatment of the tooth pulp, such as root canal work. Prosthetics deals with the construction and fitting of bridges and

dentures.

Orthodontic care, including straightening teeth and maintaining proper spacing of teeth, is covered less often by dental

plans than are other procedures. In addition, plans frequently

limit orthodontic coverage to dependent children only.

There are four methods used by dental care plans to cover

dental services:

· Plan pays a percent of dental charges;

· Plan pays up to a specified dollar amount per

procedure;

· Plan requires patient to pay an initial copayment,

after which the plan pays additional charges;

· Plan pays a varying percent of dental charges, based

on a patient’s past use of dental services.

Dental payments typically are based on a proportion of

the usual, customary, and reasonable charge for a procedure. The proportion covered by a plan often depends on

the type of procedure performed. Less costly procedures

such as examinations and x rays may be covered at 100

percent. Fillings, surgery, endodontics, and periodontics are

more likely to be covered at 80 percent. The most expensive procedures—crowns, prosthetics and orthodontia

—often are covered at 50 percent of the usual, customary,

and reasonable charge.

Some dental plan participants are offered reimbursement

based on a schedule of cash allowances. This is more common for restorative services, such as fillings, crowns, and

endodontics, than for preventive services. In this type of

arrangement, each procedure is subject to a specified maximum dollar amount that the plan will pay to the participant

or the dentist. Orthodontic care is not normally subject to

this type of schedule.

Generally, dental plans do not require copayments or have

their payments based on incentive schedules, that is, the

percent of dental expenses paid by the plan increases each

16Under this act, an HMO must provide certain coverage, such as home

health care, physical examinations, and children’s eye and ear

examinations. Under certain circumstances, employers may be required to

offer employees medical care coverage through federally qualified HMO’s.

17The act requires employers who maintain health insurance plans to continue coverage to terminated workers for up to 18 months. Workers may be

charged up to 102 percent of the premium cost. Based on a 1989 change to

this law, employees disabled at the time of termination can have benefits

continued for up to 29 months, and can be charged up to 150 percent of the

premium cost after 18 months.

and immunizations and inoculations. HMO's must include

these benefits to quality under the Health Maintenance Organization Act of 1973, as amended.16

Pre-existing condition limitation

Plans may impose restrictions on care provided to individuals who join a plan with a “pre-existing condition.” This

is a medical condition that existed prior to the individual

being covered by the plan. Among the possible restrictions

imposed are a limit on the amount the plan will pay for

treatment of the condition or a specified time period after

joining the plan during which no payment will be made for

treatment of the condition.

Coverage for retired workers

Although the Consolidated Omnibus Budget Reconciliation Act of 1985 requires employers to continue health

care benefits for employees who are retired, laid off, or otherwise separated from employment, workers may be charged

all of the premium costs at group rates. In addition, the continuation period stipulated by the law is limited.17 The survey of small private establishments focuses on coverage for

retired employees that are financed wholly or partly by the

employer.

Full-time medical care participants in the survey may

work for employers who finance, at least in part, medical

care protection after retirement (tables 49-50). These workers are usually in plans that provide postretirement coverage regardless of their age. Retirees are typically covered

by the same plan as active employees, although benefits are

coordinated with Medicare once a retiree reaches age 65. It

is more likely for the coverage to be partly paid by the retiree than to be wholly employer financed.

Dental Care

Dental care benefits often are available to full-time employees in small private establishments. Dental care may be

offered as a part of a comprehensive medical and dental

plan, or as a separate plan in addition to medical coverage.

Often, employers offer a series of medical plans from which

employees may choose, as well as a separate dental plan

that can accompany any medical plan.

When a single plan includes dental benefits together with

medical care benefits, it is not possible to distinguish which

portion of the employee’s contribution, if applicable, goes

toward dental coverage. Therefore, employee contribution

data are examined in stand-alone dental plans, that is, those

that offer dental benefits separately from medical plans.
year if the participant gets regular dental examinations.

Frequently, plans specify a deductible amount before any

dental benefits are paid by the plan. Deductibles, such as

$25 and $50 per year, often apply. Other plans can require

the participant to pay a one-time deductible (like $50), rather

than a yearly deductible. Deductibles are common for restorative services, and less common for preventive services

and orthodontia. Plans frequently limit the amount of payment each year by specifying an annual maximum benefit,

for example, $1,000 per year. Benefits for orthodontic services often are subject to a separate lifetime maximum, commonly ranging between $1,000 and $1,500.18

As a cost containment technique, many dental participants are in plans that require participants to obtain authorization from the plan before undergoing expensive treatment.

Commonly, procedures costing $200 or more are subject to

advance authorization.

 Vision Care

Vision care coverage, when available, is typically provided through a fee-for-service plan. Vision benefits may

also be available through an HMO or a PPO, which restrict

the providers available to participants (table 52).

Vision benefits cover eyeglasses, and, with few exceptions, eye examinations. Coverage for contact lenses is somewhat less extensive. To be included in the survey, vision

plans must cover contact lenses for cosmetic reasons. Plans

that provide coverage limited to medically necessary contact lenses are not included in the survey.

Participants with vision care coverage generally have limits placed on their benefits.19 Typically, coverage for eyeglasses and contact lenses are subject to scheduled dollar

allowances. For eyeware, other plans require an employee

copayment or offer a discount on the purchase of eyeglasses

and contact lenses at specified locations. Eye examinations

are commonly subject to either a dollar maximum per visit,

or the participant is required to pay a small copayment pervisit.

19 For more details on vision care benefits, see Rita S. Jain, “EmployerSponsored Vision Care Brought Into Focus,” Monthly Labor Review,

September 1988, pp. 19-23.

18 For more details on dental care benefits, see Rita S. Jain, “EmployerSponsored Dental Insurance Eases The Pain,” Monthly Labor Review,

October 1988, pp. 18-23.
Table 45. Medical care benefits: Requirements for employee contributions, by type of funding arrangement, full-time

employees, small private establishments, 1994

Contributory status

All employees Professional, technical,

and related employees

Clerical and sales

employees

Blue-collar and service

employees

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

Number (in thousands) with

single coverage for medical

care ..................................... 23,536 18,951 4,586 5,262 4,231 1,031 8,168 6,611 1,557 10,106 8,109 1,998

Number (in thousands) with

family coverage for medical

care ..................................... 20,997 16,829 4,169 4,602 3,675 927 7,195 5,793 1,401 9,201 7,361 1,840

Percent

Single coverage

Total with single coverage

for medical care .............. 100 100 100 100 100 100 100 100 100 100 100 100

Employee contributions

not required ................ 46 46 44 48 49 44 43 43 40 47 47 47

Employee contributions

required ...................... 52 52 56 50 49 54 55 54 60 51 51 53

Not determinable .............. 22133322 1 ( ) 2 2 -

Family coverage

Total with family coverage

for medical care .............. 100 100 100 100 100 100 100 100 100 100 100 100

Employee contributions

not required ................ 19 21 14 17 18 12 15 16 13 24 26 16

Employee contributions

required ...................... 75 73 79 76 75 80 79 78 83 70 69 75

Not determinable .............. 667768664669

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals.

Where applicable, dash indicates no employees in this category.
Table 46. Medical care benefits: Amount and type of employee contribution for individual coverage,1 full-time employees, small

private establishments, 1994

Type and amount of

contribution

All employees Professional, technical,

and related employees

Clerical and sales

employees

Blue-collar and service

employees

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

Number (in thousands) with

contributory coverage ......... 12,318 9,765 2,553 2,621 2,068 553 4,510 3,577 933 5,188 4,120 1,068

Percent

Total with contributory

coverage ............................. 100 100 100 100 100 100 100 100 100 100 100 100

Flat monthly amount ............. 72 68 84 67 62 83 70 66 86 75 74 82

Less than $5.00 ................ 1 1 2 ( ) 2 ( ) 2 ( ) 1 1 1 - 1 1 -

$5.00 - $9.99 .................... 34122123156 2 ( )

$10.00 - $14.99 ................ 672665561892

$15.00 - $19.99 ................ 664442445893

$20.00 - $29.99 ................ 14 14 13 9 10 7 16 16 14 15 15 15

$30.00 - $39.99 ................ 13 13 11 13 13 14 12 13 9 13 14 10

$40.00 - $49.99 ................ 8 5 19 9 7 19 8 7 13 7 2 24

$50.00 - $59.99 ................ 8 8 11 8 8 10 10 8 17785

$60.00 - $69.99 ................ 327328327336

$70.00 - $79.99 ................ 216319324217

$80.00 - $89.99 ................ 1 2 ( ) 4 1 1 2 1 2 ( ) 4 1 2 ( ) 6

$90.00 - $99.99 ................ 212334112111

$100.00 - $124.99 ............ 214111327112

$125.00 or greater ............ 2 2 - 3 4 - 1 1 - 2 3 -

Composite rate3 .................... 10 11 7 11 13 5 11 134889

Amount varies by employee

option4 ............................ 9 11 4 11 13 5 10 115781

Amount varies by earnings ... 1121 2 ( ) 2 2 ( ) 2 ( ) 1 2 2 3

Other ..................................... 222444222222

Contribution not

determinable ................... 672671672563

Average5

Average flat monthly

contribution ......................... $40.97 $38.52 $48.62 $46.83 $46.41 $47.99 $40.98 $37.77 $50.43 $38.35 $35.77 $47.31

1 Plans providing services or payments for services rendered in the hospital or by a physician. Excludes plans that provided only dental, vision or

prescription drug coverage. 2 Less than 0.5 percent. 3 A composite rate is a set contribution covering more than one benefit area, for example, health care and sickness and accident insurance. Cost data for

individual plans can not be determined. 4 Amount varies by options selected under a "cafeteria plan" or employer-sponsored reimbursement account. 5 The average is presented for all covered workers; averages exclude workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. Where applicable, dash indicates no employees in this category.
Table 47. Medical care benefits: Amount and type of employee contribution for family coverage,1 full-time employees, small

private establishments, 1994

Type and amount of

contribution

All employees Professional, technical,

and related employees

Clerical and sales

employees

Blue-collar and service

employees

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

All

plans

NonHMO

plans

HMO

plans

Number (in thousands) with

contributory coverage ......... 17,821 14,155 3,666 4,083 3,250 832 6,561 5,255 1,306 7,177 5,650 1,528

Percent

Total with contributory

coverage ............................. 100 100 100 100 100 100 100 100 100 100 100 100

Flat monthly amount ............. 74 72 80 71 68 83 71 70 75 78 77 83

Less than $20.00 .............. 2 2 1 1 1 1 1 1 1 2 3-

$20.00 - $29.99 ................ 2 2 2 ( ) 2 2 1 2 3 2 ( ) 2 2 -

$30.00 - $39.99 ................ 34112 2 ( ) 2 2 3 5 6 2 ( )

$40.00 - $49.99 ................ 333332224452

$50.00 - $59.99 ................ 23123 2 ( ) 1 2 2 ( ) 3 3 3

$60.00 - $69.99 ................ 22111111133 2 ( )

$70.00 - $79.99 ................ 554223664554

$80.00 - $89.99 ................ 555446454666

$90.00 - $99.99 ................ 22111233211 2 ( )

$100.00 - $124.99 ............ 8 7 10 8 8 6 9 8 12 7 6 11

$125.00 - $149.99 ............ 547659454439

$150.00 - $174.99 ............ 8 9 4 4 4 4 9 10 5 9 10 3

$175.00 - $199.99 ............ 554783436454

$200.00 - $224.99 ............ 444666343453

$225.00 - $249.99 ............ 5 3 12 5 3 15 3 2 4 8 5 17

$250.00 - $274.99 ............ 445445446334

$275.00 - $299.99 ............ 437554439216

$300.00 or greater ............ 7 6 10 9 7 15667659

Composite rate3 .................... 8 9 7 8 10 4 10 10 10 7 7 6

Amount varies by employee

option4 ............................ 782893784561

Amount varies by earnings ... 1 1 1 2 ( ) 2 ( ) 1 2 ( ) 2 ( ) 2 ( ) 2 2 2

Other ..................................... 323332335222

Contribution not

determinable ................... 8 8 6 9 10 6 8 9 6 7 7 5

Average5

Average flat monthly

contribution (dollars per

month) ................................ 159.63 151.00 189.63 180.73 173.35 204.31 159.56 154.76 177.58 148.84 136.54 190.92

1 Plans providing services or payments for services rendered in the hospital or by a physician. Excludes plans that provided only dental, vision or

prescription drug coverage. If the amount of contribution varied by either size or composition of family, the rate for an employee with a spouse and one child

was used. For a small percentage of employees, the employee contributes the same amount for single and family coverage. 2 Less than 0.5 percent. 3 A composite rate is a set contribution covering more than one benefit area, for example, health care and sickness and accident insurance. Cost data for

individual plans can not be determined. 4 Amount varies by options selected under a "cafeteria plan" or employer-sponsored reimbursement account. 5 The average is presented for all covered workers; averages exclude workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. Where applicable, dash indicates no employees in this category.
Table 48. Medical care benefits:1 Fee arrangement, full-time

employees, small private establishments, 1994

Fee arrangement and financial

intermediary

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

medical care ....................... 23,536 5,262 8,168 10,106

Percent

Total with medical care ............. 100 100 100 100

Traditional fee-for-service2 ... 55 53 55 57

Preferred provider

organization3 .................. 24 27 24 23

Health maintenance

organization4 .................. 19 20 19 20

Other5 ................................... 1 6 ( ) 2 1

1 Plans providing services or payments for services rendered in the

hospital or by a physician. Excludes plans that provided only dental, vision,

or prescription drug coverage. 2 These plans pay for specific medical procedures as expenses are

incurred. 3 A preferred provider organization (PPO) is a group of hospitals and

physicians that contracts to provide comprehensive medical services. To

encourage use of organization members, the health care plan limits

reimbursement rates when participants use nonmember services. 4 Includes federally qualified (those meeting standards of the Health

Maintenance Organization Act of 1973, as amended) and other HMO’s

delivering comprehensive health care on a prepayment rather than

fee-for-service basis. 5 Includes exclusive provider organizations, which are groups of hospitals

and physicians that contract to provide comprehensive medical services. 

Participants are required to obtain services from members of the organization

in order to receive plan benefits. 6 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 49. Medical care benefits: Effect of retirement on

coverage,1 full-time employees, small private establishments,

1994

Retiree coverage

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

medical care ....................... 23,536 5,262 8,168 10,106

Percent

Total with medical care ............. 100 100 100 100

With retiree coverage ........... 22 20 22 22

Without retiree coverage ...... 73 76 73 72

Not determinable .................. 5 4 5 6

1 Plans providing services or payments for services rendered in the 

hospital or by a physician. Excludes plans that provided only dental, vision,

or prescription drug coverage.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 50. Retiree medical care benefits: Source of plan funding,1 full-time employees, small private

establishments, 1994

Item

All employees

Professional,

technical, and

related employees

Clerical and sales

employees

Blue-collar and

service employees

Under

age 65

Age 65 or

greater

Under

age 65

Age 65 or

greater

Under

age 65

Age 65 or

greater

Under

age 65

Age 65 or

greater

Number (in thousands) with

medical care ....................... 23,536 23,536 5,262 5,262 8,168 8,168 10,106 10,106

Percent

Total with medical care ............. 100 100 100 100 100 100 100 100

Retiree coverage provided ... 21 19 20 18 21 19 21 19

Employer paid ................... 34333346

Jointly paid ........................ 11 8 10 8 11 9 10 6

Retiree paid ...................... 44555633

Cost unknown ................... 33222244

No retiree coverage .............. 73 75 76 78 73 75 72 74

Not determinable .................. 56445666

1 Plans providing services or payments for services rendered in

the hospital or by a physician. Excludes plans that provided only

dental, vision, or prescription drug coverage.

NOTE: Because of rounding, sums of individual items may not

equal totals. Where applicable, dash indicates no employees in

this category.

Table 52. Vision care benefits: Fee arrangement, full-time

employees, small private establishments, 1994

Fee arrangement

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

vision care .......................... 3,651 723 1,244 1,683

Percent

Total with vision care ................ 100 100 100 100

Traditional fee-for-service1 ... 64 63 62 65

Preferred provider

organization2 .................. 8 8 8 8

Health maintenance

organization3 .................. 23 27 18 25

Other4 ................................... 6 2 12 3

1 These plans pay for specific vision procedures as expenses are

incurred. 2 A preferred provider organization (PPO) is a group of hospitals and

physicians that contracts to provide comprehensive vision services. To

encourage use of organization members, the vision care plan limits

reimbursement rates when participants use nonmember services. 3 Includes federally qualified (those meeting standards of the Health

Maintenance Organization Act of 1973, as amended) and other HMO’s

delivering comprehensive health care on a prepayment rather than

fee-for-service basis. 4 Includes exclusive provider organizations, which are groups of hospitals

and physicians that contract to provide comprehensive vision services. 

Participants are required to obtain services from members of the organization

in order to receive plan benefits.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 51. Dental care benefits: Fee arrangement, full-time

employees, small private establishments, 1994

Fee arrangement

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

dental care .......................... 10,135 2,635 3,644 3,856

Percent

Total with dental care ............... 100 100 100 100

Traditional fee-for-service1 ... 84 84 82 85

Preferred provider

organization2 .................. 6 6 5 5

Health maintenance

organization3 .................. 8 9 8 8

Other4 ................................... 2 1 5 1

1 These plans pay for specific dental procedures as expenses are

incurred. 2 A preferred provider organization (PPO) is a group of hospitals and

dentists that contracts to provide comprehensive dental services. To

encourage use of organization members, the dental care plan limits

reimbursement rates when participants use nonmember services. 3 Includes federally qualified (those meeting standards of the Health

Maintenance Organization Act of 1973, as amended) and other HMO’s

delivering comprehensive health care on a prepayment rather than

fee-for-service basis. 4 Includes exclusive provider organizations, which are groups of hospitals

and dentists that contract to provide comprehensive dental services. 

Participants are required to obtain services from members of the organization

in order to receive plan benefits.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
a small percent of participants. These include: flat dollar

amounts that increase as service increases; flat dollar

amounts that increase as wages increase; and multiple-ofearnings formulas that increase the multiple at higher salary levels.

Coverage for older active workers and retirees

Many plans reduce benefits for older active workers.

Coverage is reduced to minimize the increased cost of insuring older workers.20 Plans that reduce coverage commonly make their first reduction at age 65 or 70. Rarely do

reductions occur before age 65.

Many plans reduce coverage for older workers only once,

typically to 50 percent of the original life insurance amount.

Other plans reduce coverage in several stages, such as a

reduction to 65 percent of original coverage at age 65, then

to 50 percent at age 70.

In some instances, basic life insurance coverage continues after retirement for full-time participants in small private establishments. This coverage almost always continues for the rest of the retiree’s life, but the amount of the

benefit is usually reduced at least once during retirement.21

Related protection

Additional life insurance, supplementing basic coverage,

often is available. In virtually all cases, employees have to

pay the full premium for such benefits. The typical supplemental plan provides term life insurance in multiples of one

to three times annual pay, at the employee’s option. The

availablity of supplemental coverage is more prevalent for

employees who have their basic insurance determined by a

multiple-of-earnings formula than for those with a flat dollar amount of coverage.

Life insurance coverage for dependents also is available

to many participants. Workers with this coverage are usually required to pay the entire premium. The most prevalent method used to provide dependent coverage is a flat

dollar benefit. In such plans, spousal coverage typically provides benefits of $5,000 or more while coverage for children usually offers benefits of $1,000, $2,000, or $5,000

per child. Among other plans, the employee has the option

to select specific benefits.

20Details on life insurance benefits for older workers are discussed by

Michael A. Miller in “Age-Related Reductions in Workers’ Life Insurance,”

Monthly Labor Review, September 1985, pp. 29-34. 21 For more information on retiree life insurance, see Margaret Simons

and Cynthia Thompson, “Life Insurance Benefits for Retired Workers,”

Monthly Labor Review, September 1990, pp.17-21.

Life insurance is provided to a majority of full-time

employees in small private establishments (tables 53-66).

Most workers in small private establishments with life insurance are covered by flat dollar amounts, often $10,000

to $15,000. Formulas based on earnings, such as multipleof-earnings formulas, which commonly provide basic insurance of one or two times annual salary, cover many of

the remaining life insurance plan participants. Multiple-ofearnings formulas are most prevalent in medium and large

private establishments.

Employers generally pay the entire cost of basic life insurance. When employee contributions are required, it is

frequently because life insurance benefits are being offered

as part of a cafeteria plan or reimbursement account. (For

definitions, see chapter 8.) These plans allow workers to

choose from various benefit options depending on their

needs. In such cases, employees may have to contribute,

often in the form of pretax dollars, to obtain the benefit

package they desire. Another form of employee contribution is a specified flat dollar amount per $1,000 of coverage, such as 20 cents per $1,000 of coverage per month.

Types and amounts of benefit formulas

A flat dollar amount of insurance is the most prevalent

means of providing life insurance protection for full-time

participants in small private establishments. Insurance

amounts ranging from $5,000 to $25,000 are quite common

in such plans. Blue-collar and service workers are much

more likely to receive this type of benefit than professional,

technical, and related workers or clerical and sales workers.

However, when provided, the flat-dollar amount of life insurance coverage is usually highest for the professional, technical, and related workers.

Basic coverage for most of the other full-time life insurance participants is often linked to their earnings, enabling

the level of protection to increase automatically with pay.

The most common method of tying life insurance protection to earnings is to multiply the employee’s annual earnings by a factor of one or two and round the product to the

next higher $1,000. For example, an employee earning

$22,700 would receive $46,000 of coverage under a plan

providing two times earnings ($22,700 x 2 = $45,400, which

rounds up to $46,000). Participants covered by these plans

may have a limit placed on the amount of coverage available. Such maximums usually range between $50,000 and

$500,000.

Other methods of providing life insurance protection cover

Chapter 5. Life Insurance
Service requirement

Life insurance participants often have to work a minimum period to qualify for the plan. The most prevalent service requirements for such workers are 1 to 3 months. However, most of the other participant in life insurance plans

do not have to meet any qualifying service requirements.

Accident death and dismemberment

Accidental death and dismemberment insurance is available to about half of full-time employees in small private

establishments. This insurance provides additional benefits

if a worker dies or loses an eye or a limb in an accident. The

accidental death and dismemberment benefit commonly

equals the basis life insurance benefits for accidental death,

and a portion of that benefit for dismemberment.22

Survivor income benefits

A few full-time employees in small private establishments

are covered by plans that provide a monthly income to surviving members of a deceased employee's family. These

survivor income benefits are in addition to other benefits,

such as basic life insurance and survivor pension benefits.

Survivor income payments are generally a percentage of

the employee's pay or a flat dollas amount. Benefits usually

continue for 24 months, although some continue until a specific event occurs, such as the surviving spouse remarries or

reaches age 65, or surviving children reach a given age.

22 For more information on accidental death and dismemberment benefits, see Cynthia Thompson, "Compensation for Death and Dismemberment," Monthly Labor Review, September 1989, pp. 13-17.
Table 53. Life insurance: Summary of provisions, full-time

employees, small private establishments, 1994

Item

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

Multiple of earnings benefit ... 32 38 39 22

Dollar amount benefit ........... 68 62 61 78

Benefits reduced for older

active workers ................. 27 29 32 21

Retiree coverage available ... 20 17 21 20

Supplemental coverage

available ......................... 29 29 34 25

Dependent coverage available ................................. 31 31 33 29

Spouse coverage available ............................. 31 31 33 29

Child coverage available .. 30 30 32 29

Required employee contribution ............................. 18 13 17 20

NOTE: Where applicable, dash indicates no employees in this category.

Table 54. Life insurance: Method of determining basic

coverage, full-time employees, small private establishments,

1994

Type

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

Multiple of earnings benefit 32 38 39 22

Fixed multiple of

earnings2 .................. 31 38 39 22

Multiple varies by

earnings .................... 1 ( ) 1 ( ) 1 ( ) –

Multiple varies by

service ...................... 1 ( ) 1 ( ) 1 ( ) 1 ( )

Dollar amount benefit ......... 68 62 61 78

Flat dollar amount ........... 67 61 59 77

Dollar amount varies by

earnings .................... 1 1 1 1

Dollar amount varies by

service ...................... 1 ( ) 1 ( ) 1 ( ) 1

Other ................................... 1 ( ) 1 ( ) 1 ( ) 1 ( )

1 Less than 0.5 percent. 2 Includes participants in plans in which insurance equaled a multiple of

earnings, plus or minus a specified amount.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 55. Life insurance: Flat dollar benefit amounts, full-time employees,

small private establishments, 1994 

Amount of insurance All

employees

Professional,

technical,

and related

employees

Clerical

and sales

employees

Blue-collar

and

service

employees

Number (in thousands) with

dollar amount of basic life

insurance ............................ 14,947 2,987 4,784 7,176

Percent

Total with dollar amount of

basic life insurance ............. 100 100 100 100

Flat dollar amount ............. 98 98 98 98

Less than $5,000 .......... 4 1 2 6

$5,000 - $9,999 ............ 9 5 10 10

$10,000 - $14,999 ........ 41 35 40 44

$15,000 - $19,999 ........ 18 19 20 16

$20,000 - $24,999 ........ 10 14 10 9

$25,000 - $29,999 ........ 8 10 8 7

$30,000 - $49,999 ........ 5 7 6 4

$50,000 - $99,999 ........ 3 6 2 2

$100,000 and over ........ 1 3 1 1 ( )

Dollar amount varies by

earnings ...................... 1 1 2 1

Dollar amount varies by

service ........................ 1 ( ) 1 ( ) 1 ( ) 1

Average2

Average flat dollar amount of

basic life insurance ............. $15,935 $21,584 $15,693 $13,743

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude workers without the

plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. Where

applicable, dash indicates no employees in this category.
Table 56. Life insurance: Multiple of earnings benefit amounts, full-time

employees, small private establishments, 1994

Formula

All

employees

Professional,

technical, and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

multiple of earnings basic

life insurance ...................... 6,965 1,840 3,097 2,028

Percent

Total with multiple of earnings

formula ................................ 100 100 100 100

Flat multiple-of-earnings2 99 100 99 98

Less than 1.0 ................ 3 4 2 4

1.0 ................................. 49 38 50 58

1.1 - 1.9 ........................ 11 14 10 10

2.0 ................................. 27 32 28 21

2.1 - 2.9 ........................ 3 2 4 4

3.0 ................................. 4 6 3 2

Greater than 3.0 ........... 2 4 2 1

Multiple varies by

earnings ...................... 1 ( ) 1 ( ) 1 –

Multiple varies by service 1 1 ( ) 1 2

Average3

Average flat multiple of

earnings formula ................. 1.5 1.7 1.5 1.4

1 Less than 0.5 percent. 2 Includes participants in plans in which insurance equaled a multiple of earnings, plus or

minus a specified amount. 3 The average is presented for all covered workers; averages exclude workers without the

plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. Where

applicable, dash indicates no employees in this category.
Table 57. Life insurance: Maximum benefits placed on multiple of earnings

formulas, full-time employees, small private establishments, 1994

Maximum All

employees

Professional,

technical,

and related

employees

Clerical

and sales

employees

Blue-collar

and

service

employees

Number (in thousands) with

multiple of earnings

formula ................................ 6,965 1,840 3,097 2,028

Percent

Total with multiple of earnings

formula ................................ 100 100 100 100

With maximum benefit

amount ............................ 57 65 63 40

Less than $50,000 ............ 1 1 ( ) 1 1

$50,000 - $99,999 ............ 20 19 22 19

$100,000 ........................... 8 12 8 4

$100,001 - $249,999 ........ 11 15 12 5

$250,000 - $499,999 ........ 10 13 10 6

$500,000 ........................... 4 4 5 4

$500,001 - $999,999 ........ 1 1 ( ) 1 1 ( )

$1,000,000 or more .......... 3 2 4 1

No maximum specified ......... 34 26 27 53

Not determinable .................. 9 10 10 7

Average2

Average maximum .................... $237,305 $217,830 $268,513 $190,133

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude workers without the

plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. Where

applicable, dash indicates no employees in this category.
Table 59. Life insurance: Retiree coverage, full-time

employees, small private establishments, 1994

Coverage

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

With retiree coverage ......... 20 17 21 20

Employer paid ................. 10 7 8 12

Retiree paid .................... 8 8 10 6

Jointly paid ...................... 1 1 ( ) 1 1

Source of payment

unknown ................... 1 2 2 1

No retiree coverage ............ 77 81 77 76

Not determinable ................ 3 2 2 4

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 60. Life insurance: Reductions in benefits for retirees,

full-time employees, small private establishments, 1994

Reduction policy

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

With retiree coverage ......... 20 17 21 20

No reductions ................. 4 2 5 3

With reductions

Reduced once .......... 8 7 8 10

Reduced more than

once .................... 3 3 3 3

Reduction not

determinable ............. 4 5 5 4

No retiree coverage ............ 77 81 77 76

Not determinable ................ 3 2 2 4

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 58. Life insurance: Minimum benefits placed on multiple of earnings

formulas, full-time employees, small private establishments, 1994

Minimum All

employees

Professional,

technical,

and related

employees

Clerical

and sales

employees

Blue-collar

and

service

employees

Number (in thousands) with

multiple of earnings

formula ................................ 6,965 1,840 3,097 2,028

Percent

Total with multiple of earnings

formula ................................ 100 100 100 100

With minimum benefit

amount ............................ 11 9 12 12

Less than $5,000 .............. 1 1 2 1 ( )

$5,000 - $9,999 ................ 1 2 1 1 ( )

$10,000 - $24,999 ............ 7 5 9 7

$25,000 - $49,999 ............ 2 2 1 3

$50,000 - $74,999 ............ 1 ( ) 1 ( ) 1 ( ) 1 ( )

No minimum specified .......... 76 75 74 78

Not determinable .................. 13 15 13 10

Average2

Average minimum ..................... $14,266 $14,268 $11,935 $17,976

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exclude workers without the

plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. Where

applicable, dash indicates no employees in this category.
Table 62. Life insurance: Supplemental coverage, full-time

employees, small private establishments, 1994

Coverage

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

With supplemental coverage .... 29 29 34 25

Employee paid ...................... 26 27 29 23

Jointly paid ............................ 1 1 2 1

Flexible benefits .................... 1 1 2 1

Composite rate ..................... 1 ( ) 1 1 ( ) 1 ( )

Financing not available ......... 1 ( ) 1 ( ) 1 ( ) 1 ( )

No supplemental coverage ....... 69 69 65 72

Not determinable ...................... 2 1 1 3

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 61. Life insurance: Method of reducing benefits for

retirees, full-time employees, small private establishments,

1994

Method

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

retiree coverage .................. 4,317 840 1,670 1,807

Percent

Total with retiree coverage ....... 100 100 100 100

With reductions ......................... 59 59 53 66

Percent of coverage ............. 9 14 10 7

Percent of coverage with

minimum and/or

maximum ........................ 2 2 2 1

Percent of salary ................... 1 1 ( ) 1 1

Percent of salary with

minimum and/or

maximum ........................ 1 3 1 1 ( )

Minimum and/or maximum

benefit only ..................... 1 2 1 1

Flat amount ........................... 18 12 19 20

Other ..................................... 1 1 1 –

Not determinable .................. 26 25 17 35

No reductions ........................... 18 13 24 15

Reductions not determinable .... 23 28 23 19

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 63. Life insurance: Availability of supplemental

coverage by method of determining basic coverage, full-time

employees, small private establishments, 1994

Type

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

Multiple of earnings formula ..... 32 38 39 22

With supplemental benefits .. 15 15 20 10

Without supplemental

benefits ........................... 17 23 19 12

Not determinable .................. 1 ( ) 1 ( ) 1 ( ) 1 ( )

Flat dollar amount formula ........ 68 62 61 78

With supplemental benefits .. 14 14 14 15

Without supplemental

benefits ........................... 52 47 46 60

Not determinable .................. 2 1 1 3

Other formula ............................ 1 ( ) 1 ( ) 1 ( ) 1 ( )

With supplemental benefits .. 1 ( ) 1 ( ) 1 ( ) –

Without supplemental

benefits ........................... 1 ( ) – – 1 ( )

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 64. Life insurance: Dependent coverage, full-time

employees, small private establishments, 1994

Coverage

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

With dependent coverage ......... 31 31 33 29

Employer paid ....................... 8 8 6 9

Employee paid ...................... 19 21 23 15

Jointly paid ............................ 1 1 1 2

Source of payment unknown 1 1 ( ) 1 1

Flexible benefits .................... 1 1 2 1 ( )

Composite rate ..................... 1 1 1 2

No dependent coverage ........... 67 68 65 69

Not determinable ...................... 2 1 2 3

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 66. Life insurance: Eligibility requirement, full-time

employees, small private establishments, 1994

Length-of-service requirement

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

basic life insurance ............. 21,955 4,830 7,904 9,222

Percent

Total with basic life insurance ... 100 100 100 100

With service requirement .......... 54 46 54 59

1 month ................................. 19 20 23 16

2 months ............................... 6 4 4 9

3 months ............................... 19 14 19 23

4 - 5 months .......................... 1 1 1 1

6 months ............................... 6 3 5 8

7 - 11 months ........................ 1 ( ) 1 1 ( ) 0

12 months ............................. 3 2 2 3

Greater than 12 months ........ 1 ( ) – 1 ( ) 1 ( )

No service requirement ............ 22 25 23 20

Closed to new employees ........ 1 ( ) 1 ( ) 1 ( ) 1 ( )

Not determinable ...................... 23 30 23 20

Average2

Average service requirement

(in months) .......................... 3.1 2.8 3.0 3.3

1 Less than 0.5 percent. 2 The average is presented for all covered workers; averages exlude

workers without the plan provision.

NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.

Table 65. Accidental death and dismemberment insurance: 

Method and amount of coverage, full-time employees, small

private establishments, 1994

Amount of coverage

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

AD&D insurance ................. 17,178 3,968 6,087 7,122

Percent

Total with AD&D insurance ....... 100 100 100 100

Multiple of life insurance ....... 90 91 91 90

Flat amount ........................... 6 4 5 8

Multiple of earnings .............. 3 3 3 2

Other ..................................... 1 2 1 1

NOTE: Because of rounding, sums of individual items may not

equal totals. Where applicable, dash indicates no employees in this

category.
as the average over a 5-year period. Such formulas usually

designate the 5 con-secutive years with the highest earnings

out of the last 10 years before retirement.

Participants in plans with terminal-earnings formulas frequently have benefit formulas that vary according to service, earnings, or a combination of the two factors. As an

example of variation by earnings, a terminal-earnings formula might credit an employee with 1 percent of earnings

up to the first $12,000 in each year of service plus 1.5 percent of the earnings exceeding that amount. If total earnings were $40,000 and service was 30 years, the annual pension payment would be computed as follows:

1 percent times $12,000 .................................................. $120

1.5 percent times $28,000............................................... $420

Total credits per year of service ..................................... $540

Credits ($540) times 30 years = annual benefit ...... $ 16,200

Similarly, formulas based on career earnings can provide

participants with percentages that vary, usually by earnings.

The earnings used to compute pension benefits for earnings-based formulas commonly include only “basic” earnings, that is, straight-time earnings. When additional earnings are part of the benefit calculation, such earnings may

include overtime pay, shift differentials, bonuses, and commissions.

Most plans that do not use a percent-of-earnings benefit

formula specify a dollar amount to be paid for each year of

service; for example, a plan might pay $20 monthly for each

of an employee’s 30 years of service, thus yielding a pension of $600 a month. Although the dollar amount in these

formulas can vary with an employee’s earnings or service,

the usual method is to multiply a uniform (single) dollar

amount by years of service.

The basis of pension payments can differ sharply by employee group. Traditionally, white-collar participants are

provided earnings-based pensions. Although this basis also

is used for blue-collar participants, dollar-amount formulas

are also common for them.

In addition, two other types of defined benefit pension

formulas are used. Percent-of-contribution formulas specify

a periodic contribution by an employer, and occasionally

by an employee, to a plan. Benefits are a percent of total

contributions, for example, 1 percent of total contributions

per month; if career contributions totaled $40,000, then

monthly pension benefits would equal $400. Cash account

pension formulas specify an employer contribution and a

rate of interest on that contribution. Benefits are computed

A defined benefit pension plan obligates an employer to

provide retirement benefits calculated by a formula specified in the plan. Benefits generally are based on salary, years

of service, or both. An employer, however, ordinarily has

considerable latitude in financing these benefits. Most fulltime employees in small private establishments are not offered defined benefit pension plans. However, in recent years

defined contribution plans have become increasingly prevalent. Defined contribution plans, which specify employer

and—if applicable—employee contributions, but do not

guarantee a specific benefit, are discussed in the next chapter.

The Employee Benefits Survey captures data on a variety

of defined benefit pension plan provisions, such as:

· Formulas for calculating benefits;

· How benefits are coordinated with Social Security payments;

· Ceilings on benefit payments;

· Survivor annuities;

· Age and service requirements for retirement;

· Availability of supplements to normal and early retirement pension benefits;

· Disability retirement benefits;

· Vesting schedules;

· Postretirement pension increases;

· Employee contributions; and

· Plan participation requirements.

Benefit formulas

Earnings-based formulas frequently are used to determine retirement payments for employees covered by defined benefit pension plans. Such formulas pay a flat percent of the employee’s annual earnings per year of service

(for example, 1.5 percent of earnings times 30 years of service, or 45 percent of annual earnings), or a percent that

varies by service, earnings, or age.

Approaches to calculating annual earnings and the rate

paid per year of service vary. For many participants with

earnings-based formulas, pensions are based on earnings in

the final years of employment (terminal-earnings formula);

for the remainder, an average of career earnings is used (career-earnings formula). Terminal earnings often are defined

Chapter 6. Defined Benefit Plans
as a percent of each employee’s account balance. Although

both percent-of-contribution and cash account pension formulas resemble the formulas in defined contribution plans,

the Internal Revenue Service classifies these plans as defined benefit plans because the employer guarantees a certain level of benefits.

In some pension plans, participants are eligible to receive

benefits from either primary or alternative formulas, whichever yields a greater benefit. Alternative formulas often are

included to provide a minimum level of benefits for persons

with short service or low earnings. For example, a plan may

have the two following formulas: a primary formula of 1.25

percent of average career earnings times years of service

and an alternative formula of $15 a month (or $180 a year)

for each year of service. In this case, the alternative formula

provides a higher benefit for persons with average career

earnings of less than $14,400 a year.

Private benefits and Social Security payments

Regardless of whether they provide private retirement

plans, all employers (except certain exempted ones) share

the cost of Social Security coverage equally with their employees. Because many plan sponsors feel that private pension and Social Security benefits should not be duplicative,

pension plans may contain Social Security integration provisions. Such integration may take the form of an offset

provision, under which part of the Social Security benefit is

subtracted from the annuity, or a provision to calculate the

pension at a lower rate for earnings below the Social

Security taxable wage base23 than for earnings above the

base.

Social Security offsets are usually applied immediately

upon retirement, whether or not the retiree is eligible for

Social Security benefits. The offset typically is specified as

a small percentage of the Social Security payment, for example, 1 percent times years of service. Frequently there is

a maximum offset, such as 50 percent of the Social Security

payment.

Plans that apply lower pension benefit rates to an

employee’s earnings below a specified level and higher rates

above that level are known as “step-rate excess” plans. For

example, a plan may provide a benefit equal to 1 percent of

earnings up through the Social Security taxable wage base

and 1.5 percent of earnings above the base for each year of

service.

Benefit formulas are often coordinated with Social

Security for pension plan participants. In 1989 and earlier

surveys in medium and large private establishments, the

offset approach to coordinating private pension plans and

Social Security was more prevalent than the step-rate excess approach, especially among terminal-earnings-based

plans. Since 1991, step-rate excess plans in all private sector EBS have been the most frequently observed method of

coordinating benefits for all earnings-based plans. This

23The Social Security taxable wage base increases annually. In 1993 it

was $57,600.

change resulted from the Tax Reform Act of 1986, which

imposed new rules for pension plans that coordinate with

Social Security benefits.24

Maximum and minimum benefit provisions

The Employee Retirement Income Security Act of 1974

(ERISA) and subsequent amendments place ceilings on the

size of annual pensions from defined benefit plans. These

restrictions largely affect only highly compensated employees. Many plans, however, have provisions that restrict

benefit levels for all participants. For example, some participants are in plans that limit the number of years of service included in benefit computations; maximums of 30 to

40 years are typical. For other participants, annual pensions

(usually including Social Security payments) can not exceed either a specified percent of average annual earnings,

or a specified dollar amount.

In some pension plans, participants can be covered by a

provision for a minimum retirement benefit, regardless of

age or service. Such minimum benefits provide a level of

protection, such as a flat amount of $100 a month, below

which retirement benefits can not fall.

Methods of payment

The benefit formulas just described are used to compute

a straight-life annuity, that is, a periodic payment for the

life of the retiree, with no additional payments to survivors.

Defined benefit pension plans offer a variety of additional

payment methods, although each is based on the straightlife annuity. For married employees, the standard benefit

prescribed by law is the joint-and-survivor annuity, which

provides payments to a surviving spouse after a retiree dies.

Such employees may choose a straight-life annuity or some

other form of benefit, but only upon written approval of

both the employee and spouse.

Another optional method of payment is for the employee

to receive some or all of the pension benefit in a lump-sum

payment. This lump sum provides the employee with the

actuarial equivalent of all or part of the annuity. Commonly,

only a full lump-sum option is available. If a participant

elects a full lump-sum distribution, he or she receives no

further benefits from the pension plan. Where a partial distribution is available, the participant generally receives a

reduced annuity for the remainder of her or his life.

Survivor annuities

ERISA also requires defined benefit pension plans to

provide a spouse with at least 50 percent of the retiree’s

payments after the retiree’s death. When this type of pension is paid, the employee will generally receive a lower

benefit during retirement to account for the likely increase

24For a comprehensive analysis of pension benefit formulas integrated

with Social Security, see Avy D. Graham, “Coordinating Private Pension

Benefits with Social Security,” Monthly Labor Review, March 1984, pp. 35-

38.
in the length of time the plan will have to make payments.

When the retiree dies, a pension benefit will be payable for

the life of the surviving spouse. All defined benefit pension

plan participants have survivor annuity options available to

them.25

The prevalent type of survivor benefits—joint-and-survivor annuities—provides a reduced benefit to the retiree

and a percentage of that reduced benefit to the spouse upon

the retiree’s death. The reduction may be a percent of the

benefit—for example, 10 percent—or may be actuarially

determined based on the life expectancy of the retiree and

spouse. Although some participants have plans that offer

only one joint-and-survivor option that pays a surviving

spouse 50 percent of the retiree’s adjusted pension, many

participants have a choice of two alternative percentages or

more (for example, 50, 67, or 100 percent) to be continued

to the spouse, with corresponding reductions in the employees’ annuities. In some cases, when the spouse predeceases

the retiree, the retiree’s unreduced benefit may be restored.

Unlike joint-and-survivor annuities, survivor annuities

based on the retiree’s accrued benefit do not reduce the

employee’s pension to adjust for survivor benefits. The retiree receives the straight-life annuity; following the retiree’s

death, the spouse receives a percent of that annuity—often

50 percent.

Some pension plans provide a lump sum or installment

death benefit to the survivor of a deceased retiree. Payments

are in the form of a flat amount, such as $5,000, in addition

to the survivor annuity or a certain number of monthly payments, such as 60 or 180, less payments already received by

the retiree. The latter usually occurs when the retiree and

the spouse do not elect to take the joint-and-survivor annuity option.

A few pension plans provide survivor benefits for children, usually after the retiree with no surviving spouse dies.

Commonly, the payment is a monthly flat-dollar amount to

each child.

Preretirement survivor benefits

The normal defined benefit pension plan offers survivor

benefits in case the employee dies before retirement. Participants usually have to be vested, that is, have a permanent right to accrued pension benefits before plans would

make such benefits available. Very often, a surviving spouse

would receive an annuity equivalent to the amount payable

if the employee had retired on the day prior to death with a

joint-and-survivor form of payment in effect. Most survivor

pensions like these are based on an early retirement benefit

and, aside from the joint-and-survivor reduction, are provided at no cost to the employee. For some participants,

however, preretirement joint-and-survivor protection may

involve an extra cost to the employee and is available only

25 Survivor benefits are discussed in more detail in Donald Bell and

Avy Graham, “Surviving Spouse’s Benefits in Private Pension Plans,”

Monthly Labor Review, April 1984, pp. 23-31.

if elected. The employee normally pays this cost through a

small deduction in the pension, ultimately payable to either

the employee or the surviving spouse.

Other participants have a preretirement survivor annuity

calculated as a portion of their accrued benefit (the benefit

earned as of the date they died, without a joint-and-survivor

reduction). If an active employee dies after completion of

the vesting requirement, a typical survivor would receive

an annuity equal to 50 percent of the employee’s accrued

benefit to date. Payments may be reduced by the early retirement adjustment, and begin when the employee would

have reached early retirement age. If the employee lives to

become eligible for early retirement, the survivor benefit in

many cases switches to the equivalent of a 50-percent jointand-survivor benefit calculated as if the employee had retired on the day of death. (When provisions change based

on age of the employee, the earliest available preretirement

survivor annuity is tabulated.)

Some plans also provide lump-sum death benefits to the

survivors of employees who die before retirement. Payments

are in the form of a flat amount, such as $3,000, or the equivalent of a specified number of monthly retirement payments,

such as 60.

Normal retirement

Many of the defined benefit pension plan participants in

small private establishments can retire before age 65 and

still receive full private pensions (normal retirement benefits). Participants who are required to be age 65 to receive

unreduced benefits usually do not have to satisfy a lengthof-service requirement; however, some plans may require

workers hired after age 60 to complete at least 5 years of

service.

When plans permit normal retirement prior to age 65,

they generally impose a minimum service requirement. For

example, normal retirement at age 60 and 62 is available to

a large number of participants, but these workers can also

have a service requirement, commonly 5 or 10 years. Participants who can retire with unreduced benefits prior to

age 60, including those who can retire at any age, usually

have to work a very long period, such as 30 years.

Plans that require combining a worker’s age and service

to reach a specified sum, such as 80 or 85, for retirement

with full benefits cover some participants. This type of arrangement usually specifies a minimum age. Minimum

lengths of service are less common.

A few pension plans provide monthly payments to supplement normal retirement pension benefits. These supplements

are usually found in plans where participants can retire before age 62 and generally last until retirees are eligible for

Social Security benefits.

Early retirement

It is commonly permissible for employees participating

in defined benefit pension plans to retire before normal retirement age and receive an immediate, but reduced,
retirement benefits are often greater than immediate pension, primary because the time during which LTD benefits

are paid is typically added to an employee's length of service for computation of pension benefits. (See chapter 3 for

details of LTD benefit plans.)

Eligibility for disability retirement benefits usually depends on length of service; often 10 years or more are required. Some plans, however, have no age or service requirement or require participants to meet the qualifications

of their LTD plans, which usually impose service requirements of 6 months or less.

Vesting

Even when an employee leaves an employer before becoming eligible for either a normal, early, or disability retirement benefit, a plan may ultimately pay a pension. If

certain conditions are satisfied at the time of separation,

workers have a vested interest in all or a portion of their

accrued pension benefits and may begin receiving benefits

years later.

Although all pension participants are entitled to vested

benefits under ERISA, some variations exist as to when vesting occurs. As a result of the Tax Reform Act of 1986, however, most plan sponsors have shortened their vesting schedules in the past few years.26 For example, participants in

defined benefit pension plans normally have to complete 5

years of service at any age before benefits are guaranteed

(cliff vesting). Most of the remaining participants are in plans

requiring 10 years of service. Participants not in plans with

cliff vesting are covered by a graduated vesting provision,

which increases the portion of guaranteed benefits as years

of service increase. Full vesting usually comes after 7 years.

Most commonly, participants accrue years of vested service regardless of age, although a few can be affected by

the plan sponsor’s right to exclude years of service before a

specified age in determining vesting eligibility.

Unreduced vested pension payments begin at the plan’s

normal retirement age, based on the benefit formula in effect when the employee left the plan. As an alternative, terminated and vested participants may receive a reduced pension prior to normal retirement age if the participant had

satisfied the early retirement service requirement before leaving the plan.

For terminated and vested employees who wish to receive

a pension beginning prior to normal retirement age, ERISA

requires the benefit to be at least the actuarial equivalent of

what would have been received starting at age 65. The actuarial equivalent benefit is a reduced amount determined by

the life expectancy at the age that pension payments begin.

Although under ERISA the reduction factor used in determining the pension for terminated and vested employees

can be more severe than for early retirement, the

same factor is used in plan covering many participants with

portability provision. When reductions differ, it is common

pension. Early retirement normally is solely at the employee’s option; plans generally do not require employer

approval for early retirement benefits. The amount of an

early retirement pension is reduced because benefits begin

at an early age, and the retiree is expected to receive plan

payments over a longer period.

Early retirement benefits are generally computed based

on the normal retirement formula. The benefit is then reduced by a percentage (factor) for each year between the

actual and normal retirement ages. If a plan’s normal retirement age is 62, for example, and the reduction factor is 6

percent, a person retiring at age 59 would receive 82 percent of the normal formula amount (that is, the person loses

6 percent for every year under the normal retirement age).

In addition to the 18-percent reduction for early retirement,

the annuity in this example would be based on fewer years

of service and possibly lower earnings than at age 62.

The reduction factor may be uniform or may vary by age

or service. For example, reduction factors may differ for

each year of early retirement, based on the employee’s life

expectancy at that age (actuarial reductions), or the reduction factor may differ for age brackets of several years instead of changing each year. Many participants with early

retirement opportunities have uniform reduction factors, for

example, 4 or 6 percent, for each year of early retirement.

In plans with a lower uniform reduction, such as 3 percent

per year, the employer subsidizes some of the early retirement benefit by making the reduction less severe than if

benefits are computed actuarially.

A small number of pension plans provide additional

monthly payments to supplement the early retirement pension if employees retire after meeting a specified age or

length-of-service requirement generally higher than the

minimum needed to retire. Plan sponsors include these

supplementary benefits either to induce older workers to

retire or as a reward for long service. Supplements generally last until Social Security benefits are payable.

Disability retirement

A career-ending disability may entitle an employee to a

pension before retirement age. If the disability satisfies the

plan’s definition of total disability, pension benefits often

begin immediately.When an employer provides other sources

of disability income, such as long-term disability insurance,

the plan might defer disability retirement benefits until the

other forms of income have ceased. Most pension plan participants are covered by some type of disability retirement

provision.

While blue-collar workers with disability retirement

coverage are generally in plans with immediate benefits,

many white-collar workers are in plans that defer benefits.

Workers with deferred benefits often receive long-term disability insurance (LTD) benefits that typically provide 50

or 60 percent of earnings at the time of disability; this frequently exceeds the amount that pension plans with immediate disability retirement provide. Furthermore, deferred

26 Multiemployer plans may continue to use 10-year vesting schedules

 pursuant to a collectively bargained agreement.
to provide actuarial reductions to deferred vested benefits,

eliminating the subsidy employers give to employees choosing early retirement.27

Portability

When employees change employers, vested pension benefits are frequently held by the employer until the employee

reaches retirement age. Alternatively, a plan may include a

portability provision, that is, the ability to transfer years of

credited service or accumulated benefits from one employer

to another. Currently, it is not very common for employees

with a defined benefit pension plan to be covered by a portability provision. Commonly, these participants are covered

by either a multiemployer plan established by a union or a

single employer plan offered by an establishment that has a

reciprocity agreement with related establishments, such as

in the utilities industry. In these plans, if a vested employee

moves to another employer, benefits from the prior employer

usually in the form of years of credited service are transferred over to the new employer. Some participants covered

under a portability provision may have an option to cash

out vested pension benefits valued at greater than $3,500.

Postretirement pension increases

Inflation can severely erode the purchasing power of a

fixed pension over a worker’s retirement years. To guard

against this, some pensions are adjusted on a discretionary

basis, and others are subject to automatic increases specified in the pension plans. The Employee Benefits Survey

studies automatic increases and discretionary, or ad hoc,

increases granted during the 5-year period prior to the survey.

27 For additional details on plan vesting requirements, see

Avy D. Graham, “How Has Vesting Changed Since Passage of Employee

Retirement Income Security Act?,” Monthly Labor Review, August 1988,

pp.20-25.

survey. Ad hoc increases are usually more common than

automatic postretirement adjustments (usually annual adjustments based on CPI changes) in the private sector.

Because the survey captures the number of current employees covered by defined benefit pension plans and not

the number of retirees, the survey cannot specify the proportion of annuitants actually receiving postretirement pension increases. Thus, the following statements relate to the

provisions for postretirement increases among active plan

participants.

Ad hoc pension increases are not directly linked to a costof-living index. Instead, retirees’ current pensions usually

increase by a percent of the present benefit, commonly a

uniform amount. For example, a plan may provide a 5-percent pension increase to all individuals who retired prior to

the survey year. Other plans may provide greater pension

increases for individuals retired longer. For instance, a plan

might grant a 5-percent pension increase if retired 10 years

or less, and a 10-percent increase if retired more than 10

years.

 In some instances, formulas to compensate for increases

in the cost of living are based on changes in the BLS Consumer Price Index. Adjustments can be restricted, however,

by provisions that limit the benefit change to a portion of

the CPI change or by ceilings (generally 3 percent or less)

on the periodic increase that can be applied. Plans providing cost-of-living increases usually call for annual adjustments.

Employee contributions

The employer usually pays the full cost of defined benefit pension plans for private sector participants (table 6).

For employees who have to pay part of the cost, contributions are most commonly expressed as a percent of earnings. Most participants in contributory plans pay a flat percent of all earnings, for example, 3 or 4 percent.
Chapter 7. Defined Contribution Plans

Plan types

Defined contribution plans may be classified by type of

plan (table 1). The survey provides data on the following

types: Savings and thrift plans, deferred profit-sharing plans,

money purchase pension plans, employee stock ownership

plans (ESOP’s), and stock bonus plans.30 Savings and thrift

and money purchase pension plans are common among

white-collar workers, while deferred profit-sharing plans are

often common among both white-collar and blue-collar

workers. Stock plans cover only a small portion of employees.

Participants in defined contribution plans often make

contributions to their plans. In savings and thrift plans, participants are required to make contributions as a condition

of joining the plan, with the employer matching some or all

of the employee contribution. In contrast, nearly all participants in private defined benefit plans have all contributions

made by the employer.

Employees may receive retirement benefits from defined

benefit plans, defined contribution plans, or both. A large

number of participants are enrolled in more than one plan.

When more than one plan is available, the employer most

often provides a defined benefit plan and a savings and thrift

plan.

Another type of plan frequently encountered is a 401(k)

plan (named after the applicable section of the Internal

Revenue Code). Such plans, also known as cash or deferred

arrangements, are usually features of other defined contribution plans that give employees the opportunity to defer

income and taxes into the future. The features of these plans

are discussed in more detail at the end of this chapter.

Savings and thrift plans

Savings and thrift plans enroll a large number of the defined contribution plan participants in small private establishments. Under these plans, employees may contribute a

predetermined portion of earnings (usually pretax) to an account, all or part of which the employer matches. Contributions are invested in various vehicles, such as stocks, bonds,

and money market funds, as directed by the employee or

employer, depending upon the provisions of the plan.

Although usually designed as a long-term savings vehicle,

savings and thrift plans may allow withdrawals for speci30Plans that allow the purchase of company stock at below market value

(stock purchase plans) serve to accumulate financial assets and are considered separate employee benefits in chapter 1. They are not included among

the defined contribution plans designed for retirement purposes.

Defined contribution plans generally specify the level of

employer contributions to a plan, but not the formula for

determining eventual benefits as in a defined benefit plan.

Instead, individual accounts are set up for participants, and

benefits depend on amounts credited to these accounts, plus

investment earnings. Although employers normally guarantee they will make contributions, the employee bears the

risk of fluctuation in investment earnings. Full-time employees in small private establishments are more likely to be

covered by a defined contribution plan than a defined benefit plan.

This chapter examines details of defined contribution

plans, including:

· Types of defined contribution plans available;

· Provisions, such as contributions and distributions,

associated with several types of plans; and

· Pretax arrangements, known as 401(k) plans, and

their unique features.

Since 1975, when the Employee Retirement Income

Security Act (ERISA) became effective, the number of participants in private sector defined contribution plans has risen

steadily, while the number of participants in defined benefit

plans has increased only slightly. Most of the recent participation growth in defined contribution plans is occurring in

new plans, particularly in 401(k) type plans, which offer

cash or tax-deferred options on currently taxable compensation.28

Defined contribution plans are primarily designed to

provide retirement benefits. Most retirement plans do not

allow withdrawal of employer contributions until retirement

age, death, disability, separation from service, age 591

/2, or

hardship. However, some plans may impose less stringent

restrictions for withdrawal of employer contributions, for

example, permitting one or two withdrawals per year, or

allowing withdrawal after 2 or 5 years of service.29 Nevertheless, these defined contribution plans may also furnish

retirement income because withdrawals of the employer’s

contributions are voluntary, not mandatory. For purposes of

the Employee Benefits Survey, all defined contribution plans

are considered retirement plans.

28For more information on the growth of 401(k) plans, see U.S. Department of Labor, Pension and Welfare Benefits Administration, Private Pension Plan Bulletin, No. 2, Summer 1993. 29Such withdrawals, while permitted by the plan, may trigger current income tax liability and tax penalties for the recipient.
fied conditions (such as medical and educational expenses)

and may allow participants to borrow funds from their account. Also many savings and thrift plans allow participants to transfer or “rollover” amounts received from a plan

of a former employer. Such a rollover continues the tax deferral on money that had been sheltered from taxes by the

employee’s former employer.

Employee contributions. Savings and thrift plans allow employees to choose from a range of contribution rates. A plan,

for example, might allow employee contributions of any

amount from 5 to 20 percent of pay. Maximum contributions are commonly 10, 15, and 16 percent.

The ability to make employee contributions on a pretax

basis, known as salary reduction, has, after only a few years,

become a dominant feature of savings and thrift plans.

Nearly all participants in savings and thrift plans are allowed to make pretax contributions.

The provisions governing pretax contributions vary

widely. For example, many participants in plans featuring

pretax contributions are allowed to make only pretax contributions; some have an option to make either pretax or

posttax contributions; and others must make at least some

of their contributions on a pretax basis.

The tax status of employee contributions is important

not only because of the current deferral of income taxes,

but also because an employee may not withdraw pretax contributions from his or her account–except in limited circumstances–without tax penalties.

Employer-matching contributions. Employers give incentives for participating in a savings and thrift plan by matching all or a portion of the employee’s contribution (adding

this amount to the employee’s account). Usually the employer matches a portion of the employee’s contribution up

to a specified percent of the employee’s earnings. For example, an employer may match half of the employee’s contribution up to the first 6 percent of earnings. Assuming the

employee contributes 8 percent of earnings, the employer

would add 3 percent (half of the first 6 percent of the

employee’s earnings) for a total contribution of 11 percent

to the employee’s account. In contrast with these straight

percentage matches, some participants receive matching

contribution rates varying by length of service, level of

employee contribution, or company profits.31

In some savings and thrift plans, the employer may also

provide discretionary profit-sharing contributions to the

employee’s account.

Investment decisions. Participants in savings and thrift plans

can often choose how they want their own contributions invested. Investment vehicles offered by these plans include

company stock, common stock funds, guaranteed investment

31 For more information on savings and thrift contributions and benefits,

see Michael Bucci, “Contributions to Savings and Thrift Plans,” Monthly

Labor Review, November 1990, pp. 28-36.

contracts, government securities, money market funds, and

long-term interest bearing securities such as corporate bonds

and Treasury notes. The number of choices in these plans

varies from two to seven or more. Customarily, employees

are allowed to split their contributions among the various

options__typically in multiples of 10 or 25 percent. For example, a participant may choose to invest 50 percent in company stock and 50 percent in government securities. In addition, plans often permit participants to change their investment choices periodically, such as 2 or 4 times per year.

Overall, employees have less flexibility in how employer

contributions are invested. When no choice is allowed, plans

typically specify that the matching contribution is invested

in company stock.

Withdrawals and loans. Prior to normal payout at retirement, disability, or termination of employment, many participants in savings and thrift plans are allowed to withdraw

all or a portion of employer contributions. As withdrawal

provisions are canceled or further restricted (typically due

to the tax penalties associated with withdrawals), loan provisions (discussed later in this section) have become more

available.

Many participants in plans permitting withdrawal of

employer contributions are only allowed access to funds for

hardship reasons, such as medical or educational expenses.

The remaining participants can withdraw employer contributions for any reason.

Withdrawals of employer contributions may also be subject to a variety of other restrictions. For example, some

participants who are allowed to make withdrawals can only

withdraw part of their employer’s contribution. Additionally, some who can make withdrawals are penalized if they

do so. Common penalties involve suspending employee contributions, and employer matching contributions, for a given

period, such as 6 months or 1 year. Other penalties include

suspending employer matching contributions only, or forfeiting nonvested employer contributions.

Another method of accessing an employee’s account

prior to final payout is a loan, the availability of which has

risen steadily in recent years. Loans usually have to be repaid within 5 years, but longer payment periods may apply

for home purchase or renovation loans.

Interest rates on employee loans are typically determined

by a specific economic indicator (such as the prime rate or

U.S. Treasury bill rate), are at the discretion of the plan

sponsor (employer, employer association, or union), or vary

by the reason for the loan. In the last case, loans for the

purchase of a home are often available at lower rates than

other loans.

Distribution. At retirement, savings and thrift plans normally allow for payout in the form of a lump sum. Many

participants can choose from among a lump sum and other

options, such as a lifetime annuity or installments over a

specified period.
Participation requirements. Minimum age and/or service

requirements are frequently imposed on new participants in

savings and thrift plans. To begin accumulating benefits,

savings and thrift plan participants frequently must complete a minimum amount of service, commonly 1 year, but

usually are not required to be a designated minimum age.

Vesting. Saving and thrift plans are subject to the same vesting rules under the Employee Retirement Income Security

Act as defined benefit plans. Vesting schedules vary significantly, however, between defined benefit and savings and

thrift plans. All vesting schedules apply to employer contributions; employee contributions (including pretax contributions) always are 100-percent vested.

Immediate full vesting often is provided in savings and

thrift plans. In addition, graduated vesting, in which an

employee’s nonforfeitable percentage increases over time

until it reaches 100 percent, commonly after 5 or 7 years,

applies to many participants in savings and thrift plans.

Deferred profit-sharing plans

Deferred profit-sharing plans, although not as common

as savings and thrift plans in small private establishments,

are available to a significant number of employees. Most

deferred profit-sharing plans hold money in employee accounts until retirement or another condition stipulated by

the plan (for example, disability or death). In some plans,

however, the employee may have a choice to receive a portion of the profits in cash, with the remainder placed in a

deferred account.32

Many participants in deferred profit-sharing plans have

employer contributions determined by a specified formula,

such as 4 percent of profits if annual sales were $2 million

to $5 million, and 8 percent if sales exceeded $5 million.

The remaining participants are in plans in which the employer determines its contribution at its own discretion.

Once the employer contribution is determined, the plan

may allocate it to individual participants in a number of

ways. A common method of allocation is as a proportion of

salary. Other allocation methods include formulas based on

earnings and service, participants’ contributions as a percentage of total contributions, and equal allocations to all

participants.

Deferred profit-sharing plans may allow employees to contribute to their plan as a means of increasing the value of

their account. However, it is uncommon for employees to

be required to contribute to such plans. Plans typically give

employees only limited opportunities to make investment

choices. Plan participation and vesting requirements tend

to be similar to those found in saving and thrift plans.

Money purchase pension plans

Another type of defined contribution plan, available to

a small percent of full-time employees in small private esestablishments, is a money purchase pension plan. These

plans accumulate funds through a fixed contribution to accounts set up for each employee. Typically, employer contributions are a percent of employee salary, such as 3 percent per year. These contributions, plus earnings, are available at retirement. In general, employee contributions are

neither required nor allowed, employees do not participate

in investment decisions, and accounts may not be

accessed__by either withdrawal or loan__prior to retirement.

These plans are referred to as pension plans because they

often provide a periodic payment to employees at retirement. This is accomplished by using the funds accumulated

in each employee’s account to purchase an annuity__often

from an insurance company__that guarantees a periodic

payment for life. Other payment arrangements may be available, though, including a lump sum or series of installments.

Stock plans

Two types of stock plans are considered defined contribution plans__stock bonus plans and employee stock ownership plans.33 A stock bonus plan specifies employer or employee and employer contributions to a trust fund that invests in various securities. Employee stock ownership plans

(ESOP’s), however, are generally wholly employer financed

and must be designed to invest primarily in company stock.

ESOP’s may be used as the means by which employees purchase their own company, with stock distributed to individual employee accounts periodically as loans used to finance the purchase are repaid.

Both types of stock plans make benefit distributions in

either company stock or cash. Stock plans are found infrequently among full-time employees in medium and large

private establishments.

Simplified employee pension plans

A simplified employee pension plan, or SEP, is a

“super-IRA” type of employer-funded pension plan. Under

this plan, an employer may make contributions to IRA’s

maintained by employees. Although SEP’s are specifically

designed for small establishments of 25 employees or fewer

to create employee retirement accounts, they are rare because they usually cover only the self-employed, who are

excluded from the survey.

Cash or deferred arrangements

Plans with a cash or deferred arrangement enroll many

employees within the scope of the survey.34 These arrangements, also known as 401(k) plans, allow participants to

choose between receiving currently taxable income or de33 Stock purchase plans are considered separate employee benefits and are

discussed in chapter 1.

 34 For 401(k) plans with no employer contribution, participants are those

workers actually making pretax contributions. For other plans, participants

are those workers in plans offering cash or deferred arrangements, whether

or not workers actually made pretax contributions.

32 Profit-sharing plans that pay benefits directly to the participants in cash are

not considered defined contribution plans; they are reported in chapter 1.
ferring taxation by placing the money in a retirement

account. Cash or deferred arrangements usually take the

formof either salary reduction plans or deferrals of profitsharing allocations.

Salary reduction plans allow employees to contribute a

part of their earnings to a retirement plan, and defer income

taxes on those contributions and their earnings until distribution. Such contributions are referred to as “employee elective deferrals” or “pretax contributions.”

Salary reduction features, common among white-collar

employees, are available through several types of defined

contribution plans. A very common vehicle for salary reduction is a savings and thrift plan. The remainder generally make salary reduction contributions through a profitsharing plan or a free standing plan, that is, a plan set up for

employee salary reduction with no employer contribution.

Deferrals of profit-sharing allocations give employees

the choice of receiving an employer’s profit-sharing contribution immediately in cash, or deferring the contribution

and postponing taxation until distribution. Such arrangements are not common.

In addition to data on provisions of individual defined

contribution plans, information is captured on the provisions of 401(k) salary reduction plans that include employer

contributions, including:

· Maximum pretax employee contributions;

· Plan participation requirements;

· Investment choices;

· Vesting schedules;

· Transfer or rollover of distribution;

· Availability of withdrawals and loans; and

· Distributions at retirement.

The growth of 401(k) plans has helped to expand the defined contribution plan as a savings vehicle for retirement.

Unlike some defined contribution plans, such as money purchase plans, 401(k) plans generally require employee contributions as a condition of participation and then require

the individual employee to decide how much pay to save.

Finally, the participants determine where to invest the aggregated funds, including matching employer contributions,

to enhance retirement income.
Chapter 8. Flexible Benefits Plans

and Reimbursement Accounts

35For information on flexible benefits plans in medium and large private

establishments, see Joseph R. Meisenheimer and William J. Wiatrowski,

 “Flexible Benefits Plans: Employees Who Have a Choice,” Monthly Labor

Review, December 1989, pp. 17-23.

Employer traditionally have provided their workers

benefits in a number of areas, such as medical care, life

insurance, and retirement. Employees may have a choice

from among a number of plans in a given benefit area. For

example, an employee may be able to choose between a

traditional fee-for-service medical plan and a health maintenance organization. In recent years, new approaches to

offering benefits have emerged. BLS currently collects data

on two of these—flexible benefits plans and reimbursement

accounts. Both arrangements are governed by Internal Revenue Code section 125.

Full-time employees in small private establishments are

seldom offered flexible benefits plans (table 67), unlike the

growth rate of these plans in medium and large private establishments. These plans, often called cafeteria plans, allow employees to design individual benefit packages by

choosing from among several types of benefits. In a flexible

benefits plan, employers provide each worker with an amount

of “benefits credits.” These credits may equal a fixed dollar

amount for each worker, or an amount that varies among

workers according to earnings, length of service, size of

family, or other characteristics. The employee then chooses

from various benefits and benefit levels, using credits to

purchase the desired benefits. If the credits are not sufficient to pay for the benefit, employees may have the option

to fund the difference with pretax contributions.

Flexible benefits plans usually provide several options,

including various levels of life insurance, separate dental

choices, participation in fee-for-service medical plans (with

varying deductibles and out-of-pocket maximums) or in alternative medical plans (such as health maintenance organizations and preferred provider organizations), varying levels of accidental death and dismemberment insurance, and

long-term disability insurance coverage. Some employees

covered by flexible benefits plans may receive cash in lieu

of benefits or deposit unused credits into reimbursement

accounts. Or they may choose to purchase short-term disability coverage, deposit credits in a 401(k) plan, or buy

and sell vacation days. Participants often are required to

purchase minimum levels of coverage, a basic level of

lifeinsurance, for example.

Reimbursement accounts are being offered to a growing

number of full-time employees (usually white-collar) insmall

private establishments. These accounts, also called flexible

spending accounts, provide funds from which employees

pay for expenses not covered by their regular benefits package. Reimbursement accounts are usually funded solely by

employee pretax contributions, although some accounts may

be partially funded by employers. Reimbursement accounts

may be part of a flexible benefits plan, or they may stand

alone.

A large majority of employees eligible for reimbursement accounts may allocate funds for health care deductibles,

coinsurances, and the cost of services not covered by their

medical care plan, such as dental expenses and vision exams (table 68). Eligible employees often may use money

from these accounts to pay for dependent care expenses,

generally both child care and care for elderly or disabled

relatives. Reimbursement account funds may also be allocated for the payment of the employees’ share of health

care premiums, and other insurance premiums, such as life

insurance or a spouse’s insurance premiums.

Some accounts, known as premium conversion plans,

are established solely to allow medical plan participants to

pay required plan premiums with pretax dollars. Although

such arrangements differ from the usual reimbursement accounts, where employees are reimbursed with pretax money

after a payment is made, these arrangements nonetheless

meet the Internal Revenue Code requirements for a section

125 plan.

Nearly all employees participating in flexible benefits

plans or reimbursement accounts are required to contribute

toward the cost of their benefits, or are allowed to contribute to obtain additional benefits. These contributions usually take the form of a salary reduction arrangement, which

results in lower income tax liabilities.

Individual benefit plans offered through a flexible benefits plan are analyzed and included in the tabulations for

specific benefit areas in this bulletin.35
Table 67. Flexible benefits plans and reimbursement

accounts1: Type of plan, full-time employees, small private

establishments, 1994

Type of

plan

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

flexible benefits plans and

reimbursement accounts .... 6,952 1,830 2,806 2,317

Percent

Total with flexible benefits

plans and reimbursement

accounts ............................. 100 100 100 100

Flexible benefits plan with

reimbursement accounts 10 6 12 9

Flexible benefits plan

without reimbursement

account ........................... 4 1 7 4

Freestanding reimbursement

account ........................... 86 93 81 87

1 Flexible benefits plans, also known as flexible compensation and

cafeteria plans, allow employees to choose between two or more benefits or

benefits options in determining their individual benefits packages. 

Reimbursement (flexible spending) accounts, which are used to finance

benefits or expenses unpaid by insurance or benefit plans, may be part of a

flexible benefits program or stand alone (freestanding accounts). These

accounts may be financed by the employer, employee, or both. The

employee contribution is usually made through a salary reduction

arrangement.

NOTE: Because of rounding, sums of individual items may not equal totals.

Table 68. Reimbursement accounts: Expenses covered,

full-time employees, small private establishments, 1994

Expenses

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Number (in thousands) with

reimbursement account ...... 6,664 1,814 2,620 2,230

Percent

Total with reimbursement

account1 ............................. 100 100 100 100

Health premiums .................. 77 79 74 78

Health premiums only ..... 38 39 31 45

Other health expenses ......... 50 51 57 42

Dependent care expenses .... 51 49 59 42

Legal expenses .................... 1 3 1 -

Expenses not determinable .. 1 1 1 2

1 Total is less than the sum of individual items because many plans allow

funds to be used for multiple purposes.

NOTE: Where applicable, dash indicates no employees in this category.
Chapter 9. Benefits by Selected

Characteristics

Finally, tables 79 and 80 present incidence of benefits for

part-time workers in small private establishments.39 Parttime workers within the scope of the Employee Benefits

Survey were far less likely to be covered by benefit plans

than full-time workers. Part-time workers account for about

one-fourth of the 48.6 million employees in small private

establishments.

The incidence of employee benefits is explained for each

of these characteristics in the remainder of this chapter. Any

interrelationships between characteristics that may effect

benefit incidence are not discussed—the sample of reporting establishments is too small.

Benefits in small, independent businesses

In 1994, the proportion of full-time employees in small

independent businesses who received specific employee benefits was typically less than that found among full-time

employees in all small establishments. For example, retirement benefits were available to 42 percent of full-time employees in all small establishments and to 35 percent of such

employees in small independent businesses. This difference

was nearly equally attributed to the lower incidence of both

defined benefit and defined contribution plans in small independent businesses.

Paid vacations and holidays were the most prevalent benefits available to full-time employees in small independent

businesses in 1994, covering 80 and 86 percent of workers,

respectively. Paid jury-duty leave, provided to 51 percent of

workers, paid sick leave, to 44 percent, and paid funeral

leave, to 42 percent were also commonly provided paid leave

benefits. Other paid time-off benefits were less prevalent.

Just over three-fifths of the full-time workers in small

independent businesses participated in medical care plans

in 1994; slightly more than one-half had life insurance protection. Other insurance coverage was much less prevalent:

dental care and sickness and accident insurance plans each

covered about one-fourth of full-time employees in small

independent businesses in 1994, while about an eighth had

long-term disability insurance protection. Coverage for these

benefits averaged about 5 percentage points less than the

incidence in all small private establishments.

38 Occupations are categorized as union or nonunion at the time of data

collection. To be categorized as union, the occupations must meet the following criteria: 1) A labor organization must be recognized as the bargaining agent for workers in the occupation; 2) wage and salary rates must be

determined through collective bargaining or negotiations; and, 3) settlement

terms must be embodied in a signed, mutually-binding collective bargaining agreement.

39 Employees are classified as full time or part time in accordance with the

practices of surveyed establishments.

This chapter presents incidence of employee benefits for

five selected characteristics–small independent businesses,

geographic region, major industry segment, union status,

and part-time employment.

The incidence of benefits for full-time employees in

small independent businesses, that is, wholly independently

owned small private establishments, presented in tables 69

and 70, was typically less than for workers in all small establishments. Small independent businesses, such as local

independent hardware or grocery stores, account for about

three-fourths of the total coverage of the small establishments survey, which also includes small operating units of

larger companies.

Tables 71 and 72 present the incidence of employee benefits for full-time employees in small private establishments

by four geographic regions: Northeast, South, North Central, and West.36 Employment of full-time workers among

these establishments in the four regions was as follows:

Northeast 7.7 million

South 12.9

North Central 8.6

West 6.7

The incidence of most insurance and retirement benefits provided to full-time workers in goods-producing industries was slightly higher than that provided to workers in

service-producing industries and noticeably higher for bluecollar and service workers.37 (See tables 73-76.) Service-producing industries accounted for about three-fourths of those

employed full time in 1994.

In general, full-time employees covered by collective bargaining agreements were more likely to receive insurance

and retirement coverage than nonunion workers. About 2.2

million full-time employees in small private establishments

were covered by collective bargaining agreements. Tables

77 and 78 show incidence of employee benefits for fulltime workers by union status.38

36 Geographic regions are defined as follows: Northeast—Connecticut,

Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont; South—Alabama, Arkansas, Delaware,

District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland,

Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas,

Virginia, West Virginia; North Central—Illinois, Indiana, Iowa, Kansas,

Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South

Dakota,Wisconsin; West—Alaska, Arizona, California, Colorado, Hawaii,

Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington,

Wyoming.

37 Goods-producing industries include manufacturing, mining, and construction. Service-producing industries include transportation, communications, electric, gas and sanitary services; wholesale trade; retail trade; finance, insurance, and real estate; and services. See Appendix A for additional information on survey scope.
Among other benefits studied, the most prevalent available to full-time employees in small independent businesses

was nonproduction bonuses—53 percent of such workers

received these bonuses, compared to 47 percent in all small

establishments. Twenty-four percent of employees in small

independent businesses were eligible for eldercare and 31

percent were eligible for job-related educational assistance,

compared to 33 and 37 percent, respectively, for workers in

all small establishments. Few of the other items studied were

widespread even among full-time workers in all small establishments. In small, independent businesses, these benefits, for the most part, were even less prominent.

Benefits by geographic region

The incidence of paid holidays and vacations varied little

by geographic region. Workers in the Northeast were more

likely to receive most other types of paid leave. Overall,

there was little variation in the incidence of insurance and

retirement coverage, although workers in the Northeast generally had a slight edge. Notably, workers in the South were

less likely to be covered by retirement plans. The significantly higher incidence of short-term disability benefits,

specifically sickness and accident insurance, in the Northeast is due to State mandated coverage in New York and

New Jersey (see chapter 3). The incidence of other benefits,

such as child care, employee assistance programs, and reimbursement accounts showed no particular regional patterns.

Benefits by industry

The incidence of all paid leave benefits provided to fulltime workers in service-producing industries was higher than

in goods-producing industries. Workers in service-producing industries were also more likely to receive unpaid family leave.

Workers in goods-producing industries were more likely

to be covered by most insurance and retirement benefits–

except for long-term disability insurance. Nearly twice as

many workers in service-producing industries had long-term

disability insurance compared to workers in goods-producing industries. Incidence among other benefits was higher

for workers in service-producing industries, with the exception of nonproduction bonuses, which were more commonly

provided to workers in goods-producing industries, and financial counseling benefits that were rare in both sectors.

Benefits by union status

Nearly 9 in 10 union workers received medical care, retirement, and life insurance coverage, a much greater incidence of coverage than for nonunion workers. Union workers were also more likely to receive most other benefits.

Nonunion workers, however, were more commonly provided

paid holidays, vacations, and sick leave as well as longterm disability insurance coverage.

The method for proving retirement income coverage

varied considerably between union and nonunion workers.

Four-fifths of union workers with retirement benefits received a defined benefit pension plan, while about two-fifths

received a defined contribution plan. However, only threetenths of nonunion workers with retirement benefits received

defined benefits plans, while nearly nine-tenths had a defined contribution plan. Some employees participated in both

types of plans.

Nonunion workers were more likely to be eligible for most

other benefits such as nonproduction bonuses, job-related

education assistance, and reimbursement accounts. Eldecare

and employee assistance programs, however, were more

commonly provided to union workers.

Benefits for part-time employees

Few part-time workers within the scope of this survey

received benefits usually provided to full-time worker, such

as medical care, life insurance, private retirement plans, or

unpaid family leave. Full-time employees in small private

establishments were about 10 times as likely as part-time

employees to have medical care and life insurance, 4 times

as likely to be covered by retirement plans, and 2 or 3 times

as likely to receive most leave benefits and short-term disability protection. Sickness and accident insurance was available to just under one-fifth of part-time workers. Retirement plans, life insurance, medical care, dental care, and

long-term disability insurance were available to one-tenth

or fewer of part-time workers.

Because of both the limited sample size and incidence of

benefits among part-time workers, plan provisions could not

be examined to the same extent as for full-time workers.

Paid time-off was the most prevalent type of benefit program available to the part-time workforce. About one-fourth

of all part-time employees were eligible for paid vacations,

paid holidays, and paid jury duty leave. Other types of leave

were less common. Just under one-tenth of part-time employees were eligible for paid sick leave. Paid time-off was

commonly prorated based on the work schedule of the parttime employee. For example, an employee working 4 hours

per day would receive 4 hours of pay for each vacation day

granted. Unpaid family leave was provided to about threetenths of part-time workers.

Paid time-off benefits for part-time employees were significantly lower than the benefits for full-time employees.

For example, part-time employees received an average of 6

paid holidays per year, while full-time workers received pay

for 8 holidays. Additionally, part-time employees received

fewer paid vacation days than full-time workers. Part-time

employees eligible for paid vacations were granted an average of 10 days at 5 years of service, compared to 12 days

for full-time workers. At 20 years of service, part-time employees averaged 12 days, while full-time employees averaged 15 days.

 The incidence of other benefits, such as eldercare,

nonproduction bonuses, and job-related education assistance

was also less common than for full-time workers.
Table 69. Summary: Participation1 in selected employee benefit programs, full-time employees, small independent businesses, 1994

(in percent)

Benefit All employees

Professional, technical,

and

related employees

Clerical and sales

employees

Blue-collar and

service employees

Paid time off:

Holidays ........................................................ 80 92 88 72

Vacations ...................................................... 86 93 93 80

Personal leave .............................................. 11 18 16 6

Funeral leave ................................................ 42 51 45 36

Jury duty leave ............................................. 51 70 58 41

Military leave ................................................. 11 15 12 8

Family leave ................................................. 2521

Unpaid family leave .......................................... 37 45 36 36

Disability benefits:

Short-term disability protection ..................... 56 73 64 45

Paid sick leave ............................................ 44 66 55 30

Sickness and accident insurance ............... 24 26 24 24

Long-term disability insurance ...................... 14 32 19 5

Survivor benefits:

Life insurance ............................................... 54 69 60 46

Accidental death and dismemberment ......... 42 57 47 34

Survivor income benefits .............................. 2 ( ) 2 ( ) 2 ( ) 2 ( )

Health care benefits:

Medical care ................................................. 62 78 67 53

Dental care ................................................... 23 35 25 18

Vision care .................................................... 9 11 9 9

Outpatient prescription drug coverage ......... 56 72 61 47

Retirement income benefits:

All retirement3 ............................................... 35 48 38 29

Defined benefit ........................................... 9 10 9 9

Defined contribution ................................... 29 42 33 23

Savings and thrift .................................... 12 19 13 9

Deferred profit sharing ............................ 13 17 16 10

Employee stock ownership ..................... 1 2 ( ) 2 ( ) 1

Money purchase pension ........................ 5954

Simplified money purchase ..................... 1111

Cash or deferred arrangements:

With employer contributions ...................... 15 25 16 11

Salary reduction ...................................... 15 25 16 11

Savings and thrift ................................... 12 19 13 9

Deferred profit sharing ........................... 3422

Money purchase pension ...................... 1 2 1 2 ( )

Deferral of profit sharing allocation ......... 2 ( ) 2 ( ) 2 ( ) –

Other4 ...................................................... 2 ( ) 2 ( ) 2 ( ) 2 ( )

No employer contributions ......................... 2321

Other benefits:

Stock purchase ............................................. 2 ( ) – 2 ( ) 2 ( )

Cash profit-sharing only ................................ 2 ( ) 2 ( ) 2 ( ) 2 ( )

1 Participants are workers covered by a paid time off, insurance, or retirement

plan. Employees subject to a minimum service requirement before they are

eligible for benefit coverage are counted as participants even if they have not met

the requirement at the time of the survey. If employees are required to pay part

of the cost of a benefit, only those who elect the coverage and pay their share are

counted as participants. Benefits for which the employee must pay the full

premium are outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded.

2 Less than 0.5 percent. 3 Includes defined benefit pension plans and defined contribution retirement

plans. The total is less than the sum of the individual items because many

employees participated in both types of plans. 4 Includes required contributions made to plans on a pretax basis.

 NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 70. Other benefits: Eligibility for specified benefits, full-time employees, small

independent businesses, 1994

(in percent)

Benefit All

employees

Professional,

technical,

and related

employees

Clerical and

sales

employees

Blue-collar

and service

employees

Income continuation plans:

Severance pay ...................................... 12 20 17 6

Supplemental unemployment benefits 1 ( ) 1 ( ) 1 ( ) 1 ( )

Family benefits:

Employer assistance for child care ....... 1 2 1 1

Employer-provided funds ................... 1 ( ) 1 1 1 ( )

On-site child care ............................... 1 1 1 ( ) 1

Off-site child care ............................... 1 ( ) – 1 ( ) 1 ( )

Eldercare .............................................. 24 29 23 22

Long-term care insurance ..................... 1 ( ) 1 1 ( ) 1 ( )

Health promotion programs:

Wellness programs ............................... 3 5 4 1

Employee assistance programs ........... 8 12 8 7

Miscellaneous benefits:

Employer-subsidized recreation

facilities ........................................... 4 6 4 4

Job-related travel accident insurance ... 7 10 7 6

Nonproduction bonuses ........................ 53 53 57 51

Financial counseling ............................. 2 3 1 2

Subsidized commuting ......................... 1 2 1 ( ) 1 ( )

Sabbatical leave ................................... 1 2 1 ( ) 1

Education assistance:

Job-related .......................................... 31 45 40 22

Not job-related .................................... 4 7 6 2

Flexible benefits plans .............................. 1 1 2 1

Reimbursement accounts ......................... 11 22 13 7

1 Less than 0.5 percent.

 NOTE: Because of rounding, sums of individual

items may not equal totals. Where applicable, dash

indicates no employees in this category.
Table 71. Summary: Participation1 in selected employee benefit programs, full-time employees, by

geographic region, small private establishments, 1994

(In percent)

Benefit Northeast South North Central West

Paid time off:

Holidays ................................................ 88 83 82 75

Vacations .............................................. 89 88 89 85

Personal leave ...................................... 26 9 12 6

Funeral leave ........................................ 62 48 49 42

Jury duty leave ..................................... 72 61 54 43

Military leave ......................................... 21 17 15 13

Family leave ......................................... 2 2 3 1

Unpaid time off:

Family leave ......................................... 55 43 44 52

Disability benefits:

Short-term disability protection ............. 83 55 56 54

Paid sick leave .................................... 57 49 46 50

Sickness and accident insurance ....... 65 15 21 8

Long-term disability insurance .............. 17 21 21 22

Survivor benefits:

Life insurance ....................................... 62 64 63 53

Accidental death and

dismemberment .............................. 48 51 48 41

Survivor income benefits ...................... 1 1 1 2 ( )

Health care benefits:

Medical care ......................................... 69 65 65 65

Dental care ........................................... 30 25 26 36

Vision care ............................................ 15 6 7 17

Outpatient prescription drug

coverage ......................................... 62 60 60 57

Retirement income benefits:

All retirement3 ....................................... 48 37 43 45

Defined benefit ................................... 20 12 12 20

Defined contribution ........................... 36 31 35 35

Savings and thrift ............................ 15 16 18 20

Deferred profit sharing .................... 13 13 15 13

Employee stock ownership ............. 2 2 1 2 ( )

Money purchase pension ................ 9 3 5 5

Cash or deferred arrangements:

With employer contributions ............. 19 18 22 22

No employer contributions ................ 2 2 4 2

1 Participants are workers covered by a paid time off,

insurance, or retirement plan. Employees subject to a minimum

service requirement before they are eligible for benefit coverage

are counted as participants even if they have not met the

requirement at the time of the survey. If employees are required

to pay part of the cost of a benefit, only those who elect the

coverage and pay their share are counted as participants. 

Benefits for which the employee must pay the full premium are

outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded. 2 Less than 0.5 percent. 3 Includes defined benefit pension plans and defined

contribution retirement plans. The total is less than the sum of

the individual items because many employees participated in

both types of plans.
Table 72. Other benefits: Eligibility for specified benefits, full-time employees, by geographic region, small

private establishments, 1994

Benefit Northeast South North Central West

Income continuation plans:

Severance pay ...................................... 21 15 14 11

Supplemental unemployment benefits 1 ( ) 1 ( ) 1 ( ) 1

Family benefits:

Employer assistance for child care ....... 2 1 ( ) 2 1

Employer-provided funds .................... 1 1 ( ) 1 1

On-site child care ............................... 1 1 ( ) 1 1 ( )

Off-site child care ............................... 1 ( ) 1 ( ) 1 ( ) –

Eldercare .............................................. 42 34 35 16

Long-term care insurance ..................... 1 1 ( ) 1 1 ( )

Health promotion programs:

Wellness programs ............................... 7 5 7 3

Employee assistance programs ........... 13 15 13 20

Miscellaneous benefits:

Employer-subsidized recreation 

facilities ........................................... 4 5 5 4

Job-related travel accident insurance ... 12 14 11 13

Nonproduction bonuses ........................ 49 52 45 38

Financial counseling ............................. 2 2 2 1

Subsidized commuting ......................... 1 1 ( ) 1 ( ) 1

Sabbatical leave ................................... 2 2 1 1

Education assistance:

Job-related ........................................ 32 37 40 41

Not job-related .................................. 5 7 4 4

Flexible benefits plans .............................. 2 2 3 5

Reimbursement accounts ......................... 16 22 18 16

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. Where applicable, dash indicates no employees in this

category.
Table 73. Summary: Participation1 in selected employee benefit programs, full-time employees in goods-producing industries, small

private establishments, 1994

(In percent)

Benefit All employees

Professional, technical,

and

related employees

Clerical and sales

employees

Blue-collar and

service employees

Paid time off:

Holidays ........................................................ 79 100 93 73

Vacations ...................................................... 80 95 94 76

Personal leave .............................................. 9 19 15 6

Funeral leave ................................................ 42 55 51 38

Jury duty leave ............................................. 48 75 64 41

Military leave ................................................. 11 15 16 10

Family leave ................................................. 1 2 – 1

Unpaid family leave .......................................... 41 54 44 39

Disability benefits:

Short-term disability protection ..................... 46 63 55 42

Paid sick leave ............................................ 28 51 43 21

Sickness and accident insurance ............... 29 39 30 27

Long-term disability insurance ...................... 12 30 20 8

Survivor benefits:

Life insurance ............................................... 61 80 69 56

Accidental death and dismemberment ......... 46 64 51 42

Survivor income benefits .............................. 1411

Health care benefits:

Medical care ................................................. 67 85 73 63

Dental care ................................................... 26 45 23 23

Vision care .................................................... 10 7 7 11

Outpatient prescription drug coverage ......... 59 76 67 55

Retirement income benefits:

All retirement2 ............................................... 44 62 43 42

Defined benefit ........................................... 18 18 11 19

Defined contribution ................................... 33 53 38 28

Savings and thrift .................................... 13 26 9 11

Deferred profit sharing ............................ 16 26 26 13

Employee stock ownership ..................... 1 3 – 1

Money purchase pension ........................ 6326

Simplified money purchase ..................... 1111

Cash or deferred arrangements:

With employer contributions ...................... 16 30 12 14

Salary reduction ...................................... 16 30 12 14

Savings and thrift ................................... 12 25 8 11

Deferred profit sharing ........................... 4643

Money purchase pension ...................... 3 ( ) – – 3 ( )

No employer contributions ......................... 2331

Other benefits:

Cash profit-sharing only ................................ 1 – 2 3 ( )

1 Participants are workers covered by a paid time off, insurance, or retirement

plan. Employees subject to a minimum service requirement before they are

eligible for benefit coverage are counted as participants even if they have not met

the requirement at the time of the survey. If employees are required to pay part

of the cost of a benefit, only those who elect the coverage and pay their share are

counted as participants. Benefits for which the employee must pay the full

premium are outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded

2 Includes defined benefit pension plans and defined contribution retirement

plans. The total is less than the sum of the individual items because many

employees participated in both types of plans. 3 Less than 0.5 percent.

 NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 74. Other benefits: Eligibility for specified benefits, full-time employees in

goods-producing industries, small private establishments, 1994

(In percent)

Benefit All

employees

Professional,

technical,

and related

employees

Clerical and

sales

employees

Blue-collar

and service

employees

Income continuation plans:

Severance pay ...................................... 10 22 26 6

Supplemental unemployment benefits 1 1 ( ) – 1

Family benefits:

Employer assistance for child care ....... 1 ( ) – – 1 ( )

On-site child care ............................... 1 ( ) – – 1 ( )

Eldercare .............................................. 29 40 33 27

Long-term care insurance ..................... 1 ( ) 2 1 1 ( )

Health promotion programs:

Wellness programs ............................... 4 7 8 3

Employee assistance programs ........... 13 18 11 13

Miscellaneous benefits:

Employer-subsidized recreation

facilities ........................................... 3 3 7 3

Job-related travel accident insurance ... 11 20 14 9

Nonproduction bonuses ........................ 60 60 64 59

Financial counseling ............................. 3 8 1 3

Subsidized commuting ......................... 1 4 1 1 ( )

Sabbatical leave ................................... 1 ( ) 1 – 1 ( )

Education assistance:

Job-related .......................................... 33 42 47 29

Not job-related .................................... 5 2 9 5

Flexible benefits plans .............................. 1 2 1 1

Reimbursement accounts ......................... 15 35 17 11

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items

may not equal totals. Where applicable, dash

indicates no employees in this category.
Table 75. Summary: Participation1 in selected employee benefit programs, full-time employees in service-producing industries, small

private establishments, 1994

(In percent)

Benefit All employees

Professional, technical,

and

related employees

Clerical and sales

employees

Blue-collar and

service employees

Paid time off:

Holidays ........................................................ 83 89 88 76

Vacations ...................................................... 91 92 93 87

Personal leave .............................................. 14 22 17 7

Funeral leave ................................................ 53 58 55 49

Jury duty leave ............................................. 62 74 66 52

Military leave ................................................. 19 24 20 15

Family leave ................................................. 3531

Unpaid family leave .......................................... 49 53 51 46

Disability benefits:

Short-term disability protection ..................... 66 78 71 55

Paid sick leave ............................................ 57 72 63 45

Sickness and accident insurance ............... 25 25 26 24

Long-term disability insurance ...................... 23 38 27 12

Survivor benefits:

Life insurance ............................................... 61 72 68 50

Accidental death and dismemberment ......... 48 60 52 39

Survivor income benefits .............................. 2 ( ) 2 ( ) 2 ( ) 1

Health care benefits:

Medical care ................................................. 65 79 70 54

Dental care ................................................... 29 39 32 21

Vision care .................................................... 10 12 11 9

Outpatient prescription drug coverage ......... 60 75 64 49

Retirement income benefits:

All retirement3 ............................................... 41 51 48 31

Defined benefit ........................................... 14 13 16 12

Defined contribution ................................... 34 43 39 25

Savings and thrift .................................... 18 22 21 14

Deferred profit sharing ............................ 12 14 16 9

Employee stock ownership ..................... 1121

Money purchase pension ........................ 5 10 5 2

Simplified money purchase ..................... 1211

Cash or deferred arrangements:

With employer contributions ...................... 21 27 24 15

Salary reduction ...................................... 21 27 24 15

Savings and thrift ................................... 18 22 20 14

Deferred profit sharing ........................... 2321

Money purchase pension ...................... 1 2 1 2 ( )

Deferral of profit sharing allocation ......... 2 ( ) 2 ( ) 2 ( ) –

Other4 ...................................................... 2 ( ) 2 ( ) 2 ( ) 2 ( )

No employer contributions ......................... 3532

Other benefits:

Stock option .................................................. 2 ( ) 2 ( ) 2 ( ) 2 ( )

Stock purchase ............................................. 2 ( ) 2 ( ) 1 2 ( )

Cash profit-sharing only ................................ 2 ( ) 2 ( ) 2 ( ) 2 ( )

1 Participants are workers covered by a paid time off, insurance, or retirement

plan. Employees subject to a minimum service requirement before they are

eligible for benefit coverage are counted as participants even if they have not met

the requirement at the time of the survey. If employees are required to pay part

of the cost of a benefit, only those who elect the coverage and pay their share are

counted as participants. Benefits for which the employee must pay the full

premium are outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded.

2 Less than 0.5 percent. 3 Includes defined benefit pension plans and defined contribution retirement

plans. The total is less than the sum of the individual items because many

employees participated in both types of plans. 4 Includes required contributions made to plans on a pretax basis.

 NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 76. Other benefits: Eligibility for specified benefits, full-time employees in

service-producing industries, small private establishments, 1994

(In percent)

Benefit All

employees

Professional,

technical,

and related

employees

Clerical and

sales

employees

Blue-collar

and service

employees

Income continuation plans:

Severance pay ...................................... 17 24 22 9

Supplemental unemployment benefits 1 ( ) 1 ( ) 1 ( ) 1 ( )

Family benefits:

Employer assistance for child care ....... 2 2 2 1

Employer-provided funds ................... 1 2 1 1

On-site child care ............................... 1 1 1 ( ) 1

Off-site child care ............................... 1 ( ) – 1 ( ) 1 ( )

Eldercare .............................................. 34 38 36 30

Long-term care insurance ..................... 1 1 1 1 ( )

Health promotion programs:

Wellness programs ............................... 6 8 8 4

Employee assistance programs ........... 15 19 19 10

Miscellaneous benefits:

Employer-subsidized recreation

facilities ........................................... 5 8 5 4

Job-related travel accident insurance ... 13 18 14 10

Nonproduction bonuses ........................ 43 45 48 38

Financial counseling ............................. 2 2 2 1

Subsidized commuting ......................... 1 1 1 ( ) 1 ( )

Sabbatical leave ................................... 2 3 1 2

Education assistance:

Job-related .......................................... 39 50 46 27

Not job-related .................................... 6 8 7 3

Flexible benefits plans .............................. 3 2 5 2

Reimbursement accounts ......................... 20 26 23 14

1 Less than 0.5 percent.

 NOTE: Because of rounding, sums of individual items

may not equal totals. Where applicable, dash indicates

no employees in this category.
Table 77. Summary: Participation1 in selected employee benefit

programs, full-time employees, by union status, small private

establishments, 1994

(In percent)

Benefit Union Nonunion

Paid time off:

Holidays ................................................ 73 83

Vacations .............................................. 76 89

Personal leave ...................................... 16 12

Funeral leave ........................................ 57 50

Jury duty leave ..................................... 59 58

Military leave ......................................... 13 17

Family leave ......................................... 2 2

Unpaid Family leave .......................... 61 47

Disability benefits:

Short-term disability protection ............. 79 60

Paid sick leave .................................... 44 50

Sickness and accident insurance ....... 61 24

Long-term disability insurance .............. 13 21

Survivor benefits:

Life insurance ....................................... 86 59

Accidental death and dismemberment 68 47

Survivor income benefits ...................... 1 1

Health care benefits:

Medical care ......................................... 94 64

Dental care ........................................... 57 26

Vision care ............................................ 46 8

Outpatient prescription drug coverage 88 58

Retirement income benefits:

All retirement2 ....................................... 85 39

Defined benefit ................................... 72 12

Defined contribution ........................... 32 34

Savings and thrift ............................ 11 17

Deferred profit sharing .................... 1 14

Employee stock ownership ............. – 1

Money purchase pension ................ 20 4

Cash or deferred arrangements:

With employer contributions ............. 12 20

No employer contributions ................ – 3

1 Participants are workers covered by a paid time off, insurance, or retirement plan. 

Employees subject to a minimum service requirement before they are eligible for benefit

coverage are counted as participants even if they have not met the requirement at the time

of the survey. If employees are required to pay part of the cost of a benefit, only those who

elect the coverage and pay their share are counted as participants. Benefits for which the

employee must pay the full premium are outside the scope of the survey. Only current

employees are counted as participants; retirees are excluded. 2 Includes defined benefit pension plans and defined contribution retirement plans. The

total is less than the sum of the individual items because many employees participated in

both types of plans.

NOTE: Because of rounding, sums of individual items may not equal totals. Where

applicable, dash indicates no employees in this category.
Table 78. Other benefits: Percent of full-time employees eligible for

specified benefits, by union status, small private establishments, 1994

Benefit Union Nonunion

Income continuation plans:

Severance pay ...................................... 16 15

Supplemental unemployment benefits 3 1 ( )

Family benefits:

Employer assistance for child care ....... 1 1

Eldercare .............................................. 47 32

Long-term care insurance ..................... 1 1

Health promotion programs:

Wellness programs ............................... 6 6

Employee assistance programs ........... 21 15

Miscellaneous benefits:

Employer-subsidized recreation 

facilities ........................................... 2 5

Job-related travel accident insurance ... 12 13

Nonproduction bonuses ........................ 38 48

Financial counseling ............................. 1 2

Subsidized commuting ......................... – 1

Sabbatical leave ................................... 1 1

Education assistance:

Job-related ........................................ 33 38

Not job-related .................................. 6 6

Flexible benefits plans .............................. 1 3

Reimbursement accounts ......................... 9 19

1 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal totals. Where

applicable, dash indicates no employees in this category.
Table 79. Summary: Participation1 in selected employee benefit programs, part-time employees, small private establishments, 1994

(In percent)

Benefit All employees

Professional, technical,

and

related employees

Clerical and sales

employees

Blue-collar and

service employees

Paid time off:

Holidays ........................................................ 26 29 40 18

Vacations ...................................................... 31 31 44 24

Personal leave .............................................. 4273

Funeral leave ................................................ 15 19 21 11

Jury duty leave ............................................. 25 17 27 25

Military leave ................................................. 3462

Family leave ................................................. 2 ( ) – 1 2 ( )

Unpaid family leave .......................................... 28 17 33 27

Disability benefits:

Short-term disability protection ..................... 24 30 27 21

Paid sick leave ............................................ 9 14 12 7

Sickness and accident insurance ............... 17 20 18 16

Long-term disability insurance ...................... 1 3 1 2 ( )

Survivor benefits:

Life insurance ............................................... 6 4 11 4

Accidental death and dismemberment ......... 4473

Health care benefits:

Medical care ................................................. 7 11 9 5

Dental care ................................................... 3252

Vision care .................................................... 2131

Outpatient prescription drug coverage ......... 5 11 6 4

Retirement income benefits:

All retirement3 ............................................... 10 9 17 7

Defined benefit ........................................... 5283

Defined contribution ................................... 6 7 11 4

Savings and thrift .................................... 3151

Deferred profit sharing ............................ 3252

Employee stock ownership ..................... 2 ( ) 2 ( ) 2 ( ) –

Money purchase pension ........................ 1311

Simplified money purchase ..................... 2 ( ) – 1 –

Cash or deferred arrangements:

With employer contributions ...................... 3251

Salary reduction ...................................... 3251

Savings and thrift ................................... 3151

Deferred profit sharing ........................... 2 ( ) 1 2 ( ) 2 ( )

Other4 ...................................................... 2 ( ) 2 ( ) – 2 ( )

No employer contributions ......................... 1 4 1 2 ( )

Other benefits:

Stock purchase ............................................. 2 ( ) – 1 2 ( )

Cash profit-sharing only ................................ 2 ( ) – 2 ( ) –

1 Participants are workers covered by a paid time off, insurance, or retirement

plan. Employees subject to a minimum service requirement before they are

eligible for benefit coverage are counted as participants even if they have not met

the requirement at the time of the survey. If employees are required to pay part

of the cost of a benefit, only those who elect the coverage and pay their share are

counted as participants. Benefits for which the employee must pay the full

premium are outside the scope of the survey. Only current employees are

counted as participants; retirees are excluded.

2 Less than 0.5 percent. 3 Includes defined benefit pension plans and defined contribution retirement

plans. The total is less than the sum of the individual items because many

employees participated in both types of plans. 4 Includes required contributions made to plans on a pretax basis.

 NOTE: Because of rounding, sums of individual items may not equal totals. 

Where applicable, dash indicates no employees in this category.
Table 80. Other benefits: Eligibility for specified benefits, part-time employees, small private

establishments, 1994

(in percent)

Benefit All

employees

Professional,

technical,

and related

employees

Clerical and

sales

employees

Blue-collar

and service

employees

Income continuation plans:

Severance pay ...................................... 4 3 8 2

Supplemental unemployment benefits 1 – 1 ( ) 1

Family benefits:

Employer assistance for child care ....... 1 3 1 1

Employer-provided funds ................... 1 ( ) 1 ( ) 1 ( ) 1 ( )

On-site child care ............................... 1 4 1 ( ) 1

Eldercare .............................................. 22 16 26 20

Long-term care insurance ..................... 1 ( ) 2 – 1 ( )

Health promotion programs:

Wellness programs ............................... 2 1 3 1

Employee assistance programs ........... 7 10 11 5

Miscellaneous benefits:

Employer-subsidized recreation

facilities ........................................... 3 9 2 3

Job-related travel accident insurance ... 4 4 7 3

Nonproduction bonuses ........................ 22 35 27 17

Financial counseling ............................. 1 2 1 1 ( )

Subsidized commuting ......................... 1 ( ) – 1 ( ) 1 ( )

Sabbatical leave ................................... 1 ( ) 1 ( ) 1 ( ) 1 ( )

Education assistance:

Job-related .......................................... 15 28 13 15

Not job-related .................................... 3 1 2 4

Flexible benefits plans .............................. 1 ( ) – 1 1 ( )

Reimbursement accounts ......................... 5 3 4 6

1 Less than 0.5 percent.

 NOTE: Because of rounding, sums of individual

items may not equal totals. Where applicable, dash

indicates no employees in this category.
Scope of survey

The Employee Benefits Survey (EBS)__the Bureau of

Labor Statistics (BLS) survey of the incidence and characteristics of employee benefit plans__is conducted jointly with

the Bureau’s Employment Cost Index (ECI). The portion of

the sample from which the small establishment EBS estimates are made covers all private-sector establishments1 in

the United States employing fewer than 100 workers at the

time of sample selection.2 All private-sector industries are

covered in the survey with the exception of farms and private households.

The industrial and establishment size coverage of the survey varies on a rotating basis. All surveys cover full-time

and part-time workers in all 50 States and the District of

Columbia. In even-numbered years, EBS data are collected

for small private establishments (those employing fewer than

100 workers) and State and local governments of all sizes.

In odd-numbered years, data are collected for medium and

large private establishments (those employing 100 workers

or more).

The industrial coverage, establishment size coverage, and

geographic coverage for the survey were different prior to

1990. From 1979 to 1986, the surveys covered only medium and large private establishments and excluded most of

the service industries. Establishments that employed at least

50, 100, or 250 workers, depending on the industry, were

included. The survey conducted in 1987 consisted of State

and local governments with 50 or more employees. The surveys carried out in 1988 and 1989 included all

private-sector establishments that employed 100 or more

employees. All surveys conducted from 1979 to 1989 excluded part-time employees and establishments in Alaska

and Hawaii.

Data in appendix B indicate the estimated number of

full- and part-time employees within the scope of the survey, the number of responding sample establishments, and

the number of sampled (and responding) occupational

quotes 3

 within those establishments that are actually studied for each major industry division.

Appendix A: Technical Note

1 BLS defines an establishment as an economic unit that produces goods

or services (such as a factory or a store) at a single location. An establishment is not necessarily a firm; it may be a branch plant, for example, or a

warehouse.

2 The establishments included in this survey had to be determined in advance of the actual collection because BLS only surveyed the smaller establishments. BLS classified establishments by size as of the reference date of

the samplying frame. All establishments of fewer than 100 employees that

were sampled are included in the survey, even if they employed more worked

at the time of data collection.

3 Data are collected individually for narrowly defined occupations that are

sampled within establishments. All of the employees in the detailed occupation selected may not be surveyed. Data for a group (manageable number)

of employees in the detailed occupation that included the selected employee

position are collected. This group is called a quote.

Occupational groups

Each of the narrowly defined occupations selected for

study is classified into one of the following three broad occupational groups:

Professional, technical, and related. Includes professional,

technical, executive, administrative, managerial, and related

occupations.

Clerical and sales. Includes clerical, administrative support,

and sales occupations.

Blue-collar and service. Includes precision production, craft,

and repair occupations; machine operators and inspectors;

transportation and moving occupations; handlers, equipment

cleaners, helpers, and laborers; and service occupations.

Excluded from the survey are self-employed persons, proprietors, major stockholders, members of a corporate board

who are not otherwise officers of the corporation, volunteers, unpaid workers, family members who are paid token

wages, the permanently disabled, partners in unincorporated

firms, and U.S. citizens working overseas.

Benefit areas

BLS requests that sampled establishments provide data

for a sample of their occupations on work schedules and

details of plans in each of the following benefit areas: Paid

holidays, paid vacations, paid personal leave, paid funeral

leave, paid military leave, paid jury-duty leave, paid and

unpaid family leave, paid sick leave, sickness and accident

insurance, long-term disability insurance, medical care, dental care, vision care, life insurance, defined benefit pension

plans, defined contribution plans, flexible benefits plans,

and

reimbursement accounts.

Data are also collected on the incidence of the following

additional benefits: Severance pay, supplemental unemployment benefits, travel accident insurance, nonproduction cash

bonuses, child care, eldercare, long-term care insurance,

wellness programs, recreation facilities, job-related and nonjob-related educational assistance, employee assistance programs, financial counseling, subsidized commuting, sabbatical leave, stock option plans, stock purchase plans, and cash

profit-sharing plans.

Sample design

The State Unemployment Insurance (UI) reports for the

50 States and the District of Columbia comprise the list of

establishments from which the sample is selected (called

the sampling frame). The sample design for this survey and
provide documents describing their flexible benefits plans;

reimbursement accounts; defined benefit pensions; defined

contribution plans; medical, dental, and vision care plans;

and insurance plans. BLS analyzes these plans in Washington to garner the required data on plan provisions. Data on

paid leave benefits generally are obtained directly from the

employer at the time of the visit.

Data calculation

Tabulations in this bulletin show the percent of all employees who receive specified benefits, such as paid holidays or medical care, as well as information on the provisions of many of these benefits. Tabulations of specific provisions generally indicate the percent of all employees receiving a benefit (participants) who are covered by specified features. For example, a tabulation may show the percent of workers with medical care benefits who are covered

by a health maintenance organization.

The majority of tables in the bulletin indicate the percent

of employees covered by a particular benefit plan or provision. In addition, average benefit provisions__such as the

average number of paid holidays per year__are presented.

In some cases, tabulations indicate both the percent of employees with a given provision and the average value of that

provision. For example, EBS tabulations indicate the percent of employees in fee-for-service medical care plans who

must pay selected deductibles (such as $100, $150, and $200

per year), as well as the average deductible. (All tabulations

of averages include only those employees actually covered

by the provision being averaged.)

Most tables in this bulletin also include the number of

employees receiving the benefit. This provides the reader

with additional information on the prevalence of various

benefit plans and provisions.

Survey estimation methods

The survey design uses an estimator that assigns the inverse of each sample unit’s probability of selection as a

weight to the unit’s data at each of the two stages of sample

selection. Three weight-adjustment factors are applied to

the establishment data. The first factor is introduced to account for establishment non-response, a second factor for

occupational non-response, and a third poststratification

factor is introduced to adjust the estimated employment totals to actual counts of the employment by industry for the

survey reference date.

The general form of the estimator for a population total

Y is:

Y f f

P

Y f

P

i i

i

ij ij

j ij

o

i

n i

= = =

∑ ∑ 2 1

1 1

 

'

where,

n’ = number of responding sample establishments;

the Employment Cost Index (ECI) is a 2-stage probability

sample of detailed occupations. The first stage of sample

selection is a probability sample of establishments; the second stage is a probability sample of occupations within those

establishments.

The sample of establishments is a subset of the ECI sample

that covers establishments having fewer than 100 employees at the time of selection. The ECI sample is updated over

a 4-year cycle. Each year, new sample establishments are

introduced into the survey in selected industries, replacing

previously selected sample units in those same industries.

Using this procedure, the entire sample is replaced approximately every 4 years.

To ensure that the sample is representative of all establishments that began business after the various industry

samples were selected, a sample of “births” (newly opened

establishments) is added to the existing sample each year.

The sample of establishments is selected by first stratifying the sampling frame by industry group, and then by region and establishment employment. The industry groups

usually consist of 3-digit Standard Industrial Classification

groups, as defined by the Office of Management and Budget.

The number of sample establishments allocated to each

stratum (defined by industry) reflects the ratio of employment in the stratum to employment in all sampling frame

establishments. Thus, a stratum that contains 1 percent of

the total employment within the scope of the survey receives

approximately 1 percent of the total sample establishments.

Some industries are sampled at a higher rate than other industries because of publication requirements or highly variable data.

Each sampled establishment within an industry group

(stratum) has a probability of selection proportional to its

employment. For example, consider two establishments, A

and B, with respective employment of 5,000 and 1,000. Establishment A is five times more likely to be selected than

establishment B.

At the beginning of each visit by a Bureau field economist to a sampled establishment, a second-stage probability

sample of occupations is selected from the establishment.

Data are then collected for these sampled occupations. The

number of occupations selected from an establishment is

four or six, depending on the employment size of the establishment. The probability of an occupation being selected

is proportional to its employment size within the establishment.

The narrowly defined occupations are based on the Standard Occupational Classification (SOC) system compiled

by the Department of Commerce. They are then classified

into the three occupational groups shown in this bulletin.

Data collection

Bureau field economists visit or contact sampled establishments by telephone to collect data for the survey. To

reduce the reporting burden, respondents are asked to
oi = occupation sample size selected from the ith establishment;

Yij= value for the characteristics of the jth selected occupation in the ith selected establishment;

Pi = the probability of including the ith establishment

in the sample;

Pij = the probability of including the jth occupation in

the sample of occupations from the ith establishment;

f1i = weight adjustment factor for nonresponse for the

i

th establishment;

fij = weight adjustment factor for nonresponse for the

j

th occupation in the ith establishment;

f2i = weight adjustment factor for poststratification totals for the ith establishment.

Appropriate employment or establishment totals are used

to calculate the proportion, mean, or percentage that is desired.

Reliability of estimates

The statistics in this bulletin are estimates derived from a

sample of usable occupation quotes selected from the responding establishments. They are not tabulations based on

data from all employees in small establishments within scope

of the survey. Consequently, the data are subject to sampling and nonsampling errors.

Sampling errors are the differences that can arise between

results derived from a sample and those computed from

observations of all units in the population being studied.

When probability techniques are used to select a sample, as

in the Employee Benefits Survey, statistical measures

called “standard errors” can be calculated to measure possible sampling errors.

This evaluation of survey results involves forming confidence intervals that can be interpreted in the following manner: Assume that repeated random samples of the same size

were drawn from a given population and an estimate of some

value, such as a mean or percentage, was made from each

sample. Then, the intervals described by one standard error

below each sample’s estimate and one standard error above

the estimate would include the population’s value for 68

percent of the sample. Confidence rises to 90 percent if the

intervals surrounding the sample estimates are widened to

plus and minus 1.6 standard errors, and to 95 percent if the

intervals are increased to plus and minus 2 standard errors.

Nonsampling errors also affect survey results. They can

be attributed to many sources: Inability to obtain information about all establishments in the sample; definitional difficulties; differences in the interpretation of questions; inability or unwillingness of respondents to provide correct

information; mistakes in recording or coding the data; and

other errors of collection, response, processing, coverage,

and estimation for missing data.

Computer edits of the data and professional review of

both individual and summarized data reduce the non- sampling errors in recording, coding, and processing the data.

However, to the extent that the characteristics of nonrespondents are not the same as those of respondents,

nonsampling errors are introduced in the development of

estimates. Because the influence of these limitations on the

EBS estimates is unknown, reliability measurements are

incomplete.
Appendix B: Survey Response

Information on 1994 survey response

Data for the 1994 Employee Benefits Survey in small

private establishments were collected from November 1993

to October 1994, reflecting an average reference period of

June 1994. A sample of 4,611 establishments was chosen

from Unemployment Insurance reports with reference dates

from 1986 to 1992; also included was the “birth” sample,

which represents establishments beginning operations

through 1993. (A description of sampling procedures appears in appendix A.) Respondents were asked for information as of the time of the data collection contact.

The following summary is a composite of establishment

responses to the survey:

Establishments Number

In sample 4,611

Out of business and out of scope 1,519

Refusing to respond 975

Responding fully or partially 2,135

The 2,135 responding establishments (tables A1-A2)

yielded 6,489 occupational observations (quotes) for which

data were collected.

There were four procedures used to adjust for missing

data from partial and full refusals. First, imputations for the

number of plan participants are made for cases in which

this number is not reported (approximately 7 percent of participants in health plans, 10 percent in retirement plans, and

less than 1 percent of participants in all other types of plans).

Each of these participant values is imputed by selecting a

similar plan from another establishment with similar employment in a similar industry. The participant rate from

this selected plan is then used to approximate the number of

participants for the plan that is missing a participation value.

Second, imputations for plan provisions were made when

they are not available in a responding establishment. These

plan provisions are imputed by selecting a plan from another establishment with similar characteristics. Provisions

from this selected plan are then used to represent the missing data. (This was necessary for about 15 percent of the

participants in sickness and accident insurance plans; 10

percent of flexible benefits plan participants; 51 percent of

medical, dental, and vision care participants; 36 percent of

long- term disability insurance participants; 69 percent of

retirement plan participants; and 12 percent of life insurance plan participants. Imputations were done for less than

1 percent of the participants in paid leave plans.) The rates

of nonresponse for detailed plan provisions in the health

and retirement benefit areas precludes publishing most estimates of their plan features.

For establishments that refuse, or are unable to provide

the minimum amount of usable data, a weight adjustment is

made using the sample unit employment. This technique

assumes that the mean value of the nonrespondents equals

the mean value of the respondents at some “detailed” cell

level. These cells are defined in a manner that groups establishments together that are homogeneous with respect to

the characteristics of interest. In most cases, these cells are

the same as those used for sample selection.

For establishments that refuse, or are unable to provide

data for a specific occupation, a similar cell approach is

used to make adjustments to the sampled occupation weights

in responding establishments. The characteristics of interest include the major occupation group of the unreported

occupations.

The survey data do not relate to 6 percent of the estimated 51.9 million employees in the universe of small private establishments. Of the excluded employees, about 1

out of 4 were not within the valid occupation scope of the

survey (e.g., owner-employees). The remaining 3 out of 4

were in sampled occupations that were discontinued in their

reporting establishments after participation in the survey

began. No replacement occupations were selected, nor were

adjustments made to the survey estimates to reflect these

missing data.

Standard errors

Chart A-1 provides standard errors for use in evaluating

the estimates in the tables shown in chapters 1-9 of this

bulletin containing percentage estimates. For example, table

1 shows that 34 percent of all employees participated in

defined contribution retirement plans in 1994. Chart A-1

shows a standard error of approximately 2.6 percent for this

estimate. Thus, at the 95-percent level, the confidence interval for this estimate is 28.8 percent to 39.2 percent (34

percent plus and minus 2 times 2.6 percent).

Standard errors for tables 9, 15, 24, and 26 could not be

represented graphically. They are presented as tables A3-

A6. For example, the first entry in table 24 shows an average of 8.2 days of paid sick leave annually after 1 year of

service. The standard error for this estimate is 0.54 days.
Charting estimates and generalized standard errors

Each estimate used in the production of the tables in this

bulletin has an approximately normal distribution.

Standard errors for the percentage estimates were computed from a representative portion of the 1994 survey estimates using a method called “balanced repeated replication.” Estimates are produced for each of 64 half-sample

replicates, and the variability or standard error is calculated

from these estimates. To simplify their presentation, a curve

was fitted to the standard error estimates using regression

techniques (chart A-1).

The curve’s equation is:

[ ] { } ( ) { }{ } S Pe

ab P c P d P P = + + −+ − ln ln( ) ln( )ln( ) 100 100

where:

S = standard error

P = percentage estimate from the bulletin

e exponental function

ln = natural logarithm function.

For the 1994 Employee Benefits Survey,

a = -51.50706094, b = 10.037344835,

These are regression coefficients. The curve fits the data

with R2 = 0.83549 and no definite pattern in the residuals.

The equation of the curve was obtained empirically, using the following equation:

S aPb c = 100 - P . ( )

=

c = 11.034774295, and d = -2.21323579.
 
Table A.1: Number of establishments and full-time occupational quotes studied and estimated number of full-time

workers within scope of survey, small private establishments, United States, 1994

Industry division1

Number of

establishments

studied

Number of occupational quotes studied2

Total

Professional,

technical, and related

Clerical and

sales

Blue-collar and

service

All industries ............................. 2,135 5,320 1,205 2,019 2,096

Manufacturing ....................... 132 447 72 66 309

Nonmanufacturing ................ 2,003 4,873 1,133 1,953 1,787

Mining ............................... 11 40 5 4 31

Construction ..................... 208 514 71 60 383

Transportaion,

communications,

electric, gas, and

sanitary services ......... 130 352 81 107 164

Wholesale Trade .............. 294 908 151 449 308

Retail Trade ...................... 448 858 62 451 345

Finance, insurance, and

real estate ................... 329 875 247 552 76

Services ............................ 583 1,326 516 330 480

Estimated number of full-time workers within scope of survey

All industries ............................. 35,909,558 6,571,919 11,629,051 17,708,589

Manufacturing ....................... 4,903,795 722,782 673,070 3,507,942

Nonmanufacturing ................ 31,005,763 5,849,137 10,955,980 14,200,646

Mining ............................... 298,316 29,619 23,958 244,738

Construction ..................... 3,686,660 375,772 326,693 2,984,195

Transportaion,

communications,

electric, gas, and

sanitary services ......... 2,038,634 352,640 581,110 1,104,884

Wholesale Trade .............. 4,216,450 593,674 2,057,800 1,564,975

Retail Trade ...................... 7,287,770 520,799 3,239,814 3,527,157

Finance, insurance, and

real estate ................... 3,121,870 802,174 1,868,565 451,132

Services ............................ 10,356,064 3,174,458 2,858,040 4,323,565

1 As defined in the 1987 edition of the Standard Industrial

Classification Manual, U.S. Office of Management and Budget. 

Indusry data are shown for informational purposes only and are

subject to larger than normal sample error. See section on reliability

of estimates. 2 These figures refer to all respondents to the survey, whether or

not they provided data for all items studied. See the section on

survey response.

NOTE: Because of rounding, sums of individual items may not equal

totals. Where applicable, dash indicates no employees in this

category.
Table A.2: Number of establishments and part-time occupational quotes studied and estimated number of part-time

workers within scope of survey, small private establishments, United States, 1994

Industry division1

Number of

establishments

studied

Number of occupational quotes studied2

Total

Professional,

technical, and related

Clerical and

sales

Blue-collar and

service

All industries ............................. 2,135 1,169 127 480 562

Manufacturing ....................... 132 32 1 10 21

Nonmanufacturing ................ 2,003 1,137 126 470 541

Mining ............................... 11 1 – 1 –

Construction ..................... 208 29 2 12 15

Transportaion,

communications,

electric, gas, and

sanitary services ......... 130 53 17 21 15

Wholesale Trade .............. 294 99 4 47 48

Retail Trade ...................... 448 490 3 235 252

Finance, insurance, and

real estate ................... 329 92 5 66 21

Services ............................ 583 373 95 88 190

Estimated number of part-time workers within scope of survey

All industries ............................. 12,716,611 914,998 4,153,849 7,647,764

Manufacturing ....................... 534,359 9,512 193,714 331,133

Nonmanufacturing ................ 12,182,252 905,486 3,960,135 7,316,631

Mining ............................... 3,399 – 3,399 –

Construction ..................... 216,232 10,522 60,947 144,763

Transportaion,

communications,

electric, gas, and

sanitary services ......... 525,780 122,068 103,911 299,801

Wholesale Trade .............. 427,390 17,252 228,723 181,415

Retail Trade ...................... 7,470,681 25,776 2,358,024 5,086,881

Finance, insurance, and

real estate ................... 433,837 11,997 286,603 135,238

Services ............................ 3,104,933 717,871 918,529 1,468,534

1 As defined in the 1987 edition of the Standard Industrial

Classification Manual, U.S. Office of Management and Budget. 

Indusry data are shown for informational purposes only and are

subject to larger than normal sample error. See section on reliability

of estimates. 2 These figures refer to all respondents to the survey, whether or

not they provided data for all items studied. See the section on

survey response.

NOTE: Because of rounding, sums of individual items may not equal

totals. Where applicable, dash indicates no employees in this

category.
Table A-4. Standard errors for table 15 -- Paid vacations: Average number of days by length of service and

cash-in/carryover provisions, full-time employees, small private establishments, 1994

Vacation days by minimum

length-of-service requirement All plans

Cash-in,

carryover,

or both

Carryover

only Cash-in only Cash-in andcarryover

No cash-in or

carryover

After 1 year ............................. 1.18 0.20 0.36 0.25 0.59 0.15

After 3 years ........................... 1.10 .17 .28 .26 .70 .16

After 5 years ........................... 1.32 .22 .29 .57 .56 .20

After 10 years ......................... 1.62 .26 .32 .53 .73 .24

After 15 years ......................... 2.09 .33 .42 .57 .33 .30

After 20 years ......................... 2.08 .36 .47 .60 .39 .31

After 25 years ......................... 2.38 .38 .46 .51 .37 .35

Table A-3. Standard errors for table 9--Paid holidays and

vacations: Average number of days for full-time employees,

small private establishments, 1994

Item

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Paid holidays .......................... 0.09 0.14 0.09 0.16

Paid vacation by minimum

length-of-service

requirement:

After 1 year ......................... .12 .22 .17 .17

After 3 years ....................... .11 .17 .13 .16

After 5 years ....................... .13 .19 .18 .17

After 10 years ..................... .16 .24 .20 .23

After 15 years ..................... .21 .30 .27 .27

After 20 years ..................... .21 .30 .29 .29

After 25 years ..................... .24 .11 .31 .32
Table A-5. Standard errors for table 24 -- Paid annual sick

leave: Average number of days at full pay for full-time

employees, small private establishments, 1994

Sick leave policy

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Paid annual sick leave days

by minimum length-ofservice requirement:

After 1 year of service ......... 0.54 0.44 0.31 1.52

After 3 years of service ....... .57 .80 .54 1.48

After 5 years of service ....... .69 .98 .84 1.64

After 10 years of service ..... .90 1.19 1.24 1.81

After 15 years of service ..... 1.03 1.31 1.32 1.98

After 20 years of service ..... 1.13 1.43 1.40 2.13

After 25 years of service ..... 1.15 1.49 1.44 2.13

Table A-6. Standard errors for table 26 -- Paid annual sick

leave: Average number of days at full pay for full-time

employees by accumulation policy, small private

establishments, 1994

Sick leave policy

All

employees

Professional,

technical,

and

related

employees

Clerical

and

sales

employees

Bluecollar

and

service

employees

Sick leave days by minimum

length-of-service

requirement

After 1 year of service:

Cumulative plan .............. 0.25 0.35 0.21 0.42

Noncumulative plan ........ .88 .84 .50 2.41

After 3 years of service:

Cumulative plan .............. .25 .35 .25 .42

Noncumulative plan ........ .96 1.61 .91 2.38

After 5 years of service:

Cumulative plan .............. .33 .36 .61 .44

Noncumulative plan ........ 1.16 1.93 1.32 2.67

After 10 years of service:

Cumulative plan .............. .38 .38 .70 .49

Noncumulative plan ........ 1.50 2.35 1.99 2.94

After 15 years of service:

Cumulative plan .............. .43 .38 .79 .59

Noncumulative plan ........ 1.72 2.61 2.11 3.24

After 20 years of service:

Cumulative plan .............. .46 .39 .86 .65

Noncumulative plan ........ 1.86 2.82 2.22 3.48

After 25 years of service:

Cumulative plan .............. .47 .40 .87 .71

Noncumulative plan ........ 1.91 2.94 2.29 3.47

Data not available ............... .47 .40 .86 .71
Appendix C. Availability of

Survey Data

Graham, Avy D. “Coordinating Private Pension Benefits

with Social Security,” Monthly Labor Review, March 1994,

pp. 35-38.

Wiatrowski, William J. “Employee Benefits for Union

and Nonunion Workers,” Monthly Labor Review, February

1994, pp. 34-37.

Williams, Arthur C. “Health Care Plans Covering Outpatient X-ray and Lab Tests” Monthly Labor Review,

August 1993, pp. 44-47.

Thompson, Jerline. “Incidence and Type of Disability

Insurance Benefits, 1958-90,” Monthly Labor Review, July

1993, pp. 51-53.

Bucci, Michael. “Lump-sum Benefits Available from

Savings and Thrift Plans,” Monthly Labor Review, June

1993, pp. 57-60.

Wiatrowski, William J. “Factors Affecting Retirement

Income,” Monthly Labor Review, March 1993, pp. 25-35.

Williams, Dolphene F. “Employer-Provided Retiree

Health Care Benefits,” Compensation and Working Conditions, August 1993, pp. 1-4.

Special bulletins and reports focus on a single topic or

combine related themes. Recent publications include:

Employee Benefits for Union and Nonunion Workers,

1991-92, Summary 94-7, July 1994.

Health Insurance: Employer Offering and Employee

Choice in State and Local Governments. 1992, Summary

94-12, September 1994.

Payouts from Employee Benefit Plans, Bulletin 2436,

December 1993.

Employee Benefits in the United States, Summary 93-4,

June 1993.

The tables published in this bulletin present the major

findings of the Employee Benefits Survey of small private

establishments. Survey data are also available in research

articles, special bulletins and reports, short publications, and

electronic media.

Articles based on Employee Benefits Survey data are published periodically in the Bureau’s Monthly Labor Review

and Compensation and Working Conditions. The following

is a list of recent articles:

Bucci, Michael and Grant, Robert B. “Employer-sponsored Health Insurance: What’s Offered, What’s Chosen?”

Monthly Labor Review, October 1995, pp. 38-44.

Wiatrowski, William J. “Methods of Providing Childcare Benefits to Employees,” Compensation and Working

Conditions, May 1995, pp. 5-6.

Kramer, Natalie. “Employee Benefits for Older Workers,” Monthly Labor Review, April 1995, pp. 21-27.

Kymn, Christine. “AIDS Provisions in Health Insurance,”

Compensation and Working Conditions, August 1994, pp.

4-7.

Bucci, Michael and Grant, Robert B. “Health Insurance:

Employer Offerings and Employee Choices in Small Private Establishments,” Compensation and Working Conditions, August 1994, pp. 1-3.

Foster, Ann C. “Employee Benefits in the United States,

1991-92,” Compensation and Working Conditions, July 1994,

pp. 1-6.

Foster, Ann C. “Portability of Pension Benefits Among

Jobs,” Monthly Labor Review, July 1994, pp. 45-50.

Wiatrowski, William J. “On the Disparity Between Private and Public Pensions,” Monthly Labor Review, April

1994, pp. 3-9.

Scofea, Laura A. “The Development and Growth of Employer-Provided Health Insurance,” Monthly Labor Review,

March 1994, pp. 3-10.
Recent reports on employee benefits include:

Parental Leave Benefits Provided by Employers, Summary 93-1, March 1993.

Health Care Benefits Under Close Scrutiny,

Summary 93-2, March 1993.

The public may access a wide range of Bureau of Labor

Statistics data and information, including Employee Benefits Survey data, through the Bureau’s World Wide Web

site at: http://stats.bls.gov/blshome.html

Bureau of Labor Statistics data are also accessible on

the Internet through Anonymous FTP or Gopher at:

stats.bls.gov

Electronic data are also available through the BLS

LABSTAT on-line data service; users may access Employee

Benefits Survey news releases and historical data on major

benefit incidences and provisions.

More information may be obtained by writing to:

Employee Benefits Survey, Bureau of Labor Statistics, 2

Massachusetts Avenue, NE., Room 4160, Washington, DC

20212-0001. Public information is also available by telephone at (202) 606-6222.

Employee Benefits in a Changing Economy: A BLS

Chartbook, Bulletin 2394, September 1992.

Substance Abuse Provisions in Employee Benefit Plans,

Bulletin 2412, August 1992.

To meet the needs of data users interested in specific benefit topics, Employee Benefits Survey data are used to prepare three series of short publications. Understanding Employee Benefits is a popularly written series of flyers covering benefits. Recent topics include:

The Employee Benefits Survey

The Health Care Puzzle

Retirement and Capital Accumulation

Employee Benefits in Small Establishments

Benefits for the Family

Employee Benefits for Teachers in the Public Sector

Mental Health and Substance Abuse Treatment

Benefits

Issues in Labor Statistics is one of a series of BLS occasional reports that present information of current interest.