Table 16. Paid sick leave: Percent of full-time employees by sick leave provision, medium.and large firms, 1985

Profes- Profes-
sional | Techni- sional | Techni-
‘Alem: | 204 | cal and | Produc- ‘Allem. |. and. | cal and | Produo-
Sick leave policy* oyees |20minis-| clerical | tion em-| Sick leave policy’ loves |A0minis-| clerical | tion em-
Ployees | trative | employ- | ployees Ployees | ‘trative | employ- | ployees
employ-| ees employ-| ees
ees ees
100 | 100 | i00 | 100 |) Sick teave provided on a per
disability basis® 7 28 23 8
Provided sick leave? 67 93 92 a
At 6 months of service:
Sick leave provided Under 5 days 0 1 1 ) :
annually? 51 63 74 33 5 and under 10 days 4 6 8 1 i
10 and under 30 days 3 5 6 1 j
At 6 months of service: 30 and under 60 days 1 1 1 ) |
Under 5 days "1 9 7 10 60 and under 120 days, 1 3 1 0 |
5 and under 10 days 18 21 30 10 120 and under 180 days 3 8 3 1 |
10 and under 80 days 1 2t 7 3 180 days or more .. 0 1 “ i)
30 and under 60 days 1 2 1 0 H
60 and under 120 days 1 2 ) 6 At year. of servic i
120 days or more 1 3 1 i) Under 5 days 1 1 4 0 |
5 and under 10 days 2 3 3 1 i
At 1 year of servic 10 and under 30 days 5 6 8 2 |
Under 5 days .. 3 1 3 6 30 and under 60 days 2 4 2 0
5 and under 10 days 18 14 26 16 60 and under 120 days 1 3 1 6
10 and under 30 days . 24 37 40 9 120 and under 180 days 4 8 3 2
30 and under 60 days .. 2 5 3 1 180 days or.more oO 1 o “
60 and under 120 days, 1 3 1 v)
120 days or more 1 3 1 1 At 5 years‘of service:
Under 10 days 1 1 2) 4
At 5 years of service: 10 and under 30 days 2 2 3 1
Under 5 days .. 2 1 2 3 30 and under 60 days 3 4 4 1
5 and under 10 days 15 "1 20 16 60 and under 120 days 6 9 9 3
10 and under 30 days . 20 27 32 9 120 and under 180 days 4 9 4 2
30 and under 60 days .. 7 12 12 2 180 days ‘or more 1 210 0
4 8 6 1
2 6 2 1
1 1 2 iy) |
At 10 years of service: 10 and under 30 days 1 1 2 1 i
Under 5 days .. 2 1 2 3 30 and under 60 days 1 2 2) i
5 and under 10 day: 15 10 19 16 60 and under 120 days 6 9 10 3 |
10 and under 30 days .. 18 25 30 8 120 and under 180 days 5 " 6 2
30 and under 60 days .. 5 7 8 2 180 days or more ... 1 2 1 (7)
60 and under 120 days 6 "1 9 2
120 days or more .. 5 10 5 1 At 15 years of service:
Under 10 days .. 1 1 2 iy) i
At 15 years of service: 40 and under 30 days, 1 1 2 1 \
Under 5 days .. 2 1 2 3 30 and under 60 days 1 1 1 0
5 and under 10 days 45 10 19 16 60 and under 120 days . 4 7 6 1
10 and under 30 days .. 18 24 30 8 120 and under 180 days 8 4 10 5
80 and under 60 days .. 3 5 6 2 180 days or more .. 1 3 1 0) |
60 and under 120 days 6 " 9 2 |
120 days or more .. 6 12 8 2 At 20 years of service:
Under 10 days .. 1 1 2 “
At 20 years of servi 40 and under 30 days 1 1 2 1
Under 5 days .. 2 1 2 3 30 and under 60 days 1 4 1 iy)
5 and under 10 days 15 10 19 16 60 and under 120 days .. 4 7 6 1
10 and under 30 days .. 7 24 29 8 120 and under 180 days 6 12 6 2
30 and under 60 day’ 3 5 5 2 180 days or more 4 6 5 2
60 and under 120 days, 8 10 8 2
120 days or more .. 7 14 9 2 At 25 years of service:*
Under 10 days .. 1 1 2) 0
At 25 years of service:* 40 and under 30 days 1 1 2 1
Under 5 days .. 1 1 2 1 30 and under 60 days 1 1 1 0)
5 and under 10 days 16 10 19 1B 60 and under 120 days .. 3 5 6 1
10 and under 30 days 7 24 30 8 120 and under 180 days 6 13 7 3
30 and under 60 days 4 5 5 2 180 days or more 4 6 5 2
60 and under 120 days 4 6 6 2
120 days or more . 9 7 1" 3 || As needed basis” 2 5 1 1
Other basis* iy) iy) 1 i)
INot provided paid sick leave 33 7 8 59
" Some plans grant sick leave at partial pay, either in addition or as ‘This number may vary by length of service.

an alternative to full-pay provisions. 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.

? The total is less than the sum of the individual breakdowns be-
cause some employees had annual and per disability plans.

* Employees eam a specified number of sick leave days per year.

* Less than 0.5 percent. i
* Provisions were virtually the same after longer years of service. i
* Employees earn a specified number of sick leave days for each ill- |
ness or disability. This number may vary by length of service,
*’ Plan does not specify maximum number of days.
* Includes formal plans with provisions that change from a specified
number of days per year to a specified number of days per absence.

15


b4

Table 30. Health insurance: Percent of full-time participants in plans with major medical coverage by amount of deductible

and applicable benefit period,’ medium and targe firms, 1985

‘ck Professional and Technical and clerical je Sci
All participants administrative participants participants Production participants
‘Amount of deductible® ~Benefit period
t-year | Other tyear | Other t-year | Other t-year | Other
Total | period | period | TS! | period | period | T*! | period | period | T°! | period | period
Total 100 95 4 | 100 95 4 | 100 95 4 | 100 94 6
Deductible specified 99 95 4 99 95 4 99 96 4 99 24 5
Based on earnings’ .. 5 5 - 5 5 - 6 6 4 4 -
Flat dollar amount 24 20 4 94 90 4 94 89 90 6
Less than $25 0) iv) iy) O iy) 0 o iy) iy)
2 1 1 2 1 1 2 1 1 )
1 1 - 1 1 - 1 1 1 -
13 wl 0 13 18 "1 "1 61
3 3| 0 2 2| 0 2 2 4} ¢
0 ~ 1 1 - 1 1 0 -
a4 42 3 4 39 2 4 40 44 3
iv) iv) - iv) iv) mm iy) rv) - -
1 1 ) 2 1 0) 2 2 1 -
rv) iy) - iY) oO = QO oO ) =
12 12 1 13 13 iv) 18 14 9 1
iy) - 1 1 - 1 1 a) -
13 12 1 14 14 1 18 12 "1 “
iy) iy) - 1 1 - 1 1 6 -
2 2 - | 2 2 - 3 3 1 -
2 2 |e 2 2 - 2 2 1
No deductible .. 1 | - 1 - - 1 - - 1 - -

‘ The deductible is the amount of covered expenses that an individual
must pay before any charges are paid by the insurance plan. The benefit
period is the length of time within which a single deductible requirement
applies. Some plans require that expenses equal to the deductible be in-
curred within a shorter period, such as 90 days.

2 Amount of deductible described is for each insured person. However,
many plans contain a maximum family deductible. In some plans, the indi-
vidual and family deductibles are identical.

* These plans have deductibles which vary by the amount of the partici-
pants’ earings. A typical provision is 1 percent of annual earnings with a
maximum deductible of $150.

“Leas than 0.5 percent,

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.



Table 26. Health insurance: Percent of full-time participants by coverage for selected categories of medical care, medium

and large firms, 1985

Care provided
Category of medical care Total j By basic Care not
an By basic By major berbfits and provided
benefits only’ | medical only* |, fajor medical
All participants

Hospital room and board 100 99 19 33 a7 1
Hospitalization—miscellaneous services .. 100 99 19 34 47 1
Outpatient care’ 400 99 16 29 54 1
Extended care facility’ 100 67 26 29 12 33
Home health care* 100 56 27 20 9 44
100 99 33 29 37 1
i Pi 100 99 15 52 32 1
Physician visits—office .. 100 95 9 80 6 5
Diagnostic X-ray and laborator 400 99 25 45 29 1
Prescription drugs—nonhospital 400 98 20 75 3 2
Private-duty nursing 100 94 8 85 1 6
Mental health care 100 99 14 32 53 1
Dental 100 76 72 4 - 24
Vision 100 35 28 6 ) 65

Professional and administrative
Hospital room and board ... 100 99 20 38 42 1
Hospitalization—miscellaneous services 100 99 19 39 at 1
Outpatient care’ .. “ 400 99 13 33 54 1
Extended care facility’ 100 69 25 31 12 31
Home health care* 100 59 a7 21 410 at
Surgical 100 99 33 35 32 1
Physician visits—in hospital .. 400 99 4 60 25 1
Physician visits—otfice .. 100 99 "1 85 3 1
Diagnostic X-ray and labs 100 99 24 52 23 1
Prescription drugs—nonhospital 400 98 18 76 3 2
Private-duty nursing 100 99 10 87 1 1
Mental health care 100 99 12 37 50 1
Dental 100 79 74 6 - 2
Vision 100 32 25 7 iv) 68

Technical and clerical

Hospital room and board 400 99 19 37 43 1
Hospitalization—miscellaneous se 100 99 18 38 43 1
Outpatient care® 400 99 14 34 51 1
Extended care facility’ . 100 67 22 33 12 33
Home health care* 100 87 25 22 10 43
‘Surgical... 100 99 33 35 31 1
Physician visits—in hospital 100 99 15 87 28 1
Physician visits—office 100 99 1 84 4 1
Diagnostic X-ray and laboratory* 100 99 25 50 25 1
Prescription drugs—nonhospital .. 400 97 7 7 3 3
Private-duty nursing 100 98 10 87 1 2
Mental health care 100 99 12 37 50 1
- 100 76 mn 5 ~ 24
Vision .. 100 33 25 8 iv) 67

See footnotes at end of table.

32



intervals are increased to plus and minus 2 standard
errors.

Chart A provides standard errors for use in evaluat-
ing the estimates in the 75 tables of this bulletin con-
taining percentage estimates. For example, table 1 re-
ports that 67 percent of all employees participated in
sick leave plans in 1985. Chart A shows a standard er-
tor of approximately 1.6 percent for this estimate. Thus,
at the 95 percent level, the confidence interval for this
estimate is 64 percent to 70 percent (67 plus and minus
2 times 1.6 percent). Standard errors for the four bul-
Jetin tables not containing percentages-5, 17, 18, and
56-are not yet available.

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, re-
sponse, processing, coverage, and estimation for miss-
ing data. Through the use of computer edits of the data
and professional review of both individual and summa-
tized data, efforts are made to reduce the nonsampling
errors in recording, coding, and processing the data.

However, to the extent that the characteristics of non-
respondents are not the same as those of respondents,
nonsampling errors are introduced in the development
of estimates. Because the impact of these limitations on
the Employee Benefits Survey estimates is unknown,
reliability measurements are incomplete.

For those readers interested in further mathematical
details, the next section describes how chart A was
derived from 1982 survey data.

Mathematical details on estimates and generalized stan-
dard errors chart

Each estimator used in the production of the tables in
this bulletin is approximately normally distributed.

Standard errors for the percentage estimates were com-
puted from the 1982 survey data. To simplify their
Presentation, a curve was fitted to the standard error
estimates by regression techniques.

The curve’s equation is:

[a + b {In()}2 + c {In(100-P)}? + d InP) In(00-P)]
S=e

Chart A. Employee benefits survey generalized standard errors

50 60
Percent estimate



Table 36. Health insurance: Percent of full-time participants
in plans with orthodontic benefits by lifetime maximum
amount of coverage, medium and large firms, 1985

Profes-
sional | Techni-
All par. | 206 _ | cal and | Produc
Dollar amount telpats|@9minis-| clerical |tion par-
trative | partici | ticipants
partici. | ‘pants
ants
100 | 100 | too | 100
Lifetime maximum specified os | o | os | 96
$500 4 |i | i | 45
$501-$749 5 5 4 6
$750 . 19 | 17 | 2 | 19
$751-$999 14 | 12 9 | 48
$7,000 37 | so | 42 | 33
$1,001-81,499 2 3 3 1
$1,500 3 3 3 3
Greater than $1,500 2 3 2 1
No lifetime maximum... 4 4 5 4

tals.

Table 37. Health insurance: Percent of full-time

medium and large firms, 1985

NOTE: Because of rounding, sums of individual items may not equal to-

participants in plans with mental health benefits by extent of benefits,

ici Professional and adminis- | Technical and clerical Production
All participants trative participants participants participants
Coverage limitation
Hospital | Outpatient | Hospital | Outpatient | Hospital | Outpatient | Hospital | Outpatient
care care care care care care care care
100 100 100 100 400 100 100 100
With coverage ... 99 97 99 98 99 97 98 96
Covered the same as other
illnesses ... 42 5 44 5 40 4 42 6
‘Subject to separate limitations' 57 ot 55 93 59 93 56 90
Limit on days or visits 34 26 31 26 34 27 36 26
Limit on dollars 26 ral 25 nm 29 72 25 2
Major medical coinsurance
limited to 50 percent . 3 54 2 52 2 54 3 55
No major medical ceiling
out-of-pocket expenses 12 62 4 58 4 58 10 45
Other limitations® .. 8 7 8 16 8 16 7 18
Not covered 1 3 1 2 1 3 2 4

* The total is less than the sum of the individual items because
many plans had more than one type of limitation on mental health cov-

erage.

41

Includes plans requiring copayments or a separate deductible for
inpatient or outpatient care, and plans where the rate of reimbursement

for outpatient care varied during the treatment period.



Table 9. Paid vacations: Percent of full-time part icipants by
length of service required to take vacation, medium and

large firms, 1985

Profes-
sional | Techni-
Allpar- |_2nd_ | eal and | Produc-
Length of service requirement 2) PAF. | adminis- | clerical | tion par-
Pants | ‘trative | partici. | ticipants
partici- | pants
pants
Total .. 100 100 100
With service requirement 96 97 98
1 month 10 9 4
2 months 3 2 2
3 months at 12 10
4-5 months 1 0) 2
6 months 44 45 26
7-11 months .. 1 2 1
1 year... 26 26 60
Over 1 year - 7) 2
Without service requirement 3 4 3 2
Service requirement not determin-
able “ 10) 1) iv) 1

* Less than 0.5 percent,

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.

Table 10. Paid personal leave: Percent of full-time
employees by number of paid personal leave days
provided per year, medium and large firms,

1985
Profes-
sional | Techni-
Number of days All em-| admin | ceil Pion
Ployees| trative |employ- employ.
lemploy-| ees
ees
Total ... 100 | 100 | 100 | 100
Provided personal leave 2%} 33 | 37] 18
1 day 2 2 3 1
2 days 6 7| 10 3
3 days 4 8 4 3
4 days 4 4 6 3
5 days . 4 8 6 3
More than 5 days 2 3 3 1
No maximum specifi 3 8 4 1
Varies by length of service 2 1 2 2
Not provided personal leave 7 | e7 | 63} 62

| Workers were provided as much personal leave as they needed.

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

totals.

Table 11. Paid funeral leave: Percent of full-time
employees by number of paid funeral leave days available
Per occurrence, medium and large firms, 1985

Profes-
sional | Techni-
Allem.| 2nd. [cal ana|Produe-
Number of days Joyees) 24min. | clerical |, ACM
PioYees istrative jemploy-| PIO
lemploy-} ees
ees
Total 100 | 100 | 100 | 100
Provided paid funeral leave es) 87] a9 | 287
1 day 1 1 1 1
2 days 3 2 2 3
3 days 63 | 55} 58 |. 70
4 days 3 4 4 3
5 days 9) 18) 14 5
More than 5 days oO};o;, eo] @
Varies by length of service .. e| it 9 3
Number of days not available 1 1] 0 1
Not provided paid funeral teave .. wz] i] 14] 43
Number of days varies by relation-
ship to deceased’ .. 18 19 a 16

* Less than 0.5 percent.

® The maximum number of days provided for any occurrence was in-
cluded in the distribution of funeral leave days.

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

totals.



Table 63. Defined benefit pension plans:' Percent of
full-time participants by type of vesting schedule, medium
and large firms, 1985

Table 64. Defined benefit pension plans:' Percent of
full-time participants by provision for Ppostretirement
‘survivor annuity, medium and large firms, 1985

Profes-
sional | Techni-
and | cal and | Produc-
adminis-| clerical | tion par-
trative | partici. | ticipants
Partici- | pants
pants

All par-

‘Type of vesting schedule ticipants

Protes-
‘sional | Techni-
All pare |_20d | cal and | Produc-
Type of annuity for surviving spouse ticipants acini storia ton pa.

ative | partici. | ticipants
partici- | pants

Total® 100 | 100 | 100 | 100

Cliff vesting? with full vesting after:
10 years of service at any age
10 years of service after

69 64 59 76

age 18 . 7 W 9 4
10 8 13 10
2 2 1 2

Graduated vesting,’ with full vesting

after:

18 years of service” 3 3 4 2
Oth 10 W 13 7
Vesting provision not determinable |. 1 2 1 )

100 100 100

‘annuity? only 91 94 94 87

19 15 17 22

sp
51-99 percent of retiree’s

Pension ... 5 4 2 7
100 percent of retiree's pension .| 2 2 2 1
Altemative percentages at
tetiree’s option .. 65 74 72 57
Spouse's share of joint-and-survivor
annuity plus portion of retiree’s
Pension 1 1 le} 2
Portion of retiree’s accrued pension
only ... | 8 5 6 10

! Excludes supplemental pension plans.

* Because plans may adopt alternative vesting schedules, sums of par-
ticipants covered by individual vesting schedules may exceed 100 percent.

* Under a cliff vesting schedule, an employee is not entitled to any
benefits accrued under a pension plan until satisfying the requirement for
100 percent vesting. The Employee Retirement Income Security Act
(ERISA) specifies 10 years as the maximum requirement for this form of
vesting.

‘ The Retirement Equity Act of 1984 requires that sponsors of most
pension plans count years of service completed after age 18 towards sat-
isfaction of minimum vesting requirements. For noncollectively bargained
plans, this requirement takes effect for plan years beginning on or after
vanuary 1, 1985. However, collectively bargained plans need not comply
until the earlier of: (1) the expiration date of the collective bargaining
agreement, or (2) January 1, 1987.

* Includes both participants in plans containing vesting schedules more
liberal than ERISA standards and, for graduated vesting, in plans adopting
other ERISA standards,

* Graduated vesting schedules give an employes rights to a gradually
increasing share of accrued pension benefits, determined by years of serv-
ice and eventually reaching 100 percent vesting status.

” Participants in this group were in plans that adopted ERISA’s longest
time span for graduated vesting, which calls for 25 percent vesting with 5
years of service, with the vested percentage increasing 5 percentage
Points each year for § succeeding years, then 10 percentage points for
@ach of the next 5 years. Thus, 15 years is the maximum requirament for
this form of vesting.

® Less than 0.5 percent.

69

' Excludes supplemental pension plans.

* An annuity that provides income during the lifetime of both the retiree
‘and the surviving spouse. The accrued pension will usually be actuarially
reduced at retirement because of the longer length of time that payments
are expected to be made. ERISA requires that plans provide this annuity
as an automatic form of pension payment. Employees and their spouses
must waive the spouse annuity in writing if they desire a pension during
the employee's lifetime only or another option offered by the plan, such as
guarantee of payments for a specified period.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.

|
i
i
|
|



Average replacement
rate (percent)

Chart 4. Replacement rates under pension plans including and excluding Social Security
payments: Average benefits based on 30 years of service, medium and large firms, 1985

100
O Private pension only
Ml Combined private pension
and primary Social
Security payment
80 ‘y pay
60
40 4
20
° T

$15,000 $20,000

$25,000

Worker's final year's earnings

$30,000 $35,000 $40,000

Another 10 percent of participants could qualify when
the sum of age plus service reached a specific amount,
such as 85. A minimum age of 55 was generally in-
cluded for meeting these requirements. Minimum
lengths of service were less common.

Fourteen percent of all participants were covered by
plans permitting normal retirement at any age with 30
years of service; the major concentration (19 percent)
was among production workers. Plans which featured
such a provision almost always offered other normal
retirement opportunities at specified ages with lower
service requirements. (If a plan had alternative age and
service requirements, the earliest age and associated
service were tabulated for this survey; if one alterna-
tive did not specify an age, it was the requirement that
was tabulated.)

Early retirement (tables 58 and 59). Virtually all of the
employees participating in a pension plan could retire

51

before normal retirement age and receive an immedi-
ate, reduced pension. In some cases, employer approval
was required for such early retirement benefits,

The amount of an early retirement pension is lower
for two reasons: First, fewer years of service are ap-
plied to the benefit formula because an employee has
not worked until normal retirement age. Second, be-
cause benefits begin at an earlier age, the retiree is ex-
pected to receive plan payments over a longer period
of time.

The normal benefit is reduced by a percentage (fac-
tor) for each year between the actual and normal re-
tirement 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 (100 percent minus 3 years
times 6 percent). It should be recognized, however, that
in addition to the 18-percent reduction for early retire-
ment, the annuity in this example would be based on



Chapter 5. Defined Benefit
Pension Plans

Among employees within the scope of the survey,
defined benefit pension plans are the predominant type
of retirement plan sponsored by employers. These plans
include a formula for calculating retirement benefits and
obligate the employer to provide the benefits so deter-
mined. In 1985, four-fifths of the employees were cov-
ered by defined benefit pension plans—a proportion that
has held relatively steady since 1980. (Other sources of
retirement income, such as savings plans, will be dis-
cussed in chapter 6.)

Benefit formulas (tables 49-53). Earnings-based for-
mulas applied to seven-tenths of the employees covered
by defined benefit pension plans. Plans including these
formulas pay a percent of the employee’s annual earn-
ings per year of service. Variations are common in the
approach to calculating annual earnings and the rate
paid per year of service. For 82 percent of the partici-
pants with earnings-based formulas, pensions were based
on earnings in the final years of employment (terminal
earnings formula); for the remainder, an average of ca-
Teer earnings was used. Terminal earnings were defined
as the average over a 5-year period for 84 percent of
the participants with terminal earnings formulas. Such
formulas usually designated the 5 consecutive years
with the highest earnings out of the last 10 years before
retirement,

A majority of participants with earnings-based for-
mulas—half of those with terminal earnings and over
two-thirds with career earnings formulas—were in plans
having benefit rates per year of service that varied ac-
cording to service, earnings, or age. Career earnings
formulas typically applied one rate to annual earnings
below a specified amount, and a higher rate above that
amount. For example, a plan will 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 excess earn-
ings. The annual pension payment is the sum of these
credits. The balance of formulas applied a uniform rate
to all earnings. These uniform rates averaged 1.62 per-
cent per year of service in terminal earnings formulas
and 1.55 percent in career earnings formulas. Thus, ter-
minal earnings formulas not only provide a higher earn-
ings base than career formulas," but the percentage rates
also are on average higher. However, benefits under a
terminal earnings formula were more likely to be offset

49

by a retiree’s Social Security payments. (See next
section.)

Most plans that did not use a percent-of-earnings
benefit formula specified a dollar amount to be paid for
each year of service, such as $15 a month per year of
service, yielding a pension of $450 after 30 years. Dol-
lar-amount formulas applied to 29 percent of pension
plan participants. While the dollar amount in these for-
mulas sometimes varied with an employee’s earnings or
service, the predominant method was to multiply a uni-
form dollar amount by years of service. Uniform
amounts credited per year averaged $14.83 a month.

The basis of payment differed sharply by employee
group. While a large majority of white-collar partici-
pants were provided earnings-based pensions, dol-
lar-amount formulas applied to half of the blue-collar
participants.

Thirty-six percent of all participants were in pension
plans providing benefits from either primary or alter-
native formulas, whichever was greater. Alternative
formulas were often included to provide at least a mini-
mum level of benefits for persons with short service or
Jow earnings. For example, a plan may have a primary
formula of 1.25 percent of career average earnings times
years of service, and an alternative formula of $15 a
month for each year of service. In this case, the alter-
native formula would provide a higher benefit for per-
sons with career average annual earnings less than
$14,400.

Private benefits and Social Security payments (table
34). Employers providing private retirement plans
also 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, formulas for calculating private pen-
sions often contain an offset provision requiring part of
the Social Security pension to be subtracted from the
annuity. Other plans have “excess” formulas that apply
lower pension benefit rates to an employee’s earnings
below a specified level (which is either the Social Se-

‘An employee who worked 30 years with a 5-percent pay increase
each year and who earned $25,000 in the last year of service would
have career average earnings of $13,451 a year, while the final S-year
average would be $22,730, The difference between the career and
final averages lessens with shorter lengths of service.



Joint-and-survivor annuities are based on an actuarial
or arithmetic reduction of the employee’s pension. One-
fifth of the participants were in plans offering only a
joint-and-survivor option that provides a surviving
spouse 50 percent of the retiree’s adjusted pension.
Nearly two-thirds of participants had a choice of two
or more alternative percentages (frequently 50, 67, and
100 percent) to be continued to the spouse, with cor-
responding reductions in their annuities.

Preretirement survivor benefits (table 65). Nearly all par-
ticipants were in plans providing for survivor payments
in case the employee died before retirement. Pensions
usually had to be vested before any death benefits were
payable.” For over seven-tenths of the participants, 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 of this na-
ture were based on an early retirement benefit and were
provided at no cost to the employee. However, for 15
percent of participants (down from 24 percent-in 1980),
preretirement joint-and-survivor protection involved an
extra employee cost and was available only if elected.
The cost was usually paid by the employee through a
small deduction in the pension ultimately payable to ei-
ther employee or spouse.

Employee contributions. The employer paid the full
cost of defined benefit pension plans for 90 percent of
the participants. Since 1980, the proportion of produc-
tion participants required to contribute to the cost of

*See footnote 22 for changes required by the Retirement Equity
Act.

55

their plan has risen from 5 to 10 percent. Of the em-
ployees who had to pay part of the cost, virtually all
paid a percent of earnings. The majority of participants
in contributory plans paid one rate (usually 2 to 4 per-
cent) on earnings above a specified level, and a lower
rate (or frequently zero) below that earnings level. The
annual earnings level at which this break occurred
ranged from $3,000 to $39,600, the Social Security tax-
able wage base in effect during 1985. Plans with vary-
ing employee contributions usually coordinate private
benefits with Social Security payments; as discussed
earlier, pension benefit rates used in these plans are
higher on earnings above the Social Security taxable
wage base. One sixth of the participants in contributory
plans paid a flat rate—none paid more than 3 percent.

Participation requirements (table 66). Two-fifths of the
employees with pension plans had immediate coverage.
Another one-fourth could participate regardless of age
but had a service requirement, seldom more than 1 year.
The remaining employees could not enter their em-
ployer’s pension plan until they reached a specified age
and completed 1 year of service, the most restrictive
requirement permitted under ERISA.”

Three-fifths of pension participants were in plans with
a maximum age, usually 59, beyond which newly hired
employees were not eligible. Maximum age conditions
are permitted under ERISA regulations as long as the
specified age is within 5 years of a plan’s normal retire-
ment age.

Both minimum and maximum age provisions occurred
less frequently in plans covering blue-collar workers
than in plans for white-collar workers.

>See footnote 22 regarding the Retirement Equity Act’s changes
to ERISA, effective during 1985,



Table 52. Defined benefit pension plans:'. Percent of full-time participants in plans with percent of career earnings benefit
formulas by type and amount of formula, medium:and jJarge firms, 1985. :

Provision for : Provision for
Provision for integration with - +]. Provision for integration with
maximum benefit? | Social Security maximum benefit’ | Social Security
Ty : benefit benefit
ype and amount of | 4a) Type and amount of | To4a)
formula! ‘ Without formula Without
Subject | Not sub: |With inte-| “IANO! Subject | Not sub- jWith inte-] "UID"
to maxi.) ject'to | grated | orhtey to maxi| ject to | grated | hte
mum |maximum| formula | rated mum |maximum| formula | ;Srrten
Professional and
administrative
100 100 100 100 100 Total 100 400 100 100 400
Flat percent per year of Flat percent per year of
service ... 3t 20 92 "1 92 || service... | 38 7 40 10 92
Less than 1.00 3 - 4 - 13 Less than 1.00 . 4 - 4 - 10
4.00-1.24 3 - 3 - " 2 - 2 - 5
1.25-4.49 6 - 6 6 6 4 - 4 4 3
1.50-1.74 12 9 2 1 45 24 9 25 2 66
1.75-1.99 1 - 1 1 - (o) - 6 1 -
2.00-2.24 4 - 5 1 16 3 - 3 is) 8
2.26 or gre 2 4 1 2 - 2.25 ot greater .. 2 8 2 3 -
Percent per year IPercent per year
varies 68 80 87 89 4 || varies 60 83 58 90 3
4 ? 4 4 4 By service . 4 10 4 5 3
63 59 63 83 - By earnings 55 62 54 83 -
1 13 - 1 - By age ... 1 1 - 1 -
1 - 1. - 5 2 - 2 - 5
* Excludes supplemental pension plans. * Less than 0.5 percent.
* Ifa plan contained more than one career earings formula, a primary * Formula was a flat percentage of earnings, graded by length of serv-
formula was selected and tabulated. Table includes plans with career _ice.
eamings formulas that serve as an altemative to a terminal eamings for- .
mula, NOTE: Data were insufficent to show technical-clerical and production
° These maximum provisions are independent of ERISA-mposed cell. workers separately. Because of rounding, sums of individual ems may
ings on pensions payable from defined benefit plans. not equal totals. Dash indicates no employees in this category.

Table 53. Defined benefit pension plans:' Percent of full-time participants in plans with dollar amount benefit formulas” by
type and amount of formula, medium and large firms, 1985

Provision for maximum Provision for maximum
benefit* benefit*
Type and amount of formula? Total Type and amount of formula? Total
Subject to | Not subject ‘Subject to | Not subject
maximum |to maximurn| maximum |to maximum
All participants Production
Total .. 100 100 100 Total 100 100 100
Flat monthly amount per year of [Flat monthly amount per year of
service 66 74 64 service . 69 79 66
5 3 5 3 Less than $5.00 4 5 4
$5.00-$9.99 10 14 9 $5.00-$9.99 1 15 10
$10.00-$14.99 16 23 14 $10.00-$14.99 18 24 16
$15.00-$19.99 28 10 33 $15.00-$19.99 27 4 31
$20.00-24,99 .. 4 8 3 $20.00-$24.99 4 7 3
$25.00-$29.99 .. 2 9 iv) $25,00-$29.99 3 10 1
$30.00 or greater 2 6 1 $30.00 or greater 3 6 1
Amount per year varies by service ... 8 18 5 |jAmount per year varies by service ...| 7 2 6
Amount per year varies by [Amount per year varies by
earnings ... 26 8 30 earnings 24 9 28
* Excludes supplemental pension plans. ings on pensions payable from defined benefit plans.
* Excludes plans with dollar amount formulas that serve as a mini- * Less than 0.5 percent.
tum benefit alternative to a percent of earnings formula.
® Ifa plan contained more than one dollar amount formula, a primary NOTE: Data were insufficient to show professional-administrative and
formula was selected and tabulated. technical-clerical workers separately. Because of rounding, sums of indi-

* These maximum provisions are independent of ERISA-imposed ceil- vidual items may not equal totals.

59



Table 45. Life insurance: Percent of full-time participants in plans with multiple-of-earnings formulas’ by amount of
basic insurance and maximum coverage provisions, medium and large firms, 1985—Continued

In plans in plans with maximum coverage
without
Formula Total | maximum Al Less than | $50,000- | $100,000- | $250,000- | $500,000 or
coverage $50,000 | $o9,e09 | $249,999 | $499,999 | more
Production
Total 400 47 53 7 7 16 ai 3
Life insurance is equal to annual
2 2 (0) ) - - - oy
50 28 22 5 3 10 3 0
iv) iv) 19) - iv) - Q
12 2 "1 1 ty) 9 i)
2 - 2 1 - 1 - -
27 13 14 1 41 4 7 1
2 1 () - - - - (0)
2 1 1 - 1 - 1 iv)
1 - 1 ~ 1 - -
1 1 i) - - is) i) %
i r n 0 : : * * eo
Multiple varying with earings 2 0 2 ) - 1 1 -
* Includes plans in which insurance equalled a multiple of earings, sumed to have 15 years of service.
Plus or minus a flat dollar amount. * Less than 0.5 percent.
* When the multple-ot-eamings formula varied with age, the maxi-
mum muttpie was tabulated. A few plans varied the multiple-ol-eamn- NOTE: Because of rounding, sums of individual items may not equal

ings formula according to service; in these cases, a participant was as- _—totals. Dash indicates no employees in this category.

Table 46. Life Insurance: Percent of full-time participants in
plans with flat dollar insurance’ by amount of basic
insurance, medium and large firms, 1985

Profes-
sional | Techni-
All par- | _894_| cal and | Produc-

adminis- | clerical | tion par-

‘Amount of insurance ;
ticipants "trative | partici | ticipants

partici | pants

pants
Total 100 | 100 | 100 | 100
Less than $2,000 1 2 2 1
$2,000-$4,999 12 10 4 13

$5,000-$9,999
$10,000-$14,999

$15,000-$19,999 9 2 6 "
$20,000-$24,999 5 7 2 5
$25,000-$29,999 ... 3 3 4 3
$30,000 and over .. 1 14 1 1

* Excludes participants in plans where insurance was a flat amount
based on service.

NOTE: Because of rounding, sums of individual itams may not equal to-
tals.

47



Table 20. Sickness and accident insurance: ‘Percent of full-time participants by type and duration of payments,
medium and large firms, 1985

Maximum weeks of coverage No
Type of payment Total | Less Greater | Varies | maxi-
than | 43° | 1425] 26 | 27-51] 52 | than | by | mum
13 : 52 | service
All participants.
All types .. 2 "1 6 57 2 6 () 7/0
Fixed percent of earings 44 1 4 32 1 1 ) 3/0
Less than 50 0) = iV) ~ iV) 10) - - Y =
50 16 Vv) 2 12 = cv) - i) v)
55 ) ~ ~ - iv) () - - - -
60 13 0 0) 1 9] 0 0) - 2 -
62 O |= - - | 0 - - - -
65 2/ 1 1 - - 0) -
66 v) ~ - - Q - ~ - -
67 9 0 1 - 7 iv) Y YO - VW)
70 2 - ) Q 1 - - - ) -
7 1 - “) QO iv) oO ~ iV) 10) -
80 1 - - 1 - - - - -
Percent of earnings varies 5 - ) iy) 2/0 2 - 1 -
By service 2 - = (0) 1 - 1 - - -
By length of disability 1 - ) - 0) 0) 1 - -
By both service and length of
disability .... 1 - - 0) 1 - - - 1 -
Fixed weekly dollar benefit 27 1 7 1 14 1 2 - 1 -
Less than $60 5 0 2 10) 3 0 ~ - ~ -
3 - 2 0) 1 0 QO - oO -
2 Yo iV) - 1 - Q - - -
4 1 1 1 2 - iV) - - -
3 iv) 1 iv) 2 ) 1] - - -
3 - iV) - 2 1) Y - - -
2 - ~ ~ 2 - 0) - iv) -
2 - Y V) 1 (0) 1 - 1 -
1 - 0) - 1 ~ - - - -
1 - - - Y - Vv) - 0 -
Weekly dollar benafit varies .. 24 iy 1 1 9 1 10 - 2/0
By earings . 22 0) (0) 1 8} 0 10 - 27 0
By service or length of
disability .... 2 Y t) - 10) 0) 0) - iv) -
Professional and administrative
All types .. 100 1 4 6 74 2 9 0) 4/10
Fixed percent of earnings .. | 66 1 2 5 63 1 1 0) 3h 0
Less than 50 | 4 - 0) - O) 0) - - -
50 | 22 0 - 2 19 - - oO W)
55 ® |] - - - | o] - - - -
60 20 () 1 1 16 0 V) 2 -
65 8 0) - 2 4 - - - Q -
67 WW vy 1 ~ 10 iv) 0 vy - ¢
70 3 - 0) ') 3 - - - - -
75 2 - 1 QO iv) 1 - - Q -
80 1 - - 1 - - - -
Percent of earings varies 10 - - i) 210 7 - 1
By service 5 - - 1) ) - 4 - - -
By length of disability 3 - - - 0) 0) 3 - -
By both service and length of
disability 2 - - - 1 - - - 1 -

‘See footnotes at end of table.

19



H6

Table 31. Health insurance: Percent of full-time

provisions,’ medium and large firms, 1985

Participants in plans with major medical coverage by coinsurance

Professional and ,
ick s Technical and clerical i
All participants administrative participants, Production participants
Final coinsurance provision Initial coinsurance
5, | 80 | 85 | 90 80 | a5 | 90 80 | 85 | 90 80 | 85 | 90
To- lOth-| To- loth-| To loth-| To- loth.
per-|per- | per- er- | per- | per- per- |per-|per- er- | par- | per-
‘2! Icentjcent{cont| ® | t#! icent|cent|cent| & | ' |Centjeent{eent| | * |Contlcent|cent| &
Total ... o| 65] | 4] 5|100] 24° 5| 5] 5] 100] a4] 4) | el tool eel s| al 5
Final coinsurance changes to 100
Percent 66) 5| 4] 2] 82] 70} §/ 5/ 2] a3! 74) 4! 5] 2) 70] eo] 5} 2] 3
When covered
$1-$2,000 170/)0/0!] 17 11@1@! -| 1} a9 @] ale; 12 1) -; ole
$2,001-$4, 191) | 4) 24)°23) 1 | O | 24) 23-0] 1 @] 16] lala] 4
$4,001-$6,000 22} 4) 4) @ | 28] 24] 2] 4] @ | 27] 2a} 4 1} 22] 20] 4] 4] @
$6,001-$8,000 a} 4 3] 1] 8! 4) 3) @] 4] 6 3 O| 4] 9} 5) 3) -] 4
$8,001-$10,000 ~| 9 77/0) NO) 8 SA] 2] 12] FQ] sa] 9 7 a 4a
More than $10,000 3} 301A) -| 4 31] o-] 4) 9 a] 4 -| ol alale@l -
Final coinsurance changes to other than
100 percent .. yo =) -1@) Fo -) -;@! a oat -| -lay satel -| -fe@
Coinsurance unchanged 19) -{ 1] 3] 17) 13) -/ | 3] 16 12] -) @] 3] 20] 26} -! 3] 2

‘ Coinsurance is the percent of covered expenses paid by the
plan. The balance is paid by the employee. If coinsurance provi-
sions varied by the category of medical care, the provision applying
to hospital room and board charges was tabulated.

* Amount of covered expenses described is for each insured per-
son. In rare cases, the limits for the individual and family are identi-

37

cal. in nearly all instances, covered expenses must reach specified
‘amounts within a calendar year; 2 year periods are infrequent.
® Less than 0.5 percent,

NOTE: Because of rounding, sums of individual items may not
equal totals. Dash indicates no employees in this category.



Table 62. Defined benefit pension plans:’ Percent of full-time participants in plans granting ad hoc postretire-
ment annuity increases,’ medium and large firms, 1985—Continued

Professional and 5 je
‘sti ici Se ehati Technical and | Production partici-
Characteristics All participants earinistatve clerical participants pants
Benefit formula for most recent
increase
Total .. 100 100 100 100
Flat increase .. 36 96 38 36
Monthly dotlar amount . 3 1 i) 6
Less than $10.00 1 - = 2
$10.00 1 - - 1
$15.01-$20.00 1 @ is] 1
More than $20.00 i) 0 Q 1
Varies by date of retirement © vy fe} 0
Percent of present benefit . 33 936 38 29
Less than 6.0 7 6 8 6
2 1 1 2
2 2 1 1
3 4 3 2
1 3 2 i)
1 1 1 1
1 1 1 4
More than 15.0 (v) v) v) )
Varies by date of retirement 17 18 2a 14
Type of flat increase not determi 1) - - 1
increase per year of retirement 37 42 44 34
Monthly dollar amount 1 2 1 1
Percent of present benefit 36 40 43 3
Less than 2.0 7 6 7 7
20 .. 5 5 8 5
21-24 ) v) rv) -
30. 4 5 6 2
40 .. 1 ro) 3 1
41-49 10 10 13 8
50... 5 6 4 5
60 2 3 3 i)
More than 6.0 0 - - iv)
Varies by date of retirement 3 5 3 3
Increase per year of service 24 15 12 29
Monthly dollar amount 20 14 1 28
Less than $.50 2 - ) 4
$50 3 4 3 3
$1.00 3 2 2 4
$1.01-$1.99 4 1 2 5
$2.00 1 1 1 1
More than $2.00 1 2 1 1
Varies by date of retirement .. 6 4 2 10
Percent of present benefit 1 2 ie) 1
Combination of two or more benefit formulas 4 4 3 3
Type of formula not determinable 1 2 3 ro)

* Excludes supplemental pension plans.

2 Unscheduled increases in pension payments for employees
retiring prior to 1985, Excludes one-time lump sum payments.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may

not equal totals. Dash indicates no employees in this category.



Contents—Continued

Page
Tables—Continued
Life insurance:

44, Method of determining amount of basic life insurance and frequency of

related COVETagES 6.0... e cece cece cece tenner cent enn e nett eee eee e nen ee nee e es 45
45. Multiple-of-earnings formulas by amount of basic insurance and maximum

coverage provisiONS ....... 6... eee e eee e ete e ees 46
46. Fiat dollar insurance by amount of basicinsurance .
47. Length-of-service requirements for participation ...
48. Effect of retirement on coverage ........ 0c eee ee eee eee eee eee eee

Defined benefit pension plans

49. Method of determining retirement payments
50. Terminal earnings benefit formulas by type and amount of formula .
51. Terminal earnings benefit formulas by definition of terminal earnings 58
52. Career earnings benefit formulas by type and amount of formula. . 59
53. Dollar amount benefit formulas by type and amount of formula . 59
54. Provision for integration with Social Security benefit 60
55, Maximum benefit provisions ...........6e+eeseeeee 61
56. Average replacement rates for specified final earnings and years of service . 62
57. Minimum age and associated service requirements for normal retirement . 63
58. Minimum age and associated service requirements for early retirement . 64
59. Early retirement by reduction factor for immediate start of payments 65
60. Provisions for disability retirement ... . 65
61. Provision for credit for service after age 65 . . 66
62. Ad hoc postretirement annuity increases. 67
63. Vesting schedules......... - 69
64. Provision for postretirement survivor annuity . . 69
65. Provision for preretirement survivor annuity . . 70
66. Age and length-of-service requirements for participation . .71

67.
68.
69.
70.

Defined contribution plans

Retirement and capital accumulation plan coverage .
Type of defined contribution and stock plans ......
Combinations of retirement and capital accumulation plans .
Salary reduction plans

Savings and thrift plans:

Th.

72.
73.
74,
75.
76.
77.
78.

79.

Age and service requirements for Participation
Maximum employee contribution -

Pre-tax employee contributions ....
Provision for employer matching contributions .
Provision for investment of employer and employee contributions .
Vesting schedules
Provisions for withdrawal of employer contributions
Method of distribution of account at retirement ....

Other benefits

Percent of employees eligible .

Appendixes:

A. Technical note
B. Availability of the survey’s data base

vi



Table 66. Defined benefit pension plans:' Percent of
full-time participants by age and length-of-service
requirements for participation,’ medium and large firms, 1985

Profes-
sional | Techni-
and | cal and | Produo-

‘Age and service requirement | All par-| grins. | clerical ton por:

provisions? ticipants |“trative | partick | ticipants
Partici- | pants
pants
Minimum requirement
Total 100 | 100 | 100 | 100
With minimum age and/or service
requirement 59 59 67

‘Service requirement only 23 21 23
3 months or less 1 0) i)

6 month: 2 1 1
1 year 18 18 19
2 years . oO - -
3 years . 1 Oy 1
Over 3 years 1 1 2

‘Age 20 or less 1 1 1
1-11 months of service oO iv) 1
1 year .. 6 1 )

Age 21 15 2 20 10
No service requirement 2 2 2 1
1-6 months of service 1 1 1 1
1 year’ .. 13 19 7 8

Age 22 or greater 19 16 24 19
No service requirement 1 2 2 1
1-11 months of service 1 1 1 1
1 year 7 14 at 18

Without minimum age and/or
service requirement ..

‘Age and service requirement not

determinable 2 2 2 1
Maximum age requirement
Total ... 100 100 100 100

With maximum age limitation’ .... 6t 68 69 84

‘Without maximum age limitation 39 32 31 46

! Excludes supplemental pension plans.

2 Excludes maximum 6-month administrative time lags allowed by
ERISA. Most plans with time lags adopt the beginning of designated 6-
month periods as participation dates.

* if @ plan had alternate participation requirements, one of which was
Service only, the service only requirement was tabulated.

* Less than 0.5 percent.

* The Retirement Equity Act of 1984 requires that, for plan years begin-
ing on or after January 1, 1985, nearly all plans must allow participation
fo full-time employees who have reached age 21 and who have completed
‘one year of service. Collectively bargained plans need not comply until
the earlier of: (1) the expiration date of the collective bargaining agree-
ment, or (2) January 1, 1987.

* ERISA legislation permits plan administrators to impose a maximum
‘age for participation. Maximum age must be within & years of the plan's
normal retirement date,

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.

a



Table 65. Defined benefit pension plans:' Percent of full-time participants by provision for preretirement survivor

annuity, medium and large firms, 1985

“Professional and “ik .
‘Type of annuity for surviving spouse All participants administrative partici- baer oe Production participants
pants
Total .. 100 400 100 100
Preretirement survivor annuity provided 100 100 400 100
Equivalent of joint and survivor
annuit 72 a ey 88 75
Based on early retirement? . 67 65 6 70
oO - - iY]
iv) - - iv]
51 49 a7 54
ployee 14 14 : 4 14
51-99 percent of employee ;
pension . 8 5 5 "
‘At extra employee cos 1 ) i) 1
100 percent of employee
pension ... . a 5 4 3
At extra employee cost’ oO iv) iv) -
Alternative percentages of
pension at employee's
option 4 6 5 3
At ployee 1 1 1 1
Based on normal retirement? 6 6 7 5
At extra employes cost® iv) Oo iv) iv)
25 24 , 30 22
retirement 14 13 7 13
Unreduced for early retirement 8 9 . "1 7
Based on service projected to
normal retirement date nn 2 2 2 2
‘Other annuity’ ... 3 4 3 3
No preretirement survivor annuity
provided’ ... iv) iv) iv) iv)

* Excludes supplemental pension plans.

2 The spouse annuity is computed as it the employee had retired
with a joint-and-survivor annuity. That is, the accrued pension is first
reduced because of the longer length of time that payments were
expected to be made to both the retiree and the surviving spouse.
The spouse's share is then the specified percent of the reduced
amount.

2 Survivor annuity is based upon the benefit the employee would
have received if early retirement had occurred on the date of death.

* Less than 0.5 percent.

5 Plan reduces the accrued employee pension benefit for each
year survivor protection is in force.

® Survivor annuity is based on the benefit the employee would

70

have received if eligible for normal retirement on the date of death.

7 Includes annuity based-on a dollar amount formula or percent
of earings.

©The Retirement Equity Act of 1984 requires that most pension
plans provide an automatic annuity for the surviving spouse of an
€mployee with vested benefits at the time of death. For noncollec~
tively bargained plans, this requirement takes effect for plan years
beginning on or after Januaty 1, 1985. However, collectively bar-
gained plans need not comply until the earlier of: (1) the expiration
date of the collective bargaining agreement, or (2) January 1, 1987.

NOTE: Because of rounding, sums of individual items may not
equal totals.. Dash indicates no employees in this category.



blue-collar workers to receive a defined contribution
plan in addition to a pension. While five-eighths of
white-collar workers with pensions also had a defined
contribution plan, three-eighths of blue-collar workers
had such coverage.

Salary reduction plans (table 70)

For the first time, the 1985 survey developed infor-
mation on salary reduction or 401(k) plans that allow
participants to reduce their current taxable income by
channeling part of their salary to retirement plans. As
provided under section 401(k) of the Internal Revenue
Code, income taxes on these employee contributions,
as well as on earnings of invested funds, are deferred
until moneys are eventually distributed. Consequently,
such contributions are referred to as being made with
“pre-tax” dollars.

Twenty-six percent of all employees within the scope
of the 1985 survey were in plans with 401(k) features.
Thirty-seven percent of the white-collar and 14 percent
of the blue-collar employees participated. Two-thirds
of all participants (white- and blue-collar combined)
could elect to make their 401(k) contributions to an ex-
isting savings and thrift plan where the employer
matched at least part of the employee’s contribution;
the remaining one-third of the participants were in free-
standing 401(k) plans (no employer contribution) (13
percent), profit sharing plans (16 percent), and money
purchase pension plans (4 percent).”

From a different perspective, 42 percent of all par-
ticipants in defined contribution plans could make tax-
deferred (pre-tax) contributions to their plan. The inci-
dence, again, was higher for white-collar (49 percent)
than for blue-collar (30 percent) employees.”

Savings and thrift plans

Just over one-fourth of all employees participated in
savings and thrift plans, the highest participation rate
among the defined contribution plans studied. These
plans were much more prevalent among white-collar
workers (39 and 33 percent, respectively, for profes-
sional and administrative employees and technical and
clerical employees), than among blue-collar workers (17
percent). Under these plans, employees contribute a
predetermined portion of earnings to an account, all or
part of which is matched by the employer. These funds
are invested in various ways, such as stocks, bonds, and
money market funds as directed by the employee or
employer, depending upon the provisions of the plan.

Estimates in this paragraph differ from the preliminary figures
cited in the April 24, 1986, news release, “Retirement Coverage
Widespread in Medium and Large Firms, 1985,” USDL: 86-166.

» The survey determined the number of employees actually contrib-
uting to freestanding 401(k) plans. It also determined the number
participating in employer-financed plans allowing employee contri-
butions with pre-tax dollars, but not the number of employees actu-
ally making such contributions.

B

Although usually designed as a long-term savings pro-
gram, savings and thrift plans allow for withdrawals
subject to specified conditions and possibly, penalties.

Eighty-six percent of the participants had to meet an
age and/or service requirement prior to joining the plan
(table 71): Seventy percent were required only to meet
a service requirement, most commonly 1 year.

Employee contributions (tables 72-73). Savings and
thrift plans allow the employee to choose from a range
of possible contribution rates. A typical plan allows em-
ployees to contribute (in whole percentages) anywhere
from 2 to 16 percent of their income to the plan. One-
third of the participants could contribute up to 16 per-
cent of their earnings; 10 percent and 12 percent were
other common maximums.

Two-thirds of the participants in savings and thrift
plans were. allowed to make pre-tax contributions, as
permitted by section 401(k) of the Internal Revenue
Code. Thirty-six percent were given the option to con-
tribute either pre-tax or post-tax earnings, while 30 per-
cent were required to make contributions on a pre-tax,
salary reduction basis. A majority of participants in
plans mandating pre-tax contributions, however, were
required to contribute only an initial amount pre-tax.
For example, a plan may allow a maximum contribu-
tion of 16 percent with only the first 6 percent required
on a pre-tax basis.

Employer matching contributions (table 74). Employers
provide an incentive for participation in a savings and
thrift plan by matching all or a portion of the employee
contribution and adding this amount to the employee’s
account. Usually the employer matches a portion of the
employee’s coritribution up to a specified percent. For
example, the most common provision found in the 1985
survey was for an employer to match 50 percent of the
employee's contribution up to the first 6 percent. As-
suming the employee contributed 8 percent of earnings,
the employer would add 3 percent (50 percent of the
first 6 percent of the employee contribution). In con-
trast with these straight percentage matches, one-fifth
of the participants received matching contribution rates
varying by length of service, level of employee contri-
bution, or company profits.

Investment decisions (table 75). Nine-tenths of the par-
ticipants in savings and thrift plans were allowed to
choose how they wanted their own contributions in-
vested. Common investment vehicles offered by these
plans included company stock, common stock funds,
guaranteed investment contracts, government securi-
ties, corporate bonds, and money market funds. The
number of choices in these plans varied from two to
five or more, with three choices being the most com-
mon. Employees were nearly always allowed to split
their contributions among the various options offered



Chart 3. Average employee contributions for health insurance, medium and

large firms, 1982-85

Monthly contribution

(in dollars)
50
Gece e cll Family: coverage
Professional jae
40 and administrative
Bl Production
30
20
Individual’ coverage
: mmtiiee
PC
10 cee er
°

1982 1983,

1984 1985

tions were required, typically providing insurance at
two or more times earnings.”

‘There was no upper limit on life insurance for more
than one-half of participants in multiple-of-earnings
plans. Where limits existed, the proportion of employ-
ees With maximums under $100,000 has declined from
one-half to one-fifth since 1979; the percent with maxi-
mums over $250,000 has increased correspondingly.

Thirty-one percent of life insurance plan participants
had a flat dollar amount of insurance, regardless of
earnings. One-half of all production worker participants
were covered by a uniform amount, compared with 14
percent of white-collar workers. Uniform amounts for

"The employee contribution rate was commonly expressed as a
fixed monthly rate for each $1,000 of insurance, Reported rates var-
ied widely from 7 cents to 99 cents per $1,000, and in some plans
applied only to amounts of basic scheduled insurance in excess of a
free portion (for example, the first $5,000 of coverage). Data were
not available for one-third of contributory plan participants, how-
ever, because payroll deductions sometimes applied to an insurance
policy covering life insurance and one or more other benefit areas.

30

production workers averaged $10,000, slightly higher
than the average for the other two groups. While usu-
ally providing much smaller amounts of insurance than
earnings-based formulas, flat amount coverage has im-
proved. Participants in plans providing benefits of less
than $5,000 decreased from 29 percent in 1981 to 13
percent in 1985; most of the offsetting increase was in
amounts of $15,000 or more, which, during the same
period, grew in incidence from 7 to 18 percent of
workers insured by flat amounts.

If a participant became totally disabled, life insurance
in nearly all plans was continued, either for life or until
age 65. To qualify under disability provisions, the em-
ployee was usually required to be under a specified age
(commonly age 60) at the time of disability. For a few
plans, the amount of coverage was payable to the dis-
abled employee in lump-sum or installment form.

Almost three-fourths of all life insurance participants
had additional insurance coverage if accidental death
or dismemberment occurred. The amount of insurance
was usually doubled in the case of accidental death.



Table 17. Paid sick leave: Average number of days at full
pay for full-time participants by type of plan, medium and

large firms, 1985
Profes-
sional | Techni-
and | cal and | Produc-
tem ilpar: | adminis-| clerical |tion ar-
ipants | ‘trative | partici. | ticipants
partici. | pants
pants
Paid annual sick leave" by length of
service:
At 6 months 11.9 17.1 9.0 8.6
Att year 15.9 22.8 13.3 Wt
At years 19.8 28.1 18.0 12.9
At 5 years 25.4 36.0 23.3 15.4
At 10 years . 326| 462) 314| 196
At 15 years .. 37.0 51.8 36.0 22.6
At 20 years .. 39.4 55.0 38.6. 238
At 25 years .. 40.6 56.7 39.7 24.6
At 30 years* 4141 57.3 40.2 24.9
Paid per disability sick leave” by
length of servi
At 6 months: 541 66.4 38.2 47.2
At 1 year .. 59.9 714 43.3 59.4
At3 years 63.3 75.0 49.2 59.4
At5 years 78.9 88.1 66.7 775
At 10 years .. 91.3 102.3 81.0 83.4
Ati5 years .. 105.3 112.2 95.5) 105.3
At 20 years .. 117.6 120.7 107.8 | 126.0
At 25 years 129.6 128.7 119.8 | 146.4
At 30 years’ 129.7 128.8 119.9 | 146.4

* Employees eam a specified number of sick leave days per year. This
number may vary by length of service.
® The average (mean) was virtually the same after longer years of serv-

Ice.

* Employees earn a specified number of sick leave days for each ill-
ness or disability. This number may vary by length of service.

NOTE: Computation of average excluded days paid at partial pay and
workers with only partial pay days or zero days of sick leave.

16



Table 21. Sickness and accident insurance: Percent of full-time participants with benefits based on percent of earnings
formula by maximum weekly benefit, medium and large firms, 1985

Maximum weekly benefit
‘Type of payment Total | Total | Less | s100 | $120 | st40 | ste0 | sz00 | 250 | sa00 | s350 | s400 |, NO
with than to to to to to to to to or
maximum] $100 | $119 | $139 | $159 | sise | $249 | $290 | $349 | $399 | more
Ait participants,
Total 100 68 3 5 4 28 5 9 2 4 2 7 32
90 67 3 5 4 28 5 9 2 4 2 7 23
1 - - - - - - - -' - - - 1
32 26 2 1 - 17 1 1 2 1 - 1 6
1 1 oad oa - Y iV) 0 10) iv) - - -
26 at 1 2 3 (u) 2 6 1 2 1 3 5
o | o a ee ee re -
6 () - - - V) - - ~ rv) - - 4
oOo} a -| -} -J =] -) - 1 0 -| -] - -
18 1 | () 1/0 10 110) 0) 1 1 2 2
4 2 - (0) 1) 1 ~ 1 - iV) QO 0“) i
3 1 - - - 7 0 0 - - - 1 2
11 0 >} 2} om) 2] -} 2] =] -] -] - 1
Percent of earnings varies ... 10 1 - - - - - (y - 0) () oO 9
Professional and administrative
Total .... 100 4 4 1 3| 2 3 9 1 7 1 7 36
Fixed percent of earnings 87 63 4 1 3 28 3 9 1 7 1 24
1 - - - - - - - - - - 1
28 24 2 1 - 19 - 1 1 0 - 4
1 1 - - - - 1 - - - - -
26 22 1 - 3 - 1 8] oO 5 1 4
8 1 - - - - | - - = 1] - - 7
15 13 0) - ’) e 1 - - iv) ~ 3 2
4 2 - cv) - 0 cv) - - V) 1 2
3] 0 -]; -] -]o- -{| -[ -] =] 0 3
1 - - - - - - - - - - 1
Percent of earnings varies ... 13 1 - - - - - Y - (0) vy 0 13
Technical and clerical
3 3 4 31 4 5 3 2 1 9 35
3 3 4 31 4 5 3 2 1 eo 24
- - - - - - - - - - 1
2 1 - a} 0 0 210 - - 6
- - oo - 0 0 - 10) ~ - -
1 1 3 QO 2 4 1 1 () 4 5
- - - iv) - - 6 iV) - - 6
iV) 1 Y 9 1 “) oO iV] () 4 1
- Y Vv) ” - ) - cv) 10) ‘) 1
-| = -/| -|o |] 0 - |= foe 1 2
- oO} -fo- yo 2] -] -]o-] - 2
- - - - -/| 0 - 0) 1 1 12
3 8 4 26 7 Wt 3 3 3 5 28
3 8 4 26 7 W 3 3 2 5 %
1} 2] = 14 2 1} - 2 7
-| -~) -; oa] o of -] - -
1 5 4 1 2 1 1 2 6
- - - -| 0 - - - -
-| -| -;o] = Oo} =] - 2
1) 1/ 0 10 1 1 1 3
- - oO 1 v) oO 1) 1
- - - - - - 1 2
- - - - - - - 1
Percent of earnings varies . 6 1 - - - - -|0 - -| 0 - 6

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.

|
i


Table 19. Paid annual sick leave: Percent of full-time
participants by unused sick leave policy and carryover
provisions, medium and large firms, 1985

Profes-
sional | Techni-
Unused sick leave policy and | Allpar. | 26, | a and | roduc:
‘carryover provisions. ticipants | Tate | partici | ticipants
partici. | pants
pants:
Unused sick leave policy
Total joo | 100 | 100 | 100
Carryover only as | a2 | a0 | 3a
Cast-in only 9 3 6 20
Cayover and cash-in . 6 3 5 10
Unused benefit lost 49 62 50 35
Data not available 1 1/0 1
Carryover provisions
Total 100 | 100 | 100
Unlimited accumulation so} 33 | a1 | 28
Limit on total number of days
accumulated 67 61 67 ral
Under 10 days 5 2 4 9
3 2 2 4
4 1 5 5
6 2 3 WwW
1 1 1 i
2 1 2 3
10 7 10 14
1 1 1 1
4 3 5 3
5 8 5 2
12 16 14 8
8 9 10 4
5 4 5 6
1 2 1/0
2 4 q Qo
1 2 ¢) 1

* Less than 0.5 percent.
® Carryover provisions vary by length of service.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.

18



In addition to basic coverage, some employers of-
fered their workers supplemental life insurance that was
at least partially employer financed. The typical sup-
plemental plan provided insurance in multiples of 1 to
3 times annual earnings. Only 6 percent of the employ-
ees, ranging from 9 percent of professional-administra-
tive workers to less than 3 percent of production
workers, were participants in these plans.

Thirteen percent of participants were in plans which
provided monthly income to surviving family members,
nearly always in addition to life insurance benefits. Sur-
veyed for the first time in 1985, survivor income bene-
fits were usually paid to the spouse, but sometimes ei-
ther to the spouse, children, or parents of the deceased
employee. Benefits generally consisted of either a flat
dollar amount or percent of employee earnings, pay-
able for a limited period, such as 24 months. In some
plans, payments were designed to bridge the gap be-
tween the employee’s death and the spouse’s remarry-
ing or qualifying for other benefits, such as Social
Security.

Life insurance on workers’ spouses and unmarried
dependent children also is sometimes available. One-
fifth of life insurance participants had employer-fi-
nanced dependent coverage in 1985; in most cases, the
employer paid all of the cost. Nearly all plans covered
dependent children as well as spouses. The most com-
mon coverage for death of either a spouse or a child

31

was a flat amount of $1,000. Higher amounts, however,
were available more often for spouses than for child-
ren: Spouse coverage of $2,000 or more applied to one-
half of the participants with dependent life insurance,
but similar coverage for a child applied to only one-
fifth of these workers. Instead of a flat amount, cover-
age for a child sometimes increased at specified ages:
For example, no coverage until 14 days old, then $250
until 6 months, followed by $500 up to a year, and
$1,000 thereafter.

Minimum length-of-service requirements for partici-
pation were found in plans covering 53 percent of
workers with life insurance. The incidence of these pro-
visions has decreased gradually each year from 61 per-
cent in 1981. As is the case for health and sickness and
accident insurance, service requirements are generally
3 months or less.

For 62 percent of all participants, basic life insurance
continued after retirement. The preretirement amount
of insurance, however, was reduced in nearly all in-
stances.” Other forms of life insurance—accidental
death and dismemberment, supplemental, and depend-
ent coverage—were seldom available after retirement.

'*For one-half of the participants, coverage is reduced if they con-
tinue working beyond retirement age, However, the reduction in the
amount of coverage is usually not as severe as for retirees, For de-
tails, see Michael A. Miller, “Age-related Reductions in Workers’
Life Insurance,” Monthly Labor Review, September 1985, pp. 29-34.



sixth of the white-collar participants were in plans with
other benefit formulas—a variable percentage of earn-
ings, a flat dollar amount, or a percent of earnings that
varied by length of disability.

A ceiling on income during disability was a common
limitation to LTD payments, regardless of the type of
plan. These ceilings affected benefits only if the amount
payable from the LTD plan plus income from other
sources, such as rehabilitative employment and family
Social Security payments, exceeded a specified percent-
age of predisability earnings (frequently 70 to 75 per-
cent). Nearly seven-tenths of the LTD participants were
limited by these income ceilings, by the dollar maxi-
mums in plans that pay a percent of earnings, or by a

13

combination of both.

Survivor benefits after the death of the disabled em-
ployee were available in plans covering 14 percent of
the LTD participants. A lump-sum payment, usually
equal to 3 times the monthly LTD benefit, was the most
common survivor benefit provided.

Three-tenths of the participants were in LTD plans
with special limitations on benefits for mental illness.
In most of these cases, benefits were provided for a
limited period (usually 24 months), unless the partici-
pant was institutionalized. In a few cases, benefits were
provided only if the participant was institutionalized,
or benefits were provided for a limited period, regard-
less of institutionalization.

1



The establishment size groups are defined as follows:

Establishment
employment

Employment size
group

50-99
100-249
250-499
500-999

1,000-2,499

2,500-4,999

5,000-9,999
10,000 and over

Swearnauaw

The sample size was allocated to each stratum (de-
fined by industry and size) approximately proportional
to the total employment of all sampling frame estab-
lishments in the stratum. Thus, a stratum which con-
tained 1 percent of the total employment within the
scope of the survey received approximately 1 percent
of the total sample. The result of this allocation proce-
dure is that each stratum will have a sampling fraction
(the ratio of the number of units in the sample to the
number in the sampling frame) which is proportionate
to the average measure of size of the units in the stratum.

A random sample was selected within each stratum
using a probability technique to maximize the probabil-
ity of retaining establishments which were selected in
the 1984 survey.’ This method of selection reduced col-
lection costs by decreasing the number of new estab-
lishments in the sample.

Data collection

Data for the survey were collected by visits of Bu-
reau field representatives to the sampled establishments.
To reduce the reporting burden, respondents provided
documents to BLS describing their retirement and capi-
tal accumulation plans and plans covering the four in-
sured benefit areas within the scope of the survey. These
documents included employee handbooks, brochures,
insurance policies, and summary plan descriptions that
employers are required to provide to employees under
ERISA. These were analyzed by BLS staff in Wash-
ington to obtain the required data on plan provisions.
Data on paid leave and other benefits generally were
obtained directly from the employers at the time of the
visit.

Data were collected during the months of January
through July, reflecting an average reference period of
March 1985. Respondents were asked for information
as of the time of the data collection visit.

Data tabulation
The tables presented in this bulletin show the percent
of employees who were covered by paid leave plans,

*This method modifies the method introduced by Nathan Keyfitz
in “Sampling with Probabilities Proportional to Size: Adjusting for
Changes in the Probabilities,” Journal of the American Statistical As-
sociation, March 1951, pp. 105-9.

85

participated in insurance, retirement, or capital accu-
mulation plans, or were eligible for other benefits. Ex-
cept in table 79, counts of workers covered by benefit
plans included those who had not met possible mini-
mum length-of-service requirements at the time of the
survey. Workers were counted as participants in em-
ployee benefit plans that require the employee to pay
part of the cost only if they elected the plan and paid
their share. Plans for which the employee paid the full
premium were outside the scope of the survey, even if
the employer paid administrative costs. When tabulat-
ing the effect of retirement on life insurance and health
insurance coverage, however, cases where the retiree
must pay the full cost of the insurance were counted
since the guarantee of insurability at group rates is con-
sidered a benefit.

Most of the tables in this bulletin show the percent
of workers covered by individual benefit plans or plan
provisions. Percentages are calculated in three ways.
One technique, followed in tables 1-4, 6, 8, 10-16, and
67-68, shows the number of covered workers as a per-
cent of all workers within the scope of the survey. It
is designed to show the incidence of the individual em-
ployee benefit.

A second approach is followed in tables 7, 9, 20-27,
39-40, 42-44, 47-49, 54-55, 57-58, 61, 63-66, 69-74,
and 76-78. These tables show the number of workers
covered by specific features in a benefit area as.a per-
cent of all employees who participate in that general
benefit area. They also answer questions concerning the
typical coverage provided to persons with a given in-
surance, retirement, or capital accumulation plan; for
example, what percent of all employees with health in-
surance receive dental coverage?

The third approach provides a close look at an im-
portant feature (tables 21, 28-38, 41, 45-46, 50-53, and
59); for example, what percent of all employees with
dental coverage in their health insurance are covered
for orthodontic work? Tables 60, 62, 70, and 75 com-
bine the second and third types above, indicating in the
first row of data the percent of persons in the benefit
area who have a particular coverage, while the remain-
der of the table is based on all employees with that
coverage. Table 19 uses a similar approach.

This multilevel approach has the advantage of clearly
pointing out typical benefit plan characteristics after the
prevalence of the benefit has been established. Any of
the second or third types of tables, if desired, can be
converted to the first type by multiplying each data cell
by the appropriate factors. For example, to calculate
the percent of all employees with orthodontic cover-
age, multiply the percent of those with dental plans that
cover orthodontia (table 33) by the percent of health
insurance participants with dental coverage (table 26),
and multiply that product by the percent of all employ-
ees who have health insurance coverage (table 1).



Chapter 6. Defined
Contribution Plans

Fifty-three percent of the employees within the scope
of the 1985 survey (two-thirds of the white-collar
workers and two-fifths of the blue-collar workers) par-
ticipated in one or more defined contribution plans.”
These plans, which are wholly or partly financed by
employers, are designed to provide retirement income
or asset accumulation, or both. Accordingly, for the
purposes of this survey, BLS classified all defined con-
tribution plans into one of two categories: Retirement
plans or capital accumulation plans. Retirement plans,
as defined in this study, do not allow withdrawal of
employer contributions until retirement age, death, dis-
ability, separation from service, age 59 1/2, or hardship.
Capital accumulation plans, on the other hand, impose
less stringent restrictions for withdrawal of employer
contributions. Examples of these less stringent restric-
tions include. permitting only 1 or 2 withdrawals per
year, or imposing a service requirement of 2 or'5 years
before withdrawal.”

Of the 92 percent of employees participating in re-
tirement (including defined benefit pension) or capital
accumulation plans, 71 percent were in retirement plans
only, 20 percent in both retirement and capital accu-
mulation plans, and 1 percent in capital accumulation
plans only (table 67).

As noted in chapter 5, 8 of 10 employees in medium
and large firms participated in a defined benefit pension
plan. But when defined contribution retirement plans
are considered along with defined benefit pension plans,
retirement coverage rises to 91 percent of employees.

Whether for retirement or capital accumulation, de-
fined contribution plans usually specify a contribution

2%The 41-percent figure cited in the April 24, 1986 news release,
“Retirement Coverage Widespread in Medium and Large Firms,
1985,” USDL: 86-166, applied only to defined contribution retire-
ment plans, as defined later in this paragraph.

27 BLS used these definitions for analytic purposes, but it should be
noted that most defined contribution plans can be used to provide
retirement income or accumulate financial assets. Capital accumula-
tion plans may provide retirement income, because withdrawals of
the employer's contributions are voluntary, not mandatory. Similarly,
defined contribution retirement plans can be used to accumulate as-
sets, because these plans nearly always permit pre-retirement with-
drawals of the employer’s contributions (for example, at age 59 1/2,
upon termination of employment prior to retirement, or upon disabil-
ity). Many of these plans also permit employees to receive a lump

sum, rather than an annuity, upon retirement.

2

rate by the employer, but not a formula for determin-
ing benefits, as in a defined benefit pension plan. In-
stead, individual accounts are set up for participants,
and benefits are based on amounts credited to these ac-
counts, plus investment earnings.

‘As shown in table 68, various types of defined con-
tribution plans are available for retirement and capital
accumulation purposes: 27 percent of the employees
participated in savings and thrift plans, 24 percent in
employee stock ownership plans, 18 percent in profit
sharing plans, 4 percent in money purchase pension
plans, and 1 percent in stock bonus plans.” Another 3
percent of the employees were either currently pur-
chasing company stock, through payroll deductions, at
less than market price (stock purchase plans) or were
eligible to purchase stock in the future at a designated
price (stock option plans). Many employees participated
in more than one defined contribution plan (table 69).

Nearly seven-tenths of the participants in defined
contribution retirement plans had their benefits wholly
financed by the employer. In contrast, capital accumu-
lation plans were jointly financed for 84 percent of the
participants. A large majority of capital accumulation
plans were savings and thrift plans, which involve em-
ployer matching of employee contributions.

Defined contribution plans typically supplement a de-
fined benefit or money purchase pension plan. For ex-
ample, 93 percent of the participants in savings and
thrift plans and employee stock ownership plans
(ESOP), respectively, were also covered by a pension
plan, Because savings and thrift plans and ESOPs are
relatively recent developments, they have largely been
introduced into medium and large firms which already
had pension plans. However, half of the participants in
profit sharing plans did not have a pension plan. From
the opposite point of view, half of the employees with
pension plans also had one or more defined contribu-
tion plans. White-collar workers were more likely than

284 money purchase pension plan provides for a pension annuity
or other form of retirement income that is determined by fixed con-
tribution rates plus earnings credited to the employee's account. A
stock bonus plan is a plan whereby the employer or the employee
and the employer jointly contribute to a trust fund which invests in
various securities. Proceeds from the investments are usually paid to
the employees in the form of company stock. Savings and thrift, em-
ployee stock ownership, and profit sharing plans are described later
in this chapter.



Table 50. Defined benefit pension plans:' Percent of full-time participants in plans with percent of terminal earnings benefit |
formulas by type and amount of formula, medium and large firms, 1985 j
Provision for Provision for
Provision for integration with Provision for integration with
maximum benefit? Social Security maximum benefit® Social Security
Type and amount of | otay benefit Type and amount of | 4, beneht
formula? i formula? otal
. jinte.| Without Without
‘Subject | Not sub- |With inte- inte- Subject | Not sub- |With inte-| inte-
to maxi. | jeotto | grated | grateg to max | jectto | grated | grated
mum = |maximum) formula formula mum = |maximum) formula formula
All participants !Technical and clerical
Total 100 100 100 100 100 Total 100 100 100 100 100 j
Flat percent per year of [Fiat percent per year of
50 61 39 44 81 || service .. 48 64 34 43 89
io) - 1 - 3 Less than 1.00 () - iv) - 2
6 5 6 i) 38 3 4 2 (3) 24
5 1 10 4 16 8 1 13 5 28
24 31 17 25 18 22 at 14 24 27
5 7 3 6 - . 6 9 3 7 -
7 14 1 7 6 2.00-2.24 7 14 1 7 8
2 3 iv) 2 - 2.25 of greater 2 3 1 2 -
IPercent per year |
50 38 61 55 19 || varies 51 35 66 56 "1 |
18 14 22 18 19 20 1 27 24 1 |
25 22 28 30 - 24 22 25 27 - i
1 - 3 2 - 3 - 5 3 - i
5 2 8 6 - 5 1 8 6 - i
) 1 - 1 - 1 2 - 1 -
Professional and
administrative
Total 100 100 100 100 100
Total 100 100 100 100 100 |
IFlat percent per year of |
Flat percent per year of service 49 87 a 74
service 51 61 A 47 85 Less 1 - i - 3
Less than 1.00 oy - 1 - 3 1.00-1.24 10 6 4 - 47
1.00-1.24 5 5 4 iy) 36 1.25-1.49 6 0“ 10 3 15
1.25-1.49 3 1 6 3 7 4.50-1.74 22 30 15 27 4
1.50-1.74 27 31 24 27 33 1,75-1.99 2 4 1 3 - |
1.75-1.99 7 8 6 8 - 2.00-2.24 7 14 0 8 4
2.00-2.24 7 13 2 7 8 2.25 ot greater 1 3 - 2 -
2.25 or great 2 3 0 2 -
Percent per year
Percent per year varies .. 51 43 59 58 26
varies .. 48 37 59 52 15 By service .. 18 19 7 16 26
7 13 22 18 15 By earnings 25 2t 29 92 -
27 23 3t 30 - By age 1 - 1 1 -
1 - 1 1 - By earnings and
By earnings and service 7 3 "1 9 -
service 3 2 5 4 -
|Other® 0 o - oO -
1 1 - 1 -
* Excludes supplemental pension plans. © Formula was a flat percentage of earnings, graded by length of serv-
* If @ plan contained more than one terminal earnings formula, a pri- ice.
mary formula was selected and tabulated.
* ‘These maximum provisions are independent of ERISA-‘mposed cell- NOTE: Because of rounding, sums of individual items may not equal i
ings on pensions payable from defined benefit plans. totals. Dash indicates no employees in this category.

Less than 0.5 percent.

57


to one-fourth of the employees. Slightly over one-third
of the white-collar employees received personal leave,
nearly twice the proportion of production employees
with this benefit. Most commonly, employees provided
personal leave were eligible for 1 to 5 days, averaging
3.7 days per year. In cases where personal leave was
part of an “annual leave” plan (combined vacation and
personal leave) and could not be shown separately, it
was reported as vacation time. The survey did not cover
the extent of informal personal leave.

Funeral leave, jury duty leave, and military leave
(tables 11-13)

At least 87 percent of the employees in each occu-
pational group were eligible for paid leave to attend
funerals of family members. Four-fifths of the employ-
ees received a set number of days per occurrence, av-
eraging 3.2 days. (Three days off were available to a
majority of workers in each occupational group.) For
10 percent of the white-collar workers and 3 percent
of the blue-collar workers, the number of days off de-
pended upon the employee’s length of service. Workers

in plans where the number of days off varied by rela-
tionship to the deceased were included in the count of
workers with a set number of days; the maximum num-
ber of days off was reported for each plan with this
provision. Nearly one-fifth of the employees were in
these plans.

Nine-tenths of the workers were eligible for paid
leave while serving as a juror. Paid time off for jury
duty was usually provided as needed, commonly mak-
ing up the difference between the employee’s regular
pay and the court’s jury allowance.

Military leave, providing pay for absence from work
to fulfill military training or duty commitments, was
available to seven-tenths of the employees. The most
common provision was 2 weeks off per year. However,
one-fifth of the workers could receive military leave as
needed or according to the type of military duty. For
workers with a specified number of days off, military
leave averaged 11.5 work days per year. Pay for mili-
tary leave was either regular pay or the difference be-
tween regular pay and military pay.



a separate maximum on covered hospital expenses (such
as a lifetime maximum of $25,000 on mental health bene-
fits). Even more restrictive was coverage for mental
health care outside the hospital (psychiatric office
visits). Outpatient mental health care was usually cov-
ered in the major medical portion of a plan, where: (1)
ceilings were often placed on the amounts payable for
each visit and/or each year, and (2) the coinsurance
rate for nonhospital treatment was often 50 percent,
compared to 80 percent for physical illnesses. Also,
limits on annual out-of-pocket major medical expenses
usually did not apply to outpatient mental health care.

Other health benefits (tables 38-39). The incidence of
alcohol and drug abuse provisions increased sharply for
the second consecutive year. The percent of partici-
pants covered for alcoholism treatment grew from 61
to 68 percent between 1984 and 1985, and for drug
abuse treatment, from 52 to 61 percent (chart 2).
Thirty-five percent of health insurance participants

were covered for vision care expenses in 1985, up from
30 percent in 1984 and 18 percent in 1979. Although
gains were made in all 3 occupational groups, plans for
blue-collar workers were typically more comprehen-
sive than those for white-collar workers.

Hearing care was available to 17 percent of partici-
pants in 1985, up from 14 percent in 1984, and 10 per-
cent in 1983.

Cost containment (table 40). In line with efforts to con-
tain costs of health care, an increasing number of plans
provided less expensive alternatives to a hospital stay.
Coverage for treatment in extended care facilities in-
creased from 62 percent of plan participants in 1984 to
67 percent in 1985; coverage for home health care rose
from 46 percent to 56 percent; and availability of cov-
erage for hospice care rose from 11 percent to 23 per-
cent. Lengths of hospital admissions were decreased by
provisions for prehospitalization testing, which covered
nearly half of the participants. Other cost containment

Chart 2. Coverage for selected types of medical care: Precent of full-time participants in
health insurance plans, medium and large firms, 1984 and 1985

Alcoholism
treatment

Extended core
facility

Drug abuse
treatment

Home hecolth
core

Vision
care

Hospice
core

Hearing
care

I Coverage in 1984

(J Coverage increase in 1985

50 75 100

Percent

28



Table 58. Defined benefit pension plans:’ Percent of full-time participants by minimum age and associated service
requirements for early retirement,’ medium and large firms, 1985

Profes- Profes-
sional Technical sional |Technical) prague.
‘Age and service requirements* tobents and ad jena eer Age and service requirements? | ,Ai Par sand ac” Jang cet tion par-
tive par- | ticipants tive par- | ticipants | Pants
ticipants ticipants
Total .. 100 100 100 100
Age 66-59 .. 1 1 1
Participants in plans permitting 15 years’ service 0 i) -
early retirement | 97 98 98 97 30 years’ service 1 1 1
No age requirement 4 7 2 3 || Age 60 7 2 3 412
Less than 30 ye No service requirement O 0 1 0)
service ) 1 ) ) 1-5 years’ service 0) - - 1
30 years service 4 6 2 3 10 years’ service 4 2 2 7
15 years’ service 2 1 3
Less than age 55 8 4 13 7 20 years’ service oO i) cv) “
No service requirement 0) iV) “ O)
5 years’ service .. 6 oO iv iy) o oO 19) 1
10 years’ service 3 2 4 2 O - iy] 1
15 years’ service 1 1 1 iv) iv) iv) iv) iv)
20 years’ service 1 1 0 i)
25 years’ service 4 i) 7 4 || Sum of age plus service® 10 10 10 9
Equals 70 or less 2 4 4 1
Age 55 ... 67 72 70 63 Equals 75 1 1 1 0
No service requirement 9 10 8 9 Equals 76- 1 1 2 1
1-4 years’ service .. 0) 0 1 (9) Equals 80 1 1 1 0)
5 years’ service .. 3 5 4 1 Equals 85 4 2 2 7
6-9 years’ service .. iv) iv) - Equals 90 or more iv iv) (a) -
10 years" service 43 44 43 42
11-14 years’ service .. oO 1 oO () _ ||Participants in plans without early
15 years’ service 8 9 10 7 || retirement . 3 2 2 3
20 years’ service 3 3 4 3
25 years’ service rv) iv) (v) iv) |
* Excludes supplemental pension plans. * Less than 0.5 percent.
? Early retirement is defined as the point at which a worker could re- * In some plans, participants must also satisfy a minimum age or
tire and immediately receive accrued benefits based on service and _service requirement.
earnings but reduced for each year prior to normal retirement age.
? Ifa plan had alternative age and service requirements, the earliest NOTE: Because of rounding, sums of individual items may. not equal

age and associated service were tabulated; if one allerative did not _ totals. Dash indicates no employees in this category.
specify an age, it was the requirement tabulated.



Table 61. Defined benefit pension plans:' Percent of

full-time participants by provision for credit for service after
age 65, medium and large firms, 1985

Profes-
sional | Techni-
At par- |. 2% | ea! and | Produc-
Type of credit teipants [@dminis-| clerical jtion par-
pants) "trative | partici |ticipants
partici- | pants
pants
Total 400 | 100 |} 100 | 100
No credit for service 4 65 68 86
Pension deferred
in amount 54 87 58 50
Pension deferred, but increased
actuarially suf 5 5 6 4
Pension deferred, but increased
by percent per additional year
of service” 2 3 3 1
Pension begins at age 65 i) i) a v)
Credit for service, with no actuarial
increase for later retirament age* 37 33 31 43
All service credited 18 14 16 20
Service credited to specified
maximum age 19 7 14 22
Service credited to specified
maximum years of Service —aew) 1 2 1 iv)
Gredit for service, with actuarial
increase for later retirement age’..| 1 2 1 2
All service credited ... “| 4 1 1 1
Service credited to specified
maximum age 0 0 co) iv)
Service credited to specified
maximum years of service...) - - ()
+ Excludes supplemental pension plans.

2 The pension amount computed at age 65.is increased by a specified
percent (not part of the benefit formula) for each year the employee re-

mains active.
> Less than 0.5 percent.

“ Additional service is included in the benefit formula, but the pension is
not increased for later retirement daté
5 Additional service is included in the benefit formula and the pension is

increased for later retirement date.

NOTE: Because of rounding, sums of individual items may not equal to-

2.

tals. Dash indicates no employees in this category.



Table 62. Defined benefit pension plans:' Percent of full-time participants in Plans granting ad hoc postretire-
ment annuity increases,’ medium and large firms, 1985

Professional-and

‘ci Ssional. Technical and
Characteristics ‘All participants administrative h ich
participants | “lerical participants pants
Percent of participants in plans with at least.one
Postretirement increase in the 1980-84 period... 4 39 39 43
Number of increases granted in
past 5 years
Total 100 100 100 100
51 58 64 42
24 19 15 24
10 10 12 10
1 7 5 15
5 3 2 8
2 3 2 1
Provision for minimum increase in most recent
adjustment
100 100 400 100
81 76 75 86
7 22 22 13
7 21 at 13
1 3 2 ie)
is) 1 is) iv}
8 9 8 7
1 is) iv) 1
3 3 5 2
1 2 1 1
2 1 2 3
More than $25.00 1 2 2 -
Percent of present benefit o) 1 1 -
Greater of a monthly dollar amount or a
Percent of present benefit. 0) 1 0. @
Not determinable .. 2 2 3 1
Provision for maximum increase in most
recent adjustment
Total .. 100 100 100 100
No maximum 74 72 69 78
With maximum .. 24 26 28 20
Monthly dotlar amount. 6 7 7 5
3 4 4 2
1 2 2 1
i) 1 i) -
1 1 1 2
Percent of present benefit 18 19 20 16
Less than 10 8 8 10 9
6 9 6 4
1 2 1 Vv)
3 3 3 3
Greater of a monthly dollar amount or a
percent of present benefit. 0 o) is) 2)
Not determinable 2 2 3 1

See footnotes at end of table.

67



Chapter 4. Health and Life
Insurance

Along with paid holidays and paid vacations, health
and life insurance are the most widespread employee
benefits in medium and large firms. Both benefits were
provided to 96 percent of all employees, and the extent
of coverage was nearly identical within each of the
three occupational groups.

Health insurance

Virtually all of the participants in health insurance
plans were covered for the major categories of medi-
cal care, such as hospital room and board, care by phy-
sicians and surgeons, diagnostic X-ray and laboratory
work, prescription drugs, and private duty nursing (ta-
ble 26). Among benefits less commonly provided were
vision care (covering 35 percent of the participants),
hearing care (17 percent), and routine physical exams
(13 percent). Unlike most other employee benefits, there
were few differences in health insurance provisions
among employee groups.

The various categories of medical care are covered
under 1 of 3 benefit arrangements: Basic benefits only,
major medical benefits only, or basic benefits plus ma-
jor medical. Basic benefit plans cover a specific medi-
cal service (such as hospitalization) and generally do
not require deductible or coinsurance payments by in-
sured individuals.’ Conversely, major medical plans
cover many categories of care and usually have both
deductible and coinsurance features. In-hospital care
was most commonly covered by an arrangement that
offered basic coverage plus supplemental major medi-
cal coverage. Certain categories of medical care, such
as private duty nursing, visits to a physician’s office,
and prescription drugs, usually were covered only as
major medical benefits. Dental and vision care were al-
most exclusively covered as basic benefits. Regardless
of the benefit arrangement used, most health plans lim-
ited the size of benefit payments.

A majority of the participants were in health plans
extending coverage into retirement:

‘The deductible is a specified amount of medical expense that an
insured person must pay before benefits will be paid by the plan. Co-
insurance is a provision where both the (insured) participant and the
insurer share, in a specified ratio, the health care expenses resulting
from an illness or injury. The coinsurance percentage is the share
paid by the plan (insurer),

‘The survey included fully retiree-paid coverage for the first time
in 1985.

Occupational group
Professional Technical
and and
Provision All administrative clerical Production

Total .. 100 100 100 100
With retiree
coverage ...... B 17 ci 0
Without retiree
coverage ...... 24 20 20 28
Provision not
determinable .. 3 3 3 3

These plans nearly always covered retirees up to age
65, and generally provided the same benefits given to
active employees (table 27). In over nine-tenths of the
cases, retirees remained insured after 65. Again there
was commonly no change in benefit levels, apart from
coordination with Medicare.

Regardless of the retiree’s age, premiums for retiree
insurance were fully company-paid in plans covering
nearly three-fifths of covered participants; but for one-
tenth, protection continued only if the retiree paid the
full cost. For one-third of the participants in plans cov-
ering retirees under age 65 and one-quarter in plans
covering retirees age 65 and older, the company shared
the costs with the retirees.

Hospital coverage (table 28). The most costly compo-
nent of health care is that provided by a hospital. Nearly
one-half of all personal health care expenditures in the
United States are for hospital care.’ Virtually all of the
participants in health plans analyzed in this study re-
ceived coverage for hospital expenses.

For most employees, insurance covers all initial hos-
pital room expenses; however, a growing minority must
pay part of the first-dollar costs. The percent of health
plan participants with only major medical coverage in-
creased to 33 percent in 1985, from 28 percent in 1984
and 19 percent in 1983. These employees typically must
pay both an initial deductible and a percentage of sub-
sequent hospital room charges. Of the 66 percent of
health insurance participants with basic hospital cover-
age, 13 percent must pay a specified amount per admis-
sion or, in some cases, pay for the first day of
confinement.

"Ross H. Arnett lil, David R. McKusick, Sally T. Sonnefeld, and
Carol S. Cowell, “Projections of Health Care Spending to 1990,”
Health Care Financing Review, Spring 1986, pp. 1-36.



Table 72, Savings and thrift plans: Percent of full-time
Participants by maximum allowable employee contribution,’
medium and large firms, 1985

Table 73. Savings and thrift plans: Percent of full-time
participants by provisions for pre-tax employee contribu-
tions, medium and large firms, 1985

Profes- Profes- ;

sional. | Techni- sionat | Techni-
all and | cat and | Produc- Allpar- |_ and | eal and | Produe-
Maximum allowable contribution? | i P&t- | adminis-| clerical |tion par- Item? ticipants |@dminis-| clerical tion par.
ipants | ‘trative | partici- | ticipants trative | partici- | ticipants

partici- | pants partici- | ‘pants

pants pants

Total . too | 100 | 100 | 100 Total... 100 | 100 | 100 | 00

Percent of employee earnings:

Less than 5 percent .. Q 0) () i)
5 percent iv} iv} iV) 1
6 percent .. 3 3 2 5
7-9 percent 2 2 2 2
10 percent 7 15 7 20
11 percent 3 3 4 1
12 percent 12 13 14 8
13-14 percent .. 6 5 6 6
15 percent 8 " 9 3
16 percent 32 30 1 37
17-19 percent .. 8 9 6 8
20 percent or gi 6 7 8 3
Specified dollar amount 210 1 5

* Includes contributions which may not be matched by the employer.

* Hf maximum varied by participant's length of service, age, or both, the
highest possible percentage was tabulated,

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-

Pre-tax contributions allowed 65 73 65 56

All contributions must be

pre-tax 13 14 14 10
Maximum contribution is:
5 percent .. iv) - iv) 1
6 percent .. 1 1 1
8 oF 9 percent is) iv) io) iv)
10 percent 3 3 3 3
11 percent 1 1 1 1
12 percent 3 4 2 2
15 percent 2 3 2 1
16 percent 1 2 1 iy)
Greater than 16 percent 1 1 2 6
Specified dollar amount 1 - 1 2

initial contributions must be
pre-tax! | 47 18 18 14
Maximum pre-tax contribution

is:

4 percent .. 1 1 1 -
5 percent .. 1 1 1 1
6 percent .. 4 4 3 4
7 percent .. re) io) 1 -
8 or 9 percent 1 1 2] 0
10 percent 4 4 4 5
12 percent 1 1 1 iv)
12.01 - 14.99 percent 2 2 1 2
15 percent 2 2 2 2
16 percent 1 1 2 1
Greater than 16 percent fe iv - -
Contributions may be pre-tax at
i 36 4a 33 92
Maximum pre-tax cor
is:

Less than 5 percent 0) 9) 2) ~
1 2 1 i]
6 5 6 8
3 3 2 5

3 6 3 1

iv) iv) 0) i)
4 4 4 4

3 4 3 ie)

1 1 1 2

14 percent 1 1 1 °)
15 percent 2 3 2 iv)
16 percent 8 8 6 1
18 percent 1 2 1 -
Specified dollar amount .. 2 2 2 1
Pre-tax contributions not allowed ....) 35 27 35 4

* Pre-tax contributions are allowed under section 401(k) of the intemal
Revenue Code.,
* If maximum varied by participant's length-of-service, age, or both, the
highest possible percentage was tabulated,
* Less than 0.5 percent,
“ Contributions above the maximum pre-tax level are allowed on a post-
basis.

* in most plans, all contributions may be either pre-tax or posttax at
the employee's option. In some, however, an initial contribution must be
on a pre-tax basis, with a choice between pre-tax and post-tax contribu-
tions for higher amounts. In these cases, the largest percentage available
for pre-tax contributions has been tabulated.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.



savings and thrift, employee stock ownership, profit
sharing, money purchase pension, or stock bonus plans.
Twenty-six percent of the employees were in salary re-
duction or 401(k) plans. These plans allow participants
to reduce their taxable income by channeling part of
their salary to retirement funds, deferring income tax
until withdrawal.

Free or subsidized parking, and full or partial defray-

ment of educational expenses were available to at least
three-fourths of the employees. Supplemental un-
employment benefits, subsidized commuting, prepaid
legal services, child care, and company sponsored re-
imbursement accounts for payment of such items as
medical expenses not covered by health insurance were
available to less than one-tenth of the employees.



Chapter 1. Introduction

The employee benefits survey collects data on em-
Ployee work schedules and develops information on
the incidence and detailed characteristics of 14 private
sector employee benefits paid for at least in part by the
employer. These include lunch and rest periods, holi-
days and vacations; personal, funeral, jury duty, mili-
tary, and sick leave; sickness and accident, long-term
disability, health, and life insurance; and private retire-
ment/capital accumulation plans. In addition, data are
collected on the incidence of 17 other employee bene-
fits, including severance pay, financial counseling, pre-
paid legal services, nonproduction bonuses, employee
discounts, educational assistance, relocation allowances,
and child care. The major findings of the 1985 survey
are reported in this bulletin.

The survey covers full-time employees in medium
and large establishments (generally those with at least
100 or 250 employees, depending upon the industry).
Because data collection is limited to provisions of for-
mal plans, the extent of such benefits as rest periods
and personal leave may be understated. Furthermore,
the data show the coverage of benefit plans but not the
actual use of these benefits; for example, that part of
available paid sick leave actually used.

Data are presented separately for three occupational
groups— professional-administrative, technical-clerical,
and production workers. This bulletin often discusses
the first two groups jointly as white-collar workers, in
contrast with production or blue-collar workers.

Respondents provide information on the number of
workers covered by specified benefit plans. Workers
are counted as covered by wholly employer-financed
plans that required a minimum amount of service prior
to receiving benefits, even if they had not met the mini-
mum service requirement at the time of the survey.
Where plans—such as health or life insurance—require
an employee to pay part of the cost (contributory plans),
workers are counted only if they elect the plan and pay
their share of the cost. Data on insured benefit plans
and private retirement and capital accumulation plans
are thus limited to “participants.” Plans for which only
administrative costs are paid by the employer are not
included in the survey.’

‘An exception, however, is made in tables 27 and 48, which tabu-
late postretirement health and life insurance coverage. Plans under
which retirees pay the full cost are included since the guarantee of
insurability at group rates is, in itself, considered a benefit.

Highlights

The great majority of full-time workers within the
scope of the survey were provided with health and life
insurance and private retirement plans, as well as paid
holidays and vacations (table 1). Provisions of many
employee benefits differed markedly between white-
and blue-collar workers.

On the average, employees received about 10 paid
holidays each year. The number of days of paid vaca-
tion, increasing with years of service, averaged nearly
16 days at 10 years and 21 days at 20 years. For three
other paid leave benefits available to a majority of the
employees, funeral leave averaged about 3 days per oc-
currence and military leave averaged nearly 12 days a
year; time off for paid jury duty was usually provided
as needed.

Ninety-three percent of all employees had some pro-
tection against temporary loss of income due to illness
or accident through either sick leave or sickness and
accident insurance, or both. Sick leave generally con-
tinued the worker’s full salary beginning on the first
day of an illness or accident, while insured benefits re-
placed less than full pay and began after an initial wait-
ing period. Most employees also had some protection
against extended loss of income due to disability; 48
percent had long-term disability insurance, and 41 per-
cent were covered under private defined benefit pen-
sion plans that provided immediate disability benefits.

Virtually all of the participants in health insurance
plans were covered for most categories of expenses re-
lated to hospital and medical care. Life insurance was
provided for nearly all employees, most commonly for
an amount equal to annual earnings, rounded to the
next $1,000.

Eighty percent of the employees in the survey were
covered by defined benefit pension plans, which have
formulas for determining an employee’s annuity. Bene-
fits were most frequently based on earnings during the
last 5 years of employment. Common eligibility require-
ments for normal retirement were: Age 65 with no
specified length-of-service requirement, age 62 with 10
years of service, and 30 years of service with no age
requirement. Virtually all covered employees could re-
tire early with a reduced pension, provided they ful-
filled minimum age and service requirements (most com-
monly, age 55 with 10 years of service).

Fifty-three percent of the employees participated in
one or more of the following defined contribution plans:



Table: 14. Short-term disability coverage: Percent of
full-time employees by participation in sickness and accident
insurance plans and paid sick leave plans, medium and large
firms, 1985

Profes-
sional | Techni-
Alem: |_2%_ | cal and | Produo-
Type of plan adminis-| clerical | tion em-

Ployees | trative “| employ- | ployees
employ-} ees

Total

With short-term disability coverage ..| 93 96 97 90

Sickness and accident insurance
only

‘Wholly employer financed

Paid sick leave only

5 49
4

42 668 60 a

Combined sickness and accident’

insurance/paid sick leave as | a7 | 33]. 21

Wholly employer finance 20 20 26 17
‘Without short-term disability

coverage .. 7 4 3 | 10

NOTE: Because of rounding, sums of individual items may not equal to-
tals.

Tabie 15. Pald sick leave: Percent of full-time employees by
type of provision, medium and large firms, 1985

sional | Techni-
and | cal and | Produc-

Allem- | one. and |P
Provision adminis-| clerical |tion em-
Ployees | "trative | employ- | ployees
employ-| ees
608
Total 1o0 | 400 | 100
Provided sick leave .. 67 92 a
Sick leave provided or
‘An annual basis only’ 48 59 68 32
A por disability basis o 14 23 16 7
Both an annual and per
disability basis .. 3 4 6 1
‘As needed basis 2 5 1 1
Other basis* ... iV) ty) 1 6
Not provided paid sick leave 33 7 8 59

+ Employées eam a specified number of sick teave days per year. This
number may vary by length of service.

® Employees eam a specified number of sick leave days for each ill-
ness or disability. This number may vary by length of service.

* Plan does not specify maximum number of days.

“ Includes formal plans with provisions that change from a specified
number of days per year to a specified number of days per absence after
@ certain service period.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals,

4



Chapter 2. Work Schedules
and Paid Time Off

Time off with pay is available to employees in sev-
eral different forms and amounts—from daily rest pe-
riods to annual vacations of several weeks. In 1985,
survey coverage of paid leave benefits was expanded
to include provisions for funeral leave, jury duty leave,
and military leave.

Work schedules (table 2)

Weekly work schedules of 40 hours applied to 83
percent of the employees covered by the survey.”
Eighteen percent of the professional-administrative em-
ployees, 24 percent of the technical-clerical employees,
and 8 percent of the production workers had shorter
workweeks. Three percent of the work force was sched-
uled to work other than a 5-day week.

Paid lunch and rest periods (tables 3 and 4)

Ten percent of the employees received formal paid
lunch periods, and 72 percent were provided formal
rest time, such as coffee breaks and clean-up time. Both
benefits were more common among production em-
ployees than among the two other occupational groups.

Production employees who were covered by paid
lunch plans usually received 20 or 30 minutes a day,
averaging 25 minutes. The 3 percent of white-collar
workers eligible averaged 39 minutes of paid lunch time
each day. Paid rest time, averaging 26 minutes a day
for white-collar employees and 25 minutes per day for
production employees, was provided most commonly
as two daily breaks of 10 or 15 minutes each.

Paid holidays (tables 5-7)

Virtually all full-time employees in each occupational
group were provided paid holidays, averaging 10.1 days
per year. Extended holiday plans, such as the
Christmas-New Year’s Day period provided in the auto
industry, floating holidays, and “personal holidays,”
such as employee birthdays, were included in the holi-
day plans reported.

When a holiday fell on a scheduled day off, such as
a Saturday or Sunday, another day off was regularly
granted to 85 percent of the employees. Most of the
remaining workers received either another day off or

2Work schedules include regularly scheduled overtime and paid
lunch and rest periods: Overtime hours were excluded from the 1980—
1984 surveys.

an additional day’s pay, depending on when the holi-
day fell.

Paid vacations (tables 5, 8, and 9)

Virtually all employees in each occupational group
were provided paid vacations. At 15 years of service,
full-time employees commonly received 20 days of paid
vacation annually. Vacation provisions averaged 8.7
days at 1 year, 15.9 days at 10 years, and 22.3 days at
25 years of service; these averages were virtually un-
changed since 1980—the first year such estimates were
developed. Plans covering professional-administrative
employees generally provided more vacation days than
those for other employees. Sixty-one percent of the
professional-administrative employees, for example, be-
came eligible for at least 15 days of vacation at 5 years
of service; this compared with 37 percent of the pro-
duction employees. Nearly all white-collar employees
received their regular salaries or earnings during vaca-
tion periods. About seven-eighths of the production
employees received such vacation pay; 13 percent were
provided vacation payments based on.a percentage of
annual earnings; and 1 percent received lump-sum pay-
ments from vacation funds.

Virtually all employees covered by vacation plans
had to work for a specified period before being able to
take a vacation. The most prevalent length-of-service
requirement was 6 months for white-collar employees
and 1 year for production employees.

Sixteen percent of the plan participants were allowed
to cash in unused vacation time. This option was of-
fered to 10 percent of the white-collar participants and
23 percent of the production participants.

Anniversary-year bonus vacation days, such as an ex-
tra week of vacation at 10 and 20 years of service, were
included in the count of regular vacation time. Extended
vacation plans, providing 10 to 13 weeks off with pay
every 5 years or so in addition to regular vacation, were
excluded. These plans are part of collective bargaining
agreements negotiated in the aluminum and can
industries.

Personal leave (table 10)

Formal personal leave, which allows employees to
be absent from work with pay for a variety of reasons
not covered by other specific leave plans, was provided



Tables 5, 17-18, and 56 differ from other tables be-
cause they display average benefit values rather than
percentages of workers. These tables present the aver-
ages for all covered employees; calculations exclude
workers without the benefit.

Survey response

Each combination of occupational group and work
schedule or benefit area (¢.g., health insurance for pro-
duction employees) was treated as an individual survey
and separate estimates were developed for each. This
treatment facilitated the use of partially completed es-
tablishment reports in the survey. Therefore, the actual
number of responses for the survey varies for each
combination.

The following summary is a composite picture of the
establishment responses to the survey:

Number of establishments:

Insample ... 1,509
Out of busines 43
Refusing to respond . .. 123
Nonresponse other refusal 18
Responding fully than parti 1,325

There are two procedures used to adjust for missing
data from partial schedules and total refusals. First, im-
putations for the number of plan participants are made
for cases where this number is not reported (6 percent
of all participants in the 1985 survey). Each of these
values is imputed by randomly selecting a similar plan
from another establishment in a similar industry and
geographic region. The participation rate from the ran-
domly selected plan is then used to approximate the
number of participants for the plan which is missing a
participation value but was otherwise usable.

For other forms of missing data (or nonresponse), an
adjustment is made using a weight adjustment technique
based on sample unit employment. Under such a tech-
nique, a model is assumed in which the mean value of
the nonrespondents is equal to the mean value of the
respondents at some detailed “cell” Jevel. These cells
are defined in a manner that groups establishments to-
gether which are homogeneous with respect to the
characteristics of interest. In most cases, these cells are
the same as those used for sample selection. The spe-
cific weight adjustments used in this survey were cal-
culated in four stages for each occupational group and.
benefit area combination. This allowed a maximum
amount of data from partially completed establishment
reports to be incorporated into survey estimates. For
example, data on the number of an occupational group’s
employees in an establishment or participants in a plan,
or information on the existence of a plan, could be used
even if the plan provisions could not be obtained.

Survey estimation methods
The survey design uses an unbiased estimator, the

86

Horvitz-Thompson, which assigns the inverse of each
sample unit’s probability of selection as a weight to the
unit’s data. The estimator is modified to account for a
weight adjustment factor developed during the adjust-
ment for nonresponse. The general form of the estima-
tor for a population total is:

where n = sample size
Y; = value for the characteristics of the i"* unit
P,= the probability of including the i" unit in
the sample

The basic form of the estimator, after modification to
account for the weight adjustment factor, fj, developed
during the adjustment for nonresponse, was:

ny FY}

where ny = number of responding units

f, = weight adjustment factor for the i** unit.

Appropriate employment or establishment totals are
used to calculate the proportion, mean, or percentage
which is desired.

Reliability of estimates .

The statistics in this bulletin are estimates derived
from a sample of 1,500 establishments, rather than tabu-
lations based on all 43,000 medium and large establish-
ments within scope of the survey. Consequently, the
data are subject to sampling errors, as well as nonsam-
pling errors.

Sampling errors are the differences that can arise be-
tween results derived from a sample and those com-
puted 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 cal-
culated to measure possible sampling errors.

This evaluation of survey results involves the forma-
tion of confidence intervals that can be interpreted in
the following manner: Assume that repeated random
samples of the same size are drawn from a given popu-
lation and an estimate of some value, such as a mean
or percentage, is made from each sample. Then, the in-
tervals described by one standard error below each
sample’s estimate and one standard error above would
include the population’s value for 68 percent of the
samples. 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



Table 75. Savings and thrift plans: Percent of full-time participants by provisions for investment of employer and employee
contributions, medium and large firms, 1985

‘ci Professional and adminis- | Technical and clerical ici
All participants trative participants participants Production participants
Characteristic
Employer } Employee | Employer | Employee | Employer | Employee | Employer | Employee
contributions | contributions | contributions | contributions | contributions | contributions | contributions | contributions :
Total in plans permitting investment |
choices by employees’ .. 48 90 56 92 45 91 39 85 i
Investment choices
Total 100 100 100 100 100 400 100 100
Company stock 61 70 64 70 50 65 66 74
Common stock fur 85 74 84 82 87 74 84 65 |
Corporate bonds 34 30 26 29 38 32 45 30
Diversified mix of stocks and bonds .. 13 13 13 16 13 13 1 10 |
Government securities .. 42 35 47 4 35 28 39 92
Guaranteed investment contr 64 ral 73 72 62 "1 52 69
Money market funds 23 24 22 25 26 22 22 15
Other? 4 7 3 6 7 5 4 10
Investment choices not determinable 1 0 0 7) 2 1 0 e) H
t
Number of choices |
Total 100 100 100 100 400 100 100 100
Two 20 26 17 16 a 29 26 37
Three .. 44 39 43 41 48 40 41 36 |
Four 24 26 30 34 18 22 7 20 |
Five or more 2 9 9 9 " 9 15 8 i
Investment choices not determinable 1 6 0 iv 2 1 0 iv)
* Excludes plans which limit investment options to participants age 55 * Less than 0.5 percent.
or greater.
* Includes purchases of fife insurance or annuities, real estate, NOTE: Because of rounding, sums of individual items may not equal
morigages, and deposits in credit union or savings accounts. totals.

719


Table 79. Other benefits: Percent of full-time employees
eligible for specified benefits, medium and large firms,

1985
Profes-
All em. oe stand "ton
Benefit ployees| 22m | clerical | srapioy.
istrative |employ- wos.
lemploy-| ees
ees
Total .. 100 | 100 | 100 | 100
Income continuation plans:
‘Severance pay 45 {| 61] 57] 31
‘Supplemental unemployment
benefits 8 4 a] 13
Transportation benefits:
Parking a6 | e2| 7] 92
Subsidized commuting 5 8 7 3
Travel accident insurance se | 72] 63 | 36
Gifts and cash bonuses:
Gifts .. 14) 14] 14| 14
Nonpr 20; 22] 2] 19
Financial and legal services:
Financial counseling | 19) 14 8
Prepaid legal services 3 2 2 5
Miscellaneous benefits:
Employee discounts s7| 54 | 61 | 56
In-house infirmary 46 | 47 | 38 | 50
Company sponsor
reimbursement account .. 4 6 5 2
Recreation facilities 33 | 37} 31] 32
Subsidized meals 21 | 2 | 2 | 16
Child care 1 2 1 1
Relocation allowan
Full defrayment of expenses .| 30 | 63 | 31 | 12
Partial defrayment of
expenses 13 | 19] 1] 12
Educational assistance:
Full defrayment of expenses. 27 | 92 | 92 | 22
Partial defrayment of
expenses ... 49 | sa | 52] 46

82



Table 20. Sickness and accident Insurance: Percent of full-time participants by type and duration of payments,
medium and large firms, 1985—Continued

Maximum weeks of coverage No
‘Type of payment Total | Less Greater | Varies | maxi-
than | 13 | 14.25 | 26 | 2751 | 62 | than mum
13 52 service
Professional and administrative
Fixed weekly dollar benefit al 2 1 9 - 1 - - -
6 - 10) - 5 - - - - -
1 - 1 iv) - - - - - -
1 iv) Q - 1 - 0 - - -
2 - 0) 1) 1 - 1 - - -
2 cv) re) - 1 - ) - - -
0) - - - ) - 0 - - -
1 - - - 1 - - - - -
® - - | Of - - - - - -
1 - - - 1 - - - - -
Weekly dollar benefit varies "1 - Q - 10 Q () - QO
By earnings .. 40 - oO - 9 () - iv)
By service or length of
disability ... 1 - - - 1 - - - 0) -
Technical and clerical
All types ... 100 4 10 7 64 3 6 ) 7 )
Fixed percent of eamings 67 1 7 6 45 2 1 0) Pi 0)
1 - -, - > Y - - -
25 1 2 2 20 ~ 1) - Y 10)
1 ~ - - 1 10) ~ - - -
7 0 1 2 10 1 0) - 2 -
5 ) - 1 2 - - - 1 -
() ~ - - ) - - - - -
wa] 0 3] - wo} o | oO |] - - | oO
2/-) 0/0 1] - - - | Oo | =
2| - 1/0] 0 | Oo - o | 0 -
1 - - - 1 - - - - -
Percent of earnings varies .. 10 - 0 1 4 ) 3 1 -
By service 5 - - 1 2 ~ 3 - -
By length of disability 2 - 0) - i) 0) 1 - - -
By both service and length of
disability ..... 3 - - i) 2 - - - 1 -
Fixed weekly dollar benefit 13 2 2 1 7 - 1 - 1 -
Less than $60 .. 4 - 1 - 3 - - - - -
1 - Q 1) iv) - ) - Vv) -
1 0) iV) - 0) - QO - - -
4 2 1 cv) 1 - QO - - -
1 0) ) - 1 - Q - - -
Q - - - 1) - () - ~ -
1 - - - 1 - Q - 1) -
() - - 0 - - co) - - -
rv) - - - Y - ~ - - -
oO - - - - - ) - - -
Weekly dollar benefit varies 10 0) - 7 1 1 - 1 -
By earings . 9 - 0} - 6 1 - 0) -
By service or length of
disability ... 1 - v) - 1 - 0) - i) -

See footnotes at end of table,



Employee Benefits in Medium
and Large Firms, 1985

U.S. Department of Labor
William E. Brock, Secretary

Bureau of Labor Statistics
Janet L. Norwood, Commissioner
duly 1986

Bulletin 2262

For sale by ng Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402



Appendix A: Technical Note

Scope of survey

This survey of the incidence and characteristics of
employee benefit plans covers private sector establish-
ments’ in the United States, excluding Alaska and Ha-
waii, employing at least 50, 100, or 250 workers, de-
pending on the industry. Industrial coverage includes:
Mining; construction; manufacturing; transportation,
communications, electric, gas, and sanitary services;
wholesale trade; retail trade; finance, insurance, and real
estate; and selected services (table A-t).

Establishments meeting the minimum size criteria as
of the reference date of the sampling frame are included
in the survey, even if they employed fewer workers at
the time of data collection. Establishments found to be
outside the industrial scope of the survey at the time of
data collection are excluded.

Table A-1 shows the estimated number of establish-
ments and employees within the scope of the survey
and the number within the sample actually studied for
each major industry division.

Occupational groups
Data were collected individually for the following
three broad occupational groups:

Professional-administrative: Includes occupations that
require a foundation of knowledge in the theories, con-
cepts, principles, and practices of a broad field of sci-
ence, learning, administration, or management acquired
through a college-level education or the equivalent in
progressively responsible experience. Above entry
levels, the exercise of a high degree of creativity, origi-
nality, analytical ability, and independent judgment to
solve varied and complex problems in the field of work
is characteristic.

Technical-clerical: Includes office and sales clerical,
technical support, protective services, and other such
occupations that do not require full knowledge of a
professional or administrative field of work or the ap-
plication of a high level of creativity, originality, ana-

‘For this survey, an establishment is an economic unit which pro-
duced goods or services, a central administrative office, or an auxil-
iary unit providing support services to a company. In manufacturing
industries, the establishment is usually a single physical location. In
nonmanufacturing industries, all locations of an individual company
within a Metropolitan Statistical Area (MSA) or within a nonmetro-
politan county are usually considered an establishment.

83

lytical ability, or independent judgment. Job perfor-
mance skills are typically acquired through on-the-job
experience and/or specific training which is less than
that usually represented by a baccalaureate degree.
These skills include the application of a practical knowl-
edge of established procedures, practices, precedents,
and guidelines.

Production: Includes skilled, semiskilled, and unskilled
trades; craft and production occupations; manual labor
occupations; custodial occupations; and operatives.

Excluded from the survey are executive employees
(defined as those whose decisions have direct and sub-
stantial effects on an organization’s policymaking); part-
time, temporary, and seasonal employees; and operat-
ing employees in constant travel status, such as airline
flight crews and long-distance truckdrivers.

Benefit areas

Sampled establishments were requested to provide
data on work schedules and details of plans in each of
the following benefit areas: Paid lunch periods, paid
rest periods, paid holidays, paid vacations, paid personal
leave, paid funeral leave, paid military leave, paid jury
duty leave, paid sick leave, sickness and accident insur-
ance, long-term disability insurance, health insurance,
life insurance, and retirement and capital accumulation
plans.

Data were also collected on the incidence of the fol-
lowing additional benefits: Severance pay, supplemen-
tal unemployment benefits, employee discounts, non-
cash bonuses, nonproduction bonuses, relocation allow-
ances, recreation facilities, subsidized meals, educational
assistance, automobile parking, subsidized commuting,
travel accident insurance, financial counseling, prepaid
legal services, company sponsored reimbursement ac-
counts, child care, and in-house infirmaries.

Sampling frame

The scope of this survey was the same as that of the
Bureau’s 1985 National Survey of Professional, Admin-
istrative, Technical, and Clerical Pay (PATC). The list
of establishments from which the sample was selected
(called the sampling frame) was, therefore, the same as
that developed for the 1985 PATC. This sampling frame
was developed by refining data from the most recently
available State Unemployment Insurance (UI) reports



Table 41. Health insurance: Percent of full-time participants in
contribution, medium and large firms, 1985

contributory plans by type and amount of employee

cs Professional and Technical and clerical je ‘ck
All participants administrative participants participants Production participants
‘Type and amount of contribution

Single Family Singlo Family Single Family Single Family

coverage | coverage’ coverage | coverage’ coverage | coverage! coverage | coverage’
Total 100 100 100 100 100 100 100° 100
Flat monthly amount 89 91 87 90 90 cy] 89 91
Less than $5.00 19 3 7 3 14 3 24 3
$5.00-$9.99 24 9 22 9 18 6 32 "1
$10.00-$14.95 16 8 19 6 22 6 8 10
$15.00-$19.99 8 8 8 9 "1 8 6 7
$20.00-$29.99 "1 13 13 15 14 12 7 13
$30.00-$39.99 3 10 4 10 4 W 1 8
'$40.00-$49.99 1 11 a 10 2 12 1 "1
$50.00-$59.99 i) 7 to) 8 ) 8 (o) 5
'$60.00-$69.99 - 6 - 5 - 7 - 6
$70.00-$79.99 ) 4 a 5 ) 4 - 3
$80.00-$89.99 - 2 - 1 - 2 - 4
$90,00-$99.99 - 1 - 2 - 2 - 1
$100.00 or greater = 4 - 4 - 6 - 3
Composite rate" . 7 6 5 4 5 4 9 8
Amount varies by earings 1 1 © 1 el ie} @
‘Amount varies by employee 2 2 2 2 2 2 2 1
Contribution not determinable 8 8 9 8 7 7 8 8

* 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.

? Less than 0.5 percent.

* A composite rate is a set contribution covering more than dne bene-
fit area, for example, health insurance and sickness and accident insur-

ance. Cost data for individual plans cannot be determined.
* Amount varies by options selected under a cafeteria plan or balance
‘of employer-sponsored reimbursement account,

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.

Table 42. Health insurance: Percent of full-time participants
by length-of-service requirements for participation,’ medium

and large firms, 1985

Length-of-service requirement

Profes-
sional | Techni-
All par- | and | cal and | Produc-
ticipants adminis-| clerical | tion par-
trative | partici- | ticipants

partici | ‘pants
pants
Total 100 | 100 | 100
With service requirement 54 | 39 | 45 |. 68
month .. w | 6 | 1 | 19
8 4 5s] ou
19 12 19 | 22
4 2 1 6
7 5 7 8
i) Q Q co)
1 6 @ 1
@ - - 0

Without service requirement ..

Service requirement not
determinable

45 60 53 32

1 1 2 1

* Length of time employees must be on the job before they are cov-
ered by a plan that is at least partially employer financed. There is fre-
quently an administrative time lag between completion of the requirement
and the actual start of participation. {f the lag was 1 month or more, it
was included in the service requirement. Minimum age requirements are
rare.

? Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.

43



Table 6. Paid holidays: Percent of full-time employees by Table 7. Paid holidays: Percent of full-time Participants by

number of paid holidays provided each year, medium and poficy on holidays that fall on a regularly scheduled day off,
large firms, 1985 medium and large firms, 1985
Profes- Protes-
sional | Techni- sional | Techni-
Allem.| 8nd. foal ang Produc: Altper- | and | cal and | Produc.
Number of days ployees| 20min. | clerical | Or Holiday policy ticipants [20TMinis-| clerical | tion par-
istrative }employ- eee ‘cipants trative | partici- {ticipants
lemploy-| ees Partici- | pants
ees Pants
100 100 100 100 100 100 100
re ie 96 Holiday is not observed 1 1 1 1
) e) 2
lays 1 2 1 Another day off granted 85 1 69 79
5 days plus 1 half day 10) 1) -
6 days 4 7 3 Additional day's pay in lieu of
6 days plus 1 or 2 half 0 o 10) holiday .. a 1 2 4
7 days 5 5 7
0 1 ) Another day off or day’s pay,
7 7 depending on when holiday falis 9 4 5 13
1 2/40 Another day off or holiday not
12 16 9 observed, depending on when
holiday falls 1 1 2 (0)
2 2 1)
25 2 2 Other provision applies? 1 iv) 0 1
1
16 “ i Holiday policy not determinable .... 1 1 1 1
wz 10 8 ' Less than 0.5 percent.
ololole * Includes plans where the policy differs by holiday.
13 cise Tor ee ae 7) 8) 7 NOTE: Because of rounding, sums of individual items may not equal to-
days OF oO}; Of oe tals.
6 4 3 7
1 1 () 2
oO ) 0 v)
co) 0) - -
Not provided paid holidays .. 2 1/0 4

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.



Table 2. Work schedules: Percent of full-time employees by
number of.hours scheduled per week,' medium and large
firms, 1985

Table 4.. Paid rest time: Percent of full-time employees by
minutes of paid rest time per day, medium and large firms,
1985 . 7

Profes-
sional | Techni-
and | cal and | Produc-
Alem: | adminis-| clerical | tion em-
Ployees | ‘trative | employ- | ployees
employ-} ees

Work schedule

ees
Total 100 100 100
Hours per week:
Under 35 1/ @ 0 2
35 3 4 6 1
Over 38 and under 37.5, 1 1 2 1
37.5 7 9 1 3
Over 37.5 and under 40 2 3 4] @
40 83 79 75 88
Over 40 3 2 1 4

co) 0 co) i)

Hours per week not available

‘ Work schedule data included regularly scheduled overtime, paid
lunch, and paid rest periods. Regularly scheduled overtime was excluded
from the 1980-1984 surveys.

? Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals:

Table 3. Pald lunch time: Percent of full-time employees
by minutes of paid lunch time per day, medium and large
firms, 1985

Profes-
sional | Techni-
: ‘a em-| and. [eal and] roster
Minutes per day Jovees| admin: | clerical | oioy,
Ployees| trative | employ-| "ee o%
jemploy-| ees
ees
Total 100 | 100 | 100°| 100
Provided paid rest time 72) 58} 70 | 81
Under 15 minutes 2 1 1 2
15 minutes 4 3 5 3
Over 15 and under 20 minutes () rv) () 1
20 minutes 25 | 47 | 18 | 33
Over 20 and under 30 minutes 4 2 2 6
30 minutes 34| 35 | 44) 29
‘Over 30 and under 10) - 0) 0
‘40 minutes 1 () 0 1
Over 40 minutes 2] - - 5
Number of minutes not
available Oo, o Oo}; o

Not provided paid rest time

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.

Table 5. Paid holidays and vacations: Average number of
days for full-time participants, medium and large firms,
1985

Profes- Profes-
sional | Techni- sional | Techni-
Allem-| and. [cal and Produc Allpar-| and. |cal and Produce
Minutes per day Tovea| admin. | clerical |onoioy, tem tici- | admin- Jclerical | 2Gia.
Ployees| istrative jemploy-| "ono pants |istrative| partici- patti
employ-| ees partici- | pants | Pants
ees Pants
Total .. 100 | 100 | 100 | 100 Paid hotidays 102 | 98 | 104
Provided paid lunch time 10 3 3| 17 Paid vacation by length of service:
Under 20 minutes 1| 0 1 1 ‘At 6 months’ .. 56 | 61 | 57 | 52
20 minutes . 4) 0] 0 7 7 101 | 96) 75
Over 20 and under 30 minutes () - - 0, 11.0 | 10.5 | 104
30 minutes .. 4 1 1 7 136 | 131 | 124
Over 30 minutes 1 2 2 1 165 | 160 | 155
‘Number of minutes 19.0 | 189 | 182
available 0) - ¢) 211 | 20.7 | 20.6

Not provided paid lunch time ... 90 97 97 83

227 | 226 | 22.0
233 | 234 | 225

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.

* Prior to 1985, employees receiving vacation days, but none at 6
months or at 1 year of service, were included in computing the aver-
ages.

® The average (mean) was essentially the same for longer lengths of
service.

NOTE: Computation of average included half days and excluded
workers with zero holidays or vacation days.



Table 49. Defined benefit pension plans:' Percent of

full-time participants by method of determining retirement
payments, medium and large firms, 1985
Profes-
sional. | Techni-
All par | 2M | cal and | Produc.
Basis of payment* ticipants adminis-| clerical | tion par-
pants) "trative | partici- | ticipants
partici- | pants
pants
Total 100 | 100 | 100 | 100 !
Terminal earings formula 87 76 78 36
No alternative formula 27 35 42 16
Terminal earnings alternative 8 12 "1 5
Career earnings alternative 3 5 4 2
Dollar amount alternative” 7 23 18 12
Percent of contributions
alternative 1 1 0 1
Career earings formula 13 19 12 10
No alternative formula 7 12 7
Career earnings altemative .. v) 0 0 0
Dollar amount alternative” 5 6 5
Dollar amount formula? 29 5 13 52
No alternative formul 28 5 12 50 |
Dollar amount alternative’ 1 - 0 1
Percent of contributions |
alternative . 0 0 9)
Percent of contributions formula 1 V) i) 2
No alternative formula 1 0 0) 2

* Excludes supplemental pension plans.

2 Alternative formulas are generally designed to provide a minimum
benefit for employees with short service or low earings.

3 Includes formulas based on dollar amounts for each year of service
and schedules of benefits that vary by length of service.

* ‘Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.

56



Table 33, Health insurance: Percent of full-time Participants in plans with dental benefits by extent of coverage for
selected procedures, medium and large firms, 1985

Sched ‘Sub- Percent of usual, customary, and reasonable charge Not
Type of dental procedure | Total | cash |,, ‘89, |lect 0 Less cov-
allow. |"iie | ment | Total | than | 50 | 60 |@1-74) 75 | 80 | #5 | 90 | 100° | ered
ance 50
All participants
Examinations we} 2) M | at] - 1/0 2| 2] 22] 41 1} 5] 0
Dental X-rays joo] 16} 2] | a1] - 110 2) 2] 4} 3] 7] 4 | 4
Fillings woo} 26) 3] @ | a] - 4} 4] 3] 6] 4 3] 7] 7/06
Dental surgery .. too} 23} 2] | 7] - s| 1; 3} s| 4a] 3] 7] oj 4
Periodontal care woo] 23} 2] 1) 72) - 7} 1) 8) 5] a9} 4] 7] 7] 2
Inlays too} 2) 1/ | 7 | - | 38} 6] 2) 2] 3) 2] 7] 3] 2
Crowns . foo | 26) 2) 1] | - | 3} 6} 2] 2) 134; 2] 7] 2] 2
Orthodontia 12 | - 1] 0] |] ©] 5] 1/4 210) 06 1 | 27
Professional and
administrative
Examinations wo} iw] 2] | wa] - 1/4 2; 2| 2] 1/6 | 2] ©
Dental X-rays 100 | 18 210 79 - 17 4 3 3 | 25 2 3) 4] (4
Fillings .. wo | 27 | 2] 4 | 7] - 4} 4] 4] 5/ 4} 2] 3] 6; 6
Dental surgery .. too | 2] 2] 4 | | - 5} 1) 3] 6] 4] 2} 3] 9| 4
Periodontal care $0} 25) 2) | 2] - 6} 1{ 3/ 4] 44] 2/ 3] 8] 4
too} 27 { 1] | 6) - | 39/ 6] 3) 3] a} 14] 2] 3] 2
woo} 27} 4] | 6} - | 99} 6] 3] 31 13} 4] 2] 2] 2
too} 14] - 1} | - | 5} a4} 4] a 1] oO] - 1 | 26
Technical and clerical
Examinations 1s | 2 ea] - 1| 0 3/ 1} 2) 1] mM] sj 4
Dental X-rays 1 | 3] @ | 82) - 1| 6 4] 4) 2] 4/ 2] a] 4
Fillings 2] 3] | 7} - 4] 1) 5] 5] 4] 2] 3] 6] 4
Dental surgery too | 24] 2! 4 | 73] - 5} 1] 4! 4] 4] 2] 3] 6] 1
Periodontal care 100 24 | 2) 4] 72] - 8} 1] 4] 4] 4] 2] 3) 7] 4
Inlays... too} 22, 1| @ | wm] - | 2] 5} 3] 4) ww] +] 2] 2] 2
Crowns 100 | 26; 1 1) 7) - | 4] 5) 3] 4] 3] +] 2] 2] 8
Orthodontia yoo | 13 | - 1} 5] | a) 3] 214 1/0] - 1 | 31
Production
Examinations too | 16} 2] % | a1] - 1/6 1} 2] 9] 4 1| 5]
Dental X-rays joo | t¢} 2) 4 | a2] - 1/0 2); 2] a) 4] 12] 9] 6
Fillings too) 24] 3!/ m | 7] - 4/4] 2] 6] 3) 5s] a4] 7] 6
Dental surgery too} 22) 3/ | wm} - s/ 1) 2] 6! 3 | 5s} 14] of] 4
Periodontal care joo] 21) 3] 4] 73) - 7/ 1) 2] 6] 33} 5] 1] 8] 2
Inlays woo) 24) 2} m | | - | so} 7] 2] 2] ww] 4] a] 3] 2
Crowns wo) 2) 2) 1) m}) - | 9} 7] 2] 21 1) 4] aw] 3] 2
Orthodor woo} 1] - 1) oe] - | s}] 6] 1/14 3/0) 6 1| 26
* Reimbursement arrangement in which the percentage of dental 2 Includes plans which paid the full cost.
expenses paid by the plan increases if regular dental appointments * Less than 0.5 percent.
are scheduled.
* Participant pays a specific amount per procedure and plan pays NOTE: Because of rounding, sums of individual items may not
ail remaining expenses. equal totals. Dash indicates no employees in this category.

39



Table 76. Savings and thrift plans: Percent of full-time
participants by type of vesting schedule, medium and large
firms, 1985

Protes-
sional | Techni-
. Allpare|_and_ | cal and | Produc-

Type of vesting schedule tec Pat |adminis-| clerical |tion par-

i jralive | partici- | ticipants
partici- | pants
pants:

Total’ . 100 | 100 | 100 | 100
Immediate full vesting . 25 23 a7 26
Cliff vesting,’ with full vesting after: 12 12 12 13

4-2 years .. 3 3 3 4
3-4 years . 2 3 2 iv)
5 years .. 4 2 2 6
More than 5 years 3 3 5 2
Graduated vesting,‘ with full vesting
after 28 28 30 24
4or 4 6 4 1
5 years .. 16 18 18 W
6-8 years .. 4 2 3 8
40 years 3 2 5 1
More than 10 years . 1 1 i) 2
Class vesting,* with each class fully
vested after: 37 39 34 38
1 year 3 2 2 4
2 years 20 18 20 23
3 years 10 14 8 6
More than 3 years 5 4 4 6

+ Because plans may adopt alternative vesting schedules, sums of par-
ticipants covered by individual vesting schedules may exceed 100 percent.

# Under a cliff vesting schedule, an employee is not entitled. to any
benefits accrued under the plan until satisfying the requirements for 100
percent vesting.

® "Less than 0.5 percent

« Graduated vesting schedules give an employee rights to a gradually
increasing share of accrued benefits, determined by years of service and
eventually reaching 100 percent vesting status.

Under class year vesting, employers’ contributions for a particular
year (class) become nontorfeitable after satisfying vesting requirements.
Subsequent years become fully vested as each class matures. Included
here are class year schedules with both graduated and cliff vesting fea-
tures.

Table 77. Savings and thrift plans: Percent of full-time
participants by provisions for withdrawal of employer
contributions prior to disability, retirement, or termination of
employment, medium and large firms, 1985

Profes-
sional | Techni-
Alpar. | and_| eal and | Produc:
Least restrictive provision teipents |adminis- | clerical | tion par-
pants | "trative | partici- | ticipants
partici- | pants
pants
Total oo | 100 | 100 | 100
With withdrawal provision: 80 e2 | 8t 78
For hardship reasons’ 19 19 22 7
Full withdrawal, no penalty 8 12 46 | 10

Full withdrawal, with penalty | 3 3 2 4
Partial withdrawal, no penalty.) 1
Partial withdrawal, with

penalty ) 1 -

Not determinable 3 2 3

For any reason .. 61 63 59 61

Full withdrawal, no penalty 29 28 28 32

Full withdrawal, with penalty .| 30 32 29 28
Partial withdrawal, no penalty} 1 1 1 -

Not determinable 1 1 2) 0

Without withdrawal provisions ... 20 18 19 22

+ Commonly expressed reasons for withdrawal. were: purchase or repair
of primary residence; education of an immediate family member, death or
iliness in the family; or sudden uninsured loss.

? Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.

Table 78. Savings and thrift plans: Percent of full-time
Participants by method of distribution of account at
retirement, medium and large firms, 1985

Profes-
sional | Techni-
All par. |_ 274 _ | cal and | Produc-
‘Methods of distribution available tick Pe its adminis-| clerical | tion par-
pants) "trative | partici- | ticipants
partici- | pants
pants
Total 100 100 100 100
Cash distribution’ 99 99 99 100
Lifetime annuity (including
joint-and-survivor forms) .. 29 28 30 30
Installments 59 58 58 61
Lump sum .. 99 99 99 100
Stock distribution only” 1 1 1 0
Not determinable ... 0 (v) e e

* The total is less than the sum of the individual items because many
participants are offered optional forms of cash distribution.

2 Employer and employee contributions are invested solely in company
stock, which is automatically distributed upon retirement or termination of
employment. Stock may also be distributed under plans providing for cash
distributions,

® Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.

80



Chart 1. Trends in selected deductible amount: Percent of full-time participants in
major medical plans, medium and large firms, 1979-85

Percent
60 |
~ en 100 deductible
ee el hs
Ba
50 x
‘x! mo
_
40
30
Cena, $5P deductible or les:
“aearenmannndy tng,
20 A
“Mtn
io PA
$150) deductible or more
°
1979 1980 1981 1982 1983 1984 1985

provided at 50 percent of the usual, customary, and
reasonable charge.

About one-fifth of the dental plan participants were
offered reimbursement based on a schedule of cash al-
lowances. In this type of arrangement, each procedure
is subject to a specified maximum dollar amount that
can be paid to the participant. Preventive procedures
were less likely to be subject to this type of schedule
than restorative procedures.

Two percent of dental plan participants had services
covered by an incentive schedule. Under this arrange-
ment, the percentage of dental expenses paid by the
plan increases each year if the participant is examined
regularly by a dentist.

Unlike other basic health benefits, dental plans typi-
cally required participants to pay a specified deductible
amount before the plan paid any benefits. The most
common requirement was a $25 or $50 deductible to
‘be met by the participant each year. However, some
plans required the participant to pay a deductible (usu-
ally $50) only once while a member of the plan rather
than every year. White-collar workers were more likely

than blue-collar workers to have plans with deductible
requirements.

Ninety percent of dental plan participants were en-
tolled in plans that limited the amount of payment each
year by specifying a yearly maximum benefit. Although
many plans: have raised their limits since 1980, there
was little change between 1984 and 1985. In both years,
the most common limit was $1,000. Orthodontic serv-
ices were almost always subject to lifetime maximums,
which have increased since first tabulated in 1980. Life-
time maximums of $1,000 or more for orthodontia ap-
plied to 44 percent of participants in dental plans pro-
viding this benefit in 1985, up from 17 percent in 1980.

Mental health coverage (table 37). In 1985, of the par-
ticipants in plans with mental health benefits, 57 per-
cent had more restrictive hospital coverage for mental
illnesses than for physical ailments, up from 52 percent
in 1984 and 46 percent in 1983. These plans usually re-
duced the duration of the hospital stay (often 30 days
for mental health care in basic hospital benefits, com-
pared to 120 or 365 days for other illnesses) or imposed

27



Table 43. Health Insurance: Percent of full-time participants by funding medium for selected types of coverage, medium

and large firms, 1985

‘ng Basic | Basic | Basic | Major Basic | Basic | Basic | Major
Funding medium hospital’ | surgical’ | medical’ | medical? | OPP! | hospital’ | surgical’ | medical’ | medical? Dental
All participants Technical and clerical
Total ... 100 100 100 100 100 100 100 100 100 100
Provided coverage 66 70 48 87 76 62. 64 43 89 76
Blue Cross-Blue Shield 21 15 14 12 6 20 12 W W 4
Commercial carrier 18 22 12 34 36 15 19 10 35 35
Independent health plan: 25 Hv 20 39 32 25 cis 20 39 3
18 23 13 38 29 15 21 10 39 32
7 7 7 iv} 1 10 10 10 « 1
- - - - 1 - - - - 1
1 2 1 3 2 2 2 1 3 3
Not provided coverage .... 34 30 52 13 24 38 36 57 Ww 24
Professional and administrative Production
Total .. 100 100 100 100 100 100 100 100 100 100
Provided coverage 61 65 40 89 79 71 75 54 85 73
Blue Cross-Blue Shield .. 20 W abl 1 4 23 19 7 13 7
‘Commercial carrier 16 20 10 37 38 24 24 15 32 6
Independent health plans .. 25 32 19 39 35 26 30 21 38 29
Self-insured’ .. 15 22 9 39 3 241 25 16 38 27
Heaith Maintenance
Organizations* 10 10 10 0 1 5 5 5 ie) 1
- - - 2 - - - - 1
aT 2 1 3 2 1 2 1 2 2
‘Not provided coverage 39 35 60 W 21 29 26 46 15 a7

‘A plan provision was classified as a basic benefit when it covered
the initial expenses incurred for a specific medical service. Under these
provisions, a plan paid covered expenses in one of several ways: 1) In
full with no limitation; 2) in full for a specified period of time, or until a
dolar limit was reached; and 3) a cash scheduled allowance benefit
that provided up to a dollar amount for a service performed by a hospi-
tal or physician. For a specific category of care, a plan may require the
participant to pay a lump sum amount each disability or year (deduct-
ible) or a nominal charge each visit or procedure (copayment) before
reimbursement begins or services are rendered.

2 Major medical benefits cover many categories of expenses, some
of which are not covered under basic benefits, and others for which
basic coverage limits have been exhausted. These benefits are charac-
terized by deductible and coinsurance provisions’ that are applied
across categories of care.

* Includes plans that are financed by general revenues of a com-
pany on a pay-as-you-go basis, plans financed through contributions to
a trust fund established to pay benefits, and plans operating their own

facilities if at least partially financed by employer contributions. In-
cludes plans that are administered by a commercial carrier through Ad-
ministrative Services Only-Minimum Premium Plan (ASO-MPP) con-
tracts and plans in which a commercial carrier provides protection only
against extraordinary claims.

Includes federally qualified (those meeting standards of the Health
Maintenance Organization Act of 1973, as amended) and other HMOs
delivering comprehensive health care on a prepayment rather than fee-
for-service basis. All HMOs are included here regardless of sponsor-
ship, ¢g., Blue Gross-Blue Shield or a commercial insurance carrier.

Less than 0.5 percent.

* Includes independent prepaid plans providing health benefits less
comprehensive than those of an HMO. Dental benefits plans spon-
sored by locel dental societies are also in this category.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.



Of those that received basic hospital coverage, 95
percent were in plans that paid room and board ex-
penses up to the semiprivate rate, providing some pro-
tection against rising hospital charges. Eighty-five per-
cent of the participants in basic hospital plans had ceil-
ings on the duration of coverage. Two-thirds had plans
which specified the maximum number of days covered
per confinement, most commonly 120 or 365 days. Most
of the remaining plans limited the duration of coverage
by specifying a maximum dollar amount per admission
or per year.’ Additional coverage was usually available
under a major medical plan for cases that exceeded
these limitations.

Surgical coverage (table 29). Seventy percent of health
plan participants had basic coverage for surgery in 1985.
‘Three-fourths of these participants had plans with pay-
ments based on the “usual, customary, and reasonable”
charge ‘for the procedure performed, up from 69 per-
cent in 1984. Although most of these plans paid 100
percent of such charges, 16 percent of the participants
were in plans that paid between 80 and 95 percent or
imposed an overall dollar limit on surgical payments.
The remaining quarter of participants with basic surgi-
cal benefits were covered by a schedule of payments,
listing the maximum amount payable for each opera-
tion. Charges in excess of the scheduled amount were
usually covered by a major medical plan.

Major medical coverage (tables 30-32). . Major medical
benefits, provided to nearly nine-tenths of the health
insurance participants, generally covered a wide range
of medical ‘services both in and out of the hospital.
There are two types of major medical plans: One sup-
plements basic benefits either by covering expenses
which exceed basic benefit limitations or by covering
expenses not paid by the basic plan; the other is com-
prehensive and stands alone without basic plan cover-
age. Comprehensive major medical policies have been
embraced by employers seeking to contain costs of pro-
viding health care, because they may eliminate first-dol-
Jar coverage.’

With very few exceptions, major medical benefits are
not paid until the participants have paid a deductible.
The purpose of this deductible is to keep the premium

*This limitation is commonly found in comprehensive major medi-
cal plans. These plans usually cover hospital expenses in full up to 2
specified dollar amount per confinement (typically between $2,000
and $5,000) and 80 percent thereafter. For this study, the full-cover-
age portion was treated as a basic benefit and the 80-percent portion
as major medical.

° Comprehensive major medical plans can be broken down into strict
and modified varieties. All expenses covered are subject to the de-
ductible and coinsurance provisions under the strict version, whereas
the modified version might cover hospital, or hospital and surgical,
expenses in full up to a specified dollar amount without the applica
tion of a deductible. (Also, see footnote 8.)

26

cost down and discourage unnecessary. use of medical
services. A deductible amount of $100 has been the
most common since the survey’s inception in 1979, ap-
plying to nearly half of all plan participants. However,
29 percent were required to pay deductibles of $150 or
more in 1985, up from 21 percent in 1984 and 12 per-
cent in 1983 (chart 1). Higher amounts were less preva-
lent for blue-collar workers than for white-collar
workers.

Once the worker meets the deductible requirement,
the plan pays a specified percentage (coinsurance) of
incurred expenses. Almost seven-eighths of the partici-
pants were in plans that paid 80 percent of expenses,
with the remaining 20 percent to be paid by the worker.
For over three-fourths of the participants, however, the
percentage paid by the plan increased to 100 percent
after a specified level of expenses was incurred during
a year. For example, a plan might pay 80 percent of
the first $5,000 of covered expenses and 100 percent
thereafter, thus limiting the employee’s “out-of-pocket”
cost to $1,000 (in addition to the deductible). Incidence
of this protection has increased each year since 1979,
when less than one-half of the major medical partici-
pants were covered.”

Benefits for 82 percent of major medical participants
were subject to a ceiling on the amount payable by the
plan, usually a lifetime maximum. In 1985, the most
common limitation was $1 million; $250,000 had been
the most prevalent limit in previous years. The average
lifetime maximum was $530,000—an increase of nearly
$200,000 since 1982.

Dental coverage (tables 33-36). Over three-fourths of
the participants in health insurance plans received cov-
erage for dental expenses, about the same as in 1984.
This ended a period of strong growth in dental care;
in 1979, one-half received coverage. Nearly all dental
plans covered a wide range of services including ex-
aminations, X-rays, and restorative procedures such as
fillings, periodontal care, and inlays. Plans covering or-
thodontic expenses, at least for dependent children, cov-
ered 73 percent of employees with dental benefits in
1985.

Dental payments were most commonly based on a
percentage of the usual, customary, and reasonable
charge for a procedure. The percentage covered by a
plan generally depended on the type of procedure per-
formed. Less costly procedures such as examinations
and X-rays were usually covered at 80 or 100 percent.
Fillings, surgery, and periodontal care were most likely
to be covered at 80 percent. More expensive proce-
dures—inlays, crowns, and orthodontia—were often

Trends in major medical benefits are examined by Douglas Hedger
and Donald Schmitt in “Trends in Major Medical Coverage During
a Period of Rising Costs,” Monthly Labor Review, July. 1983,. pp.
1-16.



Table 56. Defined benefit pension plan:
medium and large firms, 1985—Continued

:' Average replacement rates for specified final earnings and years of service;

Years of service

Final annual earnings
10 15 20

25 30 35 40

Combined private p

ension and primary’ Social Security benefit

52.8 58.1 63.6
478 52.2 56.8
415 45.6 49.7
36.3 40.3 44.2
92.5 36.3 40.1
29.4 33.1 96.8

68.9 741 78.8 82.9
61.4 65.8 69.7 73.2
53.9 58.0 615 64.5
48.1 51.9 55.2 58.0
43.8 47.4 50.4 53.1
40.4 43.8 46.8. 49.2

Excludes supplemental pension plans.

? Retirement annuity as a percent of earnings in the final year of work.
The maximum private pension available to an employee, not reduced for
early retirement or joint-and-survivor annuity, was calculated under each
pension plan using the eamings and service assumptions shown. This
benefit level was then expressed as a percent of earnings in the last year
of employment.

These calculations assume employees retired on January 4, 1985,
and final earings are for 1984. Eamings histories, necessary for

Table 57. Defined benefit pension plans:

applying the pension formulas, were constructed for each final earnings
level based on data provided by the Social Security Administration.

For private pension formulas that are integrated with Social Security
(see table 54) and for computation of Social Security benefits, the worker
is assumed to have retired at age 65 and paid into Social Security for 40
years. Computations exclude 1 percent of participants in plans with
benefits based on career contributions.

* Excludes benefits for spouses and other dependents.

Percent of full-time participants by minimum age and associated service

requirements for normal retirement,’ medium and large firms, 1985

Profes- Profes-
sional |Technical sional | Technical
a!) Produc al) Produc-
Age and service requirements* tebonts ad a Jan on tion par-|| Age and service requirements? toes and ac Jang oo ton par
tive par- | ticipants | Hoipants tive par- | ticipants | "Pan"
ticipants ticipants
Total .. 100 100 100 100 Age 61 1 1 1 1
No service requirement ‘) 9) iy) iv)
No age requirement 14 7 ch 20 20 years’ service ) ty a) 1
Less than 30 years’ service (9) = - 1) 26-29 years’ servi iv) i) 1 “
30 years’ service 14 7 ahi 19
More than 30 years’ service ...)(‘) ) ) 1 |[Age 62 ... 22 24 24 20
No service requirement .. 4 5 5 2
Less than age 55 0) - - “) 5 years’ service 1 1 1 oO
30 years’ service tu) - - o) 10 years' service 1 10 9 13
11-14 years’ service iv) 0 0 iv)
Age 55 .. 4 6 1 18 years’ service 2 3 3 ie)
20 years’ service 1 5 iv) (v) 20 years’ service 2 2 2 3
30 years’ service 2 1 4 25 years’ service 1 iv) 1 iv)
More than 30 years’ service .. iv) iv) (¥) (a 30 years’ service 2 2 3 1
Age 56-59 . 2 1 1 3 lage 69-64 .. 1 1 3 )
15 years’ service v) 1 No service requirement 0) 0 ) -
20 years’ service iy) - 1 10 years’ service ... 1 iv)
More than 30 years’ service . 1 1 2
lAge 65 33 30 32 35
Age 60 .. 14 16 16 4 No service requirement 29 28 30 30
No service requirement 4 4 4 3 1-4 years’ service .. o - 17) )
1-5 years’ service .. 0) 1 0) “ 5 years’ service 1 1
10 years’ service 4 3 3 4 10 years’ service 2 1 2 3
45 years’ service 1 2 1 “)
20 years’ service “ o 1 ()__||Sum of age plus service’ .. 10 14 1 6
25 years’ service ty) 6 1 ry) Equals less than 80 2 3 3 1
30 years’ service ... 3 4 4 3 Equals 80 1 1 iv) 1
More than 30 years’ service .. 2 2 to) Equals 85 4 7 3 3
Equals 90 2 2 3 1
Equals 91-94 . 1 1 1 1
Equals 95 or more “ iv) oO iv)

' Excludes supplemental pension plans.

? Normal retirement is defined as the point at which the participant
could retire and immediately receive all accrued benefits by virtue of
‘service and earnings, without reduction due to age.

* If a plan had alternative age and service requirements, the earliest
age and associated service were tabulated; if one alternative did not
specify an age, it was the requirement tabulated.

63

“Less than 0.5 percent.
5 In some plans, participants must also satisly a minimum age or
service requirement.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.



Table 1. Summary: Percent of full-time employees by participation’ in employee benefit programs, medium and large

firms,’ 1985
Employee benefit program All employees. admieatee orale yees eaiounebeainal Production émployees
Paid: :
Holidays .. 98 99 100 96
Vacations 99 99 100 99
Personal leave 26 33 37 18
Lunch period .. 40 3 3. 17
Rest time 72 58 70 81
Funeral leave 86 87 89 87
Jury duty leave 92 94 96 89
Military leave .. 70 7 75 63
Sick leave 67 93 92 a
Sickness and accident insurance 52 30 38 70
Wholly employer financed 43 23 31 61
Partly employer financed 8 7 7 9
Long-term disablity insurance 48 64 6 32
Wholly employer financed 38 49 48 27
Partly employer financed 10 16 13 8
Health insurance’ .. 96 97 96 96
Employee coverage:
Wholly employer financed 61 56 51 69
Partly employer financed 36 42 44 27
Family coverage:
Wholly employer financed 42 36 33 50
Partly employer financed 53 60 62 45
Life insurance 96 97 96 96
‘Wholly employer financed’ 86 85 85 87
Partly employer financed .. " 12 " 10
Retirement® 91 93 93 89
Defined benefit pension 80 81 82 78
Wholly employer finance 72 72 76 70
Partly employer financed . 8 9 6 8
Defined contribution plan a 49 49 32
‘Wholly employer financed® 28 32 92 24
Partly employer financed .. 13 7 7 8
Capital accumulation? 20 20 26 13
Wholly employer financed 3 4 4 3
Partly employer financed 7 26 ai 1

‘ Participants are workers covered by a paid time off, insurance,
retirement, or capital accumulation plan. Employees subject to a
minimum service requirement before they are eligible for a benefit 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.

? See appendix A for scope of study and definitions of occupa-
tional groups.

® Includes 0.7 percent of employees in plans that did not offer
family coverage.

* Includes participants in noncontributory basic plans who may
contribute to the cost of supplementat plans in these benefit areas.
‘Supplemental plans are not tabulated in this bulletin.

* The total is less than the sum of the individual items because

many employees participate in both defined benefit and defined con-
tribution plans. Defined contribution plans include money purchase
pension, profit sharing, savings and thrift, stock bonus, and employee
stock ownership plans in which employer contributions must remain
in the participant's account until retirement age, death, disability,
separation from service, age 59 1/2, or hardship.

* Employees participating in two or more plans are counted as
Participants in wholly employer financed plans only if all plans are
noncontributory.

7 Includes plans in which employer contributions may be with-
drawn from participant's account prior to retirement age, death, dis-
ability, separation from service, age 59 1/2, or hardship. Excludes
pure cash profit sharing, stock option, and stock purchase plans.

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



Table 18. Paid annual sick leave:' Average number of days at full pay for full-time participants by accumulation policy
and sickness and accident insurance coordination, medium and large firms, 1985

Profes- Profes-
sional | Techni- sional | Techni-
At par- | _and_| cal and | Produc- ‘All par | 27 | cal and | Produc-
Item ticipants |20minis- | clerical |tion par. Item ticipants |0TMInis-| clerical | tion par-
pants) trative | partici- /ticipants| trative | ‘partici- | ticipants
partici- | pants partici- | pants
pants pants
At 1 year of servic
Cumulative plan .. 96] 11.6} 98] — 7.7|[At 10 years of service:—Continued
With sickness and acci Noncumulative plan | 452} 612] 434] 272
insurance 74} 93| 24] 56 With sickness and accident
Without sickness and insurance .. 27a| 438] 312] 124
accident insurance 112| 127] 108] 100 Without sickness and
Noncumulative plan 203| 289] 161| 139 accident insurance 581| 703) 506] 47.0
With sickness and accident
insurance 126| 204| 12.0|  6.6/At 20 years of servic
Without sickness and Cumulative plan 158| 196| 172] 112
accident insurance 257, 333| 185| 229 With sickness and accident
128} 166) 172| 75
At 5 years of service:
Cumulative plan .. | 122]: 153] 130; 88 accident insurance wij 211] 172] 156
With sickness and accident Noncumulative plan 560| 742| 554| 34.1
insurance 97; 191] 121] 62 With sickness and accident
Without sickness and insurance .. 347] 546] 411) 153
accident insurance 141] 164) 135] 120 Without sickne:
Noncumulative plan 342] 472| 315| 209 accident insurance 71.4] 844] 63.7] 50.1
With sickness an
insurance 199) 328] 207)  9.7/1At26 years of service:
Without sickness and Cumulative plan 159] 196] 172) 118
accident insurance 445| 547/ 378] 360 With sickness and accident
insurance .. 129| 165) 172] 78
At 10 years of service: Without sickness and
Cumulative plan | 148] 185] 160] 104 accident insurance 1a1| 212| 172] 187
With sickness and accident Noncumulative plan 580] 767| 874} 355
insurance w18| 156! 155] 7.2 With sickness and accident
Without sickness and insurance .. se6| s71| 437| 163
accident insurance 170| 200) 164) 143 Without sickness and
accident insurance 734| 969} 653] 61.0

* Paid sick leave plans with a specified number of days available
each year. Per disability plans were excluded from this table because
(1) only one-fifth of the employees with per disability plans were also
Covered under a sickness and accident insurance plan and (2) only an-
nual sick leave plans allow the employee to cary over and accumulate
unused sick leave from one year to the next year. Instead, the number

17

of days of paid leave under a per disability plan is renewed for each ill-
ness or disability after the employee retums to work for a specified pe-
riod. Data on per disability plans are presented in table 17.

NOTE: Computation of average excluded days paid at partial pay and
workers with only partial pay days or zero days of sick leave.



Chapter 7. Other Benefits

In addition to the major benefits discussed in previous
chapters, information was collected on a number of
other benefit plans, such as subsidized meals, nonpro-
duction bonuses, and recreation facilities. The data on
these benefits show the percent of workers eligible for
a specific benefit, but do not indicate the proportion of
employees actually taking advantage of such benefits.
Generally, benefits were provided to all or none of the
workers in an employee group (professional and admin-
istrative, technical and clerical, or production workers)
within an establishment (table 79).

Automobile parking (provided at no cost or below
commercial rates) and full or partial payment of edu-
cational expenses were available to at least three-fourths
of the employees. Travel accident insurance and em-
ployee discounts on purchases of the employer’s goods
or services covered half of the employees of each group.
Among the benefits surveyed, eligibility was lowest for
supplemental. unemployment benefits, subsidized com-
muting to and from work, child care, prepaid legal
services, and company-sponsored reimbursement ac-
counts for payment of items such as medical expenses
not covered by health insurance. Child care (full or
partial defrayment of the cost of nursery, day care cen-
ter, or babysitter for employee’s children) was available
to only 1 percent of the workers.

Incidence of several benefits differed markedly by
employee group, with a larger proportion of profes-
sional-administrative employees usually covered. For

81

example, full or partial payment of relocation expenses
for transferred or newly hired employees was available
to four-fifths of the professional-administrative employ-
ees but to only two-fifths of the technical-clerical em-
ployees and one-fourth of the production employees.
Severance pay was available to three-fifths of the
white-collar employees, almost twice the proportion of
blue-collar employees covered. Travel accident insur-
ance, financial counseling, subsidized commuting, and
company sponsored reimbursement accounts were other
benefits almost twice as prevalent among white-collar
employees as blue-collar employees. Only supplemen-
tal unemployment benefits and prepaid legal services
were substantially more common among blue-collar em-
ployees than white-collar employees.

For two benefits, the data distinguish between full
and partial defrayment of the cost of the benefit to the
employee. Fully paid relocation allowances, more com-
mon among eligible white-collar employees—especially
the professional-administrative occupational group, in-
cluded payments for moving and interim living ex-
penses, and the cost of breaking a lease or selling a
house. Employees with partial reimbursement for edu-
cation expenses outnumbered those with full reimburse-
ment by nearly 5 to 3 for white-collar employees and
2 to I for blue-collar workers. Full educational assis-
tance included total cost for books, tuition, and fees,
but not necessarily for worktime lost due to attending
courses.



the number of active plan participants. Thus, since 41
percent of the pension plan participants were in plans
granting ad hoc increases, it can be assumed that about
two-fifths of the retirees received pension increases.

The same approach was used to estimate the size of
pension increases. For each plan granting an ad hoc in-
crease during the 1980-84 period, the amount of increase
was computed using three retirement periods (5, 10,
and 15 years) and two monthly pension amounts ($250
and $750) in effect on December 31, 1979. These in-
creases were then averaged, using as weights the num-
ber of active workers participating, to provide sur-
veywide estimates for each example. As shown in the
tabulation below, the length of retirement was a signifi-
cant factor in determining the size of pension adjust-
ments, with larger increases paid to persons retired
longest. Also, where maximum increases were speci-
fied, retirees with higher original pensions had lower
percentage increases.

Monthly pension on Years of retirement

December 31, 1979 5 10 IS
$250:
‘Average pension on December 31, 1984...... $286 $306 $322
Percent change, December 31, 1979-84 .. 14 22 29
$750:
Average pension on December 31, 1984 . . $886 $929
‘Average change, December.31, 1979-84. . 10 18 24

The BLS Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W) rose 41 percent
over the 5-year period studied.” For retirees in plans
with ad hoc adjustments, and with monthly pensions
and years of retirement shown above, average adjust-
ments were two-thirds or less of the price rise.

Only about 4 percent of all participants were in plans
that provided for automatic increases in pension bene-
fits to compensate for increases in the cost of living. In
most instances, the cost-of-living-adjustment formulas
provided for benefit adjustments proportional to in-
creases in the BLS Consumer Price Index. Neverthe-
less, ceilings on individual increases limited periodic
adjustments to 3 percent or less for most of the cov-
ered workers. Nearly all of the affected participants
were in plans calling for annual adjustments. Lifetime
ceilings on increases were uncommon.

Vesting (table 63). Even when an employee leaves an
employer without qualifying for either a normal, early,
or disability retirement benefit, a pension may ultimately
be paid. If certain conditions are satisfied at the time of

21 The rate of increase was determined by dividing the annual aver-
age CPI-W for 1984 by the annual average CPI-W for 1979. For a
discussion of postretirement increases, see Donald G. Schmitt,
“Postretirement Increases under Private Pension Plans,” Monthly La-
bor Review, September 1984, pp. 3-8.

separation, workers have a vested right in all or a sig-
nificant portion of their accrued pension benefits and
may begin receiving benefits years later. Although all
pension participants are entitled to vested benefits un-
der ERISA, some variations exist as to when this oc-
curs. Most pension plans require 10 years of service be-
fore benefits are guaranteed. While over two-thirds of
the participants were covered by the 10-year tule re-
gardless of age, one-sixth were 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 a plan’s
normal retirement age, based on the benefit formula in
effect when an employee left the plan. Also, terminated
and vested participants can receive a reduced pension
under a plan’s early retirement provision if the partici-
pant had satisfied the corresponding service require-
ment when leaving the plan. .

For terminated. and vested’ employees who wish to
receive a pension beginning at the early retirement age,
the benefit must be at least the actuarial equivalent of
what would have been received starting at age 65. Al-
though under ERISA the reduction factor used in de-
termining the pension for a terminated employee can
be more severe than for early retirement, the same fac-
tor was used in plans covering 77 percent of the par-
ticipants with early retirement provisions.

Postretirement survivor benefits (table 64). ERISA also
requires the availability of a form of pension in which
at least 50 percent of the retiree’s payments continue
to the spouse after the retiree’s death. When this type
of pension—called a joint-and-survivor annuity—is
paid, the employee will receive a lower benefit during
retirement since payments are likely to be made over a
longer period of time. When the retiree dies, the spouse
will receive part or all of the retiree’s monthly pension
benefits.”

2 The Retirement Equity Act of 1984, among other provisions,
amended ERISA by lowering from 25 to 21 the age after which em-
ployers must enroll workers in defined benefit and defined contribu-
tion plans, and lowering from 22 to 18 the age after which employ-
es must earn vesting credits. In addition, the act requires that the
spouse of a deceased vested employee be entitled to survivor bene-
fits regardless of age at death. For most plans, provisions of the act
were effective for plan years beginning after December 31, 1984.
Since deadlines for compliance were spread throughout 1985, pre-
vious ERISA rules were still in effect at the time some establishments
were visited. (Collectively bargained plans must comply by January
1, 1987)

ERISA requires that the joint-and-survivor coverage be automatic
for married retirees, and that waiver of this option must be requested
in writing. The Retirement Equity Act (see footnote 22) further di-
rects that spouse coverage can be waived only if both husband and
wife sign the written request. For a more complete discussion of sur-
vivor benefits, see Donald Bell and Avy Graham, “Surviving Spouse's
Benefits in Private Pension Plans,” Monthly Labor Review, April 1984,
pp. 23-31.



Table 74, Savings and thrift plans: Percent of full-time participants by provision for employer matching contributions,
medium and large firms, 1985 .

Matching percentage”
Employee earings to be matched! Total ‘Other fixed
25 percent | 50 percent | 75 percent | 100 percent | corcentages | Varies’
100 3 53 6 9 10 19
1 - o - iy) - 1
6 1 1 - 2 - 2
5 1 3 “ 1 “
14 “0 5 1 2 2 4
52 2 27 1 3 7 "1
5 - 3 1 - 1 -
5 - 3 1 “0 - 1
iv) - - - - oO
3 iv) 2 iy) - oO o
Greater than 10 percent 1 - - - 1 - ~
‘Specified dollar amount ... 9 - 8 O oO - oO
Professional and administrative
Total 100 3 45 8 "1 16 16
Up to the first:
oO = iV) - rv) - -
4 iy) 1 - 2 - 1
4 Oo 2 o 1 - 1
7 V) 6 1 3 3 4
84 2 27 1 4 12 9
6 - 3 3 - 1 -
9 - 5 3 (7) - 1
iy) < - - - 9) -
3 0) 1 1 - ) 0)
Greater than 10 percer 1 - - - 1 - -
Specified dollar amount .. 1 - - oO - Oo
Technical and clerical
Total 100 a 56 5 12 8 15
Up to the first:
2 percent 2 - 1 - 1 - -
3 percent 5 0 ) - 3 - 2
4 percent 6 1 3 iy) 1 - oO
5 percent 13 v) 5 1 2 2 3
6 percent 52 2 31 1 4 4 9
7 percent 4 - 2 2 - 1 -
8 percent 4 - 2 1 rv) - iv)
9 percent 1 - - - - 1 -
10 percent .. 3 o 2 oO - oO
Greater thé percer 1 - - - 1 - =
‘Specified dollar amount 10 - 10 iv) “ - “
Total .. 100 5! 59 2 3 6 24
Up to the first:
2 percent 2 - iv) - - 2
3 percent 8 2 3 - 1 - 2
4 percent 4 1 3 - iy] - iv]
5 percent 10 0 5 oO oO 1 5
6 percent ... 48 2 23 1 2 5 14
7 percent 5 - 5 - = QO -
8 percent ... 2 - 1 - iv) = 1
9 percent iv) - =, - oO -
40 percent 3 - 3 oO - - -
Greater than 10 percent 0 - - - ) - -
Specified dollar amount ... 18 - 7 1 - - -
* Employee may contribute a percent of salary up to a specified maxi- 2 Includes percentages which vary by length of service, level of em-
mum (see table 72); ceilings on contributions to be matched by em- ployee contribution, and company profits.
ployers generally are lower. if the maximum varied by participant's * Less than 0.5 percent.
length-of-service, age, or both, the highest possible percentage was
tabulated. NOTE: Because of rounding, sums of individual items may not equal
2 The percentage of matchable employee contributions added by em- _totais. .Dash indicates no employees in this category.

ployers. Some plans specified a maximum annual employer contribution.

78



Table A-1. Estimated number of establishments and workers within scope of survey and number studied, medium and large

firms, United States,’ 1985

Minimum Number of workers in establishments
employment in| Number of
Industry division? establishments | Number 0 Professional
within scope of | CSt@blishments | totaye and | Techical and | production
survey administrative
Within scope of survey

All industries 42,696 29,120,600 | 5,513,278 | 4,904,944 | 10,071,657
Manufacturing 17,700 11,644,567 | 2,721,991 1,654,133 6,943,863
Nonmanufacturing - 24,994 11,476,032 | 2,791,887 | 3,250,811 3,127,794

Mining 250 ‘587 475,911 402,819 84,436 315,776
Construction 250 587 258,545 73,116 57,841 73,628
‘Transportation, communications, electric, gas, and

sanitary services " 100-250 4,395 2,865,526 616,592 661,124 1,098,026
Wholesale trade . 100 5,023 995,683 282,408 249,697 380,524
Retail trade 250 4,151 3,607,601 406,833 575,799 1,085,766
Finance, insurance, and real estat 100 6.861 2,594,474 847,044 | 1,375,902 129,937
Selected services’ .. * 50-100 3,419 878,292 463,075 276,611 44,197

Studied*

All industries 1,825 4,283,802 | 1,189,825 952,924 1,820,688
Manufacturing 625 2,488,897 726,487 988,526 1,944,267
Nonmanufacturing - 700 1,794,905 463,338 563,798 476,421

Mining 250 18 37,310 16,240 9,609 10,780
Construction 250 a 41,752 18,595 11,549 6,434
Transportation, communications, electric, gas, and

sanitary services .. * 100-250 162 881,672 211,535 228,817 339,747

Wholesale trade 100 1 36,633 13,389 11,467 10,461
Retail trade 250 142 365,160 38,218 78,157 95,127
Finance, insurance, and real estate 400 187 346,163 118,540 200,245 5,406
Selected services’ "50-100 73 86,215 46,881 24,254 8,466

* Excludes Alaska and Hawail

® As defined in the 1972 edition of the Standard industrial Classification
Manual, U.S. Office of Management and Budget. Industry data are shown for
informational purposes only and are subject to larger than normal sample er-
ror. See section on reliability of estimates.

2 This figure includes out-of-scope workers. These workersmexecutive
management, part time, temporary, seasonal, and operating personnel in
constant travel status (¢.g., airline pilots}=are excluded from the counts of
employment by occupational group.

“Number of establishments and workers shown within the scope of
the survey are estimates. These estimates differ from those developed in
the 1985 PATC survey, since each is based on the findings of its
respective survey.

® Minimum employment size was 100 for chemical and allied products;
petroleum refining and related industries; machinery, except electrical;
électrical machinery, equipment, and supplies; transportation equipment;
and instruments and related products. Minimum size was 250 in all other

for the 48 States covered by the survey and the Dis-
trict of Columbia. The reference date of the available
UI reports was generally March 1983. The refinement
procedures included an effort to ensure that most sam-
pling frame units corresponded to the definition of an
establishment developed for this survey. (A small num-
ber of sampling frame units were not refined to corre-
spond to the definition of an establishment because of
limited company reporting ability.)

Sample design
The sample for this survey was a subsample of the
1985 PATC sample to reduce the costs and resources

manufacturing industries.

© Minimum employment size was 100 for railroad transportation; local
and suburban transit; deep sea foreign and domestic transportation; air
transportation, communications; electric, gas, and sanitary services; and
pipelines; and 260 for all other transportation industries. U.S. Postal
Service is excluded from the survey.

7 Limited to advertising; credit reporting and collection agencies;
computer and data processing services; research and development
laboratories; commercial testing laboratories; management and public
relations services; engineering and architectural services; noncommercial
research organizations; and accounting, auditing, and bookkeeping
services.

© Minimum employment size was 50 for accounting, auditing, and
bookkeeping services; and 100 in all other selected services.

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.

required for data collection. The sample of 1,509 estab-
lishments? was selected by first stratifying the sampling
frame by broad industry group and establishment size
group based on the total employment in the establish-
ment. The industry groups consisted of the eight major
industry divisions, as defined by the Office of Manage-
ment and Budget, which are covered by the survey and
shown in table A-1.

2-The number of sample units selected in this survey is, at present,
largely determined by resources and operational constraints and may
‘be adjusted up or down in future surveys.

84

j

i
|
|
1
|
|


Section C questions are designed to identify and
describe the benefit provisions of covered expenses in
section B that are subject to deductible, coinsurance,
and/or maximum benefit provisions. This section con-
sists of 15 sets of 7 questions. One set of questions is
completed for each covered expense, or group of
covered expenses, with identical deductible, coin-

1

surance, and maximum benefit provisions. In the first
question of each set, a group of expenses with common
provisions is identified. The remaining 6 questions give
the benefit provisions for the group. Additional sets of
questions are completed until the benefit provisions of
all covered expenses have been described.

=U. 8, GOVERNMENT PRINTING OFFICE : 1996 491-543/54380



Table 55. Defined benefit pension plans: Percent of full-time participants by maximum benefit provisions,’ medium and

large firms, 1985

Type of benefit formula

Maximum benefit provision Total® 'Terminat| Career | Dollar

learnings |earnings| amount

All participants
Total 100 | 100 | 100 | 100
Subject to maximum 40 58 8 26
Limit on years of credited

i 34 8t 8 19
2 1 1 2

1 1 2 1

° - - iy)
2 a 2 2

iv) 2 - -
12 18 2 6
1 2 - 2
10 12 - 3

1 5 0 iv)
5 8 1 a

6 > 1 -
8 10 3 9
Not subject to maximum .. 60 42 92 74

Professional and administrative

100 | 100 | 100 100

Subject to maximum .. av | 61 ae | 29
Limit on years of credited

i 4 55 a | 19
3 1 1 5

1 0 2 iv)
3 3 2 2

1 1 - -
15 | 19 1 6

1 1 - oO

wz] 9] - i)

1 1 - -
7 9 1 5

i) ~ 1 -

Other maximum? to | 10 2/1
Not subject to maximum .. sa | 39 | o2 | 7

Type of benefit formula*
‘el °
Maximum benefit provision Tota |r erminall Career | Dollar
earnings |earnings | amount
Technical and clerical
Total . 100 | 100 | 100 | 100
[Subject to maximum .. 46 56 15 26
Limit on years of creditad
service .. 4 51 14 19
3 2 1 iv)
1 1 4 3
i) - - )
4 4 2 5
1] @ |] - -
15 18 4 6
2 2 - 2
4 16 - 2
1 1 - -
6 7 2 2
0 - - -
Other maximum® 8 8 4 8
INot subject to maximum 54 44 85 74
Production
Total .. 1oo | 100 | 100 | 100
[Subject to maximum 32 58 5 26
Limit on years of cr
service .. 26 47 4 19
1 - 1 1
2 1 iv) 2
2 1 i) 2
i) 0) - -
9 19 1 4
2 2 - 2
8 15 4
i) iv) - iy)
4 8 - 2
6 - 1
8 12 2 9
INot subject to maximum 68 42 95 74

' Excludes supplemental pension plans.

? These maximum provisions are independent of ceilings on pen-
sions payable from defined benefit plans imposed by the Employee Re-
tirement Income Security Act.

* Includes plans with benefit formulas based on a percent of em-
ployee or employer contributions.

* Ifa plan contained more than one benefit formula based on termi-
nal earnings, career earnings, or dollar amounts, each formula contain-
ing a maximum benefit provision was tabulated. Participants were in-
cluded as under formulas without maximum benefit provisions only it
none of the formulas contained a maximum.

© Less than 0.5 percent.

* The benefit yielded under the formula is limited to either a percent
of terminal or career earnings, often coordinated with primary Social Se-
curity payments, or to a flat dollar amount.

NOTE: Sums of individual items may not equal totals because more
than one benefit formula within a plan may have a maximum benefit
provision. Also, some benefit formulas contain a limit on years of cred-
ited service and another maximum provision. Dash indicates no em-
ployees in this category.

61



wd

Table 28. Health insurance: Percent of full-time participants In plans with basic hospital room and board coverage by
type of benefit payments and limits to coverage, medium and large firms, 1985

‘Subject to limit on days of coverage per hospital confinement’

Subject to 4
Type of payment Total other | Uniimite
an | UPS 120) 420 days | 'y ag | 905 days 986 days | mits?
All participants
Total 100 66 9 18 4 31 4 19 15
Daily dollar allowance 5 4 2 iV) (7) 1 io) 1 -
Less than $60 0 t) ® - - - : 0 -
$50-$99 2 2 1 - - iv) - e) -
$100-$149 1 1 1 iv) 0 0 iv) Q -
$150-$199 1 1 i) - - 1 - te :
$200 or more is} iV) a) ©. iv} - - 0 =
Semiprivate rate 96 62 6 17 4 30 4 18 18
Professional and administrative
Total 400 56 6 7 4 26 3 23 a
Daily dollar allowance 3 3 1 0 iv) 2 - is) -
i) .o) 0 - - - - - -
ty) is) 0 - - - - -
1 1 iv) i) - 0) - ~ -
1 1 - - - 1 - © -
i) 0 - io) = - - -
Semiprivate rate 97 53 5 7 3 25 3 23 24
‘Technical and clerical
Total ... 100 60 7 20 6 24 2 20 20
Daily dollar allowance 2 2 1 is) 1) 1 a i) -
0 i) iv) - - - - ~ -
i) is) 0) ~ - = - 0 -
1 1 is) i) - 0) io) ~ -
1 1 - - = - i) -
$200 or more iv) (3) - i) eo - - -
Semiprivate rate .. 98 37 6 20 6 23 2 20 20
Production
Total... 100 74 " 7 4 37 5 16 "1
Daily dollar allowance 8 6 4 1 v) 1 0 2 -
Less than $50 1 i) 6 - - - - i -
$50-$99 . 3 3 2 - - 1 - 1 -
$100-$149 . 2 2 1 iv) 6) i) iv) Q -
$150-$199.. 1 1 ) - - 1 - e -
$200 or more 1 iv) 0, 9) (9) - - 0 =
Semiprivate rate .. 92 68 7 16 4 36 5 14 "1

* In some plans, the limit on days of coverage varied by length of
participation in the plan; in these cases, the participant was assumed to

have been in the pian for 1 years.

2 Includes workers in plans where the basic benefit is limited by'a
maximum dollar amount per confinement or per year, and other plans
where the fimit on the number of days of coverage applies within a

34

specified time period.
5 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals, Dash indicates no employees in this category.



and were allowed to change their investment choices
periodically.

Employees generally had less flexibility when it came
to employer contributions. Only about one-half of the
participants were permitted to choose how the match-
ing contribution was to be invested. Where no choice
was permitted, the plan’ typically specified that the
matching contribution was invested in company stock.

Vesting (table 76). Savings and thrift plans are subject
to ERISA vesting rules in the same manner as pension
plans. However, employers usually design savings and
thrift plans with .more. rapid vesting provisions. One-
fourth of all participants were fully vested immediately,
and most plans provided for full vesting at retirement,
death (for employee’s survivors), or disability regard-
less of age or service. Class year vesting is the. most
common method among savings and thrift plans. In
these plans, contributions for a particular year (class)
become nonforfeitable after a specified period of time-
usually 2 or 3 years. For example, employer contri-
butions made during 1985 would not vest until 1988.
All vesting schedules apply only to the employer’s con-
tribution, because employee contributions are always
100 percent vested.

Withdrawals and loans (table 77). ight-tenths of the
participants in savings and thrift plans were allowed to
withdraw all or a portion of employer contributions
prior to normal payout (retirement, disability, or termi-
nation of employment). One-fifth, however, were only
allowed to withdraw employer contributions for hard-
ship reasons (medical, educational, home improvements,
etc.) Three-fifths of the participants could withdraw
for any reason. Half of the participants who could with-
draw for any reason were subject to a penalty—usually
suspension of employer and employee contributions for
6 or 12 months.

The ability of the participants to withdraw their own
contributions prior to retirement, death, disability, age
59 1/2, or termination of employment depends upon
whether the money was contributed pre-tax or post-tax.
Pre-tax 401(k) contributions are subject to IRS tegula-
tions and can only be withdrawn for hardship. Post-tax
contributions are not subject to IRS hardship rules, and
many plans allow these amounts to be withdrawn for
any reason. However, a penalty in the form of a 6- or

74

12-month suspension from further contributions to the
plan is common.

Loan provisions applied to one-sixth of the partici-
pants, with one-half eligible for loans from their account
for any reason. Customarily, interest rates were set by
aspecified economic indicator (U.S. Treasury bill, prime
rate, etc.) or at the discretion of the plan sponsor.

Distribution (table 78). At retirement, savings and thrift
plans virtually always allowed for payout in the form
of a lump sum, lifetime annuity, or installments over a
specified time period. Many participants were given a
choice from among two or all three of these options.

Employee stock ownership plans (ESOPs)

One-fourth of all employees in medium and large
firms participated in an ESOP.” These plans, funded
entirely by the employer, provide employees with stock
in their company. The employer pays a designated
amount to a fund which is invested primarily in com-
pany stock and makes benefit distributions in either
company stock or cash. The vast majority of par-
ticipants in ESOPs were in payroll-based plans
(PAYSOPs). Companies receive a tax credit of up to
0.5 percent of the plan participants’ payroll, for funds
used to purchase company stock to distribute to the
participants’ accounts. Current law allows for these tax
credits through 1987.

Profit sharing plans

Bighteen percent of all employees had profit sharing
plans in 1985. There are three types of profit sharing
plans—cash plans (covering 1 percent of the workers),
deferred plans (14 percent), and plans that offer a com-
bination of cash and deferred benefits (3 percent). In a
cash plan, benefits are paid directly to the participants
in cash, usually at the end of the year, while a deferred
plan holds money in employee accounts until retirement
or another condition stipulated by the plan (disability,
death, etc.). In a combined plan, the employee usually
has an option to take a portion of the profits in cash
and put the rest into a deferred account. Twenty-two
percent of participants in profit sharing plans could
make voluntary pre-tax 401(k) contributions to the plan.

3This proportion is limited to plans where stock was credited to
employee accounts during 1985.



Table 29. Health insurance: Percent of full-time participants
in plans with basic surgical benefits by maximum allowance
for selected procedures, medium and large firms, 1985

Maximum allowance

All par-

ticipants

Protes-
‘sional
and
adminis-
trative

Techni-
cal and
clerical
partici-
Pants

Produc-
tion par-
ticipants

Total .

Usual, customary, and reasonable
charge ..
With overall
surgical payments
Without overall dollar jimit on
basic surgical payments ..
Plan pays:

80 percent

90 percent

‘95 percent

100 percent?

Maximum scheduled allowance

Most expensive surgical

procedure:
$201-$300 .
$301-$400 ..
$401-$500 ..
$501-$750 ..
$751-$1000
$1001-$1260 ..
$1251-$1500 ..
$1501-$2000 ..
$2001-$2500 ..
$2501-$3000 ..
More than $3000 ..
Not determinable*

Appendectomy:
$100 or less
$101-$150 .
$151-$200 .
$201-$300 ..
$301-$400 ..
$401-$500 ..
$501-$750 ..
More than $750
Not determinable?

Tonsillectomy:
$50 or less
$51-$100
$101-$150 .
$151-$200 ..
$201-$300 ..
‘More than $300
Not determinable®

Hysterectomy:
$200 or less
$201-$300
$301-$40

More than $1250
Not determinable’ ...

20 Vrnsnenaanss

aaanrooa?

aFoand-

Nana aane>

PunsonneeiS>

Faassane

aVenaal

4+aanmanwan

100

Srssoosenns>

plasaana

roses

plaaaenaoe

Saonadaae

aFeoavaa

waaaaanad

* Less than 0.5 percent.

* Includes full service benefits provided by Health Maintenance Organi-

zations.

* Information necessary to classify was not provided,

NOTE: Because of rounding, sums of individual items may not equal to-

tals. Dash indicates no employees in this category.

35



curity taxable wage base—usually the career aver-
age—or a dollar amount equal to a past taxable wage
base).

Sixty-one percent of all participants were in plans
where benefit formulas were “integrated” with Social
Security. Terminal earnings formulas of integrated plans
tended to adopt the offset approach, while career earn-
ings formulas tended to incorporate the excess approach.
Dollar amount formulas were rarely coordinated with
Social Security; blue-collar employees, therefore, were
less likely to have integrated benefits.”

Maximum benefit provisions (table 55). The Employee
Retirement Income Security Act (ERISA) places ceil-
ings on the size of annual pension benefits from defined
benefit plans. This restriction largely affects only highly
compensated employees. Many plans, however, have
provisions that restrict benefit levels for all participants.
For example, one-third of participants were in plans
that limited the number of years of service included in
benefit computation; maximums of 30 or 35 years were
most common. For 8 percent of the participants, annual
pensions (usually including Social Security payments)
could not exceed a specified percent of average annual
career or terminal earnings.

Replacement rates (table 56). A commonly used indi-
cator of pension adequacy is the portion of a retiree’s
final year’s earnings that is “replaced” by the retirement
benefit. To calculate replacement rates under 1985 pen-
sion plans, the maximum private benefit under each sur-
veyed plan, not reduced for early retirement or
joint-and-survivor annuity, was determined under sev-
eral assumed combinations of final annual earnings and
years of service. These benefit levels were then ex-
pressed as percents of earnings in the last year of em-
ployment. The calculations assume employees retired
on January 1, 1985, and final earnings are for 1984."
Table 56 presents average replacement rates result-
ing from defined benefit pension plans alone and in
combination with primary Social Security benefits (that
is, excluding benefits for spouse and other dependents).”
For private pension formulas that are integrated with
Social Security and for computation of Social Security
benefits, the worker is assumed to have retired at age
65 and paid into Social Security for 40 years. (For

'SFor a comprehensive analysis of formulas with Social Security
integration characteristics, see Donald Bell and Diane Hill, “How
Social Security Payments Affect Private Pensions,” Monthly Labor
Review, May 1984, pp. 15-20.

'6Earnings histories, necessary for applying the pension formulas,
were constructed for each final earnings level based on data provided
by the Social Security Administration.

"The Social Security spouse benefit, which is 50 percent of the
primary benefit, is paid in addition to the primary benefit while both
partners are alive (unless the spouse is eligible for a larger primary
benefit).

50

workers who reached age 65 in 1985, however, the So-.

cial Security benefit was the same for workers with
similar final earnings who had 25 years or more under
Social Security.)

Chart 4 displays replacement rates based on 30 years
of service for each of the earnings assumptions. Except
for the lowest earnings assumption ($15,000), the pri-
vate pension plan replaced on average about 27 percent
of the final year’s earnings; the rate for $15,000 was
about 31 percent.

When combined with primary Social Security pay-
ments available at age 65, however, replacement rates
differed substantially as earnings increased—ranging
from nearly three-fourths at the lowest assumed level
to just under one-half at the highest earnings level com-
puted. Except for the two highest assumed levels of fi-
nal earnings ($35,000 and $40,000), the primary Social
Security benefit was larger than the average private
pension.

Although private pension replacement rates for
white-collar employees increased slightly at higher earn-
ings levels, rates for blue-collar workers dropped by
almost a third. Table 49 provides an explanation: Half
of all production workers have dollar amount formulas,
paying workers with the same years of service the same
benefit, regardless of earnings history. The result is a
steady decrease in the replacement rate as final earn-
ings increase. Average replacement rates for earn-
ings-based formulas, on the other hand, increase slightly
with higher final earnings.

While average replacement rates show a consistent
relationship between pensions and service, earnings, and
type of formula, the range of pensions payable is quite
broad. Chart 5 shows that calculated monthly pensions
for employees retiring with 20 or 30 years’ service and
final earnings of $30,000 varied from less than $200 to
$1,000 or higher.”

Normal retirement (table 57). Although full Social Se-
curity benefits are not available before age 65, most
private pension plan participants were not required to
work to that age for full private pensions (normal re-
tirement). Thirty-three percent were covered by plans
that specified age 65 as the earliest age for normal re-
tirement, down from 45 percent in 1980. While employ-
ees in plans specifying age 65 usually did not have to
satisfy a minimum service requirement, plans permit-
ting normal retirement at earlier ages typically had
length-of-service requirements. Ten to fifteen years’
service were required for half of the 38 percent of par-
ticipants who could first retire at ages 60 through 64;
20 or 30 years were typically needed for retirement at
ages 55 through 59 (affecting 6 percent of participants).

'*For a more complete discussion of replacement rates, see Donald
G. Schmitt, “Today's Pension Plans: How Much Do They Pay?”
Monthly Labor Review, December 1985, pp. 19-25.



Table 22. Sickness and accident insurance: Percent of j
full-time participants by tength-of-service requirements for
participation,’ medium and large.firms, 1985

Profes-
‘sional | Techni-
; Alt par-| and | cal and | Produc-
Length-of-service requirement ‘ticipants adminis- | clerical | tion par-
Pants | ‘trative | partici | ticipants
Partici- | pants
. pants
Total .... 100 100 100 100 |
With service requirement 79 67 75 82
24 29 26 22 |
9 4 6 1
26 21 26 26
10 5 5 12
5 5 6 5
4 3 4 5
1 1 2 6
‘Without service requirement 21 33 24 18
Service requirement not
determinable e - 19) i)

* Length of time employees must be on the job before they are cov-
ered by a plan that is at least partially employer financed. There is fre-
quently an administrative time lag between completion of the requirement
and the actual start of participation. If the lag was 1 month or more, it
was included in the service requirement. Minimum age requirements are
rare.

? ‘Less than 0.5 percent.

NOTE: Because 'of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.

Table 23. Long-term disability insurance: Percent of full-time participants by method of determining payment, medium and
large firms, 1985

ici Professional and Technical and clerical i Sci i
All participants administrative participants participants Production participants |
Method With | Without With | Without with | Without With | Without |
maximum | maximum! /maximum| maximum maximum |maximum| maximum|maximum i
Total |coverage|coverage| Total |coverage|coverage| Total |coverage|coverage| Total | coverage |coverage i
provi- | provi- provi- | provi- provi- | provi- provi- | provi i
sions’ | sions sions' | sions sions’ | sions sions' | sions i
All methods 68 32 | 100 69 31 | 100 7 25 | 100 6 39
i
Fixed percent of eaming 4 58 16 at 60 21 80 65 16 59 48 " |
Less than 50 percent 1 1 0 1 1 fo) 1 1 - 1 1 - |
50 percent 22 18 4 20 13 7 20 18 2 26 23 3 i
55 percent 1 1 @ 1 1 (9) 1 1 is) 1 1 1) i
60 percent 38 29 10 47 35 42 44 34 40 24 7 7
65 or 67 ps 10 8 2 1 9 2 12 10 2 7 6 i
70 percent or more. 2 1 1 2 2 1 3 2 1 1 1 @
Percent varies by earnings 10 6 4 1 6 8 13 9 5 7 5 2 i
Percent varies by service 1 1 () 1 (o) a 1 7) 1 1 1 -
Scheduled dotlar amount {
varies by eamings 10 2 8 1 1 () 2 1 1 27 3 24 |
Other? 5 2 3 6 1 5 3/ a 3 5 3 2

* includes dollar maximums in plans that pay a percent of earnings, varying by length of disability.

ceilings on income during disability that limit the amount payable from

the LTD plans plus other income, or a combination of both. NOTE: Because of rounding, sums of individual items may not equal
? Less than 0.5 percent. totals. Dash indicates no employees in this category.
* Includes flat dollar amounts and scheduled percent of earings

23


the gap during the period between retirement and the
start of Social Security payments. Generally, supple-
mental payments end when Social Security payments
begin (either reduced payments at age 62 or full bene-
fits at age 65), and the reduced pension is then payable
for life. (At least half of the retirement pension for most
employees in this study will be Social Security pay-
ments—see section on replacement rates.) Other em-
ployers elect to offer similar incentives outside of for-
mal plan provisions to employees who retire within a
specified time period.”

Disability retirement (table 60). A career-ending dis-
ability may entitle an employee to a pension before the
normal retirement age. If the disability satisfies the plan’s
definition of total disability, pension benefits often be-
gin immediately. When an employer provides other
sources of disability income, such as long-term disabil-
ity insurance, the disability retirement benefit might be
deferred until the other forms of income have ceased.
Eighty-five percent of pension plan participants were
covered by disability retirement provisions in 1985.
Each year since first tabulated in 1980, employees in
plans with immediate disability retirement have out-
numbered those in plans with benefits deferred to nor-
mal or early retirement age. The latter, however, in-
creased by 10 percentage points over the period to 40
percent of the pension participants in 1985.

Seventy-nine percent of the production workers with
disability retirement coverage were in plans with im-
mediate benefits. White-collar workers with disability
benefits in their pension plans were more likely to be
in plans with deferred benefits. Workers with deferred
benefits were usually given long-term disability insur-
ance (LTD) benefits which typically provided 50 or 60
percent of earnings at the time of disability; this was
more than that generally provided by pension plans
with immediate disability retirement.” Furthermore,
most deferred retirement benefits were greater than im-
mediate pensions, primarily because the time during
which LTD benefits were paid was typically added to
an employee’s length of service for computation of pen-
sion benefits. (See Chapter 3 for details of LTD bene-
fit plans.)

Requirements for disability retirement were usually
based on specified years of service such as 10 years or
more. Sixteen percent of the participants, however, had
no age or service requirement for disability retirement,
and 20 percent had to meet the qualifications for the

David H. Gravitz and Frederick W. Rumack, “Opening the Early
Retirement ‘Window,” Personnel, March/April 1983, pp. 53-57.

2 For a more complete discussion of disability retirement, see Donald
Bell and William Wiatrowski, “Disability Benefits for Employees in
Private Pension Plans,” Monthly Labor Review, August 1982, pp.
36-40.

53

LTD plan, which usually had a minimal service
requirement.

Postponed retirement (table 61). Employees who con-
tinue on the job after age 65 rarely receive private pen-
sions before retirement. Moreover, postponed retire-
ment is rarely fully reflected in the size of pension bene-
fits by both crediting the service after age 65 and ad-
justing pensions upward for the shorter retirement pe-
riod. Nevertheless, slightly less than one-half of the par-
ticipants were in plans that made some allowance for
postponed retirement.

Thirty-nine percent of all participants were in plans
with benefit formulas that included credit for service
after age 65; 20 percent were subject to limits on the
number of credited years (frequently, only years up to
age 68 or 70). A number of plans with earnings-based
benefit formulas recognized earnings levels after age
65, even when service was not credited for these years.
Production workers were more likely than white-col-
lar employees to receive full credit for service after age
65. Collectively-bargained multiemployer plans, ac-
counting for 8 percent of blue-collar participants, fre-
quently provide for employer contributions to the pen-
sion fund for covered employees regardless of age.

In contrast to early retirees, who typically receive
reduced pensions over an extended time period, late re-
tirees seldom receive pensions that are increased to
compensate for the shorter time they will draw bene-
fits. Only 8 percent of the participants were in plans
that actuarially adjust the size of pensions or increase
the payment by-a specified percentage for each addi-
tional year of work beyond the normal retirement age.

Postretirement pension increases (table 62). Inflation can
severely erode the purchasing power of a fixed pension
throughout a worker’s retirement years. Forty-three
percent of pension plan participants were in plans which
increased pensions for current retirees at least once dur-
ing the 1980-84 period.. Most of these increases were
discretionary, or ad hoc, rather than automatic adjust-
ments. The amounts of ad hoc increases were not di-
rectly linked to a cost-of-living index. Instead, retirees’
current pensions were usually increased by either a per-
centage varying by the length of retirement, or a dol-
Jar amount per year of service. The latter type of in-
crease more often affected the pensions of production
workers, and frequently resulted from collective bar-
gaining agreement provisions.

Since the survey reports only the number of current
employees covered by pension plans and not the num-
ber of retirees, it cannot specify the proportion of an-
auitants actually receiving postretirement pension in-
creases. A rough measure of the incidence of postretire-
ment increases among pensioners can be derived by as-
suming that the number of retirees is proportionate to



Table 56. Defined benefit pension plans:' Average replacement rates for specified final earnings and years of service,”
medium and large firms, 1985

Years of service

Final annual earnings

10 15 20 25 30 35 40
Private pension only

10.9 16.0 242 26.4 31.4 95.9 39.8

98 144 19.4 23.8 28.3 323 35.7

a5 144 186 23.2 27.6 31.3 94.5

Os 144 186 23.4 27.3 30.9 34.0

96 14.2 18.7 23.1 27.3 20.8 33.7

96 143 18.8 23.2 274 30.8 33.6

Professional and

10.6 155 205 25.4 30.3 34.6 98.3

10.1 148 19.6 24.4 29.0 33.0 96.4

10.3 15.2 20.0 24.8 29.5 33.5 36.7

10.6 15.7 20,7 256 30.3 343 37.4

10.9 162 21.4 26.4 314 35.0 38.1

112 167 24.9 27.0 31.8 35.8 38.8

10.6 156 20.6 25.7 20.5 34.8 38.5

10.2 15.0 19.8 24.7 29.3 33.4 36.7

10.4 15.4 20.4 253 20.9 33.9 372

10.7 15.9 21.0 26.1 30.7 34.6 37.9

11.0 16.4 216 26.8 31.4 35.3 38.5

11.3 168 22.2 27.4 92.4 36.0 99.1

11.2 165 22.0 273 92.5 372 413

94 13.9 18.4 23.0 27.4 313 348

a7 128 17.0 212 25.2 28.8 318

83 12.2 162 20.0 23.8 274 30.0

80 11.9 15.7 19.4 229 26.0 28.6

79 11.6 15.3 18.9 22.3 252 277

Combined private pension and primary* Social Security benefit

526 87.8 628 68.0 814

48.2 62.8 575 622 Tad

423 48.8 51.4 55.9 672

37.6 422 46.7 514 62.0

34.0 38.6 43.1 476 58.1

314 95.8 403 447 55.1

Professional and
administrative

$15,000 52.2 574 62.1 67.0 71.9 76.2 79.9
48.5 53.2 58.0 628 67.4 71.4 4.7

43.0 479 52.7 57.6 623 66.2 69.4

28.6 43.8 48.8 53.7 58.4 623 65.5

35.4 40.7 458 50.8 55.5 59.4 625

927 38.2 43.4 48.6 63.4 87.3 60.3

52.2 87.2 62.2 67.3 724 76.4 80.1

48.5 53.4 58.2 63.1 677 NT 75.4

43.4 48.2 53.1 58.1 627 66.6 69.9

38.7 44.0 49.4 544 58.8 62.7 65.9

35.4 40.9 46.1 512 55.9 59.8 62.9

32.8 98.4 43.7 48.9 53.6 87.5 60.6

See footnotes at end of table.

62



Contents—Continued

Fy
§

Paid time off—Continued
5. Holidays and vacations: Average number of days ..

6. Holidays: Number of days provided each year .....

7, Holidays: Policy on holidays that fall on a regularly scheduled day off.

8. Vacations: Amount provided at selected periods of service .

9. Vacations: Length of service required to take vacation . .

10. Personal leave: Number of days provided per year... .
11. Funeral leave: Number of days available per occurrence .
12. Jury duty leave: Number of days available per occurrence .
13. Military leave: Number of days available per year

Disability benefits

14. Short-term disability coverage: Participation in sickness and accident
insurance plans and paid sick leave plans «0.22.0... 0... cesses cece cence eee eeeneee 14

SSeCwvwewmrarin

=e

Paid sick leave:
15. Type of provision...
16. By provision .......
17. Average number of days at full pay by type of plan.
18. Annual plans: Average number of days at full pay by accumulation policy
and sickness and accident insurance coordination
19, Annual plans by unused sick leave policy and carryover provisions ..

Sickness and accident insurance:
20. Type and duration of payments
21. Percent of earnings formula by maximum weekly benefit
22. Length-of-service requirements for participation.

Long-term disability insurance:
23. Method of determining payment ...
2A. Duration of benefits .............
25. Length-of-service requirements for participation ..

Health and life insurance

Health insurance:
26. Coverage for selected categories of medical care
27. Coverage after retirement by benefit provisions and age of retiree ...
28. Basic hospital room and board coverage by type of benefit payments

and limits to coverage ......... 6. ccc eee e eee e cence eee ene e eens eeneeneees
29. Basic surgical benefits by maximum allowance for selected procedures ....
30. Major medical coverage by amount of deductible and applicable benefit period .
31. Major medical coverage by coinsurance provisions. ....
32. Major medical coverage by maximum benefit provisions
33. Dental benefits by extent of coverage for selected procedures ...
34, Dental benefits by deductible provision ................
35. Dental benefits by yearly maximum amount of insurance .
36. Orthodontic benefits by lifetime maximum amount of coverage .. .
37. Mental health benefits by extent of benefits
38. Vision benefits by extent of benefits ....

39. Coverage for selected special benefits . . 42
40. Selected cost containment features - 42
41. Contributory plans by type and amount of employee contribution . . . . B
42, Length-of-service requirements for participation . . . B
43. Funding medium for selected types of coverage... . . 44



Table 38. Health insurance: Percent of full-time participants
in plans with vision benefits by extent of benefits, medium

Table 39. Health Insurance: Percent of full-time participants
by coverage for selected special benefits, medium and large

and large firms, 1985 firms, 1985
Profes- Profes-
sional | Techni- sional | Techni-
All par- |. and | cal and Produc- ‘All par-|_2nd__| cal and | Produc-
Benefit sana, adminis.) clorical |tion par- Benefit item saeeete |2dmini-) clerical |tion par-
trative | partici | ticipants trative | partic | ticipants
partici- | pants partici- | pants
pants pants
100 | 100 | 100 | 100 Total too | 100 | 100
Eye examinations only . 1s | 2 | 2 | 10 Covered by at least one of the
listed special benefits! a4 | o6 | a6 | 82
Examinations and eyeglasses 5 3 4 6
Second surgical opinio so | se | sz | 46
Examinations, eyeglasses, and Alcoholism treatment es | 68 | 70 | 67
contact lenses 6 | 59 | 86] 72 Drug abuse treatment ei | 61 | 63 | 60
Hearing 7 | 1% | 13) 2
Orthoptics* only 6 8 5 6 Hospice care 23 | 24 | 22 | 22
Physical exeminat 13 | 18 | 17 9
Other combinations . 8 9 | 13 7
Not covered by any of listed special
* Exercises to improve the function of the eye muscles. benefits... “| 1% | 4 | 4 | 8

NOTE: Because of rounding, sums of individual items may not equal to-

' The total is less than the sum of the individual items because many
participants receive more than one benefit.
? Plan provided, as a minimum, coverage for hearing examination ex-

penses.

Table 40. Health insurance: Percent of full-time participants
by coverage with selected cost containment features,

medium and large firms, 1985

Protes-
sional | Techni-
A par-| 2% _| cal and | Produc-
Cost containment feature fieipants |@Minis-| clerical |tion par-
trative | partici- jticipants
partici- | pants
pants
Total .. 400 | 100 | 100 | 100
Covered by at least one of the
listed cost containment features’... 63 65 64 61
Incentive to seek second
surgical opinion 24 28 28 19
Higher coinsurance, or lower or
no deductible for outpatient
surgery «. 25 28 27 22
Reimbursement for treatment at
ambilatory surgical center 39 40 40 38
Higher payment for generic
prescription drugs ... 3 4 3 3
No oF limited reimbursement for
nonemergency weekend
admissions to hospital 8 10 8. 6
‘Separate deductible for hospital
admission 9 10 9 8
Prehospitalization testing .. 46 48 47 44
Not covered by any of the listed
cost containment features | 37 35 36 39

+ The total is less than the sum of the individual items because many
workers participate in plans with more than one feature.

42



i>

Table 34. Health insurance: Percent of full-time participants
in plans with dental benefits by deductible provision,’
medium and large firms, 1985

Table 35. Health insurance: Percent of full-time participants
in plans with dental benefits by yearly maximum amount of
Insurance,’ medium and large firms, 1985

Profes- Profes-
sional | Techni- sional | Techni-
All par. |_ 2nd | ¢al and | Produc- ‘Alt par.|_2nd__| cal and | Produc-
Type of deductible” teipente |23minis-| clerical |tion par- Dollar amount ti pant adminis-| clerical |tion par-
icipants | ‘trative | partici. | ticipants S|trative | partici- | ticipants
partic | pants partic | pants
pants pants
Total ... 100 100 100 100 Total .... 100 100 100 100
‘Subject to basic dental deductible’ ..| 61 64 66 56 Yearly maximum specified* 90 90 ot oO
Less than $500 1 (o) e 1
Yearly deductible only 49 51 st 48 6 4 5 7
5 1 1 1 1 1 ie} @ 1
22 23 21 22 21 20 21 21
2 2 2 2 1 1 o) 2
20 22 23 7 45 45 46 45
2 2 2 1 3 4 3 2
2 2 2 2 6 8 8 5
oO oO iv) v) 1 1 1 0
5 4 5 6
6 6 8 6 $2,001-$2, ra) 0 0 is)
o i) 0 0 Greater than $3, 1 1 1 1
5 5 7 5
1 1 1 1 No yearly maximum .. 10 10 9 9
Both yearly and Wetine 6 7 8 5 * Includes all covered dental procedures except orthodontia. Amount
UCHBIES of maximum specified is for each insured person.
‘Subject to major medical of ‘he Separate yea ed applied to different procedures, the sum
deductible .. 5 6 7 4 2 Less than 0.5 percent. .
No deductible .. 34 | 90 | a7 | 40 NOTE: Because of rounding, sums of individual items may not equal to-
tals.

+ Excludes separate deductibles for orthodontic procedures.

2 Amount of deductible described is for each insured person. In some
plans, the individual and family deductibles are identical.

2 Deductibles may not apply to all covered dental procedures. If sepa-
rate deductibles applied to different procedures, the sum of the deductible
amounts was tabulated.

* Less than 0.6 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.



v1

Table 59. Defined benefit pension plans:' Percent of
full-time participants in plans permitting early retirement by
reduction factor for immediate start of payments, medium
and large firms, 1985

Profes-
sional | Techni-
Reduction for each year prior to All par- | ,,2na., | cal and oe
normal retirement age ticipants | "Tate | part | tones
partic | pants
pants
Total . 100 | 100 | 100 | 100
Uniform percentage® 49) 44 | 50 | 51
Loss than 3.0. 2 4 1 2
: w | wo] 4 9
2 3 2 2
7 7 8 6
3 2 2 5
7 8] 1 5
e) - - @)
4 7 | 4 | 49
2 @) 1 3
iv) ie) 1 is)
1 1) 0 1
iv) ie) 6 ca)
Percentage varies by age 49 | 50 | 49 | 49
Reduction differs for each year
of early retirement" 1) on} om | as
Reduction differs by age
bracket. ss | 39 | se | aa
Percentage varies by service 2 6 1/1 6
Other basis* o) - - O)

‘Excludes supplemental pension plans,

* In specific cases, uniform percentage reductions may approximate ac-
tuarial reductions, such as early retirement at age 55 with a 6 percent a
year reduction between age 55 and the plan’s normal retirement age of
62.

* Less than 0.6 percent.
* Reduction schedule is related to actuarial assumptions of the life
expectancy at age that pension payments begin.

Rate of reduction is held constant within age brackets, but differs
among brackets, sometimes in approximation of an actuarial table, For
example, benefits may be reduced by 6.7 percent for each year between
age 60 and the plan's normal retirement age, and by 3.3 percent for each
year retirement precedes age 60. Also includes some plans which reduce
benefits arithmetically for each year immediately below normal retirement
age and actuarially below a specified age, usually 55.

* Reduced benefit was not derived from normal retirement formula.

NOTE: Because of rounding, sums of individual items may not equal to-
tals, Dash indicates no employees in this category.

65

Table 60. Defined benefit pension plans:' Percent of
full-time participants by provisions for disabi retirement,
medium and large firms, 1985

Profes-
sional | Techni-
All par-|_ 294 | cal and | Produc-
Characteristic ticipants |20TMinis-| clerical | tion par-
pants | ative | partici- |ticipants
pattici- ) pants
pants
Percent of participants in plans
with disability retirement
benefits 35 | 82 at 88

Minimum requirements for
‘disability retirement

Total

100 | 100 100 100

No age or service 16 18 19 13

Age only 9) - 1 0
Service only . 54 45 39 68
‘Age and service 10 7 10 1"
Meets qualification for long-term

disability benefits 20 30 32 10

Benefit provisions

Total ... 100 100 100 100
Immediate disability retirement 60 43 4 79
Unreduced normal formula’ a7 33 32 61
Reduced normal formula® 6 5 3 7
Other than normal formula’ 8 5 6 "
Deferred disability retirement 40 57 59 a
With benefits-based on:
‘Service when disabled . 7. 7 9 6
Service plus credit to early
fetirement date or later .. 32 48 49 15
Service with some credit 1 1 1 ea

Excludes supplemental pension plans.

* Less than 0.5 percent.

* Immediate disability pensions may be supplemented by additional al-
lowances until an employee reaches a specified age or becomes eligible
for Social Seourity.

* The disabled worker's pension is computed under the plan's normal
benefit formula and is paid as if retirement had occurred on the plan’s nor-
mal retirement date, either based on years of service actually completed
or projected to a later date.

* The disabled worker's pension is computed under the plan's normal
benefit formula, based on years of service actually completed, and then
reduced for early receipt.

* The disabled worker's benefit is not computed by the plan's normal
benefit formula. The methods used include flat amount benefits, dollar
amount formulas, percent of unreduced normal benefits less Social Secu-
rity, and percent of earnings formulas both with and without Social Secu-
rity offsets.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.



‘Table 12. Pald jury duty feave: Percent of full-time
employees by number of paid jury duty leave days
available per occurrence, medium and large firms,

1985
Profes-
sional |Techti-l prague.
Number of days Alem admin |eoal |
Ployees | strative |employ-| employ:
lemploy-| ees
ees
Total 100 | 100 | 100 | 100
Provided paid jury duty leave e2| 04] 96 | 89
10 days 2 1 2] 2
20 days 1 2 1 1
22-90 days a| 3] 3] 2
Other 1 1 1 2
No maximum specified’ es | 06 | 89} 82
Number of days not available .. 1 1 1 1
Not provided paid jury duty leave ... si 6/| 4] 1

‘Jury duty leave is provided as needed.

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

totals.

Table 13. Paid military teave: Percent of full-time
employees by number of paid military leave days available
per year, medium and large firms, 1985

Protes-
sional) Techn predic.
Aiem-| 384 [eal and” ion
Number of days ¥,| admin. | clerical .
Ployees | istrative|employ-| es
lemploy-| ees
ees
100 | 100 | 100 | 100
7 | 7} 75) 63
1 1 1 0)
39 | 44 | 42] 36
4 5 5 4
4 4 5 3
1 1 1 1
2 2 2 2
| 2| 19] 16
1 1 1 1
Not provided paid military teave ... so | 23 | 25 | 37

* Less than 0.5 percent.

2 Military leave varies by type of duty or is provided as needed.

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

totals.



Chart 5. Monthly benefits under private defined benefit pension plans: Distribution of participants

assuming earnings of $30,000 in the final year of work,

Percent of
participants

medium and large firms, 1985

50
Hl 20 yeors of service
O 30 years of service
40
30
20
10 +
Less than $200— $400— $600— $800— $1,000 and
$200 $399 $599 $799 $999 greater

Monthly pension benefit

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. Reduction factors that differed for
each year of early retirement, based on the employee’s
life expectancy at that age (actuarial reductions) were
used in plans covering one-eighth of participants with
early retirement opportunities. Other methods of reduc-
tion, however, often approximate an actuarial reduc-
tion. For example, for over a third of the participants,
the reduction factor differed for age brackets of several
years instead of changing each year. Just under one-
half of the participants had uniform reduction factors,
most commonly 6 percent for each year. of early retire-
ment. A few plans applied reduction factors that vary
by length of service.

Two-thirds of all participants were covered by plans

52

permitting early retirement at age 55; generally, 10 to
15 years of service were required. Twelve percent of
all participants could retire earlier than age 55 if serv-
ice requirements were satisfied. Ten percent of the par-
ticipants in plans with early retirement could qualify
when the sum of age plus service reached a specific
amount. Such plans usually included minimum service
requirements ranging from 1 to 25 years; age require-
ments of 50, 55, or 56 were sometimes specified.

The early retirement pension for 14 percent of par-
ticipants was supplemented by additional monthly pay-
ments if employees retired after meeting a specified age
or length-of-service requirement higher than the mini-
mum needed to retire. Plan sponsors include these spe-
cial early retirement benefits either to induce older
workers to retire or as a reward for long service. Sup-
plemental benefits from the private pension help to fill



Table 51. Defined benefit pension plans:' Percent of
full-time participants in plans with terminal earnings formulas
by definition of terminal earnings, medium and large firms,
1985

Profes-
sional | Techni-
‘All par- | 294. | cal and | Produc-
Definition of terminal earings ja; bn. |adminis-| clerical | ti
ipants "trative | partici- | ticipants
ne. | “pants

100 100

WW 10

2 0

3 4

1 i)

1 3

is) i)

7 7

a -

5 5

1 2

85 83

5 3

1 12

6 9

cy -

5 2

is) is)

70 638

53 58

1 4

16 8

7

* Excludes supplemental pension plans.

? Less than 0.5 percent.

2 Formulas based on eamings during period other than 3 or § years’
service, or periods not immediately before retirement (for example, first 5
of last 10 years’ service).

NOTE: Because of rounding, sums of individual items may not equal to-
tals, Dash indicates no employees in this category.

58



day of illness to employees with 1 year of service. The
remainder typically had to wait 1 to 5 workdays, with
the waiting period often decreasing to zero days after
10 years or more of service.

Sickness and accident insurance (tables 14,
20-22)

Half of all employees were protected by sickness and
accident insurance plans against absences from work
due to short-term disabilities. More than four-fifths of
the participants had their benefits fully paid by their
employer. The one-fifth who were required to contrib-
ute toward the cost of coverage most often paid a fixed
amount, usually between $2 and $3 a month. Most of
the others paid a percent of monthly earnings, or had
the cost included in the premium for an insurance
package. .

Benefit payments under sickness and accident insur-
ance plans were either a percent of employee earnings
or a scheduled dollar amount. The percent of earnings
was usually fixed—typically between 50 and 67 per-
cent—although percents varying by service and length
of disability were also observed. Plans paying a percent
of earnings covered 77 percent of the white-collar par-
ticipants, compared with 35 percent of the blue-collar
participants. These earnings-based plans often had a
dollar limit on the amount of the weekly benefit avail-
able; such limits have risen steadily since they were first
recorded in 1981. For example, 33 percent of the par-
ticipants had maximum weekly benefits of $140 or more
in 1981; by 1985, this proportion had increased to 57
percent. Blue-collar workers were the most common
recipients of scheduled dollar benefits, which provided
either a fixed weekly amount (ranging from under $60
to over $220), or varying weekly benefits (usually based
on earnings).

The maximum weeks of coverage for each disability
were fixed for all but 7 percent of participants, for
whom duration of coverage varied by length of serv-
ice. Of those participants with benefits lasting for a fixed
period, most had 26 weeks of coverage. Other common
periods were 13 and 52 weeks.

Four-fifths of the employees with sickness and acci-
dent insurance were required to be on the job for a
specified minimum time period before they were cov-
ered by the plan. Service requirements were usually 1,
2, or 3 months. One percent of the participants were in
plans requiring over 1 year of service before coverage.

Sickness and accident insurance, unlike sick leave,
usually requires a waiting period before benefits begin.
The most common provision requires an employee to
be out of work due to illness or injury some short pe-
tiod, usually 3 to 7 days, before payments begin. Wait-
ing periods may be shortened or eliminated entirely for
employees involved in an accident or hospitalized.

Workers in two States, New Jersey and New York,

12

are covered by mandatory temporary disability insur-
ance plans that are at least partially employer financed.
Both of these State plans pay benefits based on a per-
centage of the worker’s earnings for up to 26 weeks
with a limit on the weekly benefit ($145 in New York
and $158 in New Jersey during the 1985 survey period).’

Long-term disability insurance (tables 23-25)

Long-term disability insurance continues the income
of employees during extended periods of disability. Gen-
erally, LTD begins after sick leave and sickness and
accident insurance are exhausted and continues as long
as the employee remains disabled, or until retirement
age. If disabled after age 60, however, LTD benefits
usually continue for 5 years or to age 70, whichever is
earlier.

Forty-eight percent of the employees covered by the
study had LTD insurance; one-fifth of the participants
were required to contribute toward the cost of the plans.
The amount of LTD insurance usually varied by earn-
ings, as did the cost to the employee. When a flat rate
was charged, employees usually paid under 0.5 percent
of their earnings. In plans charging a monthly amount
per $100-of covered earnings, the rate was always less
than 80 cents.

Service requirements found in LTD plans were usu-
ally more restrictive than for the other insurance bene-
fits. Nearly one-fourth of the participants had service
requirements of from 1 year to 3 years or more. Be-
cause of the long-term nature of this benefit, more em-
ployers restricted eligibility to employees who had dem-
onstrated some attachment to the company.

The degree of participation varied widely among the
employee groups, with white-collar workers twice as
likely to have LTD insurance as blue-collar workers.
However, many employees not covered under LTD
insurance are eligible for an immediate disability pen-
sion through their retirement plan; two-fifths of the em-
ployees (54 percent of the production workers) were
covered by immediate disability retirement provisions.

Long-term disability benefits were usually 50 or 60
percent of monthly pay. Most of the plans that pay a
percent of predisability earnings had maximum payment
limitations—commonly $1,500 to $5,000 a month.

One-fourth of the participants were in plans that pro-
vided a benefit which was not a fixed percent of earn-
ings. These formulas differed sharply by employee
group. Just over one-quarter of the blue-collar partici-
pants were in plans paying a dollar amount that varied
by the level of the worker’s earnings. In contrast, one-

*Both 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 con-
tribution and, thus, are not included in this survey.



Contents

Chapter 1. Introduction

Chapter. 2. Work schedules and paid time off. .
Work schedules .....-++++++
Paid lunch and rest periods
Paid holidays .. .
Paid vacations
Personal leave ..
Funeral leave, jury duty leave, and military leave

“Chapter 3. Disability benefits .
Paid sick leave ......+++-+++
Sickness and accident insurance
Long-term disability insurance ..

Chapter 4, Health and life insurance
Health insurance .
Life insurance ...

Chapter 5. Defined benefit pension plans
Chapter 6. Defined contribution plans .

Salary reduction plans
Savings and thrift plans
Employee stock ownership plans.
Profit sharing plans
Chapter 7. Other benefits .........eeeseeeereeee sere eeretee seers seer sees eee 8i
Charts:
1. Major medical plans: Trends in selected deductible amounts, 1979-85 . 27
2. Health insurance: Selected types of medical care, 1984-85......5-++2+000+ . 28
3. Contributory health insurance: Average monthly employee contributions, 30
4, Private defined benefit pension plans: Average replacement rates based on 30
years of service including and excluding Social Security payments ......5-+0eeeree es 51
5, Private defined benefit pension plans: Distribution of full-time participants
by monthly benefits based on earnings of $30,000 in the final year ofservice .......+- 52
Tables:
Introduction
1. Summary: Participation in employee benefit programs, 1985.. 3
. . !
Work schedules and paid time off
2. Work schedules: Number of hours scheduled per Week oo. cece cece cence renee e nee 6
Paid time off:
3. Lunch time: Minutes per day. 6
6

4, Rest time: Minutes per day ..

iv



Table 26. Health insurance: Percent of full-time participants by coverage for selected categories of medical care, medium

and large firms, 1985—Continued

Care provided
5 Care not
Category of medical care Total al By basic . By major pay pase provided
benefits only’ | medical onl” | jaior medical
Production
Hospital room and board 100 99 20 28 52 4
Hospitalization—miscelian 100 99 20 28 51 1
Outpatient care” 100 99 18 25 56 1
Extended care facility 100 65 28 26 " 35
Home health care* 100 54 2B 19 8 46
Surgical 100 99 33 24 42 1
Physician visits—in hospital .. 100 99 16 46 37 1
Physician visits—office 100 91 7 75 9 8
Diagnostic X-ray and laboratory’ .. 100 99 26 38 34 1
Prescription drugs—nonhospital 100 9B 22 73 3 2
Private-duty nursing 100 90 6 83 1 10
Mental health care 400 99 16 2 56 1
Dental 100 73 mn 3 - 27
Vision 100 37 32 5 0 63
" A provision was classified as a basic benefit when it related to the categories of care.

initial expenses incurred for a specific medical service. Under these pro-
visions, a plan paid covered expenses in one of several ways: (1) In
full with no limitation; (2) in full for a specified period of time, or until a
dollar limit was reached; or (3) a cash schaduled allowance benefit that
provided up to a dollar amount for a service performed by a hospital or
physician. For a specific category of cara, a plan may require the par-
ticipant to pay a specific amount each disability or year (deductible) or a
nominal charge each visit or procedure (copayment) before reimburse-
ment begins or services are rendered.

® Major medical benefits cover many categories of expenses, some
of which are not covered under basic benefits, and others for which ba-
sic coverage limits have been exhausted. These benefits are character-
ized by deductible and coinsurance provisions that are applied across

® Coverage for any of the following services charged by the out-
patient department of the hospital: Treatment for accidental injury or
emergency sickness; surgical procedures; rehabilitative or physical
therapy; and treatment for chronic iliness (radiation therapy, etc.).

* Some plans provide this care only to a patient who was previously
hospitalized and is recovering without need of the extensive care pro-
vided by a general hospital.

® Charges incurred in the outpatient department of a hospital and
outside of the hospital.

® Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.

Table 27. Health insurance: Percent of full-time participants in plans with coverage after retirement by benefit provisions and

age of retiree, medium and large firms, 1985

ici Professional and Technical and clerical ; ;
All participants administrative participants participants Production participants
Benefit provision
Retires under} Retiree 65 | Retiree under] Retiree 65 [Retiree under| Retiree 65 |Retiree under| Retiree 65
65 and over 65 and over 65 and over 65 and over
Total . 100 100 100 100 100 100 100 100
With retiree coverage’ 99 a1 100 95 99 94 400 88
Effect of retirement on
benefit tevel
No change in coverage? .. 81 73 83 7 82 78 79 67
Reduced coverage 15 16 13 15 11 13 18 18
Increased coverage 1 1 (a) 2 1 iv) 1
Not determinable 3 3 3 3 3 2 3 2
Retiree share of cost
Full cost 10 10 9 10 9 10 " 10
Partial cost 31 23 34 35 25 26 2
No cost 55 54 51 55 51 55 59 53
Not determinable 4 4 5 5 5 5 3 3
Without retiree coverage’ 1 9 0 5 1 6 i?) 12
* Includes plans in which insurance was continued for one month or Federal program.

longer after retirement. This table is limited to participants in plans with
group insurance for retirees. It excludes plans which provide only re-
tiree’s share of premium for medical insurance under Medicare (Part B).

? For retirees eligible for Medicare, benefits may be calculated and re-
duced by the extent to which covered expenses are reimbursed by the

33

* ‘Less than 0.5 percent. -
* Retiree coverage was provided to one age group but not the other.

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



Table 67. Retirement and capital accumulation plan
coverage: Percent of full-time employees by participation in
retirement plans and capital accumulation plans, medium
and large firms, 1985

Protes-
sional | Techni-
‘and | cal and | Produc-
dover adminis-| clerical | tion em-

trative | employ- | ployees
employ-| ees
ees

Type of plan

Total 100 | 100 100 100

Covered by retirement or capital
accumulation plan
Retirement’ onl
Capital accumulation? only ..
Retirement and capital
accumulation ..

338
3

20 28 25 13

Not covered by retirement or capital

accumulation ptan 8 6 6 10

* Includes defined benefit pension plans and defined contribution plans
‘such as money purchase pension, profit sharing, savings and thrift, stock
bonus, and employee stock ownership plans in which employer contribu-
tions must remain in the participant's account until retirement age, death,
disability, separation from service, age 59 1/2, or hardship.

* Includes plans in which employer contributions may be withdrawn
from participant's sccount prior to retirement age, death, disability, separa-
tion from service, age 59 1/2, or hardship. Excludes pure cash profit
sharing, stock option, and stock purchase plans.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.

Table 68, Defined contribution and stock plans: Percent of
full-time employees participating by type of plan, medium
and large tirms, 1985

Profes-
sional | Techni-
Alte. |. and | cal and | Produc-
Type of plan ployess {2minis-| clerical |tion em-
22S | ‘trative | employ- | ployees
employ-| ees
ees
Money purchase pension .. 4 5 5 2
‘Savings and thrift 27 39 33 7
Profit sharing! .. 18} 1 | 22 | 16
Immediate cash only 1 2 2 1
Deferred benefits only .. 14 15 7 13
Combination 3 3 5 3
Employee stock ownership 24 29 28 19
Payroll based employee stock
22) 2 | 2 | 18
2 2 3 1
1 1 1 is)
Stock option and stock purchase ..... 3 3 3 2

‘ The total may be less than the sum of the individual items because
some employees participate in more than one type of profit sharing plan.
? ‘Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals,

75

Table 69. Retirement and capital accumulation plans:
Percent of full-time participants by combinations of plans,
medium and large firms, 1985

Protes-
sional | Techni-
‘and | cal and
Type of plan tn Pat | adminis-| clerical
pants |trative | partici
partici. | pants
pants
Total 100 100 100
Defined benefit or money purchase
pension | 88 | 90 | of | 8
With:

No other plan 45 33 35 57
Profit sharing’ 5 6 9 2
Savings and thrift .. 15 22 19 )
Stocl 9 10 ab} 8
Profit sharing’ and

6 1 1 iv]
3 4 4
W 15 12 8

is

Other combinations . (s)

Profit sharing’ 1
With:

9

1

1

0

iv)

‘Savings and thrift 1 2 1 r3)
With:

No other plan 1 2 1 @

Stock? . is) i) i) i]

Stock? plan .... i) 1 1 )
With:

No other plan .... iv) 1 1 fu)

1 Excludes pure cash profit sharing plans.

* Employee Stock Ownership Plans (ESOPs), including Payroll Based
Employes Stock Ownership Plans (PAYSOPs), and stock bonus plans.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual Items may not equal to-
tals. Dash indicates no employees in this category.



Table 20. Sickness and accident insurance: Percent of full-time participants by type and duration of payments,
medium and large firms, 1985—Continued

Maximum weeks of coverage ,
lo
Type of payment Total | Less Greater | Varies | maxi-
than | 13 | 14.25) 26 | 27-51 | 52 { than | by | mum
13 52 | service
Production
All types. 2 13 6 52 2 19 - 7/0
Fixed percent of earnings 33 0) 3 3 24 () 1 - 2 0)
Less than 50 .. ty ~ - - ro) “) - - - -
5 ie iV) 2 2 o - oO - 1) iv)
10 rv) rv) 1 7 - 0 - 1 -
() ~ - - 0) - - - - -
1 ¢ - ) 1 - = - iv) ~
7 0 1 - 6 (0) ” - ~ 0
- oO iv) 1 ~ - - 1] -
1 - ) - Q rv) - - ) -
0 - - - Vv) - - - - -
Percent of earnings varies 2 - - 0’) 1 - - 0’) -
By service . 1 - - - 1 - - - ~ -
By length of disability .. ¢) - - - 1) - - - -
By both service and length of
disability . 1] - - oro - - - (0) -
Fixed weekly dollar benefi 34 1 9 1 7 1 3a - 2 -
Less than $60 6 0 3 () 2 v) - - .
4 ~ 3 “ 1 0) Y ” ) -
2 Y Y - 2 - 1) - - -
5 iv) 1 4 3 - - - - -
3 oO 1 0) 2 Vv) (V) - - -
4 - oO - 3 oO 1 - = -
3 - - - 3 - iV) - oO
4 - 0) iV) 1 (0) 1 - 1
1 - cv) - 1 - ~ - -
2 - - - 1 - 0) - 1 -
Weokly dollar benefit varies 31 Q 1 1 9 () 15 4 0)
By eamings 29 iv) Vv) 1 8 0 15 - 3 iv)
By service or length of
disability ... 2 0 (V) - 0 iv) 10) - 1 -
* Less than 0.5 percent. NOTE: Because of rounding, sums of individual items may not

equal totals. Dash indicates no employees in this category.

21



‘Preface

This bulletin presents results of a 1985 Bureau of La-
bor Statistics survey of the incidence and provisions of
employee benefit plans in medium and large firms. The
survey—the seventh in an annual series—provides rep-
resentative data for 20.5 million full-time employees in
a cross-section of the Nation’s private industries. It was
initially designed to provide the Office of Personnel
Management with information on private sector prac-
tices for use in comparisons with benefits of Federal
workers. The survey’s scope, therefore, is the same as
that of an annual Bureau survey of occupational sala-
ries in the private sector—the National Survey of Pro-
fessional, Administrative, Technical, and Clerical Pay,
which provides comparative data for evaluating Fed-
eral pay rates for white-collar occupations. Appendix
A provides a detailed description of the scope and sta-

tistical procedures used in the benefits survey.

The analysis in this bulletin was prepared in the Of-
fice of Wages and Industrial Relations by the staff of
the Division of Occupational Pay and Employee Bene-
fit Levéls. Computer programming and systems design
were provided by the Division of Directly Collected
Periodic Surveys. The Division of Wage Statistical
Methods was responsible for the sample design, non-
response adjustments, sample error computations, and
other statistical procedures. Fieldwork for the survey
was directed by the Bureau’s Assistant Regional Com-
missioners for Operations.

Pictured on the cover of this bulletin is The Optome-
trist by Norman Rockwell, reprinted with permission
from The Saturday Evening Post (c) 1956 by The Curtis
Publishing Company.



Major medical benefits
Dental benefits

Administrative details
Pre-existing condition
Minimum age of dependent children
Waiting period in case of infant illness
Maximum age of dependent children
Retiree eligibility
Effect of retirement on coverage or contributions
Disabled employees’ benefit coverage
Survivors’ benefit coverage

Section B
~ Hospital and extended care coverage
Hospital room and board coverage
Hospital intensive care
Hospital miscellaneous coverage
Extended care coverage
Extended care in licensed extended care facility
Basis of extended care coverage
Extended care by home health care

Surgical and medical benefits
Surgical care coverage
Surgical schedule
Conversion factor for relative value schedule
Selected surgical procedure maximums
Maximum for multiple procedure
In-hospital medical coverage
Medical office coverage

Maternity care benefit
Who is covered
Obstetrical schedule
Voluntary abortion coverage
Miscarriages or therapeutic abortion coverage
Maximum for male sterilization
Maximum for female sterilization
Separate deductibles

Diagnostic X-ray and laboratory testing (DXL)
benefit
DXL coverage
Limitations on DXL coverage
DXL schedule
Selected DXL procedure maximums

Outpatient care and special accident benefit
Outpatient care coverage
Comparison of inpatient and outpatient coverage
Separate limitations
Outpatient charges covered under major medical
Accidental bodily injury—special benefit

Prescription drug and private duty nursing coverage
Prescription drug
Private duty nursing

Mental health care benefits
Mental health care coverage
Hospital confinements due to mental disorders
Hospital confinements due to mental disorders
covered the same as other illnesses
Selected coverages for mental health care
Coverage in special hospital

Dental care benefits
Dental care coverage
Coverage of employees
Coverage of spouses
Coverage of dependent children
Prophylaxis and routine exams
Fillings
Surgery—dental
Inlays
Crowns
Periodontal care
X-rays
Orthodontia
Incentive schedule
Deductible
Maximum coverage
Copayment

Vision care benefits
Vision care coverage
Eyeglasses
Schedule for eyeglasses
Eye exams
Contact lenses
Orthoptics

Other medical benefits
Second surgical opinion
Alcoholism treatment
Drug abuse treatment
Hearing care
Hospice care
Physical examinations

Cost containment features

Section C

Deductible, coinsurance, and/or maximum benefit
provisions

Covered expenses
Deductible expenses
Coinsurance by the amount of incurred expenses
Coinsurance by the number of days/visits
Maximum dollar per day/visit by number of
days/visits
Maximum number of days/visits for specified ex-
penses
Maximum dollar payable for specified covered ex-

penses



Table 44. Life insurance: Percent of full-time participants
by method of determining amount of basic life insurance
and frequency of related coverages, medium and large

firms, 1985
Profes-
sional | Techni-
Al par-|_29d_ | cal and | Produc
tem ti cipant '3| 80minis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants
Total 100 100 100
Basic life insurance’ 100 100 100 100
Based on earnings 66 84 81 48
Multiple? 53 73 ral 33
Graduated 13 12 10 15
Flat amount .... 31 12 15 50
Flat amount based on service 3 3 3 2
Other’. oO oO iV) oO
With extended coverage during total
and permanent disability “| 96 97 98 94
With accidental death and
dismemberment coverage .. 73 70 65 79
‘With survivor income benefit 13 12 u 14
With dependent coverage ... 21 ral 20 20

* A few participants received only accidental death and dismemberment

insurance.

® Includes plans in which insurance equaled a multiple of earnings, plus

or minus a specific amount.

* Includes participants in plans with insurance based on pension ac-
crued at time of the employee's death,

* Less than 0.5 percent.

* Consists of monthly income, usually a percent of earnings, for the
spouse or dependent children for a specified period after death of em-

Ployee.

tals.

45

NOTE: Because of rounding, sums of individual items may not equal to-



measures, first studied in 1985, encouraged outpatient
surgery as an alternative to inpatient surgery. Cover-
age for treatment at ambulatory surgical centers was
provided to 39 percent of the participants. One-fourth
of the participants received higher reimbursements or
paid lower deductible amounts for certain surgical pro-
cedures performed on an outpatient basis.

Second surgical opinions were paid for under plans
covering half the health insurance participants in 1985,
double the percentage when first analyzed only 3 years
earlier. For 1 in 2 of these cases, incentives were in-
cluded for obtaining an additional surgeon’s opin-
ion-plan payments for many types of surgery were
either lower or not made at all if the second opinion was
not obtained.

Other cost containment provisions, such as offering
higher reimbursement for generic prescription drugs
and discouraging nonemergency weekend hospital ad-
missions, were less common.

Employee contributions (table 41). The percent of em-
ployees whose health insurance premiums are wholly
paid by their employers remained nearly stable in 1985.
Sixty-one percent of workers had employee coverage
wholly financed by their employers in 1985, about the
same as in 1984. Forty-two percent also could receive
fully employer-paid coverage for their dependents, the
first time this proportion has not fallen since first tabu-
lated in 1980.

Exact data on the amount of an employee’s contri-
butions for health benefits sometimes were not avail-
able because payroll deductions applied to an insurance
policy covering both health insurance and one or more
other benefits. However, where the amount was re-
ported, employee premiums for single and family cov-
erage averaged approximately $12 and $38 a month,
respectively—nearly unchanged from 1984 (chart 3).
Employee premiums were somewhat lower for produc-
tion participants than for the other two groups. In some
instances, included in the calculation of average em-
ployee premiums, employees contributed only for a sup-
plemental plan, such as an optional dental plan financed
jointly by employer and employees.

Participation requirements (table 42). Fifty-four percent
of participants were required to complete minimum
length-of-service periods before joining a health plan.
These service requirements usually were periods of 1,
2, or 3 months. The incidence of service requirements
varied markedly among the employee groups. While
nearly three-fifths of professional-administrative em-
ployees could participate immediately, two-thirds of
production workers had some waiting period.

Funding medium (table 43). Employers typically ar-
range for health care coverage through the purchase

of commercial insurance policies or Blue Cross-Blue
Shield plans. These arrangements covered, for exam-
ple, 60 percent of the health insurance participants with
basic hospitalization benefits in 1985, and 53 percent of
those with major medical benefits.

Self-insured health plans, however, have been grow-
ing in importance. In 1985, at least one-fourth of the
workers receiving the benefits shown in table 43 (basic
hospital, basic surgical, basic medical, major medical,
and dental benefits) were under self-insured plans of in-
dividual employers or labor-management groups. This
proportion has doubled since 1980. Such self-insurance
was most prominent as a source of major medical and
dental benefits. Employers commonly contract with
commercial insurers to protect their self-insured plans
against medical claims exceeding a predetermined maxi-
mum dollar amount.

About 7 percent of the health insurance participants
covered by the survey were enrolled in Health Main-
tenance Organizations (HMOs). An HMO is a prepaid
health care plan that delivers comprehensive medical
services to enrolled members for a fixed periodic fee."

Life insurance (tables 44-48)

Nearly all full-time employees within the scope of
the survey participated in life insurance plans in 1985;
almost nine-tenths had the cost of a basic plan paid
wholly by the employer. Life insurance coverage has
kept pace with earnings since 1979, either through an
increase in specified dollar amounts of insurance or
through increased maximums in formulas linked to
earnings.

Basic coverage for two-thirds of all life insurance
participants was based on their earnings, enabling the
level of protection to automatically increase with a rise
in pay. Earnings-based formulas were much more preva-
lent among white-collar workers (82 percent) than
among blue-collar workers (48 percent). The most com-
mon method of tying life insurance protection to earn-
ings was to multiply the employee’s annual earnings by
a factor of 1 or 2 and round the product to the next
$1,000. For example, an employee earning $22,700
would receive $46,000 of coverage under a plan pro-
viding two times earnings ($22,700 times 2 equals
$45,400, which is rounded up to $46,000).

Nearly one-half of all employees in multiple-of-earn-
ings plans had insurance equal to annual earnings. One-
third had coverage equal to twice annual earnings. Pro-
fessional-administrative participants had the highest
coverage, with plans commonly providing multiples of
two or more times their earnings. Multiple-of-earnings
formulas tended to be higher when employee contribu-

"HMO plans and plans provided through the more traditional health
insurers are compared by Allan Blostin and William Marclay in
“HMOs and Other Health Plans: Coverage and Employee Premiums,”
Monthly Labor Review, Sune 1983, pp. 28-33.



Table 32. Health insurance: Percent of full-time participants
In plans with major medical coverage by maximum benefit
provisions, medium and large firms, 1985

Protes-
sional | Techni-
and | cal and | Produc-
Type and dollar amount of | A pat. |adminis-| clerical | tion par-
ip tative | partici- | ticipants
partici- | “pants
pants
Total .. 100 | 100 | 100 | 100
With maximum limits* 82 73 76 88
Lifetime maximum only .. 74 ca 69 7
Less than $26,000 ... © iv] @ v)
$25,000 1 v) i) 1
$25,001-$49,999 .. iv) - - 1
,000 3 1 1 5
$50,001-$99,999 . iv) is) 1) 0.
$100,000 3 2 1 5
$100,001-$249,999 5 3 3 7
$250,000 .. 19 18 16 20
$250,001-$499, 4 4 3 4
$500,000 .. 15 15 15 15
$500,001-$999,999 .. 1 1 1 1
$1,000,000 22 26 27 7
More than $1,000,000 is) 1 1 0
Annual or disability maximum
only 5 5 5 5
Both lifetime and annual or
disability maximums 4 3 2 5
Without maximum limits .. 18 2 24 2

* Maximum described is for each insured person,

? Most plans with a lifetime maximum have a reinstatement clause. By
furnishing satisfactory medical evidence of insurability, an employee can
apply for restoration of the full lifetime maximum. Regardles:
ber’s physical condition, however, a typical plan automatically restores up

to $1,000 of the major medical maximum each year.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-

tals. Dash indicates no employees in this category.

38

ss of a mem-



where

S = standard error
P = percentage estimate from the bulletin, and e and In are
notations for the. exponential and natural logarithm function.

For the 1982 Employee Benefits Survey, a = -0.64683,
b = -0.02603, c = -0.017458 and d =0.123726.

These are regression coefficients. The curve fits the data with
R2 = 0.85 and no pattern in the residuals. Moreover, dif-

88

ferences between curves using 1982 and 1983 data are negligible.

The equation of the curve was obtained empirically, by
using regression methods, and starting with the equation:

s = a P> (100 - P)*

More information describing survey response and
reliability may be obtained from the Office of Wages
and Industrial. Relations, Bureau of Labor Statistics,
U.S. Department of Labor, Washington, DC 20212.



Table 24. Long-term disability insurance: Percent of
full-time participants by duration of benefits, medium and
large firms, 1985

Profes-
sional | Techni-
Allpar-|_ 89d _| cal and | Produc-
Duration of benefits fieipeate [2dminis- | clorical |tion par-
ipan' ticipants
Total . 400 100
Until a specified age! 2 24 22 20
Under age 65 } 0} ro) -
18 18 19 18
3 3 3 3
Duration of benefit varies 73 72 73 74
By length of service 1 1 1 1
By age at time of disabil 72 n 72 73
‘Single reduction 34 31 31 4
Gradual reduction 38 40 40 33
Other... 6 6 5 5

* The age may be directly specified or the designated retirement age.

? Less than 0.5 percent.

* Under the Age Discrimination in Employment Act, age-based reduc-
tions in employee benefit plans are permissible when justified by signifi-
cant cost considerations. The duration of benefits may be reduced gradu-
ally acoording to an age schedule or reduced once at a specified age.

* Includes benefits lasting for life, for a specified number of months, or
until some unspecified retirement age.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicatas no employees in this category.

Table 25. Long-term disability insurance: Percent of
full-time participants by length-of-service requirements for
participation,’ medium and large firms, 1985

Profes-
sional | Techni-
and _| cal and | Produc-
adminis-| clerical |tion par-
trative | partici | ticipants

All par-

Length-of-service requirement | sipants

partic | pants
Pants:
Total 100 | 100 | 100 | 100
With service requirement 69 68 2 66
1 month .. 1 12 9 10
2 months 4 3 2 7
3 months 16 13 16 18
4.5 months 2 1 1 4
6 months 12 "1 12 18
15 8 19 8
1 2 2 is)
2 1 3 1
6 7 7 4
Without service requirement ..

a1 32 28 34

‘ Length of time employees must be on the job before they are cov-
ered by a plan that is at least partially employer financed. There is fre-
quently an administrative time lag between completion of the requirement
and the actual start of participation. If the lag was 1 month or more, it
was included in the service requirement.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.



Appendix B: Availability of
the Survey’s Data Base

The tables published in this bulletin present the major
findings of the Employee Benefits Survey; results of ad-
ditional research appear in the Monthly Labor Review.
However, these cover only a portion of the employee
benefits information collected. Persons interested in all
provisions of a particular benefit studied during the an-
nual survey can purchase a set of magnetic tapes con-
taining the survey’s data base through the Office of
Wages and Industrial Relations, Bureau of Labor
Statistics, Washington, D, C. 20212. The charge for fur-
nishing the data is limited to the cost of producing the
tapes and preparing supporting documentation.

For major benefit items, the BLS survey obtained
plan provisions and employee participation data for
each of three employee groups (professional-
administrative, technical-clerical, and production
workers). Information on employer costs was not col-
lected. The magnetic tapes, which consist of a control
file and plan data files for each benefit area, may be used
to derive national estimates, similar to those published
in this bulletin, for other items on the data base. For
some data items not presented in this bulletin, however,
the datafile is insufficient to produce reliable national
estimates, because either information on the provisions
frequently was not available or the number of
employees with the provision was very small. Moreover,
the tapes cannot yield reliable estimates for individual
industries, geographic regions, or establishment size
classes. Full documentation accompanies the tapes, in-
chiding examples of estimating formulas. Although
Bureau staff will respond to any questions concerning
the content of the tapes, technical assistance in develop-
ing estimates cannot be provided to purchasers due to
the heavy workload associated with the survey program.

Data users can purchase tapes with details of plans
for one benefit area or all, j.e., health, life, sickness and
accident, and long-term disability insurance; private
retirement and capital accumulation plans; and paid
time-off provisions—lunch time, rest periods,
holidays, personal leave, vacations, funeral leave, jury
duty leave, military leave, and sick leave. (Table 79
presents all of the information that was collected on the
other benefits surveyed.) The plan data file contains
provisions for each plan which was reported and for
which usable information was available. However, plan
identification numbers on the tape are scrambled (and
other identifying information is removed) to protect the
confidentiality of responding establishments.

89

Purchasers also receive the control file, which con-
tains establishment information required to produce
estimates from the plan data. Control file records in-
clude establishment sample weights and size codes;
geographic, industrial, and employee group classifica-
tion codes; and the number of workers in the employee
group. The control file also lists all benefit plans offered
in each establishment, with the number of plan par-
ticipants in each employee group. A plan is listed on
more than one control file record if it covers employees
in more than one establishment. Although plan iden-
tification numbers on the control file are scrambled, the
same scrambled numbers appear on the data file so they
can be matched to make estimates. Because establish-
ment schedule numbers on the control file are scrambled
differently for each employee group, it will not be possi-
ble to link together plans offered to different employee
groups within an establishment.

Benefit provisions obtained from plan documents are
recorded in coding manuals for insurance, retirement,
and capital accumulation plans, and are then entered on
the plan data file. A set of coding manuals and instruc-
tions for completing them are supplied to tape pur-
chasers for interpretation of data on the file. Paid time-
off provisions are reported on collection forms which
are also provided to tape purchasers.

The analysis of insurance, retirement, and capital ac-
cumulation plans is extremely detailed. The following
list of health insurance plan provisions included in the
data base gives an indication of the breadth and depth
of the information available on the magnetic tapes.
Other insurance and pension analysis is similarly
detailed.

Health insurance data base
Plan participation requirements
When plan participation begins
Waiting period by type of benefit
Maximum age for participation

Employee contribution for employee and family
benefits-percent paid or monthly contribution

Section A
Funding media for major categories of health care
Hospital benefits
Surgical benefits
Medical benefits



Table 8. Pald vacations: Percent of full-time employees by amount of paid vacation provided at selected periods of
service, medium and large firms, 1985

Profes- Profes-
sional | Techni- sional | Techni-
‘Alem: |_ 294. | cal and | Produc- ‘Alem. |_ 274. | cal and | Produc-
Vacation policy ployees |@aminis-) clerical jtion em Vacation policy b adminis-| clerical |tion em-
trative | employ: | ployees Ployees | "trative | employ- | ployees
employ-| ees employ-| ees i
ees ees
Total 100 | 100 | 100
JAt 15 years of service: |
In plans providing paid vacations’ .. 99 99 | 100 99 5 days a ie) ro) i) i
10 days 3 1 1 4 i
At 6 months of servict Over 10 and under 15 days .. ro) i) a i)
Under 5 days 5 3 4 7 15 days 25 19 20 31
5 days 37 45 47 28 Over 15 and under 20 days .. 4 5 5 3
Over 5 and under 1 9 15 13 5 day 62 68 70 56 {
10 days 4 5 6 1 2 2 2 2 |
‘Over 10 and under 15 days .. io) io) ia) 0 2 2 1 1
15 days ... 1 2 Q is) 1 1 1 2
Over 15 days 1 1 i) 1
At 1 year of service: e a) G) i)
Under 5 days 19) 0. 0 = 3 1 1 4
5 days 30 8 13 50 6 i) i) 0)
Over 5 and under 10 days 1 1 1 1 10 5 6 13 }
10 days .. 6 79 8i 4 a) a | 0 1 |
Over 10 and under 2 2 2 1 87 62 68 49 |
15 days .. 3 7 3 1 3 4 3 3 |
Over 15 days 1 2 e 1 lays .. 24 24 19 25 |
‘Over 25 and under 30 days .. 1 2 2 1 |
‘At 3 years of service: : 30 days . io} ro) i) |
5 days 4 1 1 7 Over 30 days to) (6) 2
Over 5 and under 10 days 2 9) © 3
10 days .. 7 76 85 74 |IAt 25 years of service:
Over 10 and under 15 days .. 8 7 6 10 () i) oy 6
15 days .. 6 2 7 3 3 1 4 4 i
Over 15 and under 20 days .. 0 ra) fe) a Over 10 and under 16 days . e® 6 fe) ©
. 1 2 1 re) 15 days .. 8 5 6 1
1 1 e 1 Over 15 an eo 0 0 a
20 days 33 36 36 30
At 5 years of servi Over 20 and under 25 days 2 4 3 1 i
5 days @ ia) 0 1 25 days 46 47 48 45
Over 5 io) - - (9) ‘Over 25 and under 30 days 2 1 1 2
10 days .. 45 31 38 55 . 4 4 3 4 H
Over 10 and under 15 days. 6 7 6 6 1 1 1 2
15 days 44 53 52 a4
1 2 1 1
2 5 3 1 (0) iy) is) is)
1 1 ® 1 3 1 1 4
is) is) iv) e
VS 8 5 6 11
re) ro) rs) ie) ver 15 and under 20 days 9) 19) 1] 1) i
6 3 3 9 20 days .. 92 35 35 28 |
1 1 e 1 Over 20 and under 25 days 1 2 1 1 t
15 days . 66 et 72 68 25 days .. 40 40 44 38
‘Over 15 and under 20 days 7 6 4 10 Over 25 and ul 2 1 2 2
7 27 19 10 30 days .. or) 13 9 11
2 2 1 2 Over 80 days 2 2 2 3
* Employees receiving no paid vacations in their early years of service ® Provisions were virtually the same after longer years of service.
are included in the overall percentage of workers provided paid vaca-
tions; however, they are disregarded in computing the distributions by NOTE: Data include anniversary year bonus days and exclude ex-
length of service. tended vacations. Dash indicates no employees in this category.

® Less than 0.6 percent.



Table 54. Detined benefit pension plans:' Percent of full-time participants by provision for integration of pension with

Social Security benefit, medium and large firms, 1985

‘Type of benefit formula®

, e
Provision Total Terminal Career | Dollar

earnings | earings | amount

Type of benefit formula”

Provision Total® lrerminal] Career | Dollar
earnings earnings | amount

All participants
Total 100 | 100 | 100
With integrated formula 61 89 75 1
Offset by Social Security
payment* 40 69 14 1
Based on 32 56 9 1
Not based on service’ 8 13 5 -
Dollar amount ... 0) 0) - -
Percent of payment 8 13 5 -
Pure excess® 2 4 2 -
Step-rate excess” 25 28 63 -
Integrated with a Social
Security breakpoint 10 W 24 -
Integrated with a specific
dollar breakpoint 15 16 39 -
Without integrated formuta 39 "1 25 99

Professional and administrative

Total 100 | 100 | 100
With integrated formula 82 92 65 2
Offset by Social Security

Payment! .. 55 70 12 2
Based on service 44 87 7 2

Not based on service’ W 14 5 -

Dollar amount .. 0) 0) - -

Percent of payment 1 13 5 -

Pure excess” 3 5 1 -
Step-rate exces: 33 28 54 -

Integrated with
‘Security breakpoint 15 13 24 -
Integrated with a specific
dollar breakpoint 19 18 3t -
Without integrated formula... 18 8 35 98

Technical and clerical

Total 100 | 100 j 100
\With integrated formula 79 1 74 2
Offset by Social Security

payment’... 56 72 24 2
Based on service® 47 61 13 2
Not based on service’ . 10 4 or -
Dollar amount .. 0) 0) = -

10 1 "1 -

3 4 1 -

ar 26 52 -

Security breakpoint 14 12 ar -

Integrated with a specific

dollar breakpoint

Without integrated formul at 9 26 98

Production
Total .. 100 | 100 }| 100 | 100
ith integrated formula ... 39 84 88 -
Offset by Social Security
23 | 63 9 -
18 49 8 -
5 15 1 -
0”) QO - -
5 15 1 -
2 4 2 -
19 28 80 -
Integrated with a Social

‘Security breakpoint 6 8 ral -

Integrated with a specific
dollar breakpoint

\Without integrated formula .. 61 16 12 | 100

* Excludes supplemental pension plans.

? Includes plans with benefit formulas based on a percent of em-
ployee or employer contributions.

* If a plan contained more than one benefit formula based on termi-
nal earnings, career earnings, or dollar amounts, each integrated for-
mula was tabulated. Participants were included as under nonintegrated
formulas only if none of the formulas was integrated.

“ Benefit as calculated by formula is reduced by portion of primary
Social Security payment.

* Offset is equal to the product of a percent of primary Social Seou-
rity payments and the participant's years of service with the employer. A
maximum offsat is frequently applied, for example, 50 percent.

® Benefit formula includes a reduction by a specified percent of pri-

‘mary Social Security payments or a specific dollar amount. Although
generally offsets of up to 83.33 percent are permitted by the Internal
Revenue Service for plan qualification, offsets in excess of 50 percent
‘are uncommon.
7 Less than 0.5 percent.
* Formula does not apply to earings subject to FICA (Social Secu-
fity) taxes or below a specific dollar breakpoint.
* Formula applies lower benefit rate to earnings subject to FICA (So-
_ cial Security) taxes or below a specific dollar breakpoint.

NOTE: Sums of individual items may not equal totals either because
of rounding or because more than one benefit formula within a plan was
integrated. Dash indicates no employees in this category.



Table 70. Salary reduction plans: Percent of full-time
employees participating in plans permitting employee
contributions with pre-tax dollars -- section 401(k) plans,
medium and large firms, 1985

Profes-
sional | Techni-
and cal and | Produc-
Item poyens adminis-} clerical |tion em-
trative | employ- | ployees
cemploy-| ees
ees
Percent of all employees in plans
with 401(k) features .. 26 40 34 14,
‘Type of 401(k) Plan
Total 100 100 100 100
Free standing plan’ 5 13 12 12 15
401 (K) contributions are made to an
existing:®
‘Savings and thrift plan es | 72 | 63 | 66
Profit sharing plan 16 12 20 7
Money purchase plan 4 4 4 2

+ Employer contributions are not made to the plan.

2 Tabulations show percent of employees participating in plans to which
they may make contributions with pre-tax dollars. Not all participants may
elect to make such contributions.

NOTE: Because of rounding, sums of individual items may not equal to-
tals.

16

Table 71. Savings and thrift plans: Percent of full-time
participants by age and length-of-service requirements for
participation, medium and large firms, 1985

Profes-
sional | Techni-
and | cal and | Produc-
Age and soso Apa adminis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants:
Total 100 100 100
With minimum age and/or service
requirement .. 86 84 87 88
Service requirement only 70 eo | 70 73
$3 months or less. 8 9 8 7
6 months 6 8 6 5
1 year .. 48 46 46 54
2 years 4 3 6 5
25-35 months i) io) 0 -
3 years 2 2 4 2
‘Age 20 or less 4 4 4 5
No service requirement e iv) ie) -
1-11 months of service 2 2 2 2
1 year 2 2 3 2
Age 21° W W 13 10
No service requirement i) is) 19)
1-6 months of service .. 4 4 4 3
1 year 6 6 7 5
Over 1 yee 4 1 2 1
Without minimum age and/or
service requirement .. 14 16 13 12

* if a plan had alternate participation requirements, one of which was
service only, the service only requirement was tabulated.

2 Less than 0.5 percent.

2 The Retirement Equity Act of 1984 requires that, for plan years begin-
ning on or after January 1, 1985, nearly all plans must allow participation
to full-time employees who have reached age 21 and who have completed
cone year of service. Plans may impose a service requirement of up to
three years if the employee is vested immediately upon participation. Also,
collectively bargained plans need not comply until the earlier of: 1) The ox-
piration date of the collective bargaining agreement, or 2) January 1, 1987.

NOTE: Because of rounding, sums of individual items may not equal to-
tals. Dash indicates no employees in this category.



Table 45, Life insurance:
basic insurance and mi

Percent of full-time participants in plans with multiple-of-earnings formulas’ by amount of
um coverage provisions; medium and large firms, 1985, oi

In plans with maximum coverage

In plans
without a
Formula Total | maximum at Less than | $50,000- |" $100,000- | $250,000- } $500,000 or
coverage $50,000. | $99,999 | $249,999 | $499,099 more
Ail participants
Total 100 48 82 4 6 18 6
Life insurance is equal to annual
earings times:?
Less than 1.0 .. 2 2 iy) iv) i) - - i)
45 24 20 3 3 9 a 1
1 iv) 1 - - i) - Q
8 2 6 - 1 1 4 to]
1 - 1 i) - 1 - -
33 16 7 @) 2 5 7 3
2 1 1 - - - 1 e)
e 2 1 ot - Q iv) Vv) i)
) - : : . -
2 1 - - 1 is] i]
1 ie) iy) - - iV) ty) is)
Multiple varying with earnings .. 3 1 2 e - ia) -
Professional and administrative
Total .. 100 49 51 3 6 19 7
Life insurance is equal to annual
earnings times:?
2 1 ie) iv) 0) - iy)
40 24 18 2 3 8 2
1 0 1 - - 1 9]
7 3 4 - 1 2 )
1 - 1 - 1 - .
38 19 20 @ 2 6 8 4
2 1 1 - - - 1 i)
e 1 eo - 8 iv) is) 1
3.0 3 1 2 - - 1 @ i)
More than 3.0 1 is) iv) = - ® iy) iv)
‘Multiple varying with earnings 4 1 2 rv) - iv) -
Technical and clerical
Total 100 48 82 4 7 19 7
Life insurance is equal to annual
earnings times: :
Less than 1.0 3 2 1 i) 1 - -
47 22 2 10 3 ee
1 e 1 - 1 -
5 3 - 1 1 1)
1 - 1 - 1 - -
33 15 18 oy 6 7 3
1 1 e) - - 9) iv]
3 1 eo - ie) @) i)
a - 2 : = .
2 1 2 - - 1 @ 1
1 1 ro) - - 10) iv) a
Multiple varying with earnings 4 1 3 1 - i) -

‘See footnotes at end of table.



Table 47. Life insurance: Percent of full-time participants
by length-of-service requirements for participation,’
medium and large firms, 1985

Profes-
sional | Techni-
oo At par-|__2%4_ | cal and | Produc-
Length-of-service requirement | j, tion par-
pants ticipants
Total .. 100 100
With service requirement 53 42 49 62
1 month 17 16 13 20
2 months .. 7 3 4 10
3 months .. 18 14 at 19
4-5 months 1 1 o) 2
6 months .. 8 6 8 10
7-41 months ) - - is)
1 year 1 2 2 1
‘Over 1 year ie) 1 ro) ie)
Without service requirement 46 58 51 38
Service requirement not
determinable .. a ea 0) ®

* Length of time employees must be on the job before they are cov-
ered by a plan that is at least partially employer financed. There is tre-
quently an administrative time tag between completion of the require-
ment and the actual start of participation. If the lag was 1 month or
more, it was inckided in the service requirement. Minimum age require-
ments are rare.

? Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.

Table 48. Life insurance: Percent of full-time participants in
basic life insurance plans by effect of retirement on
coverage, medium and large firms, 1985

Profes-
sional
‘All pare |_and Produc-
Effect of retirement Par | adminis tion par-
ticipants | “trative ticipants
partici
Pants
Total 100 | 100 | 100 | 100
Insurance continues’ 62 64 66 59
eo | 62 | 65 | 57
4 4 4 3
30} 2 | 8t 30

Reduced more than once

| 26 29 29 23

4 0 1 1 iv)
2 2 1 2

during retirement ...
Continues in form of paid-up
ingurance®
Ceases during retirement .

Insurance discontinued immediately .| 38 36 34 a

* Includes plans in which coverage is fully retiree paid.

® Plan accumulates permanent amounts of insurance through the con-
tributions of active employees.

* Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may not equal to-

48



Chapter 3. Disability Benefits

Through paid sick leave or sickness and accident in-
surance, workers may be protected against loss of in-
come during temporary absences from work due to ill-
ness or accident. During extended periods of disability,
workers’ income may be continued through long-term
disability insurance or disability pensions. In 1985,
short-term disability protection was available to 93 per-
cent of all employees in the survey through sick leave,
sickness and accident insurance, or both. Sick leave
usually provides 100 percent of the worker’s normial
earnings; sickness and accident insurance usually re-
places 50 to 67 percent of pay. Long-term disability in-
surance (LTD), which typically pays 50 or 60 percent
of earnings, was available to 48 percent of the employ-
ees; 41 percent (some with LTD insurance) were eligi-
ble for immediate disability benefits under their pension
plans, with payments usually determined by credited
service without regard to age.

For 25 percent of the workers, employers provided
short-term disability coverage by coordinating sick
leave benefits with sickness and accident insurance. This
is done by either starting insurance benefits after sick
leave pay has ended, or paying both benefits concur-
rently. When payments are made from both sources,
sick leave pay is reduced by the amount of the insur-
ance 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. At 5 years of service, for example, annual
sick leave plans coordinated with insurance made avail-
able an average of 15.6 days at full pay—only half of
the days provided by plans without insurance. This gap
widened as years of service increased.’

Long-term disability insurance payments usually be-
gin after sick leave and sickness and accident insurance
are exhausted and continue as long.as the person is dis-
abled or until retirement age. Career-ending disabilities
may entitle an employee to an immediate pension, or
the pension may be deferred until other forms of in-
come, such as LTD insurance, have ceased.

Paid sick leave and LTD insurance were most often
provided to white-collar workers, while sickness and
accident insurance and immediate disability pension

*For further analysis of short-term disability protection, see William
J. Wiatrowski, “Employee Income Protection Against Short-term
Disabilities,” Monthly Labor Review, February 1985, pp. 32-38.

benefits were more prevalent among blue-collar
workers,

Paid sick leave (tables 14-19)

Seventy-two percent of the employees covered by
paid sick leave plans were allowed a specified number
of days per year (annual sick leave plans). Another 21
percent of the participants were provided sick leave
benefits for each illness (per-disability plans), while most
of the remainder were covered by both annual and per-
disability benefits. The number of days of sick leave
granted varied widely by the type of sick leave plan as
well as by specific provisions of each plan. Within in-
dividual plans, the maximum number of days granted
is either uniform for all covered employees or increases
with seniority.

Because annual sick leave plans do not renew bene-
fits after each illness, two-fifths of the employees cov-
ered were allowed. to carry over and accumulate un-
used sick leave from year to year (cumulative plans).
Such plans typically granted fewer days per year than
plans in which unused days were not accumulated. For
example, at 20 years’ service, cumulative annual plans
averaged 15.8 days at full pay, while noncumulative
plans averaged 56.0 days. Three-tenths of the workers
with carryover provisions were allowed to accumulate
an unlimited amount of sick leave; two-thirds had limits
on the amount of sick leave that could be accumulated,
tanging from under 10 days to over 130 days; and the
remainder had carryover provisions that varied by
length of service.

Per-disability sick leave plans generally provided
more days of paid leave for an illness than annual plans.
The average number of days at full pay was 59.9 at 1
year of service, 78.9 at 5 years of service, 105.3 at 15
years of service, and 129.6 at 25 years of service. Un-
der annual plans, the average number of days available
was 15.9 days at 1 year, 25.1 days at 5 years, 37.0 days
at 15 years, and 40.6 days at 25 years.

Slightly over one-fifth of sick leave participants, usu-
ally under per-disability plans, had partial pay benefits
available after full-pay benefits ended. Another 2 per-
cent of the participants had only partial-pay benefits
available.

Sick leave plans commonly had a short service re-
quirement, generally 3 months, before new employees
became eligible for benefits. Seven-eighths of the par-
ticipants were in plans providing benefits on the first