ment age. If the disability satisfies the plan’s definition of
total disability, pension benefits often begin immediately.
When an employer provides other sources of disability in-
come, such as long-term disability insurance, the disability
retirement benefit might be deferred until the other forms
of income have ceased. Eighty-nine percent of pension plan
participants were covered by disability retirement provisions
in 1986.

Each year since this retirement provision was first tabu-
Jated in 1980, employees in plans with immediate disability
retirement have outnumbered those in plans with benefits
deferred until normal or early retirement age, although this
gap has been narrowing. There has been a 15-percentage-
point drop in immediate disability benefits over the 7-year
period, with a comparable rise in deferred benefits.

Seventy-five percent of the production workers with disa-
bility retirement coverage were in plans with immediate
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 insurance (LTD) benefits that typically
provided 50 or 60 percent of earnings at the time of disabili-
ty; this was more than that generally provided by pension
plans with immediate disability retirement.?* Furthermore,
most deferred retirement benefits were greater than immedi-
ate pensions, primarily because the time during which LTD
benefits were paid was typically added to an employee’s
jength of service for computation of pension benefits. (See
chapter 4 for details of LTD benefit plans.)

Requirements for disability retirement were usually based
on specified years of service such as 10 years or more. Thir-
teen percent of the participants, however, had no age or serv-
ice requirement for disability retirement, and 25 percent had
to meet the qualifications for the LTD plan, which usually
had a minimal service requirement.

Postponed retirement (table 66). Employees who continue
on the job after age 65 rarely receive private pension pay-
ments before retirement. Moreover, postponed retirement
is rarely fully reflected in the size of pension benefits; full
recognition of postponed retirement would require credit-
ing service after age 65, and adjusting pensions upward for
the shorter retirement period. Nevertheless, almost one-half
of the participants were in plans that made some allowance
for postponed retirement.

Forty percent of all participants were in plans with benefit
formulas that included credit for service after age 65; 22 per-
cent were subject to limits on the number of credited years
(frequently, only years up to age 68 or 70). Some 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-collar
employees to receive full credit for service after age 65. Col-

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

lectively bargained multiemployer plans, accounting for 8
percent of blue-collar participants, frequently provide for em-
ployer contributions to the pension fund for covered em-
ployees regardless of age.

In contrast to early retirees, who typically receive reduced
pensions over an extended time period, late retirees seldom
receive pensions that are increased to compensate for the
shorter time they will draw benefits. 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 additional year of work beyond the normal retire-
ment age. (This includes 1 percent of participants with both
full credit for service and an actuarial increase in benefits.)

Postretirement pension increases (table 67). Inflation can se-
verely erode the purchasing power of a fixed pension
throughout a worker’s retirement years. Thirty-eight percent
of pension plan participants were in plans that increased pen-
sions for current retirees at least once during the 1981-85
period. Most of these increases were discretionary, or ad
hoc, rather than automatic adjustments specified in the pen-
sion plans.

The amounts of ad hoc increases were not directly linked
to a cost-of-living index. Instead, retirees’ current pensions
were usually increased by either a percentage varying by the
length of retirement, or a dollar amount per year of service.

* The latter type of increase more often affected the pensions

57

of production workers, and frequently resulted from collec-
tive bargaining agreement provisions.

Since the survey reports only the number of current em-
ployees covered by pension plans and not the number of
retirees, it cannot specify the proportion of annuitants actu-
ally receiving postretirement pension increases. A rough
measure of the incidence of postretirement increases among
pensioners can be derived by assuming that the number of
retirees is proportionate to the number of active plan par-
ticipants.

In 1986, 35 percent of the pension plan participants were
in plans granting ad hoc increases. This number has
decreased steadily from a high of 51 percent in 1983. That
high level was due in part to the relatively high rate of price
increases over the preceding 5 years (1978-82).

The size of ad hoc pension increases during 1981-85 was
computed for each plan granting such an increase, using three
retirement periods (5, 10, and 15 years) and two monthly
pension amounts ($250 and $750) in effect on December 31,
1980. Where increases varied by a retiree’s length of serv-
ice, 25 years of service was assumed. These increases were
then averaged, using as weights the number of active work-

25 The 1986 Budget Reconciliation Act requires most qualified plans to
credit service after a plan's normal retirement age, beginning in 1988, sub-
ject to any maximum credited service provisions in the plan (see table 60).
In addition, a February 1987 court ruling indicates that employers may have
to begin crediting service immediately after normal retirement age, although
the ruling is being appealed (American Association of Retired Persons V.
Equal Employment Opportunity Commission, U.S. District Court for the
District of Columbia, February 26, 1987).


Table 22. Sickness and accident insurance: Percent of full-time participants with benefits based on percent of saminge
formula by maximum weekly benefit, medium and large firms, 1986

Maximum weekly benefit
Type of payment Total | Total | Less | $100 | $120 | st4o | st60 | $200 | $250 | $200 | sas0 | s4oo | NO
with | than | to to to to to to to to or mum
maximum} $100 | $119 | $139 | $159 | $199 | s249 | $29e | $349 | $399 | more
All participants
Total ..... 100 68 3 7 1} 23 9 5 5 4 1} 10 32
Fixed percent of earnings a9 67 3 7 1] 2 9 4 5 4 1 9 23
Less than 50 0) - - - - - - - - - - - (0)
50 .. 37 31 2 410 20 1 1 en) 1 6
1 1 - - - - QO io) - 10) Q - -
oO; a -f -} =f =) =] =] =] =] =] 0 -
a1 15 ie) 1 (Oy 1 1 1 3 2) 0 4 5
+) 0) -J -f =} -] -]}] m7} -] -] =) -] 0
2) 0 : ~ -7 0 - - - | 0 - - 2
iV) 0 - 0) ~ 7 - - ~ = ~ 0) 0)
7 14 1 en) 1 6 110 177) 3 3
7 5] () 0 1) 2 - 1 -| 0 10) 1 2
4] 0 - ~| -f -f; -]} -] =] =] 0 3
1] 0 -{ -7} Of -7 =] =] -f -]o-] = 1
Percent of eamings varies .... "1 2 - - - - - 1 Yo 0) iV) 0 9
Professional and administrative
Total 100 61 1 r0) (0) 22 8 4 6 7 1 10 39
Fixed percent of earnings 86 61 1/0 ) 22 8 4 6 7 1/10 25
Less than 50 ) - - - - - - - - - - - 0
32 25 iv) QO iv) at - 0) 2) 0 ) iY 7
oO}; o ~-1 =f =f -f -] =) =] =] =] 6 -
26 20 QO - YO ° 1 3 4 6 1 5 6
0 - - ye -} -} -f -) =] -] -) ©
2 - - 7 - - - - - - 7 :
0 - - - - - - -| - | - -| - 7.0
15 12 V) - Y 0 71 0 9) 1) 0 3 2
6 4 Y 0 - 1 - 1 - “) 2 2
4 - - - - - - - - - - - 4
1 - - - - - - - - - - - 1
Percent of earnings varies 14 ’) - - - - - - - ¢) - - 14
Technical and clerical
Total ... 100 67 2 7 1 | 29 6 2 4 3 1] 2 33
Fixed percent of earnings 87 66 2 7 1] 29 6 2 4 210 "1 22
Less than 50 0) - - - - ~ - - - - : - rc)
42 37 1 5 | () 2 | 1) 0 - -
10) () - - - - Q (0) i) - - -
ao} a ~J -f -] -[ =] =] -7 =[ -] 0 -
7 wz] 0 1] 0 1 1 1 2 1/0 4 6
) - -} -f -]} -} -f -]| -] -] -] -] 0
0 - QO - - - 0) - - 1
) - ~j =} -} 2] -] - -j; -]| =| 0
7 13 Q 1); 0 iN) 51 Q 1 1] 0 5 4
3 2 0 1) - Y - ) - ) iV) 1 1
5 1 - - - - - - - - - 1 4
rn) -| -] 0 -| -7 -} -]| -} -] - 1
Percent of eamings varies .... 13 2 - - - - - - -}ole 1 1"

See footnotes at end of table.

23


Preface

This bulletin presents results of a 1986 Bureau of Labor
Statistics survey of the incidence and provisions of employee
benefit plans in medium and large firms. This is the Bureau’s
eighth survey in this series, and it provides representative
data for 21.3 million full-time employees in a cross-section
of the Nation’s private industries. Appendix A provides a
detailed description of the scope and statistical procedures
used in the survey.

The analysis in this bulletin was prepared in the Office
of Wages and Industrial Relations by the staff of the Divi-
sion of Occupational Pay and Employee Benefit Levels. In-
dividual chapters of the bulletin were prepared by Donald R.
Bell (chapter 6), Allan P. Blostin (chapters 3 and 5),
Douglas E. Hedger (chapter 5), James N. Houff (chap-
ters 2 and 4), Michael A. Miller (chapter 5), John W.

iti

Thompson, Jr. (chapter 2), and William J. Wiatrowski (chap-
ters 6-8). Appendix A was prepared by Larry L. Huff, Divi-
sion of Wage Statistical Methods. Text was prepared by
Margaret D. Simons.

Computer programming and systems design were provid-
ed by the Division of Directly Collected Periodic Surveys.
The Division of Wage Statistical Methods was responsible
for the sample design, nonresponse adjustments, sample er-
ror computations, and other statistical procedures. Fieldwork
for the survey was directed by the Bureau’s Assistant Region-
al Commissioners for Operations.

Pictured on the cover of this bulletin is Take Your Medi-
cine by Norman Rockwell, reprinted with permission from
The Saturday Evening Post (c) 1936 by The Curtis Publish-
ing Company.


Table 60. Defined ‘benefit pension plans:' Percent of full-time participants by maximum benefit provisions,’ medium and

large firms, 1986

‘Type of benefit formula®

Maximum benefit provielon Terminal] Career | Dollar

Total’ earnings | earnings| amount

Type of benefit formula®

Maximum benefit provision Terminal] Career | Dollar

Total’ | eamings| earnings | amount

All participants
Total . 100 | 100 | 100 | 100
Subject to maximum .. a 56 8 26
Limit on years of credited

service ..... 36 50 8 20

2 1 - 1

1 2 - 1
5 5 oO 4

9) 1 - -
12 17 1 7

1 1 - iv)
9 14 iv) 2

(3) is) - i)
6 8 4 2

More than 40 1 1 2 1
Other maximum® 7 9 iv 9
Not subject to maximum 59 44 92 74

Professional and administrative

Total .. yoo | 100 | 100 { 100
Subject to maximum .. 47 59 8 a7
Limit on years of credited

service 42 54 8 7
Less than 20 2 1 - 3

1 1 - iy)
4 4 1 4

1 1 - -
15 19 1 5

1 1 = @

12 16 i) 1

iy) - -
8 10 5 3

More than 40 1 1 1 -
Other maximum® 8 8 i) 10
Not subject to maximum 52 4 92 73

Technical and clerical

Total 100 | 100 | 100
[Subject to maximum 45 58 7 26
Limit on years of credited

service 4 53 7 20
Less than 2 2 - 3

20 1 1 - oy

25 7 7 - 7
26-29 1 1 - -

30 14 16 1 7

31-3 1 1 - e)

35 10 14 - 1

36-39 is) 6 - -

40 . 8 10 4 2

More than 40 1 1 1 -

Other maximum® . 6 7 6 6
INot subject to maximum 54 4A 93 14

Production
Total 100 | 100 | 100 | 100
‘Subject to maximum 34 52 9 27
Limit on years of credited

servi 29 43 8 20
Less than 20 1 2 - ra)

20. 2 3 - 2

25 4 5 - 3

26-29 ©} o) - -

30 10 16 2 8

313 1 1 - 0

35. 6 10 - 2

96-39 iv) 6 - 1

40.. 3 3 2

More than 40 2 2 3 1

Other maximum’ .. 8 1 iv} 9
Not subject to maximum .. 66 48 ot 73

‘Excludes supplemental pension plans.

? These maximum provisions are independent of internal Revenue
Code ceilings on pensions payable from defined benefit plans.

* Ifa plan contained more than one benefit formula based on termi-
nal earings, career earnings, or dollar amounts, each formula contain-
ing @ maximum benefit provision was tabulated. Participants were in-
cluded as under formulas without maximum benefit provisions only it
one of the formulas contained a maximum.

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

* 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. Aiso, some benefit formulas contain a limit on years of cred-
ited service and another maximum provision. Dash indicates no em-
ployees in this category.



Chapter 7. Defined
Contribution Plans

Sixty percent of the employees within the scope of the 1986
survey (seven-tenths of the white-collar workers and one-
haif of the blue-collar workers) participated in one or more
defined contribution plans. These plans, which are wholly
or partly financed by employers, are designed to provide
retirement income, capital accumulation, or both. Retirement
plans, as defined in this study, do not allow withdrawal of
employer contributions until retirement age, death, disabili-
ty, separation from service, age 59 1/2, or hardship. Capi-
tal accumulation plans, on the other hand, impose less
stringent restrictions for withdrawal of employer contribu-
tions.?3 Examples of these less stringent restrictions include
permitting only one or two withdrawals per year, or impos-
ing a service requirement of 2 or 5 years before withdrawal.

Two-thirds of the employees within the scope of the sur-
vey were in retirement plans only, and 22 percent were in
both retirement and capital accumulation plans; 1 percent
had capital accumulation but no retirement plans (table 72).

As noted in chapter 6, three-fourths of employees partici-
pated in a defined benefit pension plan. But when defined
contribution retirement plans are considered along with de-
fined benefit pension plans, retirement coverage rises to 89
percent.

Whether for retirement or capital accumulation, defined
contribution plans usually specify a contribution rate by the
employer, but not a formula for determining benefits, as in
a defined benefit pension plan. Instead, individual accounts
are set up for participants, and benefits are based on amounts
credited to these accounts, plus investment earnings.

As shown in table 73, various types of defined contribu-
tion plans are available for retirement and capital accumula-
tion purposes: 30 percent of the employees participated in
employee stock ownership plans, 28 percent in savings and
thrift plans, 22 percent in profit-sharing plans, 2 percent in
money purchase pension plans, and less than one-half of 1
percent in stock bonus plans.** Another 3 percent of the em-
ployees were currently purchasing company stock, through

33 BLS used these definitions for analytic purposes, but it should be noted
that most defined contribution plans can be used to provide retirement in-
‘come or accumulate financial assets. Capital accumulation plans may pro-
vide retirement income, because withdrawals of the employer’s contributions
are voluntary, not mandatory. Similarly, defined contribution retirement
plans can be used to accumulate assets, because these plans nearly always
permit preretirement withdrawals of the employer's contributions (for ex-
ample, at age 594, upon termination of employment prior to retirement,
‘or upon disability). Many of these plans also permit employees to receive
a lump sum, rather than an annuity, upon retirement).

17

payroll deductions, at less than market price (stock purchase

-plans), and less than one-half of 1 percent of employees were

eligible to purchase stock in the future at a designated price
(stock option plans). As table 74 shows, it was common for
employees to participate in more than one defined contribu-
tion plan.

Seventy percent of participants in defined contribution
retirement plans had their benefit wholly financed by the em-
ployer. In contrast, capital accumulation plans were jointly
financed for 78 percent of the participants. A large majority
of capital accumulation plans were savings and thrift plans,
which involve employer matching of employee contributions.

It was common for employees to participate in both a de-
fined benefit or money purchase pension plan and one or
more other retirement or capital accumulation plans. Sixty
percent of participants in pension plans of medium and large
firms (70 percent of white-collar and 45 percent of blue-collar
participants) also had at least one additional plan, up from
50 percent in 1985.

The likelihood of a combination of plans varied with the
type of plan. For example, two-thirds of profit-sharing plan
participants did not have a pension plan available to them.
Conversely, almost 90 percent of savings and thrift plan par-
ticipants were also defined benefit plan participants. Profit-
sharing plans often substitute for pensions, while savings and
thrift plans commonly are supplements.

Cash or deferred arrangements (table 75)

One-third of the employees within the scope of the survey
were in plans with a cash or deferred arrangement.3> These
arrangements allow participants to choose between receiv-
ing currently taxable income, or deferring taxation by plac-
ing the money in a retirement account. Cash or deferred
arrangements took the form of either salary reduction plans
or deferrals of profit-sharing allocations.

3 A money purchase pension plan provides for a pension annuity or other
form of retirement income that is determined by fixed contribution 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 con-
tribute 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, employee stock ownership, and profit-sharing plans
are described later in this chapter.

35 The survey determined the number of employees actually contribut-
ing to freestanding 401(k) plans. It also determined the number participat-
ing in employer-financed plans allowing employee contributions with pretax
dollars, but not the number of employees actually making such contributions.



ly had to wait 1 to 5 workdays, with the waiting period often
eliminated after 10 years of service.

Sickness and accident insurance (tables 14, 21-23)

Half of all employees were protected by sickness and ac-
cident insurance plans against income losses 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 contribute toward the cost of cover-
age 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 in-
surance package.

Benefit payments under sickness and accident insurance
plans were either a percent of employee earnings or a sched-
uled dollar amount. The percent of earnings was usually
fixed—typically 50 to 70 percent—although some plans
varied the percentage by length of service or length of disa-
bility. Plans paying a percent of earnings covered 81 per-
cent of the white-collar participants, compared with 40
percent of the blue-collar participants. These earnings-based
plans often had a dollar limit on the amount of the weekly
benefit available; such limits have risen steadily since they
were first recorded in 1981. For example, 33 percent of the
participants had maximum weekly benefits of $140 or more
in 1981; by 1986, this proportion had increased to 57 per-
cent. 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 5 percent of participants, for whom dura-
tion of coverage varied by length of service. Of those par-
ticipants with benefits lasting for a fixed period, most had
26 weeks of coverage. Other common periods were 13 and
52 weeks.

Three-fourths of the employees with sickness and accident
insurance were required to be on the job for a specified mini-
mum time period before they were covered by the plan. Serv-
ice requirements were usually under 6 months. Four percent
of the participants were in plans requiring 1 year of service
before coverage.

Sickness and accident insurance, unlike sick leave, usual-
ly 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 period, usually 1 to 7 days,
before payments begin. Waiting periods may be shortened
or eliminated entirely for employees involved in an accident
or hospitalized.

Workers in two States, New Jersey and New York, are
covered by mandatory temporary disability insurance plans
that are at least partially employer financed. Both of these
State plans pay benefits based on a percentage of the work-
er’s earnings for up to 26 weeks with a limit on the weekly

13

benefit ($145 in New York and $200 in New Jersey during
1986).*

Long-term disability insurance (tables 24—27)
a

Long-term disability insurance continues the income of em-
ployees during extended periods of disability. Generally, 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 re-
quired to contribute toward the cost of the plans. The most
common type of employee contribution was a monthly
amount per $100 of covered earnings. The rate was typi-
cally between 20 and 40 cents per $100 of coverage.

Service requirements found in LTD plans were usually
more restrictive than for the other insurance benefits. Slightly
over one-fifth of the participants had service requirements
of from 1 year to 3 years or more. Because of the long-term
nature of this benefit, more employers restricted eligibility
to employees who had demonstrated some attachment to the
company.

The degree of participation varied widely among the em-
ployee 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 pension through their retirement plan;
nearly two-fifths of the employees (50 percent of the produc-
tion workers) were covered by immediate disability retire-
ment provisions.

Long-term disability benefits were usually 50 or 60 per-
cent of monthly pay. Most of the plans that pay a percent
of predisability earnings had maximum monthly payments
ranging from $1,000 or less to over $10,000. Common max-
imums were $3,000 and $5,000.

One-fourth of the participants were in plans that provided
a benefit which was not a fixed percent of earnings. These
formulas differed sharply by employee group. Nearly three-
tenths of the blue-collar participants were in plans paying
a dollar amount that varied by the level of the worker’s earn-
ings. In contrast, one-sixth of the white-collar participants
were in plans with other benefit formulas—a variable per-
centage of earnings, a flat dollar amount, or a percent of earn-
ings that varied by length of disability.

4 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 contribution and, thus, are not included
in this survey.

5 Covered earnings refers to that portion of a worker's earnings replaced
by LTD benefits. For example, if an LTD plan pays 60 percent of earnings
up to $3,000, covered earnings are $5,000 (60 percent of $5,000 equals
$3,000.)



Table 67. Defined benefit pension plans:' Percent of full-time participants In plans granting ad hoc postretire-
ment annuity increases,’ medium and farge firms, 1986

Professional and , A
ici ssi Technical and | Production partici-
A\l participants sdministrati a
Characteristic participant aaa stat Wve | clticalpartcpants Dante
Percent of participants in plans with at least one |
postretirement increase in the 1981-85 period .... 35 92 29 39 i
Number of increases granted in
100 100 100 100
46 55 59 36
24 2B 21 25
9 10 8 8
22 9 2 32
19) 1 1 -
Provision for minimum Increase In most recent
adjustment
Total 100 100 100 100
No minimum 86 82 84 88
With minimum 14 18 15 2
Monthly doltar amount 13 7 14 "
Less than $5 1 1 1 2
$10 6 9 7 4
$11-$14 1 iv) iW) 2
$15 3 4 4 1
$20 ie) iv) Q e
$25 1 @) iv) 1
More than $25 1 1 1 1
Percent of present benefit 1 i?) io) 1
Greater of a monthly dollar amount or a
percent of present benefit. ) 1 o) -
Not determinable 1 1
Provision for maximum increase in most
recent adjustment
Total 100 100 100 100
‘No maximum 80 74 76 85
With maximum. 19 26 23 15
Monthly dollar amount 5 5 4 6
$100 or less .. 2 a 3 1
$101-$150 3 2 1 4
More than $200 1 iv) 19) 1
Percent of present benefit 14 19 19 9
Less than 10 3 2 ? 2
10-14 6 10 6 3
15-19 i) 1 1 iv)
25-29 1 1 1 1
30 or more 4 5 3 3
Greater of a monthly dollar amount or a
percent of present benefit .. ie) iv) -
Not determinable 1 1 )

See footnotes at end of table.

72



or more for orthedontia applied to SO percent of participants _

in dental plans providing this benefit in 1986, up from 17
percent in 1980.

Mental health coverage {table 41). Of the participants in plans
with mental health benefits, 61 percent had more restrictive
hospital coverage for mental ilinesses than for other ailments
in 1986, up from 57 percent in 1985 and 41 percent in 1981.
These plans commonly reduced the duration of the hospital
stay (often 30 days for mental health care in basic hospital
benefits, compared to 120 or 365 days for other illnesses)
and sometimes imposed a separate maximum on covered
hospital expenses (such as a lifetime maximum of $50,000
on mental health benefits). Even more restrictive was cover-
age 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) ceil-
ings were often placed on the amounts payable for each visit
and/or each year, and (2) the coinsurance rate for nonhospi-
tal treatment was often 50 percent, compared to 80 percent
for other illnesses. Also, limits on annual out-of-pocket major

medical expenses usually did not apply to outpatient mental
health care.'?

Other health benefits (tables 42-43). The incidence of alco-
hol and drug abuse provisions continued to increase (chart
2). The percent of participants covered for alcoholism treat-
ment rose slightly, from 68 to 70 percent between 1985 and
1986. Drug abuse treatment has steadily increased in avail-
ability, from 37 percent when first tabulated in 1982 to 66
percent in 1986.

Forty percent of health insurance participants were covered
for vision care expenses in 1986, up from 35 percent in 1985
and 18 percent in 1979. Although gains were made in all
three occupational groups, plans for blue-collar workers were
typically more comprehensive than those for white-collar
workers.

Hearing care was available to 20 percent of participants
in 1986, up from 17 percent in 1985 and 10 percent in 1983,

2 A more detailed examination of mental health care provisions in health
care plans is provided by Allan P. Blostin in a Monthly Labor Review arti-
cle scheduled for publication in the summer of 1987.

Chart 2.

Coverage for selected types of medical care: Percent of full-time. participants
in health care benefit plans, medium and large firms, 1984-86

Alcoholism
treatment

Extended care
facility

Drug abuse
treatment

Home
health care

Vision care:

Hospice care

Hearing care

40 50 60 70. 80

Percent



Bureau of Labor Statistics

Regional Offices

Soar

REGION Vill

ry

REGION Vil

REGION II

vumonco £9,
-a00f

ca GLANDS

oF a REGION VI
Awan >
Region | Region IV Regions Vil and Vil!

John F. Kennedy Federal Building
Suite 1603

Boston, Mass. 02203

Phone: (617) 565-2327

Regicn Il
Suite 3400
1515 Broadway
New York. N.Y. 10036
Phone: (212) 944-3121

Region Ill
3535 Market Street
P.O. Box 13309
Philadelphia, Pa. 19101
Phone: (215) 596-1154

1371 Peachtree Street: N.E

Atlanta, Ga. 30367
Phone: (404) 347-4418

Region V
9th Floor
Federal Office Building
230 S. Dearborn Street
Chicago. Ill. 60604
Phone: (312) 353-1880

Region VI
Federal Building
525 Griffin St., Rm. 221
Dallas, Tex. 75202
Phone: (214) 767-6971

911 Wainut Street
Kansas City. Mo. 64106
Phone: (816) 374-2481

Regions IX and X
450 Golden Gate Avenue
Box 36017
San Francisco. Calif. 94102
Phone: (415) 556-4678



Table 31. Health care benefits: Percent of full-time
participants by provision for coverage during a layoff,
medium and large firms, 1986

Profes-
sional | Techni-
and | cal and | Produc-

All pat | adminis-| clerical | tion par-

Benefit provision

ticipants | ‘rative | partici | ticipants
partici- | pants
pants
Total... 100 | 100 | 100 ; 100 |
With coverage continuation during
layoff! 52 47 46 59
Initial cost for employees on
layoff? paid by:
Employee only .. 15 14 15 17
Employer and employee 7 8 8 6
Employer only 27 23 20 33
Not determinat 3 3 2 3
Duration of employer-financed
coverage:
1-2 months 9 8 "1
3 months 5 4 5
4-5 months 1 0 r7)
6 months 4 3 3
. 7-11 months 0 ie) r?)
1 year 5 3 6
Over 1 year 1 1 2
Varies by service 2 2 3
Until rehire 2 2 5
Not determinable 2 4 4

Without coverage continuation
during layoff

22 23 23 22 i

No policy established . 24 29 30 18

Layoff policy not determinable

* Benefits may be financed by employer, employer and employee
jointly, or employee only.

? ‘Administrative costs were excluded from the tabulations.

® Less than 0.5 percent.

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

37


i

Table 56. Defined benefit pension plans:'. Percent of
full-time participants in plans with terminal earnings formulas
by definition of terminal earnings, medium and large firms,

1986
Profes-
sional | Techni- .
; All par- | 2%d__| cal and | Produc-
Definition of terminal earnings | icjpangg | @dminis-| clerical | tion par- i
trative | partici- | ticipants
partici- | pants i
pants
Total 100 | 100 | 100
Three years 13 14 1" 4
Last 3 1 1 1 -
High 3 1 2 1 1
‘Of last 5 0 1 ee ea
Of last 10 1 1 1 1
High consecutive 3 4 4 8 13
Of last 5 (o) a) (o) -
Of last 10 8 8 6 8
Of career 3 3 2 5
Five years 84 84 87 80
Last 5 4 5 5 3
High 5 10 9 12 10
Of last 10 5 6 5 4
Of career 5 3 7 5
Other ... oe) @ ie) io)
High consecutive § 69 70 69 68
‘Of last 10 51 51 51 51
Of last 15 1 2 1 a
Of career 16 15 16 16
Other period’ . 3 3 3 5

* Excludes supplemental pension plans.

? Less than 0.5 percent.

2 Formulas based on earnings during period other than 3 or 5 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.

62


times earnings for 3 in 5 participants.'S Professional-
administrative participants had the highest coverage, with
noncontributory plans commonly providing multiples of two
or more times earnings. And when their plans were contribu-
tory, nearly 3 in 4 had coverage of twice annual earnings
‘or more.

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 employees with maximums
under $100,000 has declined from one-half to one-fourth
since 1979.

Thirty 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 uni-
form amount, compared with 13 percent of white-collar
workers. Uniform amounts for production workers averaged
$10,400, almost $2,000 more than the average for the other
two groups. While usually providing much smaller amounts
of insurance than earnings-based formulas, flat amount cover-
age has improved. Participants in plans providing benefits
of less than $5,000 decreased from 29 percent in 1981 to
19 percent in 1986; most of the offsetting increase was in
amounts of $15,000 or more. The $15,000 or more amounts
grew in incidence from 7 to 22 percent of workers insured
by flat amounts during the same period.

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

In addition to basic coverage, some employers offered their
workers supplemental life insurance that was partially em-
ployer financed. The typical supplemental plan provided in-
surance in multiples of | to 3 times annual earnings. Eleven
percent of the employees were eligible to join these plans.
(The survey did not record the number of employees actual-
ly contributing.)

Ten percent of participants were in plans which provided
monthly income to surviving family members, nearly always
in addition to life insurance benefits. There are two types
of survivor income benefits. The ‘‘transition’’ type of sur-

15 The employee contribution rate was commonly expressed as a fixed
monthly rate for each $1,000 of insurance. Reported rates varied widely
from 9 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 ex-
ample, the first $5,000 of coverage). Data were not available for one-third
of contributory plan participants, however, because payroll deductions some-
times applied to an insurance policy covering life insurance and one or more
other benefits.

33

vivor benefit pays a monthly amount to a surviving spouse
for a limited period (usually 24 months). In some plans, these
payments are followed by a subsequent series of payments,
known as “bridge” benefits. Bridge benefits continue until

a later event, such as remarriage or the surviving spouse’s *

65th birthday. Benefits generally consisted of either a per-
cent of employee earnings at the time of death or a flat dol-
lar amount.

Survivor benefit plans may also make payments to depend-
ent children or dependent parents. The benefits may be ad-
justed for the size of the employee’s family and the type of
dependents who survive.

Life insurance on workers’ spouses and unmarried depend-
ent children also is sometimes available. One-sixth of life
insurance participants had employer-financed dependent
coverage in 1986; in most cases, the employer paid all of
the cost. Nearly all plans covered dependent children as well
as spouses. The most common coverage for death of either
a spouse or a child was a flat amount of $1,000. Higher
amounts, however, were available more often for spouses
than for children: Spouse coverage of $2,000 or more ap-
plied to one-half of the participants with dependent life in-
surance, but similar coverage for a child applied to only
one-fifth of these workers. Coverage of $5,000 or more on
the spouse’s life was not unusual, but rare in the case of a
child. For nearly one-quarter of participants, coverage for
a child increased at specified ages: For example, $250 until
2 years old, followed by $500 up to 3 years, and $1,000
thereafter.

Minimum length-of-service requirements for participation
were found in plans covering 54 percent of workers with life
insurance. As is the case for health and sickness and acci-
dent insurance, service requirements are generally 3 months
or less.

Basic life insurance continued after retirement for 59 per-
cent of all participants. The preretirement amount of insur-
ance, however, was reduced in nearly all instances.'® Other
forms of life insurance—accidental death and dismember-
ment, supplemental, and dependent coverage—were seldom
available after retirement.

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



Table 59. Defined benefit pension plans:' Percent of full-time participants by provision for integration of pension with

Social Security benefit, medium and large firms, 1986

Type of benefit formula”

Type of benefit formuta®

Provision orae [Terminal] Careor | Dollar Provision Tota [Terminal] Career | Dollar
earnings earrings] amount earnings|earnings| amount
Alt participants Technical and clerical
Total... 100 | to0 | 100 | 100 Total 400 | 100 | 100
With integrated formula . 62 90 69 1 |lWith integrated formula 79 93 74 1
Offset by Social Security Offset by Social Security
payment... 43 ca) 13 1 payment" 58 6 19
Based on service® 36 60 9 1 Based on service® 50 68 10 1
Not based on service® 7 1 5 - Not based on service® 8 9 10 -
Dollar amount e) 1 (0) - Dollar amount 3) 0) 0) -
Percent of payment 7 1" 4 - Percent of paymer 9 9 -
Pure excess® 1 1 1 - Pure excess" 1 1 1 -
Step-rate excess’ 23 25 54 - Step-rate excess’ 25 23 54 -
integrated with a Social Integrated with a Social
Security breakpoint .. 10 10 23 - Security breakpoint .. 13 " 29 -
Integrated with a specific integrated with a specific
dollar breakpoint . 14 15 32 - dollar breakpoint 13 13 25 -
Without integrated formuta 38 10 3t 99. ||Without integrated formula 21 7 26 99

Professional and administrative

Total 100 100 100 100
With integrated formula .. 81 94 62 1
Offset by Social Security
payment* . 55 72 12 1
Based on service® 46 62 7 1
Not based on service’ ... 9 10 5 -
Dollar amount 0 iV) iv)
Percent of payment 9 10 5 -
Pure excess* 2 2 1 -
Step-rate excess’ 31 27 4g -
Integrated with a Social
‘Security breakpoint 14 13 20 -
Integrated with a specific
dollar breakpoint .. 19 16 30 -
Without integrated formula 19 6 38 99

With integrated formula

|Without integrated formula

Production

Total 100 100 | 100

42 83 74 ¢)

Offset by Social Security

Payment* 28 65 " 0)
Based on service’ 22 50 10 0)
Not based on service® 6 15 1 -

Dollar amount 1 2 0) -

Percent of payment .. 5 13 1 -

Pure excess” ry ry 1 -

Step-rate excess’ 7 24 62 -
Integrated with a Social

Security breakpoint .. 7 24 -
Integrated with a specifi

dollar breakpoint .. 12 18 38 -

* Excludes supplemental pension plans.

? if a plan contained more than one benefit formula based on termi-
nal eamings, 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.

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

“ 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 Secu-
rity payments and the participant's years of service with the employer. A
maximum offset is frequently applied, for example, 50 percent.

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

65

mary Social Security payments or a specific dollar amount. Although
generally offsets of up to 83.33 percent were permitted by the internal
Revenue Service for plan qualification, offsets in excess of 50 percent
were uncommon.

” ‘Less than 0.5 percent.

* Formula does not apply to earnings subject to FICA (Social Secu-
tity) taxes or below a specific dollar breakpoint.

® Formula’ applies tower benefit rate to eamings 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 37. Health care benefits: Percent of full-time participants in plans with denta! benefits by extent of coverage for

selected procedures, medium and farge firms, 1986

sone ncen-| Sub- Percent of usual, customary, and reasonable charge ot | Not
Type of dental procedure | Total | cash | vo, bons Less cov. | deter
allow. |Schet|S0bey. | Totat | than | 60 | 60 | 61-74] 75 | 80 | 85 | 90 | 100° | ered | By
ance | © 50
All participants,
Examinations 400 | 17 | 3 eo | - 1] - 2 1| 2] 0 1/ s7}@] -
Dental X-rays 40 | 17} 3] () | BO} - 1] - 2] 2]{ 2 4 7} 4} @ | -
Fillings 100 | 27} 3 1 | 6} - 41 3 5/3] 4] 6 9 1| -
Dental surgery .. yoo | 25] 2 1) 7] - 51 3 4} a7] 4 6 | 10 1/04
Periodontal care 100 | 25 2 1| 69] - 8 1 3{ 4] 3] 4] 6 9} 2/04
Inlays .. 100 | 27 1 1 | 68 | - | 34 5} a} 2) 12 2| 6 4] 3) 0
Crowns 400 | 27 1 2| 6] - 3a4/o5/| 3] 2] 12] 2] 6 4] 2) 0
Orthodontia’ .. 100 | 15 | - 2) ss) 47 3 1 1 3] - oO 3] 2] }
Professional and
administrative
Examinations wi 2] | 7] - 1] - 1 1| 2] 6 +] sai a | -
Dental X-rays 100 | 18 2] 0 | m2] - 1] - 3} 2] a] 2] 3] 4} MO] -
joo} 29) 2} 1] 68) - 4} 0 3] 3] 4) 3) 3 8 1] -
100 | 26 1 2} 70] - é| 3 2] 4| 3] 3] 10 1/0
100 | 26 1 2] 69 | - 8 1 3 2] 4] 3) 3 9] 2] 0
joo | 29 | () 1} 6} - | 36 5] 4) 2) 4 1 2} 3} 2/0
400 | 29} (4) 2/68] - | 3) 5/| 4] 2) 14 1 2| 3 1/06
100 | 17] - 2| 86] | 4) 3 1 1 2|- | 0 3] 4] 0
Technical and clerical
Examinations 100 | 16 2|@ | er] - 1] - 1 1] 23! oO 1] 54] | -
Dental X-rays 400 16 210 81 1 - 2 1 27 2 3 44 1 -
Fillings 100 | 27 2 1] 6 | - 4/0 2] 4] 447) 3 3 a] ij -
Dental surgery .. woo | 2} 2] 2] 7] - 6] 0 2] 3] 44] 3 3 ee! i1|/
Periodontal care . 100 | 25 2] 2] a] - 8 1 2] 3] 41 3} 3 e| 3/0
Inlays .. too | 28] () 1] 69 | - | 38 6s] 4|{ 1] 14 1 2} 3{ 2] 0
Crowns 100 | 28} () 2| 6] - | 38 5 4} oa] 4] 4 2} 31 1) 0
Orthodontia® .. 100 | 17] - 2] sa] | 44 a 1 2 +] - | 0 2] a]
Production
100 | 17 31 | eo} - a] - 2} 2} 2/0 2} 6} @ | -
100 7 3 iy) 80 - 1 - 2 3 15 5 Ww 43 fu) -
100 | 26] 3] () | 70] - 5] } 3} 6] 30] 6] 10 9] mo] -
100 24 3 1 cal - 51 3 6 30 5 10 "1 2 -
Periodontal care .. 100 | 25] 3 1] 70] - 71 0 3] 6] 2] 5] 10] 10 1| -
Inlays .. 100 | 26 1 1] 68 | - | 30 5| 2] 3] 10] 3] 10 5| 4] -
Crowns 100 | 26] 2 1] 6 | - | 3 | 5s} 2] 3] 10} 3] 10 s| 3] -
Orthodor too | 14] - 1] e | --| 5s] 2] 2/0 51-10 2| 24

1 Reimbursement arrangement in which the percentage of dental ex-
penses paid by the plan increases if regular dental appointments are

scheduled.

? Participant pays a specific amount per procedure and plan pays all

remaining expenses.

® Includes plans which paid the full cost.

* Less than 0.5 percent.
* Participants ware included as having coverage for orthodontia in

cases where benefits ware limited to children.

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

totals. Dash indicates no employees in this category.

43



Table 79. Savings and thrift plans: Percent of full-time participants by provisions for Investment of employer and employee

contributions, medium and large firms, 1986

Professional and administra-| Technical and clerical je fc
All participants tive 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’ . 49 89 54 90 45 7 45 20
Investment choice
Total 400 100 100 100 100 100 100 100
Company stock 58 65 63 67 55 67 52 59
Common stock fund 86 74 86 73 86 73 84 67
Corporate bonds 32 31 29 32 36 32 32 27
Diversified mix of stocks and bonds 18 7 19 20 2t 19 14 "1
Government securities .. 35 33 43 at 29 26 27 29
Guaranteed investment contracts 71 73 72 71 64 71 79 7
Money market funds 32 26 35 31 35 25 24 20
10 7 9 7 9 7 4 8
Number of choices

Total 100 100 100 100 100 100 100 100
24 28 18 19 25 30 34 40
36 35 35 34 36 36 37 37
25 24 3t 33 23 22 16 13
Five or more 15 12 16 14 16 12 14 10

* Excludes plans that limit investment options to participants age 55 or
greater.

? Includes purchases of life insurance or annuities, real estate,
mortgages, and deposits in credit union or savings accounts.

Table 80. Savings and thrift plans: Percent of full-time
participants by provisions for withdrawal of employer
contributions prior to disability, retirement age, or
termination of employment, medium and large firms, 1986

Profes-
sional | Techni-
‘All pare |_and_ | eal and | Produc-
Least restrictive provision ticieents |20minis- | clerical | tion par-
pants | ‘trative | partici. | ticipants
partici. | pants
pants
Total yoo | 100 | 100
Withdrawals permitted 82 83 79 84
For hardship reasons' 26 28 24 25
Full withdrawal, no penalty 19 2 16 18
Full withdrawal, with penalty; 5 6 5 5
Partial withdrawal, no penalty! 2 2 2 2
Partial withdrawal, with
penalty 7) ie) lo) -
For any reason 56 54 58 59
Full withdrawal, no penalty 18 20 15 18
Full withdrawal, with penalty .| 34 31 35 37
Partial withdrawal, no penalty] 1 1 1 1
Partial withdrawal, with
penalty 3 3 4 2
Not determinable ro) to) cy -
No withdrawals permitted .. 18 7 24 16
Provision not determinable ... a) ° 0 -

* Commonly expressed reasons for withdrawal were: Purchase or re-
pair of primary residence, education of an immediate family member, death
or illness 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.

85

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

‘Table 81. Savings and thrift plans: Percent of full-time
particlpants by method of distribution of account at
retirement, medium and large firms, 1986

Profes-
sional | Techni-
‘All pare|_ 2nd} cal and | Produc-
Method of distribution available | 4.05 ants |adminis-| clerical | tion par-
icipi trative | partici- | ticipants
partici- | pants
pants
Total 100 | 100 | 100
Cash distribution’ 99 98 99 99
Lifetime annui
joint-and-survivor forms) 28 26 29 at
installments .. 52 55 53 47
Lump sum 98 98 98 99
Stock distribution? 1 1 1 1
Not determinable .. r7) 1 1 7)

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

* 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.



(combined vacation and personal leave) and could not be
shown separately, it was reported as vacation time. The sur-
vey did not cover the extent of informal personal leave.

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

At least 87 percent of the employees in each occupational
group were eligible for paid leave to attend funerals of
family members. Four-fifths of the employees received a set
number of days per occurrence, averaging 3.2 days. (Three
days off were available to a majority of workers in each oc-
cupational group.) For 10 percent of the white-collar wor-
kers and 3 percent of the blue-collar workers, the number
of days off depended upon the employee’s length of serv-
ice. Workers in plans where the number of days off varied
by relationship 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 relation-
ship provision. Nearly one-fourth 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; employer payments commonly
made up the difference between the employee’s regular pay
and the court’s jury allowance.

“Military leave; providing pay. for absence“ fron work to
fulfill military training or duty commitments, was available
in establishments employing two-thirds of thie employees.
The most common provision was 2 weeks off per year, but
one-sixth of the workers were in establishments providing
military leave as needed: For workers with a specified num-
ber of days off, military leave averaged 11.5 workdays per
year. Pay for military leave was either regular pay or the
difference between regular pay and military pay.

The following tabulation shows the average lengths of
several paid leave benefits:

Profes-
sional
All and Technical
partici- admin. and ~
pants istrative clerical Production
Lunch time— :
minutes per day ...... 27 40 38 24
Rest time— . .
minutes per day ...... . 26 26 26 25
Personal leave—
days per year ........ 37 39 3.6 3.8
Funeral leave—
days per occurrence... 3.2 3.4 35 31
Military leave—
days per year ........ ws U7 7 2


Contents—Continued

Health care—Continued:
37. Dental benefits by extent of coverage for selected procedures .
38. Dental benefits by deductible provision
39. Dental benefits by yearly maximum amount of insurance
40. Orthodontic benefits by lifetime maximum amount of coverage .
41. Mental health benefits by extent of benefits . .
42. Vision benefits by extent of benefits .
43. Coverage for selected special benefits .
44. Selected cost containment features......
45. Contributory plans by type and amount of employee contribution
46. Length-of-service requirements for participation . .
47. Funding medium for selected types of coverage ..

Life insurance:
48. Method of determining amount of basic life insurance and frequency of
Telated Coverages ..... 26.0 c eee e cece cece eee eee ete eee e ene ten eneeneee 49
49. Multiple-of-earnings formulas by amount of basic insurance and maximum
coverage provisions
50. Flat dollar insurance by amount of basic insurance .
51. Dependent life insurance coverage ..
52. Length-of-service requirements for participation
53. Effect of retirement on basic coverage

Defined benefit pension plans:
54. Method of determining retirement payments
55.-Terminal earnings benefit formulas by type and amount of formula .
56. Terminal earnings formulas by definition of terminal earnings ...
37. Career earnings benefit formulas by type and amount of formula .
58. Dollar amount benefit formulas by type and amount of formula . .
59. Provision for integration of pension with Social Security benefit .
60. Maximum benefit provisions ............... 00sec eee eee ee
61. Average replacement rates for specified final earnings and years of service .
62. Minimum age and associated service requirements for normal retirement .
63. Minimum age and associated service requirements for early retirement .
64. Early retirement by reduction factor for immediate start of payments .
65. Provisions for disability retirement
66. Provision for credit for service after age 65 ...
67. Ad hoc postretirement annuity increases . .
68. Vesting schedules
69. Provision for postretirement survivor annuity
70. Provision for preretirement survivor annuity .
71. Age and length-of-service requirements for participation

Defined contribution plans:
72. Retirement and capital accumulation plan coverage. .
73. Type of defined contribution and stock plans
74. Combinations of retirement and capital accumulation plans
75. Cash or deferred arrangements

Savings and thrift plans:
76. Maximum allowable employee contribution .............00 00 sees cence cence ences 82

vii


Table 34, Health care benefits: Percent of full-time participants in plans with major medical coverage by amount of deductible

and appicable benefit period,’ medium and large firms, 1986

Sch Professional and Technical and clerical ‘
All participants jnistrative participants participants Production participants
Amount of deductible? Benefit period Benofit period Benefit period Benefit period
Total | syear | Other | T! | year | other | TO! | tear | otner | 72! | s-year | other’
period | period period | period period | period period | period
Total .... 96 4 | 100 97 3 | 100 7 3 | 100 94 6
Deductible specified 100 96 4 | 100 97 3 | 100 97 3 | 100 94 6
Based on earings? 4 4 - 4 4 - 6 6 - 3 3 -
Flat dollar amount 96 a1 4 95 92 3 94 91 3 96 91 6
Less than $25 iv) ie) iv) 0 ) o is) oO O is) - i)
1 1 1 1 iv) 1 1 } iv) 2 1
10 10 9) 9 9 “ 8 7 Oo 13 3 i)
iv) oO - rv) “ = iy) QO = “ O
3 2 ro) 2 2 0 2 1 “) 3 3 (9)
QO rv) ~ iv) iy) - v) - - -
44 42 2 43 4 2 40 39 1 46 43 3
1 1 = 1 1 - 1 1 - 1 1 -
15 15 ) 7 vio 20 20 | ¢ 4 11 i)
ie) ro) - 1 1 - iv) iy) = iv] oO -
15 14 1 14 3a | 15 14 “ 15 14 1
iv) 0) - 1 1 - 1 1 - - - -
3 3 - 3 3 - 3 3 - 2 2 -
iv) iv) - oO oO - iv) oO - oO iv) -
2 - 2 2 - 2 2 - 2 2 -
1 1 CC) 1 1 ) 2 2/ 1 1 -
of -]f-}of]-)-7o}-}]-) o | - -

* 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’ earnings. A typical provision is 1 percent of annual earnings with a
maximum deductible of $150.

“ 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 66. Defined benefit pension plans:' Percent of
full-time participants by provision for credit.for service after
age 65, medium and large firms, 1986

Profes-
sional | Techni-
and | cal and | Produc-

Type of credit ta oats | @dminis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants

Total. too | 100 | too | 100
No credit for service | 59 | 89 | 66 | 55
Pension deferred with no change
in amount .. st | s2 | ss | 49
Pension deferred, but increased
actuarially . 5 5 6 5
Pension deferred, but incre
by percent per additional year
of service’ ... 2 3 1
Pension begins at age 65 1 1 1
Credit for service, with no actuarial
increase for later retirement age'..| 40 | 39 | 34 | 44
All service credited 22 | 23 | at 24

Service credited to spe
maximum age
Service credited to specified

18 16 12 23

maximum years of service ... 0 - i) -
Credit for service, with actuarial
increase for later retirement age” 1 1 1 1
All service credited 1 1 1 1
Service credited to specifi
maximum years of service ... 0 - - eo

is) iv) iv) iV)

Provision not determinable

+ Excludes supplemental pension plans.

® 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.

2 Less than 0.5 percent.

* Additional service is included in the benefit formula, but the pension is
not increased for later retirement date.

+ 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-
tals. Dash indicates no employees in this category.

7



fined benefit plans. To begin accumulating benefits from a
savings and thrift plan, 90 percent of participants had to meet
such requirements. Participation requirements were also
common for profit-sharing plans (86 percent), and employee
stock ownership plans (74 percent). In contrast, only 59 per-
cent of defined benefit pension plan participants faced such
provisions.

Of those defined contribution plans with participation re-
quirements, most required a minimum amount of service,
commonly 1 year, and did not require an employee to be
a designated minimum age. Conversely, defined benefit pen-
sion plans that included participation requirements most often
specified a minimum age and a minimum amount of service.

Defined contribution plans are subject to ERISA vesting
tules in the same manner as defined benefit pension plans.
Vesting schedules vary significantly, however, between de-
fined benefit and defined contribution plans, and variations
are also common between individual types of defined con-
tribution plans. All vesting schedules apply to employer con-
tributions; employee contributions (including pretax
contributions) are always 100-percent vested.

Twenty-six percent of savings and thrift plan participants

80

and 29 percent of deferred profit-sharing participants had
immediate full vesting, a feature rarely found in defined
benefit plans. PAYSOP’s, by law, are always 100-percent
vested. Class-year vesting, where employer contributions for
a particular year (class) become nonforfeitable after a specific
period of time, ‘was available to nearly 30 percent of sav-
ings and thrift plan participants. Such vesting was uncom-
mon in profit-sharing plans.

Graduated vesting, where an employee’s nonforfeitable
percentage increases over time and reaches 100 percent,
usually after 5 or 10 years, was most common in deferred.
profit-sharing plans, with 2 of 3 participants covered by such

a provision. One-fourth of savings and thrift plans par--

ticipants had graduated vesting, and only about 10 percent
of defined benefit plan participants had such vesting. Final-
ly, ‘‘cliff’’ vesting, where no vesting occurs until an em-
ployee satisfies the service requirements for 100-percent
vesting, is found in the majority of defined benefit plans,
but was required of only 20 percent of savings and thrift plan
participants and 2 percent of deferred profit-sharing plan
participants.


«
’ Employee Benefits in Medium
and Large Firms, 1986

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

Bureau of Labor Statistics
Janet L. Norwood, Commissioner
June 1987

Bulletin 2281

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


Contents—Continued

Page
Work schedules:
2. Number of hours scheduled per week... .......... 000020 c cece eee ee eee e ee eneeees 7
Paid time off:
3. Lunch time: Minutes per day 7
4. Rest time: Minutes per day . . 7
5. Holidays and vacations: Average number of days. . 7
6. Holidays: Number of days provided each year ...............0.0005 8
7. Holidays: Policy on holidays that fall on a regularly scheduled day off. 8
8. Vacations: Amount provided at selected periods of service 9
9. Vacations: Length of service required to take vacation . 10
10. Personal leave: Number of days provided per year..... 10
11. Funeral leave: Number of days available per occurrence - 10
12. Jury-duty leave: Number of days available per occurrence ~i
13. Military leave: Number of days available per year ~il
Short-term disability coverage:
14. Participation in sickness and accident insurance plans and paid sick leave plans......... 15

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 ........... 06.00. 0sc ccc e eee eee eee e ee
19. Annual plans: Average number of days at full pay by sickness and accident
insurance coordination .
20. Annual plans by unused sic!

leave policy and carryover provisions . .

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

Long-term disability insurance:
24. Method of determining payment ..
25. Duration of benefits
26. Length-of-service requirements for participation . .
27. Limitations on benefits for mental illness

Health care:
28. Coverage for selected categories of medical care .
29. Coverage after retirement
30. Coverage after retirement by benefit provisions and age of retiree . _
31. Coverage during a layoff .... 22.6... cece cee cece eee eee n een een eee
32. Basic hospital room and board coverage by type of benefit payments and

limits to coverage «0.2.0... 0... cece eee cece eee e ete e eee en bene ee tae
33. Basic surgical benefits by maximum allowance for selected procedures
34. Major medical coverage by amount of deductible and applicable benefit period
35. Major medical coverage by coinsurance provisions.........
36. Major medical coverage by maximum benefit provisions ...

vi



2...

For a majority of employees, insurance covers all initial
hospital 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 increased to
35 percent in 1986, from 33 percent in 1985, 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 64 percent of health
insurance participants with basic hospital coverage, 14 per-
cent must pay a specified amount per admission or, in some
cases, pay for the first day of confinement.

Of those who received basic hospital coverage, 96 per-
cent were in plans that paid room and board expenses up
to the semiprivate rate, providing some protection against
rising hospital charges. Seventy-five percent of the par-
ticipants in basic hospital plans had ceilings on the duration
of coverage. Almost three-fifths 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 2 maximum
dollar amount per admission or per year.? Additional cover-
age was usually available under a major medical plan for
cases that exceeded these limitations.

Surgical coverage (table 33). Seventy-five percent of health
plan participants had basic coverage for surgery in 1986.
Over four-fifths of these participants had plans with payments
based on the ‘‘usual, customary, and reasonable”’ charge for
the procedure performed, up from 75 percent in 1985 and
69 percent in 1984. Although most of these plans paid 100
percent of such charges, 12 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 one-
fifth of participants with basic surgical benefits were covered
by a schedule of payments, listing the maximum amount pay-
able for each operation. Charges in excess of the scheduled
amount were usually covered by a major medical plan.

Major. medical coverage (tables 34-36). Major medical
benefits, provided to 82 percent of the health insurance par-
ticipants, generally covered a wide range of medical serv-
ices both in and out of the hospital. Because more employees
are selecting health maintenance organizations (HMO’s), the
proportion of major medical participants has dropped from
92 percent in 1983. (HMO’s typically provide first-dollar or
basic coverage for most health services and, therefore, rarely
provide major medical benefits.)

There are two types of major medical plans: One supple-
ments basic benefits either by covering expenses which ex-
ceed basic benefit limitations or by covering expenses not

9 This limitation is commonly found in comprehensive major medical
plans. These plans usually cover hospital expenses in full up to a specified
‘dollar amount per confinement or per year (typically between $1,000 and
$10,000) and 80 percent thereafter. For this study, the full-coverage por-
tion was treated as a basic benefit and the 80-percent portion as major
medical.

28

paid by the basic plan; the other is comprehensive and stands
alone without basic plan coverage. Comprehensive major
medical policies have been embraced by employers seeking
to contain costs of providing health care, because they may
eliminate first-dollar coverage.'°

With very few exceptions, major medical benefits are ‘not
paid until the participants have paid a deductible. The pur-
pose of this deductible is to keep the premium 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, applying to nearly half of
all plan participants. However, 36 percent were required to
pay deductibles of $150 or more in 1986, up from 29 per-
cent in 1985, 21 percent in 1984, and 12 percent in 1983
(chart 1). Higher deductibles were less prevalent 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 ex-
penses. Almost seven-eighths of the participants were in plans
that paid 80 percent of expenses, with the remaining 20 per-
cent to be paid by the worker. For over four-fifths of the
participants, however, the percentage paid by the plan in-
creased 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 per-
cent 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 participants were co-
vered.'! In 1986, outlays for covered expenses were capped
at $1,200 or less per year for 3 out of 4 participants with
“*stop-loss”” coverage.

Benefits for 80 percent of major medical participants were
subject to a ceiling on the amount payable by the plan, usually
a lifetime maximum. In 1986, the most common limitation
was $1 million; $250,000 had been the most common limit
until 1985. The average lifetime maximum was
$570,000—an increase of 67 percent since 1982. The propor-
tion of participants in plans with unlimited payments also
increased in that period, from 14 to 20 percent.

Dental coverage (tables 37-40). Seventy-one percent of the
participants in health insurance plans received coverage for
dental expenses, a slight decline from 1985. Nearly all den-
tal plans covered a wide range of services including exami-
nations, X-rays, and restorative procedures such as fillings,
periodontal care, and inlays. Plans covering orthodontic ex~

10 Comprehensive major medical plans can be broken down into strict
and modified varieties. All expenses covered are subject to the deductible
and coinsurance provisions under the strict version, whereas the modified
version might cover hospital, or hospital and surgical, expenses in full up
toa specified dollar amount without the application of a deductible. (Also,
see footnote 9.)

11 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. 11-16.


Table 84. Selected defined contribution plans: Percent of full-time participants by age and length-of-service requi.

ments for participation, medium and large firms, 1986

, Professional and adminis- | Technical and clerical i
All participants trative participants participants Production participants
, ‘ Em- Em- Em- Em.
Age and service requirement | savings |Deferred| ployee | Savings |Deterred| ployee | Savings |Deferred| ployee | Savings |Deferred} ployee
Provision’ ‘andj profit- | stock | and | profit. | stock | and | profit. | stock | and | profit. | stock
thrift | sharing | owner- | thrift | sharing | owner- | thrift | sharing | owner- | thrift | sharing | owner-
plans | plans | ship | plans | plans | ship | plans | plans | ship | plans | plans | ship
plans plans plans plans
Total 100 100 100 100 100 100 100 100 100 100 100 100
With minimum age and/or service .
requirement | 90 86 74 88 83 72 a 86 84 92 88 69
Service requirement only . 73 69 68 72 64 66 72 65 79 7 74 62
3 months or less 7 4 4 7 3 2 7 4 3 8 5 5
6 months ... 8 7 5 8 4 5 6 8 4 10 9 5
7-11 months .. (9) - - @ - - @ - - - = -
1 year . 50 49 36 50 44 41 49 44 45 83 56 27
2 years 5 2 10 4 1 8 1 10 5 2 13
2 7 13 3 12 " 2 12 17 2 2 12
Oo] - - |e] - -|o]- - - - -
‘Age 20 or less | 6 3 1 6 2 1 6 1 1 7 5 2
No service requirement ...../  @) 0 - ia © - 1 = - - fol -
1-11 months of service 4 1 oO) 4 | 0 ic) 2/1 0 (a) 5 1 1
1 year . 2 1 2 1 is) 3 1 6 2 3 1
Age 21... .| 10 12 9 16 4 13 14 7 8 4
No service requirement ..... 1 ie) 1 0 fe) 1 @ @ 1 re) 1
1-6 months of service 1 3 - 2 4 - 2 4 - a 3 -
8 7 3 7 "1 3 10 9 3 6 5 3
i] 1 (9) @ 1 @ ca) 1 re) ie] 1 @
Age 22 or older’ .... ro) 1 1 2 1 ro) 5 1 re) 1 1
1-11 months of service = 2 - - 2 - - 5 - ~ -
1 year .. i) () 1 1 1 1 i) i) 1 i) - 1
‘Over 1 year - - io) - - iy) - - iy) - - -
Without minimum age and/or
service requirement 10 14 26 12 7 28 9 14 16 8 12 3t
Age and service requirement not
determinable fom a @ - (3) iv] - is) ie) - - 19)

* If a 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 nearly all plans
must allow participation to full-time employees who have reached age
21 and who have completed 1 year of service. Plans may impose a
service requirement of up to 3 years if the employee is vested immedi-
ately upon participation. The Internal Revenue Service announced that

87

the compliance date for most plan sponsors is June 30, 1986. However,
collectively bargained plans need not comply until the earlier of: 1)
the expiration date of the collective bargaining agreement, or 2)
danuary 1, 1987.

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

1



Table 75. Cash or deferred arrangements:' Percent of
full-time employees participating in plans permitting
employee contributions with pretax doilars, medium and
large firms, 1986

Profes-
sional | Techni-
and cal and | Produc-
tem Al eae [2dminis- | clerical | tion em-
Ployees | trative | employ- | ployees
employ-| ees
ees
Percent of all employees in plans
with cash or deferred arrangement 33 48 39 20
Salary reduction plans . 3t 46 37 19
Deferral of profit sharing
allocation 2 1 2 1
Salary reduction plans
100 | 100 | 100 | 100
67 70 69 60
Profit sharing plans .. 19 15 19 25
* Money purchase pension plans 2 2 1 3
Freestanding plans® "W 13 10 10
Other 1 ) i) 2

* Tabulations show percent of employees participating in plans to which
they may make contributions with pretax dollars, deferring otherwise tax-
able income. Not all participants may elect to make such contributions.

? Employer contributions are not made to the plan. Includes employes
contributions permitted under either section 401(k) or 403(b) of the Internal
Revenue Code.

+ Less than 0.5 percent.

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

82

Table 76. Savings and thrift plans: Percent of full-time
participants by maximum allowable employee contribution,"
medium and large firms, 1986

Protes-
sional | Techni-
; ‘tt par- |. 294 | cal and | Produc-
Maximum allowable contribution? | 7; PAt- | adminis-| clerical jtion par-
Ps trative | partici- | ticipants
Partici- | pants
Pants
Total... 100 | 100 | 100 | 100
Percent of employee eamings .. 98 99 99 94
Less than 5 percent .. 1 1 1 e
5 percent .. rs) - i+) 1
6 percent .. 4 4 5 3
8 percent . 5 7 4 4
9 percent .. 1 1 1 a)
10 percent 13 12 14 13
10.01-10.99 percent iy) iv) i) -
14 percent 1 1 1 1
11,01-11.99 percent 0 o) 0) e
12 percent 13 12 15 11
12.01-12.99 percent a) eo ro) e
13 percent 4 4 5 3
14 percent 2 2 1 1
14.01-14.99 percent i) - - 1
15 percent 9 "W 1” 5
16 percent 29 ar 28 34
16.01-16.99 percent a) - - 1
17 percent 5 6 3 7
17.01-17.99 percent 4 iv) iy) 1
18 percent 2 a 2 1
20 percent 2 3 2 1
21.01-24.99 pe 2 3 2 1
25 percent 2 2 1 3
Greater than 25 percent 1 is) i) 4
Specified dollar amount. 2/ @ 1 5
Other 1 1 1 1

‘ Includes contributions that may not be matched by the employer.

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

® Less than 0.5 percent.

* Includes participants in plans where the employee's contribution was
a fixed percent of earnings up to a specified dollar level and a higher per-
centage above that level.

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



Table 9. Paid vacations: Percent of full-time participants by Table 10. Paid personal leave: Percent of full-time

length of service required to take vacation, medium and employees by number of paid personal leave days
targe firms, 1986 . provided per year, medium and large firms, 1986
Protes- Protes-
sional | Techni- sional |Techri-|,,
‘llpar- | and | eal and | Produc ‘Altem-| and. |cal ang|Produc-
Length of service requirement | ,-; PRI. |adminis-| clerical |tion par- Number of days ‘ ‘admin. | clerical |_ ton
i trative | partici. | ticipants Ployees| istrative |employ-| °MPOY-
partici- | pants lemploy-| ees | °°
Pants ees
Total 100 | 100 | 100 100 | 100 | 100 | 100
With service requirement 7 95 96 98 2 | 93 | 35] 15
1 month 5 8 7 3 2 2 3 1
2 months 3 4 2 2 5 8 8 2
3 months 9 10 1 9 3 4 4 2
2 1 1 3 4 4 6 3
a7 45 45 29 4 6 5 2
1 1 2 2 2 3 3 1
39 26 29 51 3 7 4 1
0) - co) iv) Varies by length of service 2 1 2 3
j Without service requirement .. 3 5 3 1 Not provided paid personal leave 7 | 67 | 65] 85
: Senyce requirement not determin- 0 0 0 0 * Workers were provided as much personal leave as they needed.
i NOTE: Because of rounding, sums of individual items may not equal
i * Less than 0.5 percent. totals.

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

Table 11. Paid funeral leave: Percent of full-time
employees by number of paid funeral leave days available
per occurrence, medium and large firms, 1986

: Profes-
sional |Techni-| podug.
alleme) and cal 2nd ton
Number of days in .
Ployees | srrative employe. jemploy
lemptoy-| ees
ees
Total 100 | 100 | 100 | 100
| Provided paid funeral leave 88 87 87 88
1 day .. 1 1 1 2
! 2 days 2 2 2 3
j 3 days 6s | 55] s4| 73
| 4 days 3 3 3 2
H 5 days joj 13] 17 5
! More than § days a) 19) 1) 0
Varies by length of service 7/4 9 3
Number of days not availat 0) io) Yo v)
Not provided paid funeral leave wz] 13] 13] 12
Number of days varies by relation-
ship to deceased? ... 23 | 24| 30) 19

* Less than 0.5 percent.
* The maximum number of days provided for any occurrence was in-
cluded in the distribution of funeral feave days.

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


Table 51. Life insurance: Percent of full-time Participants Table 52. Life insurance: Percent of full-time participants

with dependent coverage by type and amount of coverage, by length-of-service requirements for participation,’
medium and large firms, 1986 medium and large firms, 1986 |
i
Profes- Profes- i
sional | Techni- sional | Techni- i
All pare | 290 | cal and | Produc- All par-|_29d_| cal and | Produc-
Type and amount of coverage | J P3\- | adminis-| clerical |tion par- Length-of-service requirement | ic;.ants |adminis-| clerical jtion par-
in trative | partici- | ticipants trative | partici- | ticipants
partici- | “pants partici- | pants
pants pants
Total oo | 100 | 100 | 100 Total .. 100 | 100 | 100 | 100
Death of spouse 100 | 100 | too | 100 With service requirement 84 42 54 62
Flat benefit 88 86 84 1 1 month 7 7 16 19
Less thai 2 O) 2 3 2 months .. 7 3 2 1
$1,000 26 5 23 36 3 months .. 19 14 24 20
$1,500 12 16 14 7 4-5 months .. 1 ne) a) 2
$2,001 14 13 9 18 6 months .. 7 6 9 7
$2,50 8 7 8 8 7-41 months a - co) 1
$3,001 3 1 2 4 1 year 1 1 1 1
$4,001 1 1 QO 1 Over 1 year 1 1 1 1
$5,001 24 30 23 13
More than $5,000 2 4 3 Y Without service requirement .. 46 58 46 38
Benefit varies ws 12 14 16 7 Service requirement not
By age of spouse 10) 4 1 - determinable ... ie) a) @ ia)
By empioyee earings 2 3 2 2
By employee option .. 9 W 13 5 Not applicable—plan not
available to new employees (a) 7) ro) io)
‘Amount of coverage not
determinable .. 1 QO i) 2 * 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-
Death of child 97 99 98 96 quently an administrative time lag between completion of the require-
Flat benefit 65 68 63 69 ment and the actual start of participation. If the lag was 1 month or |
Less than $1,000 .. 6 5 6 6 more, it was included in the service requirement. Minimum age require-
$1,000 26 20 19 34 ments are rare.
$1,500 14 19 13 1 2 Less than 0.6 percent.
$2,000 10 10 10 9
$2,500 6 9 9 3 NOTE: Because of rounding, sums of individual items may not equal
$3,000 1 2 2 oO totals. Dash indicates no employees in this category.
$4,000 iv) 1 1) ~
$5,000 .. 2 2 3 0
More than $5,000 .. 0) ) 1 1)
Benefit varies 32 30 34 31 Table 53. Life insurance: Percent of full-time participants
By age of child? . 23 24 22 24 by effect of retirement on basic life insurance coverage,
By employee earnings .. 2 3 2 2 medium and large firms, 1986
By employee option .. 7 7 10 5
Profes-
Amount of coverage not sional | Techni-
determinable ... 1 Y Oy 2 ‘All pare |_ 29d | cal and | Produc-
Effect of retirement tieiponte|2dminis-| clerical |tion par-
Insurance on child not provided .| 3 1 2 4 Pants/ trative | partici- | ticipants
partici- | pants
* Less than 0.5 percent. Pants
2 Amount of insurance increases at some point after 1 year of age. Totat 100 | 100 | 100 | 100
NOTE: Because of rounding, sums of individual items may not equal to- tinues' 59 64 6 66
tals. Dash indicates no employees in this category. tn Ee ae tor ite : 7 61 £0 3
Continues in full 2 3 3 2
Reduced once 29 29 28 29
Reduced more than once
during retirement 25 29 27 at
Continues in form of paid-up
insurance® @ 1 1 0)
Geases during retirement 2 2 1 3
Provision not determinable © iv) is) a)
Insurance discontinued immediately .| 39 34 38 43
Effect not determinable 1 2 2 1

* Includes plans in which coverage is fully paid by retiree.

? 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-
tals.

52


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

firms, United States,’ 1986

Minimum Number of workers in establishments
employment in} Number of
Industry division? establishments | , Number Professional .
within scope of | establishments) Toya an Teonnical 24 | Production
survey administrative
Within scope of survey

All industries - 45,525 24,110,418 | 5,906,430 | 5,369,631 10,026,761
Manufacturing 18,610 14,990,401 | 2,744,932 1,647,309 6,798,243
Nonmanufacturing - 26,714 12,720,017 | 3,161,498 | 3,722,322 9,228,518

Mining 250 560 364,144 104,777 67,344 183,275
Construction 250 573 244,841 59,814 34,890 122,634
Transportation, communications, electric, gas, and

sanitary services .. 100-250 4,126 2,887,408 723,689 737,876 4,117,508
Wholesale trade 100 5,094 1,095,915 315,001 261,084 449,235
Retail trade . 250 4,496,307 567,860 909,086 4,207,883
Finance, insurance, and real estate .. 100 2,729,827 938,933 1,492,516 86,620
Selected services’ * 50-100 2,878 901,575 451,424 279,827 61,413

Studied”

All industries .. - 1,308 4,346,361-| 1,222,928 958,054 1,784,137
Manute turing ..|* 100-250 578 2,995,432 727,229 374,163 1,266,553
Nonmanutacturing - 730 1,950,929 495,699 583,891 517,584

Mining 250 24 33,544 15,050 9.311 8,912
Construction 250 20 29,491 7,086 4,293 14,249
Transportation, communications, electric, gas, and

sanitary services . 100-250 153 1,052,775 248,431 262,961 390,489
Wholesale trade 100 112 3,698 13,687 10,402 11,594
Retall trade .. 250 135 370,350 43,931 79,235 78,291
Finanoe, insurance, and real estate .. 100 207 341,699 122,918 192,108 5,169
Selected services’ * 50-100 82 84,372 44,596 25,581 8,880

* Excludes Alaska and Hawaii

2 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 sample error.
See section on reliability of estimates.

* This figure includes out-of-scope workers. These workers—executive
management, part time, temporary, seasonal, and operating personnel in
constant travel status (2.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. Thase estimates differ from those developed in
the 1986 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;
electrical machinery, equipment, and supplies; transportation equipment;
and instruments and related products. Minimum size was 250 in all other

This multilevel approach has the advantage of clearly point-
ing out typical benefit plan characteristics after the preva-
lence 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 em-
ployees with orthodontic coverage, multiply the percent of
those with dental plans that cover orthodontia (table 37) by
the percent of health insurance participants with dental cover-
age (table 28), and multiply that product by the percent of
all employees who have health insurance coverage (table 1).

Tables 5, 17-19, and 61 differ from other tables because
they display average benefit values rather than percentages

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 250 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 alt 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
tesponse.

of workers. These tables present the averages for all covered
employees; calculations exclude workers without the benefit.

Survey response

Each combination of occupational group and work sched-
ule or benefit area (e.g., health insurance for production em-
ployees) was treated as an individual survey, and separate
estimates were developed for each. This treatment facilitat-
ed the use of partially completed establishment reports in the
survey. Therefore, the actual number of responses for the
survey varies for each combination.

94



Table 67. Defined benefit pension plans:' Percent of full-time participants in plans granting ad hoc postretire-
ment annuity increases,’ medium and large firms, 1986—Continued

Professional and i " fc.

i oe ati Technical and | Production partici-

Characteristic All participants administrative i ic {
participants clerical participants pants

Benefit formula for most recent

increase
Total .. 100 100 100 100
Flat increase 38 40 44 36
Monthly dollar amount .. 5 2 1 8
Less than $10.00 2 = - 4
$10.00 1 19] i) 2
$10.01-$15.00 .. i) ia) - =
$15.01-$20.00 .. 0) ° e o)
More than $20.00 1 - - 1
Varies by date of retirement 1 1 1 1
Percent of present benefit .. 32 38 43 25
Less than 5.0 4 6 5 3
2 1 1 a
1 2 2 Q
1 3 ie) 19)
1 1) 1 ie)
3 2 1 4
1 1 1 1
More than 15.0 0) iv) 1 is)
Varies by date of 20 22 31 14
‘Type of flat increase not determinable 1 - - 1
Increase per year of retirement 32 39 39 24
Monthly dollar amount .. 2 3 1 1
Percent of present benefit .. 30 36 938 23
Less than 2.0 6 6 10 8
20 3 5 3 2
3.0 4 5 6 2
40 2 3 2 2
41-49 6 6 8 5
5.0 4 4 3 4
6.0 1 1 1 )
Varies by date of retirement 4 5 4 4
Increase per year of service 28 7 14 39
Monthly dollar amount .. a7 16 13 38
Less than §.50 1 - - 2
$.50 3 2 2 3
$1.00 .. 18 1 8 26
$1.01-$1.99 vl 0 fe) -
$2.00 1 1 1 1
More iN $2.00 .. 1 1 1 1
Varies by date of retirement 3 1 2 5
Percent of present benefit .. 1 1 1 1
Combination of two or more benefit formulas .. 2 4 2 2
Type of formula not determinable ro) 1 1 0)
* Excludes supplemental pension plans. NOTE: Because of rounding, sums of individual items may |
? Unscheduled increases in pension payments for employees not equal totals. Dash indicates no employees in this category. i

retiring prior to 1986. Excludes one-time jump-sum payments,
+ Less than 0.5 percent.

B


Table.28. Health care benefits: Percent of full-time participants by coverage for selected categories of medical care,
medium and large firms, 1986

Care provided
Category of medical care Total , ; By basic Caro not
al By basic By major benefits and | Provided"
benefits only’ | medical only” major medical
All participants. i
Hospital room and board... 100 99 24 35 40 C1
Hospitalization—miscellaneous services 100 99 24 36 40 1
Outpatient care* 100 99 24 38 41 1
Extended care faclity* 100 70 29 30 1 30
Home health care* .. 100 66 30 25 1 34
Surgical . 100 99 37 25 38 1
Physician visits—in hospital .. 100 99 21 51 27 1
Physician visits—office ... 400 96 16 75 5 4
Diagnostic X-ray and laboratory* 100 99 29 47 24 1
Prescription drugs—nonhospital .. 100 97 25 69 3 3
Private-duty nursing 100 94 14 80 1 6
Mental health care .. 100 99 19 35 45 1
Dental . 100 71 68 3 - 29
Vision .. 100 40 35 5 0) 60
Professional and administrative
Hospital room and board 100 99 25 38 36 1
Hospitalization—miscellaneous services 100 99 25 39 36 1
Outpatient care* 100 99 20 40 39 1
Extended care facili 100 14 3t at 1 26
Home health care® 100 74 33 27 TI 29
Surgical 100 99 37 28 35 1
Physician visits—in hospital 100 99 21 58 24 1
Physician visits—office 100 99 18 78 2 1
Diagnostic X-ray and labor . 100 99 29 5t 19 1
Prescription drugs—nonhospital 100 97 25 69 3 3
Private-duty nursing .. 100 97 15 at 10) 3
Mental health care 100 99 18 38 1
Dental ... 100 78 11 4 - 25
Vision 100 39 33 6 0) 61 i
Technical and clerical i
Hospital room and board 100 99 24 38 36 1
Hospitalization—miscellaneous services 100 99 24 39 36 1
Outpatient care* 100 99 20 42 37 1
Extended care facility’ 100 69 28 31 W 31
Home health care® 100 69 at 27 1 31
Surgical 100 99 37 27 36 1
Physician visits—in hospital 100 99 21 56 22 1
Physician visits—office 100 98 18 7 3 2
Diagnostic X-ray and laborato 100 99 30 50 20 1
Prescription drugs—nonhospital 100 95 22 71 3 4
Private-duty nursing 100 96 15 81 oO 4
Mental health care 100 99 18 40 41 1
Dental 100 72 68 4 - 28 |
Vision 100 a 34 6 é) 59 i

See footnotes at end of table.

34


Table 44. Health care benefits: Percent of full-time
Participants by coverage with selected cost containment
features, medium and large firms, 1986

Profes-
sional | Techni-
Allpar- |_ 294 _ | cal and | Produc-
Cost containment feature | ante | adminis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants
Total .. 100 100 100 100
Covered by at least one of the
listed cost containment features'..| 68 70 70 65
Incentive to seek second
surgical opinion .. 35 40 40 28
Higher coinsurance, or lower oF
no deductible for outpatient
surgery .. 28 a 33 23
Higher payment for generic
prescription drugs .. 7 7 7 6
No of limited reimbursement for |
nonemergency weekend
admissions to hospital .. 10 13 13 8
‘Separate deductible for hospital
admission 9 10 9 7
Urging prehospitalization testing .| 47 51 82 43
Preadmission certification
requirement .. 16 18 15 16
Higher payment for delivery at
birthing center 12 15 12 "
Incentive to audit hospital
statement 2 3 2 1
Not covered by any of the listed
cost containment features ... 32 29 29 34
Dental plan only? . 1 1 1 9)

* The total is fess than the sum of the individual items because many
workers participate in plans with more than one feature.
? Participants who elected dental coverage only were not included in

this tabulation.
* Less than 0.5 percent.



|
|

Table 49. Life insurance: Percent of full-time participants in plans with muitiple-of-earnings formulas’ by amount of
basic insurance and maximum coverage provisions, medium and large firms, 1986—Continued

in plans In plans with maximum coverage
Formula Total without
maximum Al Less than | $50,000- | $100,000- | $250,000- | $500,000 or
coverage ‘$50,000 | $99,999 | $249,999 | $499,999 | more
Production
Total 400 48 62 9 10 at 8 6
Life insurance is equal to annual |
earnings times i
Less than 1.0 4 1 i) r) 1 - ) i
56 3t 25 7 2 12 2
1 1 iW) - - iv) is]
7 2 5 1 3 1 0 rc
1 - 1 - - 4 - -
26 10 16 to) 3 6 5 2
) r) - - : - -
2 e 2 - 1 - 9) iv)
1 - 1 - 1 - - -
2 1 9) - iv) Q 9)
iy) - iy) - - - o iV)
Muttipie varying with earnings . 1 - 1 1 - - 6 -
* Includes participants in plans in which insurance equaled a multi: sumed to have 15 years of service.

ple of earnings, plus or minus a specific amount. ? Less than 0.5 percent.

? When the multiple-of-earnings formula varied with age, the maxi-
mum multiple was tabulated. A few plans varied the multiple-of-earn-
ings formula according to service; in these cases, a participant was as-

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

Table 50. Life insurance: Percent of full-time participants in
plans with flat dollar insurance’ by amount of basic
insurance, medium and large firms, 1986

Profes-
sional | Techni-
All par-|_2nd_| eal and | Produc-
Amount of insurance ticipants adminis-} clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants:
Total .. 100 100 100 100
Less than $2,000 2 3 3 2
$2,000-$4,999 .. 17 19 27 15 i
$5,000-$9,998 .. 29 33 27 30 |
$10,000-$14,999 30 25 29 30
$15,000-$19,999, 12 9 7 13
$20,000-$24,999 3 6 2 2
$25,000-$29,999 4 3 3 5 |
$30,000 and over 3 2 2 4 |
” Excludes participants in plans where insurance was @ flat amount
based on service.
NOTE: Because of rounding, sums of individual items may not equal to-
tals.

51


Table 45. Health care benefits: Percent of full-time participants in.contributory plans by type and amount of employee

contribution, medium and large firms, 1986

i Professional and Technical and clerical i ‘i
All participants, administrative participants participants Production participants
Type and amount of contribution’
Single Family Single Family Single Family Single Family
coverage | coverage’ | coverage | coverage? | coverage | coverage’ | coverage | coverage’
Total . 400 100 100 100 100 100 100 100
Flat monthly amount .. 89 89 89 89 87 88 89 89
Less than $5.00 19 4 18 3 16 a 24 5
$5,00-89.99 ... 20 7 18 6 16 5 26 9
$10.00-$14.99 15 7 7 7 16 5 13 9
$15.00-$19.99 .. rT 7 12 8 14 6 8 8
$20.00-$29.99 13 " 16 "1 16 10 10 12
$30.00-$39.99 2 " 3 12 3 12 2 10
$40.00-$49.99 1 10 i 11 2 13 1 7
$50.00-$59.99 } 8 7) 8 0 9 e 6
$60.00-$69.99 ¢) 6 0 5 1 6 ea 6
$70.00-$79.99 - 5 - 5 - 5 - 4
$80.00-$89.99 - 2 - 3 - 4 - 1
$90,00-$99.99 - 2 - 2 - 2 - 2
$100.00 or greater .. - 5 - 5 - 6 - 4
‘Composite rate* 6 4 4 3 4 3 8 6
‘Amount varies by earnings . ) - ro) - ) - - -
Amount varies by employee® .. 5 4 5 9 6 3 2
Contribution not determinable 6 8 5 7 4 6 8 9

* Participants were counted as being in contributory plans if enrolled in
‘a noncontributory medical plan and in an optional contributory dental pro-
gram. Therefore, lower contribution rates shown partly reflect the cost of
dental care only.

2 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.

Table 46. Health care benefits: Percent of full

* A composite rate is a set contribution covering more than one 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.

ime

participants by length-of-service requirements for participa-

tion,’ medium and large firms,

Length-of-service requirement

Total ..

With service requirement ..
4 month
2 months
3 months
4-5 months ..
6 months
7-11 months
4 year .

Without service requirement

Service requirement not
determinable

1986
Profes-
sional | Techni-
and | cal and | Produc-
on pate| Sdminis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants
400 | 100 | 100 | 100
49 39 44 88
15 15 14 16
3 5 5 Ww
17 13 7 18
3 1 1 8
5 5 MJ s
1 1 i) 1
oe |/o}o]a
50 60 55 4
1 1 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 tt
and the actual start of participation.

was included in the service requirement.

rare.
? Less than 0.5 percent.

lag between completion of the requirement

It the fag was 1 month or more, it
Minimum age requirements are

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

tals.

47



Table 71. Defined.benefit pension pians:' Percent of
full-time participants by age and length-of-service
requirements for participation,’ medium and large firms, 1986

Profes-
Techni-
“ ‘ cal and | Produc-
Age and service requirement All par- i a
provision? ticipants | clerical |tion par-

partici- | ticipants
pants

Minimum requirement

Total .. 100 100 | 100 | 100

With minimum age and/or service

requirement 59 58 66 57

Service requirement only Fa a 22 19

8 months or less 1 1 1 1

4-5 months: rv) - - r0)

6 months 2 2 2 2

1 year 14 16 14 13

3 years .. iv) O 0 iv)
Over 3 years 3 3 5

Age 20 or less... 1 1 1 1

1-11 months of service 1 1 1 1

1 year iv) iv) iv) iv)

Age 21 20 22 22 18

No service requirement 2 2 2 1

1-6 months of service iv) iv) } iy)

1 year 18 20 20 17

‘Over 1 year .. Oo iv) QO QO

Age 22 or greater* 7 14 a 18

No service requirement 1 1 1 1

4-11 months of service ... 1 1 1 1

1 year 15 12 18 16

‘Over 1 year .. oO - - iy)

Without minimum age and/or
service requirement 40 4 34 43

Age and service requirement not
determinable ..

oO 4 0 i)

Maximum age requirement

Total .. 100 | 100 | 100 100

With maximum age limitation’ .. 58 64 67 50

Without maximum age limitation 42 36 33 50

+ Excludes supplemental pension plans.

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

> If a 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 nearly all plans must
allow participation to full-time employees who have reached the age of 21
and who have completed one year of service. For noncollectively bar-
gained plans, compliance was required by June 30, 1986; collectively bar-
gained were required to comply by the earlier of: (1) the expiration date of
the collective bargaining agreement, or (2) January 1, 1987. Since the
survey was conducted in January-June of 1986, previous ERISA rules
were in effect when surveyed establishments were contacted.

* ERISA legislation permitted plan administrators to impose a maximum
age for participation. Maximum age must have been within § years of the
plan's normal retirement date. The Omnibus Budget Reconciliation Act of
1986 will not permit such exclusions for plan years beginning in 1988.

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

716



Table 82. Payroll-based employee stock ownership plans:
Percent of full-time participants by selected provisions,
medium and large firms, 1986

Tabie 83. Deferred profit-sharing plans: Percent of full-time
Participants by selected provisions, medium and large firms,
1986

Profes- Profes-
sional | Techni- sional | Techni-
7 All par- | 274 | cal and | Produc- Allpar-| 2nd. | cal and | Produc.
Provision feipants| #@inis-| clerical | tion par- tem, tieipants|#minis-| clerical jtion par-
trative | partici | ticipants trative | partici- | ticipants
partici- | pants partici- | pants
pants pants

Formula for allocation of stock

Total .. 400 | 100 } 100 | 100
Equally to all participants ... 22 24 20 23
Based on participant's earnings 78 76 80

Earllest distribution of stock

Total 400 | 100 | 100
‘Seven years after allocation? 15 7 15 14
Upon termination, death, or disability]

only 85 83 85 86
Form of distribution

Total 100 | 100 | 100
Stock only 58 55 56 62
Cash or stoc! 42 45 44 38

‘ Ina payroll-based stock ownership plan (PAYSOP), the employer cre-
ates individual company stock accounts for employees, The employer
eams a tax credit equal to the value of the contribution, "A 1986 amend-
ment to the Intemal Revenue Code has repealed PAYSOP tax credits for
compensation paid or accrued after December 31, 4686.

2 ‘Active employees may receive the value of Aheir accounts at the end
of the 84th month after the stock is allocated. /The 1986 amendments to
the Internal Revenue Code permit the distribution of accounts immediately
upon plan termination. ‘

Includes plans which distributed cash unless stock was demanded,
and vice versa.

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

86

7 —#pases (on stated formula

Method of determining employer
contributions.

Total

100 100 | 100

52 55+] 55
qty] 45 45

se

lo predetermined formula...

Allocation of profits to Individual

employees

Total 100 | 100 | 100
Equally to all participants 1 (0) 0) 3
Based on participant's earnings...) 81 80 76 84

Based on participant's earnings and
service .. | 10 a 10 9
Other? 8 4 5

Loans from employees’ accounts
Total 100 | 100 | 100 | 100

Permitted
Not permitt

25 2B 24 24
75 72 76 76

* Less than 0.5 percent.

? Allocation of profits was based on either participant contributions as a
Percent of total contributions, participant earings and performance of
staff, or some other formula combining elements of the above.

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



Table 35. Health care benefits: Percent of full-time participants in plans with major medical coverage by coinsurance
provisions,’ medium and large firms, 1986

Final coinsurance provision

Professional and ,
Technical and clerical | production participants

Initial coinsurance Initial coinsurance {nitial coinsurance Initial coinsurance

Total ..

Final coinsurance changes to 100
percent

When covered expenses” reach:
$1-82,000 ..
$2,001-$4,000
$4,001-$6,000
$6,001-$8,000
$8,001-$10,000

More than $10,000

anon
3,93_3
321.

noasSoa

Final coinsurance changes to other than

100 percent ...

Coinsurance unchanged

cal. In nearly all instances, covered expenses must reach specified

' Coinsurance is the percant 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-

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.



Contents

Page
Chapter 1. Introduction 2.0.0... ccc ccc eee cece cece cece eet eee eee b eee t nent ee ee eens 1
Chapter 2. Highlights ©... 2.0... 26sec ccc ccc ce cece teeeee eee eee eee ete eee 2

Chapter 3. Work schedules and paid time off .........-. 0.0.0 cece eee e cece eee e ene e eee
Work schedules .
Paid lunch and rest periods .
Paid holidays
Paid vacations ....
Paid personal leave.
Paid funeral leave, jury-duty leave, and military leave ...

Chapter 4. Disability benefits ..
Paid sick leave ...........
Sickness and accident insurance

Long-term disability insurance .. 13
Chapter 5. Health care and life insurance ........... 6002 c ee ese e cece eee eee eee .. 27

Health care

Life insurance -
Chapter 6. Defined benefit pension plans ........... 0.0 cece cece cece eee e cree ete e neces 53
Chapter 7. Defined contribution plans .. 77

Cash or deferred arrangements ..
Savings and thrift plans ......
Employee stock ownership plans .
Profit-sharing plans
Participation and vesting

Chapter 8. Plan administration ...
Plan sponsor
Flexible: benefits plans and reimbursement accounts . .

Charts:
i. Major medical plans: Trends in selected deductible amounts, 1979-86 ..............+. 29
2. Health care: Selected types of medical care, 1984-86
3. Contributory health care: Average monthly employee contributions, 1982-86 ...
4. Private defined benefit pension plans: Average replacement rates based on 30
years of service including and excluding Social Security payments ..
5. Private defined benefit pension plans: Distribution of full-time participants
by monthly benefits based on earnings of $30,000 in the final year of service ........ 56

Tables:
1. Summary: Participation in employee benefit programs, 1986 ...............0.0.00005 4


Table 58. Defined benefit pension plans:'. Percent of full-time participants In plans with dollar amount benefit formutas* by

type and amount of formula, medium and large firms, 1986

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 maximur| maximum |to maximum
All participants Production
Total 100 100 100 Total 100 100 400
Flat monthly amount per year of Flat monthly amount per year of
service 59 73 55 | service .... nen 58 72 54
Less x 4 " 2 Less than $8.00 .. 5 12 2
$5.00-$9.99 10 12 9 $5,00-59.99 ...... " 11 10
$10.00-814.99 10 7 "1 $10,00-$14.99 . 10 7 4
$15.00-$19.99 .. a 20 24 $15.00-819.99 22 18 23
$20.00-$24.99 to 7 4 $20,00-$24.99 5 7 8
$25.00-$29.99 3 10 1 $25,00-$29.99 3 1 1
$30.00 or greater 2 6 1 $30.00 or gre 3 6 1
‘Amount per year varies by service...) 6 "1 5 ||Amount per year varies by service... 7 12 6
Amount per year varies by |Amount per year varies by
earnings a4 13 40 || earnings 34 14 40
‘Scheduled dollar amount varies by IScheduled dollar amount varies by
service .. ) 2 - service 1 2 -

* Excludes suppfemental pension plans.

* Excludes plans with dollar amount formulas that serve as a mini-

mum benefit alternative to a percent of earnings formula.

* Ifa plan contained more than one dollar amount formula, a primary

formula was selected and tabulated.

‘ These maximum provisions are independent of intemal Revenue

Code ceilings on pensions payable from defined benefit plans.

* Less than 0.5 percent.

NOTE: Data were insufficient to show professional-administrative and
technical-clerical workers separately. Because of rounding, sums of indi-
vidual items may not equal totals. Dash indicates no employees in this

category.

64



Table 49. Life insurance: . Percent of full-time participants in plans with multipte-of-earnings formulas‘ by amount of
basic insurance and maximum coverage provisions, medium and large firms, 1986

in plans In plans with maximum coverage
Formula Total without
maximum all Less than | $50,000- | $100,000- | $250,000- | $500,000 or
coverage $50,000 | $99,999 | $249,999 | $499,999 more
All participants
Total 400 48 52 4 9 20 " 8
Life insurance is equal to annual
earnings times:
Less than 1.0 3 2 2 17) 1 4 - 6
45 26 19 2 10 2 2
1 iv) 1 - - 1 - e
7 2 4 iv) 2 1 iv) 1
1 - 1 - - 1 - -
34 14 19 iv) 3 6 7 3
2 1 1 - - e 1 -
2 1 1 1 - °) eo
0, - ra) - iv) - - -
3 1 2 - - @ 1 1
1 QO 1 - i) @ “
Multiple varying with earnings 1 ro) 1 1 - ta) ic) -
Professional and administrative
Total .. 100 47 53 2 9 19 14 9
Life insurance is equal to annual
earnings times:*
Less than 1.0 .. 3 1 2 fo 1 1 - ral
36 21 15 2 3 6 2 2
2 i) 1 - - 1 - °
7 3 4 - 1 2 1 ro)
1 - 1 - - 1 - -
4 19 22 iv) 3 6 9 4
2 1 1 - - 7) 1 -
2 1 1 - 19) - e 1
is) - i) - 0 - ~ -
3 1 2 - - 1 1 1
1 1 1 - - re) o) ro)
Multiple varying with earnings 1 (a) 1 0 - 1 el -
Technical and clericat
Total .. 100 47 53 2 9 21 12 9
Life insurance is equal to annual
earnings times:
Less than 1.0 3 1 1 ie) 1 1 - v)
45 28 18 1 3 " 2 2
1 e 1 - - 1 - i)
6 5 - 2 i 1 1
1 - 1 - - 1 ~ -
32 13 18 (7) 3 5 7 3
2 1 1 - - r0) 1 -
2 1 2 - 1 - ) a
iv) - 0 - ia) ~ - -
3.0 4 1 3 - - 1 1 2
More than 3.0 2 1 1 - - 1 io) ro)
Multiple varying with earnings 1 (7) 1 1 - 1 6 -

See footnotes at end of table.

50



Appendix B: Availability of
the Survey’s Data Base

The tables published in this bulletin present the major find-
ings of the Employee Benefits Survey; results of additional
research appear in the Monthly Labor Review. However,
these tables cover only a portion of the employee benefits
information collected. Persons interested in all provisions
of a particular benefit studied during the annual survey can
purchase a set of magnetic tapes containing the survey’s data
base through the Office of Wages and Industrial Relations,
Bureau of Labor Statistics, Washington, DC 20212. The
charge for furnishing the data is limited to the cost of produc-
ing 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 collected. 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 in the data
base. For some data items not presented in this bulletin,
however, the data file is insufficient to produce reliable na-
tional 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, geograph-
ic regions, or establishment size classes. Full documenta-
tion accompanies the tapes, including examples of estimating
formulas. Although Bureau staff will respond to questions
concerning the content of the tapes, technical assistance in
developing estimates is limited 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, i.e., health, life, sickness and accident,
and long-term disability insurance; private retirement and
capital accumulation plans; flexible benefits and reimburse-
ment accounts; and paid time off provisions—lunch time, rest
periods, holidays, personal leave, vacations, funeral leave,
jury-duty leave, military leave, and sick leave. 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 con-
fidentiality of responding establishments.

Purchasers also receive the control file, which contains
establishment information required to produce estimates from
the plan data. Control file records include establishment sam-

99

ple weights and size codes; geographic, industrial, and em-
ployee group classification codes; and the number of wor-
kers in the employee group. The control file also lists all
benefit plans offered in each establishment, with the num-
ber of plan participants in each employee group. A plan is
listed on more than one control file record if it covers em-
ployees 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 establishment sched-
ule numbers on the control file are scrambled differently for
each employee group, it will not be possible to link together
plans offered to different employee groups within an estab-
lishment.

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 instructions for com-
pleting them are supplied to tape purchasers for interpreta-
tion of data on the file. Paid time off and flexible benefits
provisions are reported on collection forms which are also
provided to tape purchasers.

The analysis of insurance, retirement, and capital accumu-
lation 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 avail-
able on the magnetic tapes. Other insurance and pension anal-
ysis 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—
monthly contribution
Pretax status of contributions

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


Table 22. 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, 1986—Continued

Maximum weekly benefit
Type of payment tota | Tota | Less | s100 | $120 | $140 | steo | $200 | s250 | $200 | $350 | $400 | NO in
with | than | to to to to to to to to or |maximur
maximum! $100 | $119 | $139 | $159 | $199 | s249 | $209 | $349 | $399 | more
Production
Total .. 100 72 5| 1 2} 2a| 10 6 5 4 1 8 28
Fixed percent of earnings .. 92 70 5 Ww 2 21 10 4 4 4 1 8 22
Less than 50 0) - - - - = - - - - - - fa)
50 35 30 3 5 1] 18 2 1 1 1 - 2 5
55 1 1 - - - 1 - - 0 “0 s 2
57 oO} 0 Fs +
60 a 6) () 3 1 1 1 1 4 1/1 0 4 5
62 1 1 - - - - 1 - - - - 1
65 2; 0 -| -| -] 0 -f -| -|o -| - 2
68 1 1 - 1 - - - - - - -lo -
87 18 15 2 210 1 6 1 - - 1 4
70 9 7 1 11 0 4} - 1 -|/o]o}]o 2
7 3| 0 - - ~ - - - - - - 16 3
80 and over 1) 0 - -| 0 - - - - - : a 1
Percent of eamings varies 8 2 - - - - - 2) 0 - - 1 6

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

* Less than 0.5 percent.
tals. Dash indicates no employees in this catagory.

Table 23. Sickness and accident Insurance: Percent of
full-time participants by length-of-service requirements for
participation,’ medium and large firms, 1986

Profes-
sional | Techni-
, All par- cal and | Produc-
LLength-of-service requirement | seisants clerical |tion par-
partic. | ticipants
pants
Total. 100 400 | 100
With service requirement . 7 | 64 | 76 | 90
1 month 24 24 | 24 | 20
2 months u 9 | 13 | 12
2a | 19 | 25 | 25
40 5 6 | 12
6 4 5 7
4 3 2 4
(a) ® 1 9)
Without service requirement 23 | 36 | 24 | 20
Service requiremont not
determinable io) - - ie)

* 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.

24


Table 21. Sickness and accident insurance: Percent of full-time participants by type and duration of payments, medium anu

large firms, 1986

Maximum weeks of coverage

No
Type of payment Total | Less Greater | Varies Ne
than 13 14-25 26 27-51 52 than. by = | maximum
13 52 | service
All participants
All types ... 400 1 14 4 59 2 14 0 5 (0)
Fixed percent of earning 48 Y 6 3 35 1 1 Oy 2 0)
Less than 50 iv) ~ - - 0) 0) - ~ - ~
5 20 ) 2 1 16 iv) Q - (y 0)
0) - - - 0) iv) - - - -
iy) - - 0) - ~ - - - -
1 0 1 1 8 o ie) iv) oO iv)
) ~ - - 0) - ~ - -
1 ”) 0) 0 Q - 0) - 0) -
) ~ () - 0 - ~ - ~ -
9 Y 1 - 7 - v) v) 10) -
4 - 1 0) 3 - 0 - 0) -
2 - a) - ”) 1 - - 0 -
1 - (0) 0) 1 - - - - -
Percent of earnings varies .. 6 - 0) - 3 ° 2 - 1 -
By service .. 3 - - 2 = 1 - 0) -
By length of disability 1 - 0 - 6) ) 1 - - -
By both service and length of
sability . 1 - - 1 - - - Oy -
By earnings Y - - ) - - - -
Fixed weekly dollar benefit 27 iv} 8 1 14 Y 2 - 2 -
Less than $60 5 i) 3 - 2 ) - - - -
$60-$79 3 - 2 - 1 - - - - -
$80-$99 . 2 - 0) - 2 - - - - -
$100-$119 .. 4 - 1 3 ~ iV) - - -
$120-$139 .. 4 0 1 Yo 2 1) - - ~ -
$140-$158 .. 3 - iv) - 1 «) 1 - () -
$160-$179 .. 2 - ~ Y 2 10) 0 - - -
$180-$199 . 2 - 0) tu) 1 - Q - 1 -
$200-$219 . 2 - ) - 1 - 1 - 1 -
$220 or more 1 - “) - 1 - o) - - -
Weekly dollar benefit varies 19 0) 0 1 7 i) 9 1
By earnings 18 0) 0) ) 7 0 9 - 1
By service or fength of
disability 1 - 9) iv) QO Oo - - ca) -
Professional and administra-
tive
All types 100 1 6 3 1% 3 8 °) 3 0)
Fixed percent of earnings 68 1 3 3 55 3 1 0) 2 “0
Less than 50 .. () - - - - ) - - = -
50 26 0) - Q 24 a] () - ”) iv)
57 (0) ~ - % - ~ - - - ~
60 20 ro) 1 1 16 Y 0 0 1 (0)
62 0 ~ - - iV) - ~ - - -
65 2 ” - 1 “) - ) - ) -
66 0) ~ - - cs) - ~ - ~ -
67 W QO 2 ~ 9 - cv) 0) “ -
70 5 - 0) “) 4 - - - = -
7 3 - Yo ~ ) 2 - - iv) -
1 - io) 0“ 0 - - - - -
Percent of earnings varie 4 - 1) - 3 - 7 - 0) -
By service .. 6 - - - 2 - 4 - 0 -
By length of disability 3 - Y - 0) - 3 - - -
By both service and length of
disability 1 - - - 1 - - - 0) -
By earnings 0 - - - t) - - - - -

See footnotes at end of table.

20



Chart 3. Average employee contributions for health care benefits,
medium and large firms, 1982-86
Monthly contribution Monthly contribution
{in dotlars) {in dollars)
50 50
T T T
Family coverage ——
4 40
Production.
| 30
20 Individual coverage 20
Technical and clerical,
= 10
Production”
0 ! i | 0
1982 1983 1984 1985 1986

cent of employees. With a PPO, employers encourage em-
ployees to use designated health care providers.

The role of self-insurance in major medical plans increased
in 1986. Forty-five percent of major medical plan participants
were in self-insured plans, up from 38 percent in 1985. Self-
insurance of basic health and dental care remained about the
same, ranging from 27 percent of basic hospital and medi-.
cal participants to 39 percent of those with dental benefits.
Commercial carrier and Blue Cross-Blue Shield policies,
which in 1980 covered 5 in 6 employees receiving the
benefits shown in table 47, accounted for one-half or less
of the coverage in 1986. However, employers commonly
contract with commercial insurers to protect their self-insured
plans against medical claims exceeding a predetermined max-
imum dollar amount.

Life insurance (tables 48-53)
Ninety-six percent of full-time employees within the scope

of the survey participated in life insurance plans in 1986;
nearly ail participants (92 percent) 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 par-
ticipants was linked to their earnings, enabling the level of
protection to increase automatically with a rise in pay.
Earnings-based formulas were much more prevalent among
white-collar workers (82 percent) than among blue-collar
workers (48 percent). The most common method of tying
life insurance protection to earnings was to multiply the em-
ployee’s annual earnings by a factor of 1 or 2 and round the
product to the next $1,000. For example, an employee earn-
ing $22,700 would receive $46,000 of coverage under a plan
providing 2 times earnings ($22,700 times 2 equals $45,400,
which is rounded up to $46,000).

Nearly 1 in 2 employees in multiple-of-earnings plans had
insurance equal to their annual earnings. Two in five had
coverage equal to twice annual earnings or more. Multiple-
of-earnings formulas tended to be higher when employee con-
tributions were required, providing insurance at two or more

32


Chart 5. Monthly benefits under private defined benefit pension plans: Distribution of participants
assuming earnings of $30,000 in the final year of work, medium and large firms, 1986

Percent of Percent of
participants participants
50 50
40 | 40
30 b 4 30
20 - 4 20
20
10 years of 410
service
0 le)

Less than $200  $200-$399

Monthly pension benefit

$400-$599

$600-$799 $800-$999 $1,000 and greater

several years instead of changing each year. Nearly one-half
of the participants had uniform reduction factors, most com-
monly 3, 5, or 6 percent for each year of early retirement.
In plans with a low uniform reduction, such as 3 percent per
year, the employer is subsidizing some of the early retire-
ment benefit by making the reduction less severe than if
benefits were computed actuarially.

Two-thirds of all participants were covered by plans per-
mitting early retirement at age 55; generally, 10 to 15 years
of service were required. Fifteen percent of all participants
could retire earlier than age 55 if service requirements were
satisfied. Nine percent of the participants in plans with ear-
ly retirement could qualify: when the sum of age plus serv-
ice reached a specific amount. Such plans usually included
minimum service requirements ranging from 1 to 25 years;
age requirements of 50, 55, or 56 were sometimes specified.

The early retirement pension for 14 percent of participants
was supplemented by additional monthly payments if em-
ployees retired after meeting a specified age or length-of-
service requirement higher than the minimum needed to re-
tire. Plan sponsors include these special early retirement

56

benefits either to induce older workers to retire or as a re-
ward for long service.

Supplemental benefits from the private pension help to fill
the gap during the period between retirement and the start
of Social Security payments. Generally, supplemental pay-
ments end when Social Security payments begin (either
reduced payments at age 62 or full benefits at age 65), and
the reduced pension is then payable for life. (For most em-
ployees in this study, at least half of their retirement pen-
sion will be Social Security payments—see section on
replacement rates.) Other employers elect to offer similar
incentives outside of formal plan provisions to employees
who retire within a specified time period.?*

Disability retirement (table 65). A career-ending disability
may entitle an employee to a pension before the normal retire-

23 For the results of a survey of the incidence of early retirement incen-
tive programs, the types of incentives offered, and how successful they have
been, see Hewitt Associates, Plan Design and Experience in Early Retire-
ment Windows and Other Voluntary Separation Plans (Lincolnshire, Mlinois:
Hewitt Associates, 1986).



Table 68. Defined benefit pension plans:' Percent of
full-time participants by type of vesting schedule, medium
and large firms, 1986

Table 69. Defined benefit pension plans:' Percent of
full-time participants by provision for postretirement
survivor annuity, medium and large firms, 1986

Profes-
sional | Techni-
All pare 2nd | eal and | Produc-
Type of vesting schedule feipants adminis-| clerical on par-
trative | partici- ipants
partici. | pants
pants

Profes-
sional | Techni-
. - All par- and cal and | Produc-
Type of annuity for surviving spouse | jo, br4<|adminis-| clerical | tion par-
Pp trative | partici- | ticipants
partic- | pants
pants.

Total? . 100 | 100 | 100 | 100

i) iy) 0) i)

Immediate full vesting ..

Cliff vesting,‘ with full vesting after:
10 years of service at any age... 69 67 66 72
10 years of service after
age 16 .. -
10 years of service after age 19
or later®
Other*

no ©
+02 ©
as
n~

Graduated vesting,” with full vesting
after:
Less than 10 years of service
10 years of service
11 years of service
12-14 years of service
15 years of service"
Other’...

2
Rosanne

2
neeaae

Vesting provision not determinable ..| @) @ ie) a)

* Excludes supplemental pension plans.

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

* Less than 0.5 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. .

5 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, compliance was required by June 30, 1986; collectively bargained
plans were required to comply by the earlier of: (1) the expiration date of
the collective bargaining agreement, or (2) January 1, 1987. Since the
survey was conducted in January-June of 1986, previous ERISA rules
were in effect when the surveyed establishments were visited.

* Includes participants in plans containing service requirements for vest-
ing more liberal than ERISA standards.

” Graduated vesting schedules give an employee rights to a gradually
increasing share of pansion benefits determined by years of service, even-
tually 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 & percentage
points each year for 5 succeeding years, then 10 percentage points for
each of the next § years. Thus, 16 years is the maximum requirement for
this form of vesting.

* Participants in this group were in plans which call for 60 percent vest-
ing after 5 years of service if age plus service equals 45. Thereafter, the
vested percentage increases 10 percentage points each of the next §
years.

14

Total 100 | 100 | 100

Spouse's share of joint-and-survivor

annuity? only 92 93 94 90
50 percent of retiree’s pensior 18 14 7 22
51-9 percent of retiree’s

pension 6 4 3 10
100 percent of retiree's pension.| 1 i) ) 1
Alternative percentages at

‘etiree's option 66 75 73 56

‘Spouse's share of joint-and-survivor
annuity plus portion of retiree’s
pension 7

Portion of retirae’s accrued pension
‘only .|

* Excludes supplemental pension plans.

2 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.

5 Less than 0.8 percent.

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



Table 26. Long-term disability insurance: Percent of full-time
participants by length-of-service requirements for participa-

tion,’ medium and large firms, 1986
Profes-
sional | Techni-
; ; Al par- |__€nd__ | cal and | Produc-
Length-of-service requirement | cj ants | adminis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
Pants
Total .. 100 100 100 100
With service requirement 67 66 73 62
1 month 10 13 1 6
2 months 4 2 2 8
15 14 7 13
2 1 1 4
14 13 16 14
"1 1 14 9
3 3 3 2
1 1 2/ @
7 7 7 6
Without service requirement ... 33 34 27 38
Service requirement not
determinable ro) - - a

* 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
If the lag was 1 month or more, it
was included in the service requirement,

and the actual start of participation.

® Less than 0.5 percent.

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

Table 27. Long-term disability insurance: Percent of full-time participants in plans with limitations on benefits for
mental ilIness, medium and large firms, 1986

Professional and
Limitation All participants administrative partici. | Technical and clerical | production participants
pants Participants:

Total .. 100 100 100 100
Without limits .. 63 60 59 73
Benefits limited . 37 40 a 27

Benefits provided only it
institutionalized .. 1 2 2 Y
Uniess institutionalized, benefit
‘amount reduced 0) 0 ) 0)
Unless institutionalized, benefits
provided only for limited period 30 34 35 22
12 months 3 3 6 1
24 months 27 30 28 ral
Other . 0) 1 0 -
Benefits provided only for limited
period .. 4 4 5 5
0 10) - -
4 4 4 4
1 0 (v) 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.

26



Appendix A: Technical Note

Scope of survey

This survey of the incidence and characteristics of em-
ployee benefit plans covers private sector establishments! in
the United States, excluding Alaska and Hawaii, employing
at least 50, 100, or 250 workers, depending on the industry.
Industrial coverage includes: Mining; construction; manufac-
turing; transportation, communications, electric, gas, and
sanitary services; wholesale trade; retail trade; finance, in-
surance, and real estate; and selected services (table A-1).

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 in-
dustrial scope of the survey at the time of data collection are
excluded.

Table A-1 shows the estimated number of establishments
and employees within the scope of the survey and the num-
ber within the sample actually studied for each major indus-
try division.

Occupational groups

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

Professional-administrative: Includes occupations that re-
quire a foundation of knowledge in the theories, concepts,
principles, and practices of a broad field of science, learn-
ing, 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, originality, 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, tech-
nical support, protective services, and other such occupa-
tions that do not require full knowledge of a professional or
administrative field of work or the application of a high
level of creativity, originality, analytical ability, or indepen-
dent judgment. Job performance skills are typically acquired
through on-the-job experience and/or specific training which

1 For this survey, an establishment is an economic unit that produced goods
or services, a central administrative office, or an auxiliary unit providing
support services to a company. In manufacturing industries, the establish-
ment is usually a single physical location. In nonmanufacturing industries,
all locations of an individual company within a Metropolitan Statistical Area
(MSA) or within a nonmetropolitan county are usually considered an es-
tablishment.

92

is less than that usually represented by a baccalaureate
degree. These skills include the application of a practical
knowledge of established procedures, practices, precedents,
and guidelines.

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

Excluded from the survey are executive employees (de-
fined as those whose decisions have direct and substantial
effects on an organization’s policymaking); part-time, tem-
porary, and seasonal employees; and operating 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 holi-
days, paid vacations, paid personal leave, paid funeral leave,
paid military leave, paid jury-duty leave, paid sick leave,
sickness and accident insurance, long-term disability insur-
ance,.health insurance, life insurance, retirement and capi-
tal accumulation plans, and flexible benefits plans and
reimbursement accounts.

Sampling frame

The industrial scope of this survey was the same as that
of the Bureau’s 1986 National Survey of Professional, Ad-
ministrative, Technical, and Clerical Pay (PATC). The list
of establishments from which the sample was selected (called
the sampling frame) was the same as that used for the 1986
PATC survey, except that small establishments (below the
Employee Benefits Survey’s employment cutoffs noted in
table A-1) were not included. This sampling frame was
developed by refining data from the most recently available
State Unemployment Insurance (UI) reports for the 48 States
covered by the survey and the District of Columbia. The
reference date of the available UI reports was generally
March 1984. The refinement procedures included an effort
to ensure that most sampling frame units corresponded to
the definition of an establishment developed for this survey.
(A small number of sampling frame units were not refined
to correspond to the definition of an establishment because
of limited reporting ability of companies.)



Table 2. Work schedules: Percent of full-time employees by
number of hours scheduled per week,’ medium and large
firms, 1986

Table 4, Paid rest time: Percent of full-time employees by
minutes of paid rest time per day, medium and large firms,
1986

Profes- Profes-
sional | Techni- sional | Techni-
Atvem: |_2nd_ | cal and | Produc- Ateme| _2n4_ [eal ana |Prosue”
Work schedule fe adminis-| clerical |tion em- Minutes per day , admin- | clerical | 10"
Ployees |trative | employ- | ployees Ployees | trative |employ-|°TMPIOY-
employ-| ees lemploy-| ees | SS
22s, ees

is) io) 2

5 7 1

3 5 1

8 13 | -3

4 5 9)

79 69 90

2 @ 3

Hours per week not available ... is) ro) - )

* Work schedule data included regularly scheduled overtime, paid
funch, 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. Dash indicates no employees in this category.

Table 3. Paid lunch time: Percent of full-time employees
by minutes of paid lunch time per day, medium and large
firms, 1986

400 | 100 | 100 | 100

Total ...
Provided paid rest time

Under 15 minutes 1/0 | 0 3
15 minutes 4 3

‘Over 15 and under 20 minutes oO - - QO
20 minutes we | i9 | 33
‘Over 20 and under 30 minutes 4 2 3 6
30 minutes 34] 38) 40) 31
Over 30 ant 0) - 19) Vv)
40 minutes iV) 1)

Over 40 minutes 2] -] 0 5
Number of minutes not

available

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,
1986

Profes-
sionat | Techni-
and |cal and|Produe-
All em- Teta |_tion
loyees| 20min | clerical | enoigy,
P istrative |empioy-|°" >
lemploy-| ees

ees

Minutes per day

Protes-
sional | Techni-
Allpar-| and jcat and|Prosue-

item tic | admin- | clerical | Hon
pants istrative] partici- perk
| Pare | Pan

pants

100 | 100 | 100 | 100

Total
Provided paid lunch time 10 3 4] 7
Under 20 minutes 1] 0 i) 3
20 minutes 310 7
‘Over 20 and under 30 minutes 7) - -|0
30 minutes 1 1 6
‘Over 30 minutes. 1 2 2 1
Number of minutes not
available . 1 - - 1

90 97 96 83

Not provided paid lunch time

Paid holidays 10.0 | 102 | 98 | 100

Paid vacation by length of service:
‘At 6 months’ 55 | 60 | 57] 50

ge | 101 | 96] 75
11.0 | 105 | 102
135 | 13.0 | 120
165 | 160 | 153
19.0 | 189 | 179
212 | 20.7 | 203
227 | 225 ) 217
23.4 | 23.0 | 224

* 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 for these lengths of service. They are now included only for the
service periods for which they receive vacations.

® 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 70. Defined benefit pension plans: Percent of full-time participants by provision for preretirement survivor

annulty, medium and large firms, 1986

Professional and ,
‘Type of annuity for surviving spouse All participants administrative partici- Technica! anc Clerical | production participants
pants participants,
Total . 100 100 100 100
Preretiroment survivor annuity provided 99 100 99 99
Equivalent of joint and survivor
annuity? 65 64 63 68
Based on early retirement 60 58 56 63
Less than 50 percent o
employee pension 19) oO iv Oo
At extra employee cost oO iy) i) 1)
50 percent of employee
pension 48 43 45 52
At extra employee cos! 13 13 10 16
51-99 percent of employee
pension .. 4 3 5
At extra employee cost® oO iv) 0
100 percent of employee
pension ... 3 4 3 3
At extra employee cost rv) i) oO 0
Alternative percentages of
pension at employee's
option 5 7 5. 3
At extra employee cost “ oO oO 1
Based on normal retirement 6 6 6 5
At extra employee cost” iv] - - iv)
Portion of accrued employee
benefit 31 33 35 28
Reduced for early
retirement .. 18 at 23 14
Unreduced for early retirement . "1 10 10 13
Based on service projected to
normal retirement date . 2 2 2 1
Other annuity’ 2 2 2 3
‘Type of annuity not determinable ... oO o fv) 0
No preretirement survivor annuity
provided? 1 ) 1 1

‘ Excludes supplemental pension plans.

? The spouse annuity is computed as if 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 specificed percent of the reduced amount.

* 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.

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

75

7 Includes annuity based on a dollar amount formula or percent
‘of earnings.

* The Retirement Equity Act of 1984 requires that most pension
plans provide an automatic annuity for the surviving spouse of an
employee with vested benefits at the time of death. For noncollec-
tively bargained plans, compliance was required by the earlier of: (1)
the expiration date of the collective bargaining agreement, or (2)
January 1, 1987. Since the survey was conducted in January-June
of 1986, previous ERISA rules were in effect when the surveyed es-
tablishments were visited.

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



Table 72. Retirement and capital accumulation plan
coverage: Percent of full-time employees by participation In
retirement plans and capital accumulation plans, medium
and large firms, 1986

Profes-
sional | Techni-
‘and | cal and | Produc-

‘adminis-| clerical | tion em-
trative | employ- | ployees
employ-| ees
ees

All em-

Type of plan ployees

Total .. 100 100 | 100 100

Covered by retirement or capital

accumulation plan 91 93 93 88
Retirement’ only 67 62 64 72
Capital accumulation? only . 1 1 1 1
Retirement and capital

accumulation .. 22 30 28 14
Not covered by retirement or capital
accumulation plan 9 7 7 12

* Includes defined benefit pension plans and defined contribution plans
such as money purchase pension, profit shating, 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 account 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.

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

Table 73. Defined contribution and stock plans: Percent of
full-time employees participating by type of plan, medium
and large firms, 1986

Profes-

sional | Techni-

‘and _| cal and | Produc-

All em- | adminis-| clerical {tion em-

Ployees | ‘trative | employ- | ployees
employ-| ees

ees

Type of plan

Savings and thritt' ..

Profit sharing? . 22 22 22 22
Immediate cash only 1 1 1 1
Deferred benefits only 18 18 18 17
‘Combination ... 3 3 4 4

Employee stock ownership® 30 32 32 27
Payroll based employee sto

ownership 28 30 31 26
2 3 2
Money purchase pension 2 2 1 2

‘Stock bonus

‘Stock option
‘Stock purchase

* Includes 0.2 percent of employees in plans with both matching and
nonmatching employer contributions, Not all participants in such plans
may elect of be required to contribute.

? The total may be less than the sum of the individual items because
some employees participate in more than one type of profit sharing or em-
ployee stock ownership plan.

* Less than 0.5 percent.

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

81

Table 74, Retirement and capital accumulation plans:
Percent of full-time participants by combinations of pians,
medium and large firms, 1986

Profes-
sional | Techni-
‘Alt par |_ an | cal and | Produc-
‘Type of pian teipants |207inis-| clerical |tion par-

trative | partici- | ticipants
partici- | pants
pants

Total . 100 | 100 | 100 100

Defined benefit or money purchase
i 85 86 85 865

35 26 26 46

Profit sharing! ... 5 6 8 3
Savings and thrift 15 24 19 8
Stock® "1 10 12 "
Profit sharing’ and

savings 1 1 0 i)
Profit sharing’ and

stock? 5 5 9
Savings and stock* " 45 14 7

‘Two or more stock?
plans
Other combinations,

Profit sharing’ "1 10 10 "
With:

No other plan .. 8 7 8 9
Savings and thri 1 1 1 1
Stock? 1 1 1 1
Savings and stock’ i) 0 0 oy
Two or more stock

plans 7) 0 i) i?)
Savings and thrift 3 3 3 2
‘with:

No other plan .. 2 2 3 1

Stock’ 1 1 1 17)
Stock’ plan 1 1 2 1

With:
‘No other plan .. 1 1 2 1

* Excludes pure cash profit sharing plans.

® Employee stock ownership plans (ESOP’s), including payroll based
‘employee stock ownership plans (PAYSOP's), and stock bonus plans.

* Less than 0.5 percent.

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



plans have attracted much attention recently, only 5 percent
of all employees covered by the survey were eligible for
reimbursement accounts, and only 2 percent were offered
flexible benefits plans. Reimbursement accounts are used to
pay for expenses not covered by a company’s regular benefits

package, such as insurance premiums, child care, or health
care deductibles. A flexible benefits plan was defined in the
survey as a plan giving employees a choice among two or
more types of benefits.


(medical, educational, home improvements, etc.). The re-
maining participants could withdraw employer contributions
for any reason. Two-thirds of the participants who could
withdraw for any reason were subject to a penalty—usually
suspension of employer and employee contributions for 6
or 12 months, or forfeiture of non-vested employer contri-
butions. .

The ability of the participants to withdraw their own con-
tributions prior to retirement, death, disability, age 59 1/2,
or termination of employment depends upon whether the
money was contributed pretax or posttax. Pretax contribu-
tions are subject to Internal Revenue Code provisions and

. can only be withdrawn for hardship. Posttax contributions
are not subject to hardship rules, and many plans allow these
amounts to be withdrawn for any reason. However, a penalty
in the form of a 6- or 12-month suspension from further con-
tributions to the plan is common.

Another method of accessing an employee’s account prior
to final payout is through loan provisions—one-fourth of par-
ticipants in savings and thrift plans were allowed to borrow
from their accounts. One-half of the participants in plans per-
mitting loans were also able to withdraw part of their ac-
count for any reason. The other half were in plans that
prohibited withdrawals or allowed them only for hardship
reasons. Interest rates on employee loans were typically de-
termined by a specific economic indicator (such as the prime
rate or U.S. Treasury bill rate) or were at the discretion of
the plan sponsor (employer, employer association, or union).
Loans were generally required to be repaid within 5 years,
but longer payment periods applied for home purchase or
renovation loans.

Distribution (table 81). 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 (table 82)

Thirty percent of all employees in medium and large firms
participated in an employee stock ownership plan (ESOP), up
from 24 percent in 1985.27 These plans, usually funded en-
tirely by the employer, provide employees with stock in their
company. The employer pays a designated amount to a fund
that is invested primarily in company stock and makes benefit
distributions in either company stock or cash. The majority
of participants in ESOP’s were in payroll-based plans (PAY-
soP’s). Companies received a Federal 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’ ac-
counts. This tax credit expired on December 31, 1986.

While the maximum employer contribution to a PAYSOP

37 This proportion is limited to plans where stock was credited to em-
ployce accounts during 1986.

79

was fixed by law at 0.5 percent of payroll, employers had
some discretion in allocating that money to individual em-
ployees. Nearly 80 percent of 1986 participants were in plans
that allocated benefits in proportion to salaries. (By law, only
salaries up to $100,000 per year could be included in such
calculations.) The remaining participants were in plans that
allocated benefits equally to all participants.

The PAYSOP provisions in the Internal Revenue Code al-
lowed employer contributions to be distributed after they had
been held in an employee’s account for 7 years. Despite this
provision, 85 percent of PAYSOP participants had to wait until
termination of employment, death, or disability to have
benefits distributed. Only 15 percent of participants could
gain access to their benefits after 7 years. With the expira-
tion of the PAYSOP tax credit, employers who terminate their
plans may distribute accumulated benefits immediately.

Final distribution of PAYSOP benefits was in the form of
stock for 58 percent of participants. The remaining par-
ticipants could choose between a distribution in stock or the
equivalent in cash.

Profit-sharing plans (table 83)

Twenty-two percent of all employees had profit-sharing
plans in 1986, up from 18 percent in 1985. There are three
types of profit-sharing plans—cash plans (covering 1 per-
cent of the workers), deferred plans (18 percent), and plans
that offer a combination of cash and deferred benefits (3 per-
cent). In a cash plan, benefits are paid directly to the par-
ticipants in cash, usually at the end of the year, while a
deferred plan holds money in employee accounts until retire-
ment or another condition stipulated by the plan (disability,
death, etc.). In a combined plan, the employee may auto-
matically receive a portion of the profits in cash, with the
remainder placed in a deferred account, or the employee may
be given a choice of cash or deferred benefits.

Three-fifths of 1986 participants in deferred profit-sharing
plans had employer contributions determined by a specified
formuta, such as 4 percent of profits if annual sales were
$2-5 million, 8 percent if sales exceeded $5 million. The re-
maining participants were in plans where the employer con-
tribution was determined at the discretion of the employer.

Once the employer contribution is determined, it may be
allocated to individual participants in a number of ways. The
most common method of allocation was in proportion to
salary (81 percent of plan participants). Other allocation
methods included formulas based on earnings and service
(10 percent) and equal allocations to all participants (1 per-
cent). Another plan feature, loans from employee accounts,
was available to one-fourth of the participants in deferred
profit-sharing plans.

Participation and vesting (tables 84 and 85)

Minimum age and/or service participation requirements
are more common in defined contribution plans than in de-


Table 86. Plan administration: Percent of full-time participants in selected benefits by type of plan sponsor, medium and
large firms, 1986

tei Sickness and accident | Long-term disability i :
Plan sponsor Health insurance Life insurance inewance sneurance Defined benefit pension
All participants i
Total 100 100 100 100 100
Single employer 96 97 87 100 96
Multiemployer' .. 4 3 2 - 4
Mandated benefits* - - 1 - -
Employer association” . iy) 0 - 0 -
Professional and
administrative
100 100 100 100 100
100 39 82 100 100
Multiemployer’ .. i) oO - - iy)
Mandated benefits! - - 18 - -
Employer association’ . “ 0) - ) -
Technical and j
clerical |
Total 100 100 100 100 100
Single employer 28 at 99 99
Multiemployer’ .. 1 - 1
Mandated benefits? .. - 19 - -
Employer association’ . 1 - 1 - |
Production
Total 100 100 100 100 100
Single employer 93 94 90 100 92
Multiemployer’ .. 7 6 3 - 8
Mandated benefits? . - - 7 - -
Employer association’ . oO iv - - -
+ Individual employers in the same or in a related industry contributing a * Band of small employers in a common trade or business, for example,
negotiated amount to trust fund providing benefits for employees covered _savings and loan associations. The plan sponsored by the association is
under a collective bargaining agreement. not negotiated with the employees.
® The majority of the participants with mandated sickness and accident * Less than 0.5 percent.
insurance benefits were covered by State temporary disability plans. The
remaining employees (1 percent) were covered by the Railroad Unemployment NOTE: Because of rounding, sums of individual items may not equal
insurance Act. totals. Dash indicates no employees in this category.



ers participating, to provide surveywide estimates for each
example. As shown in the tabulations below, the length of
retirement was a significant factor in determining the size
of pension adjustments, with larger increases paid to per-
sons retired longest. Also where maximum increases were
specified, retirees with higher original pensions‘ had lower
percentage increases.

Monthly pension on

Years of retirement
December 31, 1980 “3 0 i

5 10 15

$250:
‘Average pension on December 31, 1985
Percent change, December 31, 1980-85 .

. $292 $319 $344
7 27 37

$750:
‘Average pension on December 31, 1985
Percent change, December 31, 1980-85 .

$832 $914 $988
WM (22 32

‘The BLs Consumer Price Index for All Urban Consumers
(CPI-V) rose 31 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 ad-
justments ranged from 35 to 119 percent of the price rise.

Only 3 percent of all participants were in plans that provid-
ed for automatic increases in pension benefits to compen-
sate for increases in the cost of living. In most instances,
these cost-of-living-adjustment formulas provided for benefit
adjustments proportional to increases in the BLS Consumer
Price Index. Nevertheless, ceilings on individual increases
limited periodic adjustments to 4 percent or less for most
of the covered workers. Nearly all of the affected participants
were in plans calling for annual adjustments. Lifetime ceil-
ings on increases were uncommon.

For the first time, the survey collected information on the
incidence of lump-sum payments made to current retirees.
In 1986, 6 percent of participants were in plans which gave
retirees at least 1 lump-sum payment during the 1981-85
period. These payments ranged from $100 to $1,000.
Retirees receiving these lump sums normally also received
permanent pension increases between 1981 and 1985. In fact,
they often received both adjustments in the same year.

Vesting (table 68). Even when an employee leaves an em-
ployer without qualifying for either a normal, early, or dis-
ability retirement benefit, a pension may ultimately be paid.
If certain conditions are satisfied at the time of separation,
workers have a vested interest in all or a portion of their ac-
crued pension benefits and may begin receiving benefits years
later.

Although all pension participants are entitled to vested
benefits under the Employee Retirement Income Security Act
of 1974 (ERISA), some variations exist as to when this oc-

26 The rate of increase was determined by dividing the annual average
CPL-U for 1985 by the annual average CPI-U for 1980. For a discussion of
postretirement increases, see Donald G. Schmitt, ‘“Postretirement Increases
Under Private Pension Plans,"” Monthly Labor Review, September 1984,
pp. 3-8.

58

curs. Most pension plans require 10 years of service before
benefits are guaranteed. While over two-thirds of the par-
ticipants were covered by the 10-year rule regardless of age,
one-sixth were affected by the plan sponsor’s right to ex-
clude years of service before a specified age in determining
vesting eligibility.?”

Unreduced vested pension payments begin at a plan’s nor-
mal retirement age, based on the benefit formula in effect
when an employee left the plan. Also, terminated and vest-
ed participants can receive a reduced pension under a plan's
early retirement provision if the participant had satisfied the
corresponding service requirement when leaving the plan.

For terminated and vested employees who wish to receive
a pension beginning at the early retirement age, ERISA re-
quires the benefit to be at least the actuarial equivalent of
what would have been received starting at age 65. The actu-
arial equivalent benefit is a reduced amount determined by
the life expectancy at the age that pension payments begin.
Although under ERISA the reduction factor used in determin-
ing the pension for a terminated employee can be more se-
vere than for early retirement, the same factor was used in
plans covering 65 percent of the participants with early retire-
ment provisions.?*

Postretirement survivor benefits (table 69). ERISA also re-
quires 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
generally receive a lower benefit during retirement since pay-
ments 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.29
Joint-and-survivor annuities are based on an actuarial or
arithmetic reduction of the employee’s pension. Nearly one-
fifth of the participants were in plans offering only a joint-
and-survivor option that provides a surviving spouse 50 per-
cent of the retiree’s adjusted pension. Sixty-six percent of

27 Among other provisions, the Retirement Equity Act of 1984 amended
ERISA by lowering from 25 to 21 the age after which employers must en-
roll workers in defined benefit and defined contribution plans, and lower-
ing from 22 to 18 the age after which employees must earn vesting credits.
In addition, the act requires that the spouse of a deceased vested employee
be entitled to survivor benefits regardless of employee’s age at death. For
most plans, the Internal Revenue Service extended the deadline for com-
pliance with provisions of the act until June 30, 1986. (Collectively bar-
gained plans had to comply by January 1, 1987.) Since the survey was
conducted from January to June 1986, previous ERISA rules were in effect
when the surveyed establishments were visited.

28 Due to changes in the Tax Reform Act of 1986, benefits from most
defined benefit plans will vest more rapidly beginning in 1989. Vesting pro-
visions differ significantly between defined benefit and some types of de-
fined contribution plans. The next chapter discusses these differences.

29 ERISA requires that the joint-and-survivor coverage be automatic for
married retirees, and that waiver of this option must be requested in writ-
ing. The Retirement Equity Act (see footnote 27) further directs that spouse
coverage can be waived only if both husband and wife sign the request.
For a more complete discussion of survivor benefits, see Donald Bell and
Avy Graham, ‘Surviving Spouse’s Benefits in Private Pension Plans,”
Monthly Labor Review, April 1984, pp. 23-31.



average—or a dollar amount equal to a past taxable wage
base).

Sixty-two percent of all pension plan participants had
benefit formulas ‘‘integrated’’ with Social Security.
Terminal-earnings formulas of integrated plans tended to
adopt the offset approach, while career-earnings 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 integrat-
ed benefits.'*

Maximum benefit provisions (table 60). The Employee
Retirement Income Security Act (ERISA) and subsequent
amendments place ceilings on the size of annual pension
benefits from defined benefit plans. These restrictions largely
affect only highly compensated employees. Many plans,
however, have provisions that restrict benefit levels for all
participants. For example, 36 percent 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 7 percent of the participants, annual pen-
sions (usually including Social Security payments) could not
exceed a specified percent of average annual career or ter-
minal earnings.

Replacement rates (table 61). A commonly used indicator
of pension adequacy is the portion of a retiree’s final year’s
earnings that is ‘‘replaced”’ by the retirement benefit. To cal-
culate replacement rates for 1986 pension plans, the maxi-
mum private benefit under each surveyed plan, not reduced
for early retirement or joint-and-survivor annuity, was de-
termined under several assumed combinations of final an-
nual earnings and years of service. These benefit levels were
then expressed as percents of earnings in the last year of em-
ployment. The calculations assume employees retired on
January 1, 1986, and final earnings are for 1985.19

Table 61 presents average replacement rates resulting 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 for-
mulas that are integrated with Social Security and for com-
putation of Social Security benefits, the worker is assumed
to have retired at age 65 and to have paid into Social Securi-
ty for 40 years. (For workers who reached age 65 in 1986,
however, the Social Security benefit was the same for work-
ers with similar final earnings who had 26 years or more
under Social Security.)

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

19 Earnings histories, necessary for applying the pension formulas, were
constructed for each final earnings level based on data provided by the So-
cial Security Administration.

2© The Social Security spouse benefit, which is 50 percent of the primary

venefit, is paid in addition to the primary benefit while both partners are
live (unless the spouse is eligible for a larger primary benefit).

54

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 private pension
plan replaced on average about 28 percent of the final year’s
earnings; the rate for $15,000 was about 32 percent.

When combined with primary Social Security payments
available at age 65, however, replacement rates differed sub-
stantially as earnings increased. They ranged from nearly
three-fourths at the lowest assumed level of earnings to just
over one-half at the highest earnings level computed. Ex-
cept for the two highest assumptions ($35,000 and $40,000),
the primary Social Security benefit payment was larger than
the average private pension.

Although private pension replacement rates (excluding So-
cial Security) for white-collar employees remained fairly
constant at higher earnings levels, rates for blue-collar work-
ers dropped by almost a third. Table 54 provides an expla-
nation: Nearly 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
earnings increase. Average replacement rates for earnings-
based formulas, on the other hand, increase slightly with
higher final earnings.

While average replacement rates show a consistent rela-
tionship 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 em-
ployees retiring with 20 or 30 years’ service and final earn-
ings of $30,000 varied from less than $200 to $1,000 or
higher.?#

Normal retirement (table 62). Although unreduced Social
Security benefits are not available before age 65, most pri-
vate pension plan participants were not required to work to
that age for full private pensions (normal retirement). Thirty-
six percent were covered by plans that specified age 65 as
the earliest age for normal retirement. While employees in
plans specifying age 65 usually did not have to satisfy a mini-
mum service requirement, plans permitting normal retire-
ment at earlier ages typically had length-of-service
requirements. One to ten years’ service were required for
half of the 36 percent of participants who could first retire
at ages 60 through 64; 20 or more years were typically need-
ed for retirement at ages 55 through 59 (affecting 4 percent of
participants).??

Another 11 percent of participants could qualify when the
sum of age plus service reached a specific amount, such as

21 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.

2 Jn 1980, 45 percent of participants had to work until age 65 to be eligible
for an unreduced benefit. Gradual liberalization of retirement requirements
has contributed to an increase in average replacement rates for both nor-
mal and early retirement since 1974, as observed by Donald Bell and Wil-
liam Marclay, ‘Trends in Retirement Eligibility and Pension Benefits,
1974-1983,” Monthly Labor Review, April 1987, pp. 18-25.

/


Table 16. Paid sick leave: Percent of full-time employees by sick leave provision, medium and large firms, 1986

Profes- Profes-
sional | Techni- sional | Techni-
‘Atte. |_ 290 | cal and | Produc- Alem. | 2nd | cal and | Produc-
Sick leave policy’ t ‘adminis-| clerical | tion em Sick leave policy’ fe adminis-| clerical | tion em-
Ployees | ‘trative | employ- | ployees Ployees | ‘trative | employ- | ployees
employ- ees ‘employ-| . ees .
ees ees
Total 100 | 100 | 100 Sick leave provided on a per
disability basis® .. 7 27 22 8
Provided paid sick
leav 70 93 93 45 At 6 months of service:
Under 5 days 0) i) 1 -
Sick leave provided 5 and under 10 days . 4 6 5 1
annually* 54 63 74 37 10 and under 30 days 3 5 6 1
30 and under 60 days ) 1 ra) )
At 6 months of service: 60 and under 120 days .. 1 3 1 0
Under 5 day: 14 10 20 13 120 and under 180 days 2 6 2 0
5 and under 10 days 18 22 28 10 180 days or more .. iv) 1 0 -
10 and under 30 days .. 10 19 4 2
30 and under 60 days 1 2 1 ) At 1 year of service:
60 and under 120 days 1 2 1 0 Under 5 days 1 0 1 1
120 days or more .. 1 2 1 1 § and under 10 days .. 2 3 3 1
10 and under 30 days 4 6 7 1
At year of service: 30 and under 60 days 2 4 2 }
Under 5 days 3 1 2 4 60 and under 120 days . 1 3 1 6
5 and under 10 days 22 16 29 at 120 and under 180 days 3 7 3 1
10 and under 30 days 23 36 36 8 180 days or more | 1 i) -
30 and under 60 days 2 4 3 1
60 and under 120 days 1 3 1 iv) At 5 years of service:
120 days or more .. 1 3 4 1 Under 10 days .. 1 1 2 1
10 and under 30 days 1 2 2 (9)
At 5 years of service: 30 and under 60 days 2 4 3 6
Under § days 2 1 2 3 60 and under 120 days .. 7 10 10 3
5 and under 10 day: 19 " 23 at 120 and under 180 days 4 8 4 1
10 and under 30 days 18 25 28 8 180 days or more “ 1 “ 0°
30 and under 60 days 7 12 12 2
60 and under 120 days 4 9 6 1 At 10 years of service:
120 days or more . 2 5 2 1 Under 10 days .. 1 1 2 1
10 and under 30 days 1 1 2 (9)
At 10 years of service: 80 and under 60 days 1 2 1 o
Under § days .. 2 v) 1 3 60 and under 120 days .. 7 9 10 4
5 and under 10 days 19 1 24 20 120 and under 180 days..| 5 10 5 2
10 and under 30 days 16 22 25 8 180 days or more 1 2 1 ro)
30 and under 60 days 5 9 8 2
60 and under 120 days 7 " 10 2 At 18 years of service:
120 days or more .. 4 5 1 Under 10 days .. 1 1 2 1
40 and under 30 days 1 1 2 )
At 15 years of service: 30 and under 60 days 1 1 1 o
Under 5 days 2 ) 1 3 60 and under 120 day 3 6 5 1
5 and under 10 days 19 1 24 20 120 and under 180 days 9 15 4 4
40 and under 30 days 16 22 25 8 180 days or more 1 2 1 ro)
30 and under 60 days 3 4 5 1
60 and under 120 days 8 14 rT 3 At 20 years of service:
120 and under 180 days..| 4 9 5 1 Under 10 day: 1 1 2 1
180 days or more 2 2 2 1 10 and under 30 day: 1 1 2 0
30 and under 60 days 1 1 1 to)
At 20 years of servici 60 and under 120 days 3 6 4 1
Under 5 days .. 2 a) 1 3 120 and under 180 days 6 W 6 2
5 and under 10 days .. 19 1 24 20 180 days or more 4 6 6 2
10 and under 30 days. 16 22 25 8
30 and under 60 days 3 4 5 1 At 25 years of service:®
60 and under 120 days 7 13 10 3 Under 10 days 1 1 2 1
120 and under 180 days 5 10 7 1 10 and under 30 days 1 1 2 “
180 days or more 2 3 2 1 30 and under 60 days 1 1 1 to)
60 and under 120 days 3 5 4 1
At 25 years of service:* 120 and under 180 days 6 12 7 2
Under days 1 i) 1 1 180 days or more 5 6 7 2
5 and under 10 days .. 19 W 24 24
10 and under 30 days 16 22 25 8 As needed basis” 3 7 2 1
30 and under 60 days 3 4 5 1 ‘Other basis* () “ o o)
60 and under 120 days .. 5 9 7 2
120 and under 180 days 7 13 9 2 |INot provided paid sick leave 30 7 7 55
180 days or more 2 3 2 1

* Employees receiving partial pay only or no sick leave in their early
years of service are included in the overall percentages of workers pro-
vided sick leave; however, they are disregarded in computing the distri-
‘butions by length of service up to the service period at which they be-

come eligible for full sick leave pay.

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

? Employees earn a specified number of sick leave days per year.

“ Less than 0.5 percent.

* Provisions were virtually the same after longer years of service.
* Employees earn a specified number of sick leave days for each ill-

ness or disability.

* 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.



Table 41. Health care benefits: Percent of full-time participants in plans with mental health benefits by extent of
benefits, medium and large firms, 1986

ci Professional and adminis- | Technical and clerical Production
All participants trative participants participants participants
Coverage limitation
Hospitat | Outpatient | Hospital | Outpatient | Hospital | Outpatient | Hospital | Outpatient
care care care care care care care care
Total 100 100 400 100 100 100 100 100
With coverage 99 97 99 29 98 98 99 6
Covered the same as other
illnesses 37 6 37 7 34 5 39 5
Subject to separate limitations! .. 61 a1 62 92 6 93 60 90
Limit on days or visits 38 33 36 3 38 34 40 34
Limit on dollars 26 68 26 66 28 66 26 70
Major medical coinsurance
limited to 50 percent 2 48 2 48 2 51 3 a7
No major medical ceiling on
out-of-pocket expenses . 13 49 16 53 14 55 10 44
Other limitations? . 7 22 8 22 9 22 6 22
Not covered 1 3 1 1 2 2 1 4

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

erage.

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

Table 42. Health care benefits: Percent of full-time

participants in plans with vision benefits by extent of

benefits, medium and large firms, 1986

for outpatient care varied during the treatment period.

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

totals.

Table 43, Health care benefits: Percent of full-time
Participants by coverage for selected special benefits,

medium and large firms, 1986

Profes- Profes-
sional | Techni- sional | Techni-
; ‘Altpar-|_2n¢ Produc- 7 Altpar | and. | cal and | Produc-
Benefit teeete| adminis. tion par- Benefit item tieiponts |29minis-| clerical | tion par-
ne trative ticipants trative | partici- | ticipants
partici- particl- | pants
pants pants
100 | 100 | 100 | 100 Total 100 | 100 | 100 | 100
19 26 | 26 13 Covered by at least one of the
listed special benefits’ eo | 93 92 86
Examinations and eyeglasses 7 6 7 7
Second surgical opinion sz | 62 | 62 81
Examinations, eyeglasses, and Alcoholism treatment 70 | 74 73 | 65
contact lenses .. es | 59 | 56 a Drug abuse treatment .. ee | 70 | 69 | 63
Hearing care* 20 18 17 | 22
Orthoptics* only 3 5 3 3 Hospice care .. 31 36 32 28
Physical examinations 18 22 22 14
Other combinations 7 6 8 6
Not covered by any one of the
* Exercises to improve the function of the eye muscles. listed special benefits .... " 7 8 15

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

tals.

45

’ The total is fess 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 48. 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, 1986
Profes-
sional | Techni-
‘and | cal and | Produo-
ttem depots |2dminis-| clerical |tion par-
icipe trative | partici- | ticipants
partici. | pants
Pants:
Total .. 400 } 100 | 100 | 100
Basic life insurance’ 100 100 100 100
Based on earnings 66 83 80 48
Multipte? .. 54 73 72 32
Graduated schedule 12 10 8 15
Flat amount .. 30 12 15 50
Flat amount based on service 4 4 5 2
Other iv) iv) ra) oO
With accidental death and
dismemberment coverage 72 65 65 79
With survivor income benefit’ 10 12 9 10
With availability of partly employer-fi-
nanced supplemental life
insurance 1 13 12 8
With dependent coverage .. W7 19 18 16

‘A few participants received only accidental death and dismemberment

insurance.

? Includes participants in plans in which insurance equaled a multiple of

earings, plus or minus a specific amount.
2 Includes participants in plans with insurance based on family size.

« Less than 0.8 percent.

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

ployee.

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

tals.

49



Salary reduction plans (available to 31 percent of em-
ployees) allowed employees to contribute a part of their earn-
ings to a retirement plan, and defer income taxes on those
contributions and their earnings until distribution. Such con-
tributions are referred to as ‘‘employee elective deferrals’’
or “‘pretax contributions.’”

Deferrals of profit-sharing allocations (available to 2 per-
cent of employees) provide employees with the choice of
receiving an employer’s profit-sharing contribution immedi-
ately, or deferring the contribution and postponing taxation
until distribution.

Participation in plans with salary reduction features, which
are authorized by sections 401(k) and 403(b) of the Internal
Revenue Code, increased from 26 to 31 percent of employees
between 1985 and 1986.3¢ Forty-two percent of the white-
collar and 19 percent of the blue-collar employees partici-
pated. Two-thirds of all participants (white- and blue-collar
combined) could elect to make their 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 freestanding plans (no
employer contribution), profit-sharing plans, or money pur-
chase pension plans.

From a different perspective, 49 percent of all participants
in defined contribution plans could make tax-deferred con-
tributions to their plan. The incidence, again, was higher for
white-collar (55 percent) than for blue-collar (38 percent)
employees. The following tabulation shows the percent of
defined contribution plan participants in plans with salary
reduction features:

Percent of
participants

75
28
34

Savings and thrift
Deferred profit sharing
Money purchase pension

Savings and thrift plans

Twenty-cight percent of employees participated in savings
and thrift plans—38 percent of white-collar and 17 percent
of blue-collar workers. Under these plans, employees con-
tribute a predetermined portion of earnings to an account,
all or part of which is matched by the employer. Contribu-
tions are invested in various ways, such as stocks, bonds,
and money market funds, as directed by the employee or em-
ployer, depending upon the provisions of the plan. Although
usually designed as a long-term savings program, savings
and thrift plans allow for withdrawals subject to specified
conditions and, possibly, penalties.

Employee contributions (tables 76-77). Savings and thrift
plans allow employees to choose from a range of possible

36 Most participants in cash or deferred arrangements were in plans that
qualified under section 401(k) of the Internal Revenue Code. A small num-
ber of plans under section 403(b) were observed in not-for-profit organi-
zations.

7B

contribution rates. A typical plan allows employees to con-
tribute (in whole percentages) anywhere from 6 to 16 per-
cent of pay. Nearly three-tenths of the participants could
contribute up to 16 percent of their earnings; 10 percent and
12 percent were other common maximums.

Three-fourths of the participants in savings and thrift plans
were allowed to make pretax contributions, up from 65 per-
cent in 1985. Thirty-nine percent were given the option to
contribute either pretax or posttax earnings in 1986, while
36 percent were required to make contributions on a pretax,
salary reduction basis. Half of the participants in plans man-
dating pretax contributions were required to contribute only
an initial amount pretax. For example, a plan may allow a
maximum contribution of 16 percent with only the first 6
percent required on a pretax basis.

Employer matching contributions (table 78). Employers pro-
vide an incentive for participation in a savings and thrift plan
by matching all or a portion of the employee’s contribution
and adding this amount to the employee’s account. Usually
the employer matches a portion of the employee’s contribu-
tion up to a specified percent of the employee’s earnings.
For example, the most common provision found in 1986 was
for an employer to match 50 percent of the employee’s con-
tribution up to the first 6 percent of earnings. Assuming the
employee contributed 8 percent of earnings, the employer
would add 3 percent (50 percent of the first 6 percent of the
employee’s earnings). In contrast with these straight percen-
tage matches, nearly one-fourth of the participants received
matching contribution rates varying by length of service,
level of employee contribution, or company profits.

Investment decisions (table 79). Nine out of ten participants
in savings and thrift plans were allowed to choose how they
wanted their own contributions invested. Common invest-
ment vehicles offered by these plans included company stock,
common stock funds, guaranteed investment contracts,
government securities, 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 common.
Employees were nearly always allowed to split their contri-
butions among the various options and were allowed to
change their investment choices periodically.

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

Withdrawals and loans (table 80). Eight-tenths of the par-
ticipants in savings and thrift plans were allowed to with-
draw all or a portion of employer contributions prior to
normal payout (retirement, disability, or termination of em-
ployment). Twenty-six percent, however, were only allowed
to withdraw employer contributions for hardship reasons



Table 12. Paid jury-duty leave: Percent of full-time
employees by number of paid jury-duty leave days
available per occurrence, medium and large firms,
1986

Profes-
sional | Techni-
veme| 2nd fea! ana Eon
Number of days admin- | clerical
Ployees| istrative employ-|° ROY”
lemploy-| ees | °°
ees
Total .. 400 | 100 | 100 | 100
Provided paid jury-duty leave 93} 96 | 96] 90
Under 10 days 1] 0 4 1
10 days 2 2 2 2
11-19 day iv) 10) 10) 0)
20 days 2 2 1
21-30 days .. 3 3 2 3
More than 30 days 10) ) 19)
No maximum specitied 87 | 89
Number of days not available .. iv) 0 0)
Not provided paid jury-duty leave...) 7 4 4] 10

* Less than 0.5 percent.
2 Jury-duty leave is provided as needed.

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

Table 13. Paid military leave: Percent of full-time
employees by number of paid milltary leave days available
per year, medium and large firms, 1986

Profes- -
sional | Techn produ
Allem-| .and Jeal and” tion
Number of days admin- | clerical
ployees' trative |employ-°TMPIOY-
lemploy-| eas | °S
ees
Total 100 | 100 | 100
Provided paid military leave m4 | 72
1 1 2) 0
9) - Q -
go | 42} 40] 37
4 4 5 3
3 3 3 2
2 2 3 2
1 2 2 1
‘More than 30 days iV) ) 1) 1)

‘No maximum specifi
‘Number of days not available

Not provided paid military leave

* Less than 0.5 percent.
? Military leave is provided as needed.

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



Chapter 6. Defined Benefit
Pension Plans

In medium and large firms, defined benefit pension plans
are the predominant type of employer-sponsored retirement
plan. These plans use formulas for calculating retirement
benefits and obligate the employer to provide the benefits
so determined. In 1986, three-fourths of the employees had
a One Plans—down slightly from earlier
years. et sources of retirement income, such as savings
plans, have been growing in importance recently. They will
be discussed in chapter 7, ‘Defined Contribution Plans.’’)

Benefit formulas (tables 54-58). Earnings-based formulas ap-
plied to 72 percent of the employees covered by defined
benefit pension plans. Such formulas pay a percent of the
employee’s annual earnings per year of service (for exam-
ple, 1 percent of earnings times 30 years of service). Varia-
tions are common, however, in the approach to calculating
annual earnings and the rate paid per year of service. For
79 percent of the participants with earnings-based formulas,
pensions were based on earnings in the final years of em-
ployment (terminal earnings formula); for the remainder, an
average of career 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 for-
mulas usually designated the 5 consecutive years with the
highest earnings out of the last 10 years before retirement.

Three-fifths of participants with formulas based on career
earnings were in plans having benefit rates per year of serv-
ice that varied according to service, earnings, or age. Career-
earnings formulas typically applied one rate to annual earn-
ings below a specified amount, and a higher rate above the
amount. (This is often done to lower employer costs for wage
levels upon which Social Security taxes are paid, as described
in the next section.) For example, a plan will credit an em-
ployee with 1 percent of earnings up to the first $12,000 in
each year of service plus 1.5 percent of the earnings exceed-
ing that amount. The annual pension payment is the sum of
these credits.

Formulas based on terminal earnings typically provided
participants with a flat percent of earnings per year of serv-
ice. For plans providing flat rates per year of service, the
rates averaged 1.62 percent for terminal-earnings formulas
and 1.66 percent for career-earnings formulas. This slight-
ly higher benefit percentage for career-earnings formulas is
more than offset by the lower earnings to which these for-
mulas are applied.'? Conversely, benefits under a terminal-
earnings formula are more likely to be offset by a retiree’s

53

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 monthly per year of service, yield-
ing a pension of $450 after 30 years. Dollar-amount formu-
las applied to one-fourth of pension plan participants,
continuing a decline from 32 percent in 1981. While the dol-
lar amount in these formulas sometimes varied with an em-
ployee’s earnings or service, the predominant method was
to multiply a uniform (single) dollar amount by years of serv-
ice: Uniform amounts credited per year averaged $15.51 a
month.

The basis of pension payments differed sharply by em-
ployee group. While a large majority of white-collar par-
ticipants were provided earnings-based pensions,
dollar-amount formulas applied to nearly half of the blue-
collar participants.

Thirty-seven percent of all pension plan participants would
receive benefits from either primary or alternative formu-
las, whichever was greater. Alternative formulas were often
included to provide at least a minimum level of benefits for
persons with short service or low earnings. For example,
a plan may have a primary formula of 1.25 percent of aver-
age career earnings times years of service, and an alterna-
tive formula of $15 a month for each year of service. In this
case, the alternative formula would provide a higher benefit
for persons with average career earnings of less than $14,400
a year.

Private benefits and Social Security payments (table 59). Em-
ployers 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 pensions often contain an offset pro-
vision requiring part of the Social Security pension to be sub-
tracted from the annuity. Other plans have ‘‘excess’’
formulas that apply lower pension benefit rates to an em-
ployee’s earnings below a specified level (which is either
the Social Security taxable wage base—usually the career

17 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 5-year average would
be $22,730. The difference between the career and final averages lessens
with shorter lengths of service.



Contents—Continued

77. Pretax employee contributions .. .
78. Provision for employer matching contributions
79. Provision for investment of employer and employee contributions
80. Provisions for withdrawal of employer contributions ..
81. Method of distribution of account at retirement

Selected defined contribution plans:
82. Provisions of employee stock ownership plans
83. Provisions of profit-sharing plans
84. Age and length-of-service requirements for participation ... wee
85. Vesting schedules 2.2.0.0... ccc cece cece eee ener e ene nee eee eee ene es

Plan administration:
86. Type of plan sponsor ............--.0--5
87. Flexible benefits plans and reimbursement accounts coverage .. .

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

viii



Table 64. 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, 1986

Profes-
sional | Techni-
Reduction for each year prior to All par- | ond. | Cal an | Produc:
normal retirement age ticipants clerical |fon par
trative | partici- | ticipants
partici- | pants
pants
Total 100 | 100 | 100 | 100
Uniform percentage? .. 46 42 45 49
Less than 3.0 2 4 2 1
3.0 10 10 10 9
3.1-3.9 2 3 2 1
40 5 8 6 4
41-49 2 2 2 3
50 9 10 ) 8
515.9 is) - - i)
60 13 7 2 7
67 2 1 i 4
More than 6.7 1 1 ia) 1
Percentage varies by age 51 52 83 50
Reduction differs for each year
of early retirement’ .. 13 4 4 16
Reduction differs by age
bracke 38 a 42 34
Percentage varies by service . 2 5 1 1

Other basis* W) 1 v) ie)

‘ 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.

3 Less than 0.5 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.

70

Table 65. Defined benefit pension plans:' Percent of
full-time participants by provisions for disability retirement,
medium and large firms, 1986

Profes-
sional | Techni-
- At par-|_and_| cal and | Produc-
Characteristic ficipante|®4TMiNis-| clerical | tion par-
trative | partici | ticipants
partici- | pants
pants

Percent of participants in plans
with disability retirement

benefits 89 89 88 90

Minimum requirements for
disabllity retirement

Total too | 100 | 100 | 100

No age or service .. 13 4 15 "1

Age only ... @ - e -

Service only 50 39 40 62

‘Age and service 12 9 "1 14
Receipt of long:

benefits . 25 | 38 | 33 13

Benefit provisions

Total 100 | 100 | 100 | 100
Immediate disability retirement’ 55 36 39 75
Unreduced normal formutat a 26 26 60
Reduced normal formula’ .. 6 5 3 7
Other than normal formula’ .. 8 7 10 8
Deferred disability retirement ... 45 64 61 25
With benefits based on:
Service when disabled 7 9 9 5
Service plus credit to early
retirement date or later 37 53 5t 18
Service with some credit 1 2 1 1
Not based on service fa] ia) fe} -

+ Excludes supplemental pension plans.

® Less than 0.5 percent.

3 Immediate disability pensions may be supplemented by additional al-
fowances until an employee reaches a specified age or becomes oligible
for Social Security.

* 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-
tity, 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 24. Long-term disability insurance: Percent of full-time participants by method of determining payment, medium and
large firms, 1986 |

|
‘ci Professional and Technical and clerical ‘i
All participants administrative partcipants paricipants Production participants |
Method With | Without With | Without With | Without With | Without |
et maximum] maximum maximum} maximum maximum| maximum {maximum |maximum i
Total |coveraga|coverage| Total {coverage|coverage| Total |coverage| coverage! Total |coverage| coverage
provi- | provi- provi- | provi- provi- | provi- provi- | provi-
sions’ | sions sions’ | sions sions' | sions sions' | sions \
All methods .. a” 29 | 100 76 25 | 100 78 22 | 100 58 42 :
Fixed percent of eamings 76 60 16 82 62 20 82 87 15 61 50 "1
‘Less than 60 percent 2 2 (a) 2 1 1 2 2 2 2 - |
50 percent .. 20 15 19 2 7 21 18 3 2 7 4
55 percent .. 2 2 a 2 2 io) 2 2 e 2 1 1 j
60 percent .. 39 30 46 36 1 4 32 10 26 20 5
65 or 67 percent .. 12 a 1 VW 10 2 14 13 1 it 9 1
70 percent or more 2 2 a 2 2 @ 2 2 fo) 1 1 io)
Percent varies by earings .. 10 6 4 4 6 4 12 6 6 6 4 3
Percent varies by service .. 0 0 0 0 eo 0 1 @ ie) - - -
Scheduled dollar amount
varies by earnings .. 9 1 8 1 1 - 2 i 1 29 2 26
Other? 4 4 1 5 5 6 3 3 ie) 4 2 2
Data not available te) - ce) io) - is) (9) - co) - - -
* includes dollar maximums in plans that pay a percent of earnings, * Includes flat dollar amounts and scheduled percent of eamings

cellings on income during disability that limit the amount payable from _varying by Jength of disability.
the long-term disability insurance plans plus other income, or a combina-
tion of both. NOTE: Because of rounding, sums of individual items may not equal

? Loss than 0.5 percent. totals. Dash indicates no employees in this category.

Table 25. Long-term disability insurance: Percent of
full-time participants by duration of benefits, medium and
large firms, 1986

Profes-
sional | Techni-
All par- | 294. | cal and | Produc-
Duration of benefits ticipants |3minis-| clerical |tion par-
trative | partici- | ticipants
partici- | pants
pants
Total 100 | 100 | 100 | 100
Until a specified age! 16 15 15 19 i
Under age 65 (5) ro) () ) |
Age 65 2 12 1 13
Age 70 4 3 6
Duration of benefit varies 78 79 79 75
By length of service (9) (0) ©
By age at time of disability’ . 78 79 79 75
Single reduction 96 34 30 44
Gradual reduction 42 45 48 30
Other* 6 6 6 6

' 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
gradually according 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.

25


Table 61. Defined benefit pension plans:' Average replacement rates for specified final earnings and years of service,’

medium and large firms, 1986—Continued

Years of service®

Final annual earnings
10 15 20

25 30 35 40

Combined private pension and primary‘ Social Security benefit

Production
54.1 59.7 65.1
49.1 53.8 58.4
43.4 477 52.0
98.1 42.3 46.3
94.4 38.2 42.1
31.0 35.0 38.8

70.4 75.4 80.1 84.5
63.0 67.3 2 74.9
56.1 60.1 63.6 66.8
50.2 54.0 87.3 60.2
45.8 49.4 52.5 55.3
42.4 45.8 48.7 513

‘ Excludes supplemental pension pians.

? 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 earings 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 1, 1986,
and final earnings are for 1985. Earnings histories, necessary for
applying the pension formulas, were constructed for each final earnings
level based on data provided by the Social Security Administration.

Table 62. Defined benefit pension plans:' Percent of full-time

For private pension formulas that are integrated with Social Security
(see table 59) 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 2 percent of participants in cash account
pension plans or plans with benefits based on career contributions.

* The years of service intervals represent total service with the

‘employer. Time spent satisfying service requirements for plan participation
was excluded from the calculation of replacement rates, unless the pension

plan specified that such time was to be included in benefit computations.
« Excludes benefits for spouses and other dependents.

participants by minimum age and associated service

requirements for normal retirement, medium and large firms, 1986

Profes- Profes-
sional | Technical sional |Technicall
=_| Produc- Produc-
A All par- | and ad- |and cleri- i i All par- | and ad- | and cleri-|
‘Age and service requirement? | ieiants | ministra-| cal par- | ©" Par Age and service requirement | icisants | minista- | cal par- | SoM Pa
tive par- | ticipants | "oiPa" tive par- | ticipants | "Pants
ticipants ticipants
Total 100 100 100 100
\Age 62 . 19 19 20 18
No age requirement .. 13 6 10 20 ‘No service requirement 4 4 5 4
30 years’ service 13 5 10 19 1-4 years’ service oO cy) ry) QO
More than 30 years’ service fu) - iu) vl 5 years’ service .. 1 1 1 )
8 years’ service .. (uy ”) ro) -
Age 53 i) - - 40 years’ service 7 7 6 8
30 years’ service o - - i) 14 years’ service 0 ) ) -
18 years’ service 2 3 4 1
Age 55 3 1 a 20 years’ service 2 2 2 3
20 years’ service 2 1 1 25 years’ service 1 1 1 1
25 years’ service iv) 0) 0) 30 years’ service 1 1 1 1
30 years’ service 1 1 2
More than 30 years’ service ) ) () jiAge 63-64 2 2 4 2
. No service requirement vl oO oO -
Age 56-59 1 ) 1 2 10 years’ service 2 2 3 1
15 or 20 years’ service .. - ) 1 20 years’ service 0 - - 1
30 years’ service Oy - 0) 1
More than 30 years’ service iv] “) 1 llAge 65 36 33 36 38
No service requirement 32 31 34 32
‘Age 60 si 14 20 15 10 1-4 years’ service oO - - 0
No service requirement 4 6 5 3 5 years’ service 2 1 1
445 years’ SENVICE sn 3 5 3 1 10 years’ service 2 1 1 3
10 years’ service a 3 3 3
15 years’ SErViCE sess 1 1 1 1 ||Sum of age plus service 1 14 13 7
20 years’ service oO iv) O 1 ‘Equals less than 80 1 2 2
26 years’ service ru) iv) iv) iv) Equals 80 1 1 fe) io)
30 years' service a 4 4 2 Equals 85 5 7 4
More than 30 years’ service rv) 0 - - Equals 90 3 2 6 2
Equals more 1 1 1 1
Age 61 1 1 1 iv)
5 years’ service oO io) 19) iv)
20 years’ service 0) oO 10) -
26 years’ service 0 1 1 i)

* 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.

3 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.

* Less than 0.5 percent
© In most plans, participants must also satisfy a minimum age or serv-
ice requirement.

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

68



Table 55. 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, 1986

Provision for Provision for
Provision for integration with Provision for integration with
maximum benefit? | Social Security maximum benefit? | Social Security
Type and amount of | 4, benefit Type and amount of benefit
formula? otal ' formula? Total
. inte.{. Without i ith inte-| Without
Subject | Not sub- |With inte-}: “re Subject | Not sub- With inte) “OMY
tomaxi-| jectto | grated | to maxi-| jectto | grated grated
mum {maximum} formula formula mum = |maximum} formula formula
All participants [Technical and clerical
Total . 100 100 100 400 100 Total 100 100 400 100 100
Flat percent per year of Flat percent per year of
service 87 65 49 53 82 || service 57 m1 43 54 95
Less than 1. 1 - 3 - iv) - 1 - 4
4,00-1.24 .. 6 3 9 oO 2 2 2 ivy 23
4.25-1.49 . 8 3 13 8 11 4 20 10 27
1.50-1.74 . 24 29 19 25 24 32 15 23 34
1.75-1.99 . 5 7 3 6 5 7 4 6 -
2.00-2.24 10 18 2 " 1 19 2 1 7
2.25 or greal 3 6 - 3 4 8 - 4 -
Percent per year
varies 43 36 51 47 43 29 57 46 5
By service 16 15 7 16 7 12 22 18 5
By earings 20 18 23 24 18 16 24 20 -
By age .. 2 - 4 2 3 - 6 3 -
By earnings and By earings and
service 5 2 7 5 - service 5 1 8 5 -
Professional and Production
administrative
Total ... 100 100 100 100 100
Total .. 100 100 100 100 100
|Flat percent per year of
Fiat percent per year of service 60 60 61 56 4
service 55 65 43 51 93 Less than 1.00 3 - 6 - 12
Less than 1.00 1 - 2 - 10 4.00-1.24 - 12 4 19 1 42
1.00-1.24 4 3 4 0 37 4.25-1.49 8 4 12 8 8
1.25-1.49 5 3 9 5 8 1.50-1.74 22 22 22 26 10
1.50-1.74 27 32 24 26 34 4 7 2 5 -
1.75-1.99 6 8 4 7 - 10 20 oy) 12 1
2.00-2.24 9 15 3 10 4 2 5 - 3 -
2.25 or greater .. 3 5 - 3 -
iPercent per year
varies 40 40 39 44 26
45 35 57 49 7 By service 15 19 12 12 26
16 14 17 16 7 By earnings 18 7 18 24 -
24 20 29 26 - By age 2 - 3 2 -
2 - 3 2 - By earings and
By eamings and ‘service 5 4 6 7 -
service .. 4 2 7 5 -

*" Excludes supplemental pension plans.

? Ifa plan contained more than one terminal eamings formula, a pri-
mary formula was selected and tabulated.

2"These maximum provisions ara independent of Internal Revenue
Code ceilings on pensions payable from defined benefit plans.

61

* Less than 0.5 percent.

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

totals. Dash indicates no employees in this category.



Tabie 18. Pald annual sick leave

and sickness and accident insurance coordination, medium and large firms, 1986

Average number of days at full pay for full-time participants by accumulation policy

Profes- Profes-
sional | Techni- sional | Techni-
A par.|_ 294 _ | cal and | Produc ‘ait par. | 29d _| cal and | Produc.
tte tenons 2dminis-| clerical | tion par tem feipants [@0nis-| clerical |tion pare
ipants| ‘trative | particl- | ticipants| trative | partici- | ticipants
partici | pants partici- | pants
pants pants
At 1 year of service:
Cumulative pian 93| 112} 9.6] — 7.4]]At 10 years of service —Continued
With sickness and accident Noncumulative plan 446; 607| 435| 25.4
insurance 76| 94| 85| 64 With sickness and accident
Without sickness and insurance 250; 423} 268| 125
accident insurance . 10s] 121] 102] 90 Without sickness and
Noncumulative plan 198| 275| 154] 148 accident insurance .. ses| 687] 536| 45.0
With sickness and accident
inguranca 108| 171] 10.6] 6.5 /|At 20 years of servic
‘Without sickness and Cumulative plar sens 17.3 22.6 19.3 11.3
accident insurance . 261] 321] 189] 269 With sickness and accident
insurance sensacseca| 14.6 23.8 18.7 73
At 5 years of servic Without sickness and
‘Cumulative plan 124] 156] 134] 89 accident insurance 192] 220] 196| 165
With sickness and accident Noncumulative plan s67| 747| 566| 337
100} 145| 122] 66 With sickness and accident
Without sickr insurance 3os| so2} 339| 158
accident insurance .. 144] 162} 144) 118 Without sickness a
Nonoumulative plan . 346| 479] 316| 209 accident insurance 751| 954] 703| 609
With sickness and accident .
insurance 183] 31.6] 188;  9.3/)At 25 years of service:
Without sickness and Cumulative plan 178}. 234] 197| 116
accident insurance .. 46.1] 55.1] 304] 386 With sickness
insurance 155| 257) 195) 84
At 10 years of service: Without sickness and
Cumulative plan 157| 202) 174| 107 accident insurance 194] 223) 198/ 156
With sickness and accident Noncumulative plan 6... 538| 77.1} 583/ 35.9
insurance 123| 104} 156] 74 With sickness and accident
Without sickness and insurance 322] 516} 956) 170
accident insurance .. 1e2| 207| 184] 154 Without sickness and
accident insurance ... 777| 882) 720) 645

* Paid sick leave plans with a specified number of days available
each year. Per disability plans were excluded from this table because
plans were also

covered under a sickness and accident insurance plan, and (2) only an-
nual sick leave plans allow the employee to carry over and accumulate
unused sick leave from oné year to the next year. Instead, the number

(1) only one-fifth of the employees with per disabilit

of days of paid leave under a per disability plan is renewed for each ill-
ness or disability after the employee returns 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.



fl
\

Table 28. Health care benefits: Percent of full-time gArticipants by coverage for selected categories of medital care,

medium and large firms, 1986—Continued

Garé piovided eat
i Rena ee Be basic 3 Care not
Category of medical care Total oh by base By major pepe ag || provided’
nefits only’ | medical only’ | stor medical
= ~ ~
“Apte) Fee AmalFec te] Fe< He [Fee | Ho §
Production | meres Re re fa ect fore ann | aa
Hospital room and board Fiaay 100 J 23 32 44 Uy
Hospitalization—miscellaneous services 4 190-- 23 33 “4 | 0)
Outpatient care‘ , 100 i a1 35 44 q ()
Extended care facility’ Bi too | 28 30 10 32
Home health care® . joo f a7 23 10 39
Surgical 100 37 22 at 0)
Physician pi 100 22 45 33 0)
Physician visits—office .. \ 100 13 73 7 7
Diagnostic X-ray and laborator \ 100 28 42 29 y)
Prescription drugs—nonhospital 100 26 69 3 3
Private-duty nursing 100 12 79 1 8
Mental health care .. » 100\ 24 31 47 1
1,100 | 66 3 - 32
400 36 4 O° 60

+ Includes employees who elected to waive participation in their
ployer’s medical program but who enrolled in dental and/or
plans.

A provision was classified as a basic benefit when it related to the
initial expenses incurred for a specific medical service. Under these pro-
visions, a plan paid coverad expenses in one of several ways: (1) In
full with no limitation; (2) in full for a specified period of tine, or until a
dollar limit was reached; or (3) a cash scheduled allowance benefit that
provided up to @ doliar amount for a service performed by a hospital or
physician. For a specific category of care, a plan may require the par-
ficipant to pay a specific amount each disability or year (deductible) or a
nomiinal 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-

ion

35

ized by deductible and coinsurance provisions thal/are applied across
categories of care.

“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 illness (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. Excludes provisions for hospica care that
are shown in table 43.

® 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.



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, 1986

Average replacement

Average replacement

rate (percent) rate (percent)

80 80
70 70
60 60
50 50
40 b + 40

Private

pension

only
30 - 30
20 - 20
10 - 10.
0 0

$20,000

$25,000

Worker's final year's earnings

$40,000

85. A minimum age of 55 was generally included for meet-
ing these requirements. Minimum lengths of service were
less common.

Thirteen percent of all participants were covered by plans
permitting normal retirement at any age with 30 years of serv-
ice; the major concentration (19 percent) was among produc-
tion workers. Plans that featured such a provision almost
always offered other normal retirement opportunities at speci-
fied ages with lower service requirements. (If a plan had al-
ternative age and service requirements, the earliest age and
associated service were tabulated for this survey; if one al-
ternative did not specify an age, it was the requirement that
was tabulated.)

Early retirement (tables 63 and 64). Virtually all of the em-
ployees participating in a pension plan could retire before
normal retirement age and receive an immediate, 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 applied to the

55

benefit formula because an employee has not worked until
normal retirement age. Second, because benefits begin at an
earlier age, the retitee is expected to receive plan payments
over a longer period of time.

The normal benefit is reduced by a percentage (factor) for
each year between the actual and normal retirement ages.
If a plan’s normal retirement age is 62, for example, and
the reduction factor is 6 percent, a person retiring at age 59
would receive 82 percent of the normal formula amount (100
percent minus 3 years times 6 percent). In addition to the
18-percent reduction for early retirement, the annuity in this
example would be based on fewer years of service and pos-
sibly 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 cover-
ing one-eighth of participants with early retirement oppor-
tunities. Other methods of reducing benefits approximate an
actuarial reduction. For example, for three-eighths of the par-
ticipants, the reduction factor differed for age brackets of



Table 21. Sickness and accident insurance: Percent of full-time participants by type and duration of payments, medium and
large firms, 1986—Continued

Maximum weeks of coverage |
‘Type of payment Total | Less Greater | Varies | _ N°
ype array than 13 14-25 26 27-51 52 than by maximum
13 52 | service
Professional and administra-
tive—Continued
Fixed weekly dollar benefit . 1 0) 2 ) 8 ) ) - -
than $60 4 - 0) - 4 - - - -
1 - 1 - ¢) - - - :
1 - QY - 4 - - - -
1 - - - 1 - - - -
1 iv) iv) 0 1 - - - -
Q - - - a) ~ - - - |
QO - - - 0 o - - -
oO - QO iv) - - - - -
1 - QO - 1 - - - -
0) - v) - - - ) - -
Weekly dollar benefit varies 10 Q 0) - 9 () Q ) -
By earings .... 10 (0) oO - 9 0) 0) - r0) -
Technical and clerical
All types ... 100 1 14 2 68 4 7 iv) 4 10)
Fixed percent of earnings 73 1 " 2 52 3 1 0) 2 0)
Less than 50 () - - - - “ - - . .
35 - 5 0) 30 ) Yo - 0 QO
Q) - - - 0) vu) - - - -
0) - - ) ~ ~ - - - -
14 - 2 1 9 VW) 0) - rv) oO
0) - = - ) - ~ - ~ -
1 - i) 0 “ - 0) - 0) - |
y) - - - 0) - - - - -
14 1 3 - 9 - 1 iv) 1 -
3 Y oO 2 - Yo - - -
4 - 1 - v) 2 - - 1 -
1 0) - 1 - - - - -
Percent of earnings varie: 10 1 - 5 (0) 3 - - |
By service .. 6 - - - 3 - 2 - “ .
By length of disability 2 1 - 0 ) 1 - - -
By both service and length of
disability .. 3 - - - 1 - - - 2 -
By earnings 0 - - - i) - - - - -
Fixed weekly dollar benefit 9 0) 2 ) 6 ‘) 0) - - -
Less than $60 3 - ¢ = 2 0) - - - -
1 - 1 - Q - - - - ~
(0) - 0 - 0) - - - - -
2 - Q - 1 - - - - -
1 QO QO Y 1 7 ba 7 7 7
1 - - - 1 - 0 - - -
1 - ~ = 10) QO Qo - - -
0) - 0) 0) ~ - ~ - - -
$200-$219 .. 1 - “) - 0) - } - - - j
$220 or more 0) - “ - - fo - “) - - - !
Weekly dollar benefit varies 8 Q) 0 - 5 1 1 - 0 -
By earnings ..... 8 0) 0) - 5 1 1 10) -
By service or length of
disability . ¢) - ° - - - - - - -

See footnotes at end of table.

21


Table 85. Savings and thrift and deferred profit-sharing plans: Percent of full-time participants by type of vesting

schedule, medium and large firms, 1986

All participants icharreniear inet Teens Production participants
‘Type of vesting schedule Deferred Deferred Deterred Deferred
Savings and d | Savings and | Dsfered | savings and | omeneing | Savings and d
profit-sharing ‘ profit-sharing | S°¥ profit-sharing | S°¥ profit-sharin
thrift plans plans ‘91 thrift plans plans thrift plans plans thrift plans plans 9
Total’ 100 100 100 100 100 100 100 100
Immediate full vesting ... 26 29 23 35 27 34 29 23
Cliff vesting? with full vesting
afte 20 2 22 2 ral 2 14 2
1-2 years 5 1 6 io) 6 ro) 4 1
3-4 years, 7 - 7 - 8 - 5 -
5 years ... 7 7) 8 1 6 i) 5 -
More than 6 y 1 1 1 1 1 1 ) 1
Graduated vesting‘ with full
vesting after: 25 66 24 87 26 60 25 74
4 or fewer years .. 2 - 2 - 3 - 1 -
16 3 15 3 14 5 7 1
2 5 2 5 3 4 1 5
1 7 e 6 io) 7 1 8
1 1 @ 2 1 1 1 -
a 1 0 1 a) 1 ia) 2
4 24 3 24 4 24 3 23
Q 5 ® 4 ia) 6 i) 5
ie) 14 Q 6 QO 4 - 25
ie) 6 7) 5 i?) 6 1 6
- 0) - 1 - (0) - (0)
Class vesting’ with each class
fully vested after: 29 4 30 7 26 5 32 2
4 year . 1 - 1 - eQ - 2 -
2 years 16 2 14 3 16 2 19
3 years 8 1 12 1 7 1 5
4 years 3 - 3 - 2 - 6 -
5 years ra) 1 1 2 1 2 vl )
Vesting provision not determin-
able v) - i) - iv) - - -

* Because plans may adopt alternative vesting schedules, sums of
participants 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,
eventually reaching 100 percent vesting status.

* Participants in this group were in plans which call for 50 percent

88

vesting at any age after 5 years of service if age plus service equals 45.
Therefore, the vested percentage increases 10 percent in each of the
next 5 years.

* Under class-year vesting, employers’ contributions for a particular
year (class) become nonforfeitable after employees satisty vesting re-
quirements. Subsequent years become fully vested as each class ma-
tures. Included here are class year schedules with both graduated and
cliff vesting features.

NOTE: Dash indicates no employees in this category.



Table 36. Health care benefits: Percent of full-time
participants in plans with major medical coverage by
maximum benefit provisions, medium and large firms,

1986
Profes-
sional | Techni-
and | cal and | Produc-
Type and Peart alba Siete | adminis-| clerical | tion par-
pants) ‘trative | partici- | ticipants
partici- | pants
pants
Ola serene 100 | 100 | 100
With maximum leit 76 74 86
Lifetime maximum only 68 66 70
Less than $25,000 ) - = iv)
$25,000 .. 1 0) 10) 2
$25,001-$49,999 .. iv) w) w) -
,000 .. 3 1 1 5
$50,001-$: (a) iv) is) io)
$100,000 2 1 1 3
$100,001-$249,999 3 2 3 4
,000 16 15 13 18
$250,001-$499,999 5 5 8 6
$500,000 13 14 14 12
$500,001-$999,999 . 2 2 2 2
$1,000,000 22 25 26 18
More than $1,000,000 1 1 1 1
Annual or disability maximum
only 7 7 5 8
Both lifetime and annual or
disability maximums 5 3 2 9
Without maximum limits ... 20 24 26 14

* 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. Regardless of a mem-
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.

42



Table 77. Savings and thrift plans: Percent of full-time participants by provisions for pretax employee contributions,‘

medium and large firms, 1986

Profes- Profes-
sionat | Techni- sional | Techni-
‘All par- |_nd_ | cal and | Produc- All par. | 37d cal and | Produc-
Item? ie be ats |Adminis-| clerical |tion par- Iter? ticipants [24TMninis-| clerical | tion par-
icipants | ‘trative | partici- | ticipants| ipants| "trative | partici- | ticipants
partici- | pants partici- | pants
pants pants
Total 100 | 100 | 100 | 100
Initial contributions must
Pretax contribution allowed .. 75 82 72 69 be pratax’—Continued
11 percent of earnings Yo fal - -
All contributions must be pretax .| 18 21 18 14 42 percent of earings...) 4 4 4 3
Maximum contribution is: 18-14 percent of earings .. 1 1 1 1
4 or 5 percent of 16 percent of eamings 1 1 1 1
earnings .. oO i) O a) 16 percent of earnings 1 2 “ -
6 percent of earnings 2 2 2 1 Greater than 16 percent of
8 percent of earnings 3 5 3 2 earnings 0) 1 1 0)
9 percent of earnings 1 1 1 oO
10 percent of earnings 2 3 3 2 Contributions may be pretax at
11 percent of earnings 0 oO iv] iv) the employee's option® 39 39 33 45
11.01-11.99 percent of Maximum pretax
earnings 0) 0 Oy 0) contribution is:
42 percent of earings 3 3 Less than 5 percent of
12.01-14.99 percent of earnings .. 0) i) 0) )
earnings 1 1 fy) fu) 5 percent of earnings 1 1 1 1
16 percent of earings 2 3 3 2 6 percent of earings 7 5 10 7
46 percent of earnings 3 2 3 4 7 percent of eamings 2 2 1 5
Greater than 16 percent 8 percent of eamings 4 5 3 3
earnings 1 1 1 0) 9 percent of earnings i) 1 iy) o
10 percent of eamings 8 8 7 8
Initial contributions must 11-12 percent of earnings 2 2 2 3
18 23 20 10 13-14 percent of earnings 2 3 1 3
15 Percent of earnings 3 3 3 3
‘contribution is: 16 percent of earnings 7 7 5 1
3 percent of earnings iv) iv] iy) - 18 percent of earnings Vy i] QO (¥)
4 percent of earnings oO 4 1 20 percent of earnings fv) oO oO 1
5 percent of earnings 1 1 0) Oy
6 percent of earnings 3 3 4 1 ||Pretax contribution not allowed ... 25 18 28 31
7 percent of earnings “ 1 0 -
8 percent of earnings 2 3 3 )
9 percent of earnings iv) yl i} -
10 percent of earings 4 6 3 3

* Pretax contributions are allowed under sections 401(k) and 403(b)
the Internal Revenue Code.

? if maximum contributions varied by participant's tength-of-service,
age, or both, the highest possible percentage was tabulated.

? Contributions above the maximum pretax level must be on a post-
tax basis.

* Less than 0.5 percent.

5 In most of these plans, all contributions may be either pretax or

posttax at the employee's option. In some, however, an initial contribu-
tion must be on a pretax basis, with a choice between pretax and
posttax contributions for higher amounts. in these cases, the largest
percentage available for pretax contributions has been tabulated.

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

83



Table 54. Defined benefit pension plans:' Percent of
full-time participants by method of determining retirement °
payments, medium and large firms, 1986

Profes-
. sional | Techni-
; Ai par. | 9nd | cal and | Produc-
Basis of payment” telpants | @0minis-| clerical jtion par-
Pp trative | partici- | ticipants
partici- | pants
pants
Total 100 | 100 | 100
Terminal earings formula 57 72 72 40
No alternative formula 29 35 40. 18
Terminal earnings alternative 10 13 13 7
Career earnings alternative 2 3 2 2
Dollar amount alternative” 15 19 7 12
Percent of contributions
alternative .. 1 1 ) 1
Career eamings formula . 15 23 16 Wt
No alternative formula .. 8 12 8 6
Career earnings alternative o 6 0) 0
Dollar amount alternative® 7 10 6 5
Percent of contributions
alternative . QO oO iv) i)
Dollar amount formula? 26 5 oh 48
No alternative formu 25 4 4 46
Dollar amount alternative 1 oO 0 2
Percent of contributions
alternative oO oO oO v)
Percent of contributions formula o O 19) 1
No altemative formula .. oO oO iv) 1

Other formula.

+ Excludes supplemental pension plans.

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

2 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.

60



Table 78. Savings and thrift plans: Percent of full-time participants by provision for employer matching contributions,
medium and targe firms, 1986

Matching percentage”

Employee earnings to be matched’ Total Other fixed

25 percent | 60 percent | 75 percent | 100 percent | rcentages Varies?

All participants:

3
8
»
rs
3
oa
8
8
py
8

Total

Up to first:
2 percent ...
3 percent
4 percent
5 percent
6 percent
7 percent
8 percent
10 percent
12 percent or greater

Specified dollar amount

1
~

3
2
aANoae
a
Boas

Bana

0
2

‘
y
asain Sn aF
eens
1

Oo
0

0
Professional and administrative i

Naeso8

Total 32 8 14 7 25

3
s
s

Up to first:
2 percent
3 percent
4 percent
5 percent
6 percent
7 percent
8 percent
10 percent
12 percent or greater

Specified dollar amount

Bon?

peat
;

Sota ouae
:

"seman

moaned
133
>
By
1

Technical and clerical

8
>
8
-
a
©

Total .. 28

Up to first:
2 percent
3 percent
4 percent
5 percent
6 percent
7 percent

go
Namen SianF

12 percent or greater
Specified doliar amount

’
3

Production

8
g
8

Total .

Up to first:
2 percent
3 percent
4 percent
§ percent
6 percent
7 percent
8 percent
10 percent
12 percent or greater
Specified dollar amount

oO

Bours
ma
'
Broan

iy)
4

ane
to

3.8
BanwFoWowos
3
ees

0 1
. 0
0

oO

Bouwas

0 0

* Employee may contribute a percent of salary up to a specified maxi- ° Includes percentages which vary by length of service, level of em-
mum; ceilings on contributions to be matched by employers generally afe ployee contribution, and company profits.
lower. If the maximum varied by participant's length-of-service, age, or “Less than 0.5 percent.
both, the highest possible percentage was tabulated.

® ‘The percentage of matchable employee contributions added by em- NOTE: Because of rounding, sums of individual items may not equal
ployers. Some plans specified a maximum annual employer contribution. _ totals. Dash indicates no employees in this category.

84


Chart 1. Trends in selected deductible amount: Percent of full-time participants
in major medica! plans, medium and large firms, 1979-86

50 deductible or less

Percent Percent
® T T 1 | 1 | 60
ieee
Tae  ,
eel a
50 | em, $100 deductible — 50
mr
boone!
ee,
a
40 4 40

30

1979

4 20
re Ree ee,
4
$150 deductible or more 4 10
° J J 1 1 A ! 0
1980 1981 1982 4983 1984 1985 1986

penses, at least for dependent children, covered 75 percent
of employees with dental benefits in 1986.

Dental payments were most commonly based on a percent-
age of the usual, customary, and reasonable charge for a
procedure. The percentage covered by a plan generally de-
pended on the type of procedure performed. Less costly
procedures such as examinations and X-rays were usually
covered at 80 or 100 percent. Fillings, surgery, and perio-
dontal care were more likely to be covered at 80 percent.
More expensive procedures—inlays, crowns, and
orthodontia—were often covered 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 allowances. In
this type of arrangement, each procedure is subject to a speci-
fied maximum dollar amount that can be paid to the par-
ticipant. Preventive procedures and orthodontia were less
likely to be subject to this type of schedule than restorative
procedures.

Three percent of dental plan participants had services cov-

ered by an incentive schedule. Under this arrangement, 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 typically
required participants to pay a specified deductible amount
before the plan paid any benefits. The most common require-
ment was a $25 or $50 deductible to be met by the participant
each year. However, some plans required the participant to

. pay a deductible (usually $50) only once while a member

29

of the plan rather than every year. White-collar workers were
more likely than blue-collar workers to have plans with
deductible requirements.

Eighty-eight percent of dental plan participants were en-
rolled in plans that limited the amount of payment cach year
by specifying a yearly maximum benefit. Although many
plans have raised their limits since 1980, there was little
change between 1985 and 1986. In both years, the most com-
mon limit was $1,000. Orthodontic services were almost al-
ways subject to lifetime maximums, which have increased
since first tabulated in 1980. Lifetime maximums of $1,000


Chapter 3. Work Schedules
and Paid Time Off

Time off with pay is available to employees in several
different—forms—from daily rest periods to annual vacations
of several weeks. In 1986, survey coverage of paid leave
benefits included provisions for lunch and rest periods; holi-
days and vacations; and personal, funeral, jury-duty, and
military leave. Information on paid sick leave appears in
chapter 4.

Work schedules (table 2)

Weekly work schedules of 40 hours applied to 82 percent
of the employees covered by the survey.” Nineteen percent
of the professional-administrative employees, 30 percent of
the technical-clerical employees, and 7 percent of the produc-
tion workers had shorter workweeks. Two percent of the
work force was scheduled 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 cleanup time. Both benefits were more
common among production employees than among the two-
other occupational groups.

Production employees who were covered by paid lunch
period plans usually received 20 or 30 minutes a day, aver-
aging 24 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 10.0 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 birth-
days, were included in the holiday plans reported.

When a holiday fell on a scheduled day off, such as a Satur-
day or Sunday, another day off was regularly granted to 84

2? Work schedules include regularly scheduled overtime and paid lunch
and rest periods. Overtime hours were excluded from the 1980-84 surveys.

percent of the employees. Most of the remaining workers
received either another day off or an additional day’s pay,
depending on when the holiday fell.

Paid vacations (tables 5, 8, and 9)

Virtually all employees in each occupational group were
provided paid vacations. Vacation provisions averaged 8.8
days at 1 year of service, 15.8 days at 10 years, and 20.6
days at 20 years; these averages were virtually unchanged
since 1980—the first year such estimates were developed.
Plans covering professional-administrative employees gener-
ally provided more vacation days than those for other em-
ployees. Sixty percent of the professional-administrative
employees, for example, became eligible for at least 15 days
of vacation at 5 years of service; this compared with 36 per-
cent of the production employees. Nearly all white-collar em-
ployees received their regular salaries or earnings during
vacation periods. About seven-eighths of the production em-
ployees received such vacation pay; nearly all of the others
were provided vacation payments based on a percentage of
annual earnings. Anniversary-year bonus vacation days, such
as an extra week of vacation at 10 and 20 years of service,
were included in the count of regular vacation time.

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

Sixteen percent of the plan participants were allowed to
cash in unused vacation time. This option was offered to 10
percent of the white-collar participants and 22 percent of the
production participants.

Paid personal leave (table 10)

Formal personal leave, which allows employees to be ab-
sent from work with pay for a variety of reasons not covered
by other specific leave plans, was provided to one-fourth of
the employees. Slightly over one-third of the white-collar
employees received personal leave, more than twiee the
proportion of production employees with this befiefit. Most
commonly, employees provided personal leave were eligi-
ble for 1 to 5 days, averaging 3.7 days per year. In cases
where personal leave was part of an ‘‘annual leave’’ plan


“Table 38. Health care benefits: Percent of full-time Table 39. Health care benefits: Percent of full-time

Participants in plans with dental benefits by deductible Participants in plans with dental benefits by yearly maximum
provision,’ medium and large firms, 1986 amount of insurance,’ medium and large firms, 1986
Profes- Profes-
sional | Techni} - sional | Techni}, |
‘All par- |_87d__ | cal and | Produc- Al pare |_29d__ | cal and | Produc- |
Type of deduotible* ficioerts |24minis-| clerical tion par- Dollar amount ticipants |24TMinis-| clerical |tion par- |
Hoipants | ‘trative | partici- | ticipants icipants partici- | ticipants
partici- | pants partici- | pants
pants pants
Total 100 | 100 | 100 Total 100 | 100 | 100
‘Subject to basic dental deductible’ .| 63 65 70 59 Yearly maximum specified? 88 86 85 90
Less than $500 0) 0 0 iv)
Yearly deductible only 53 53 58 51 $500 4 2 2 5
1 1 2 1 e v] (<) 1
22 23 20 22 $750 19 19 20 19
1 1 1 i $751-$999 1 1 1 2
26 25 28 25 $1,000 42 40 a 44
1 1 1 1 $1,001-$1,499 . 4 4 3 5
2 2 3 10 13 12 8
Over $100 .. i) 0 0 0 1 1 iv) 1
$2, 3 3 3 3
Lifetime deductible only 5 5 6 4 $2,001-$2,999 .. iv) iv) 0) 0
$50 ... 5 6 3 $3,000 1 1 2 2
Over $50 i) rs) “ 1 Greater than $3,000 ro) ro) () 1
Both yearly and lifetime No yearly maximum .. 12 14 15 10
deductibles 6 6 8 4
Maximum provision not determinable] *) ro) ) - i
Subject to major medical i
deductible 4 5 § ‘ " includes all covered dental procedures except orthodontia. Amount
‘of maximum specified is for each insured person.
No deductible 32 30 25 38 ® if separate yearly maximums applied to different procedures, the sum

of the maximums was tabulated.

* Excludes separate deductibles for orthodontic procedures. * Less than 0.5 percent.
? Amount of deductible described is for each insured person. in some
plans, the individual and family deductibles are identical. NOTE: Because of rounding, sums of individual items may not equal to-

* Deductibles may not apply to all covered dental procedures. If sepa- _tals. Dash indicates no employees in this category.
rate deductibles applied to different procedures, the sum of the deductible
amounts was tabulated,

* Less than 0.5 percent.

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

Table 40. Health care benefits: Percent of full-time
participants in plans with orthodontic benefits by lifetime
maximum amount of coverage, medium and large firms, 1986

Protes-
sional | Techni-
ll par- | _2nd__| eal and | Produc-
Dollar amount ficipants |29TMinis-| clerical |tion par-
trative | partici- | ticipants
partici- | “pants
pants
Total ..... 100 100 100 100 |
Lifetime maximum specified 94 94 94 94
Less than $500 0) 0) 0) o)
$500 9 8 10
$501-$749 6 5 4 8
$750 19 at 21 7
$751-§999 10 6 5 14
$1,000 .. 39 37 40 39
$1,001-$1, 4 7 5 2
$1,500. 5 5 8 2
- Greater than $1,500 2 2 3 4
No lifetime maximum 6 6 6 6

* Less than 0.5 percent,

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


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

firms,” 1986
Employee benefit program All employees nica and Techical and gereal Production employees
Paid:
Holidays 99 99 400 98
Vacations 100 99 100 100
Personal leave 25 33 35 15
Lunch period 10 3 4 7
Rest time 72 58 69 82
Funeral leave 88 87 87 88
Jury-duty leave 93 96 96 90
Military leave 66 74 72 58
Sick leave . 70 93 93 45
Sickness and accident insurance 49 28 35 69
Wholly employer financed 41 22 28 59
Partly employer financed 8 6 7 9
Long-term disability insurance 48 68 60 30
‘Wholly employer financed .. 38 52 47 24
Partly employer financed 10 16 13 6
Health insurance” 95 96 24 96
Employee coverag
Wholly employer financed .. 54 582 45 61
Partly employer financed a 45 49 35
Family coverage:

Wholly employer financed .. 35 33 28 41
Partly employer financed 60 64 66 55
Life insurance ... 96 97 96 95
Wholly employer financ 87 87 87 86
Partly employer financed 10 10 9 9
_aliament 89. 92 92 87
7 Patines benefit pension ahd] 78 78 74
Wholly employer finafice 73 74 69
Partly employer financed 5 5 3 5
Defined contribution plan 47 53 585 40
~ “Wholly employer financed? 33 33 36 at
Partly employer financed 15 20 19 9
Capital accumulation’ .. ~ 31 29 16
‘Wholly employer financed? . 6 6 5
Partly employer financed 78 25 23 rT

* Participants are workers covered by a paid time off, insurance,
fetirament, 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 @ 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 less than 0.5 percent of employees in plans that did not
offer family coverage.

* Includes participants in noncontributory basic plans who may
contribute to the cost of supplemental plans in these benefit areas. Sup-
plemental 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 plans, and 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 69 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.

* 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.



Tabie 32. Health care benefits: 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, 1986

Subject to limit on days of coverage per hospital confinement’ Subject to
Type of payment Total Under 120 421 - 364 $68 day other | Unlimited
- YS | limite?
Alt days | 120 days | 75.2% | 365 days | $39 98¥S | mits
All participants
Total 100 58 7 16 4 27 3 7 25
Daily dollar allowance 4 4 2 e) iv) 1 - 1 -
Less than $50 0 iv) iV) - iy) - (a) -
$50-$99 . 1 1 1 - - - - - :
$100-$149 .. 2 1 0 i) i) - 9) -
$150-$199 . 2 1 1 - - 1 - i) :
$200 or more (9) (a) 1) - 19) 1] - 19) -
‘Semiprivate rate . 96 84 5 16 4 26 3 16 25
Professional and administrative
Total .. 100 8t 5 7 3 24 3 20 28
Daily dollar allowance 2 2 1 iy ° 1 - - -
Q 0 Q - - 0) - : -
i) 0) (o) = - - - - -
1 1 1 0 - 0 - - -
1 1 - - - 1 - - -
$200 or more 19) (9) - = o) © - > -
Semiprivate rat 98 49 4 7 3 23 3 20 28
‘Technical and clerical |
Total 400 53 4 20 3 24 2 7 30
Daily dotiar allowance 1 @ ie) i) 1 - is) -
Less than $50 a) iG) - - ® - - -
$50-$99 .. is) 0 - - - - - -
$100-$149 1 a) Vv) - iy) - 1) -
$150-$199 1 - - - 1 - - -
$200 or more Q - - 0 0 - -
Semiprivate rate St 3 20 3 23 2 7 30
Production
Total 100 64 " 14 6 30 4 15 at
Daily dollar allowance 7 6 4 0 1 1 - 1 -
Less than $50 1 a) 0 - - - - 1 :
$50-$99 1 1 1 - - - - - -
$100-$149 3 3 2 ie) 1 i) - Q -
$160-$199 2 2 1 - - 1 - ro) -
$200 or more .. 19) iv) 0, - - iv] - o >
Semiprivate rate 93 38 7 14 5 29 4 14 at
* In some plans, the limit on days of coverage varied by length of specified time period.
Participation in the plan; in these cases, the participant was assumed to > Less than 0.5 percent.
have been in the plan for 15 years.
® Includes workers in plans where tha basic benefit is limited by a NOTE: Because of rounding, sums of individual items may not equal

‘maximum dollar amount per confinement or per year, and other plans _totals. Dash indicates no employees in this category.
i where the limit on the number of days of coverage applies within a

38


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

large firms, 1986

Profes-
sional | Techni-
and | cal and | Produc-
tem teats adminis-| clerical |tion par-
trative | partici | ticipants
partici- | pants
pants
Paid annual sick leave’ by length of
service:
‘At 6 months . 1147] 164] 90] 93
Att year 162] 216] 128] 114
At years .. 191] 272] i741] 128
At 5 years .. 251| 364] 236] 151
At 10 years 322} 462{ 319] 182
At 16 years 37.0} 523) 371] 214
At 20 years gos} s62{ 401| 228
At 25 years 412} 680) 412] 264
At 30 years* 418 58.7 418 24.6
Paid per disability sick leave? by
length of service:
At 6 months ... 4g6| sat] 317! 923
‘Att year 522] 631] 397] 429
At years sai] 687) 467] 524
At 5 years .. 746| 927| 651] 722
At 10 years eo2| 1005] e09| 766
At 15 years joes | 1124] 1011] 1022
At 20 years 4215| 1212] 1188] 1269
At 25 years 137.4] 1321] 1368] 161.5
At 30 years* 137.5] 1322] 1369] 151.5

+ 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 sarv-

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.

7



Chapter 4. Disability Benefits

Through paid sick leave or sickness and accident insur-
ance, workers may be protected against loss of income dur-
ing temporary absences from work due to illness or accident.
During more extended periods of disability, workers’ income
may be continued through long-term disability insurance or
disability pensions.

In 1986, short-term disability protection was available to
94 percent 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 normal earnings; sick-
ness and accident insurance usually replaces 50 to 70 per-
cent of pay.

Long-term disability insurance (LTD), which typically pays
50 or 60 percent of earnings, was available to 48 percent
of the employees; 37 percent (some with LTD insurance)
were eligible for immediate disability benefits under their
pension plans.

Twenty-five. percent of the workers had sick leave plans
coordinated with sickness and accident insurance. Coordi-
nation is accomplished by either starting insurance benefits
after sick leave pay has ended, or paying both benefits con-
currently. When payments are made from both sources, sick
leave pay is reduced by the amount of the insurance benefits
so that the total benefit does not exceed full salary. Regard-
less of the method of coordination, employers offering sick-
ness and accident insurance tend to allow fewer sick leave
days than those without such insurance. At 5 years of serv-
ice, for example, annual sick leave plans coordinated with
insurance granted an average of 14.7 days at full pay—less
than half the days provided by plans without insurance. This
gap widened as years of service increased.?

Long-term disability insurance payments usually begin af-
ter sick leave and sickness and accident insurance are ex-
hausted and continue as long as the person is disabled or until
retirement age. Career-ending disabilities may entitle an em-
ployee to an immediate pension, or the pension may be
deferred until other forms of income, such as LTD insurance,
have ceased. (Disability provisions of pension plans are dis-
cussed in chapter 5.)

Paid sick leave and LTD insurance were more prevalent
among white-collar workers, while sickness and accident in-
surance and immediate disability pension benefits were more
prevalent among blue-collar workers.

3 For further analysis of short-term disability protection, see William J.
Wiatrowski, ‘Employee Income Protection Against Short-term Disabili-
ties," Monthly Labor Review, February 1985, pp. 32-38.

12

Paid sick leave (tables 14-20)

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 19 percent of the par-
ticipants were provided sick leave benefits for each illness
(per disability plans), while most of the remainder were cov-
ered by both annual and per disability benefits or plans that
provided time off as needed. 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 annual and per disability plans, the maximum num-
ber of days granted is either uniform for all covered
employees or increases with seniority.

Because annual sick leave plans do not renew benefits af-
ter each illness, 43 percent of the employees covered were
allowed to carry over and accumulate unused sick leave from
year to year (cumulative plans). Such plans typically grant-
ed fewer days per year than plans in which unused days were
not accumulated. For example, at 20 years’ service, cumula-
tive annual plans averaged 17.3 days at full pay, while non-
cumulative plans averaged 56.7 days. Three-tenths of the
workers with carryover provisions were allowed to accumu-
late an unlimited amount of sick leave; two-thirds had limits
on the amount of sick leave that could be accumulated, rang-
ing 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 aver-
age number of days at full pay was 52.2 at 1 year of serv-
ice, 74.6 at 5 years of service, 106.6 at 15 years of service,
and 137.4 at 25 years of service. Under annual plans, the
average number of days available was 15.2 days at 1 year,
25.1 days at 5 years, 37.0 days at 15 years, and 41.2 days
at 25 years.

One-fourth of sick leave participants with 10 years of serv-
ice had partial-pay benefits available after full-pay benefits
ended. In many of these plans, the number of days with full-
pay benefits increases with seniority and the number of days
with partial-pay benefits decreases, eventually resulting in
all sick leave days at full pay. Another 2 percent of the par-
ticipants had only partial-pay benefits available.

Sick leave plans commonly had a short service require-
ment, generally 3 months, before new employees became
eligible for benefits. Nearly seven-eighths of the participants
were in plans providing benefits on the first day of illness
to employees with 1 year of service. The remainder typical-



Chapter 1. Introduction

The employee benefits survey collects data on employee
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
benefits include lunch and rest periods, holidays, vacations,
and personal, funeral, jury-duty, military, and sick leave;
sickness and accident, long-term disability, health, and life
insurance; and private retirement/capital accumulation plans.
In addition, data are collected on flexible benefits plans and
reimbursement accounts.

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 col-
lection is limited to provisions of formal 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 ex-
ample, 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.

OTIS 8 a tee

Respondents provide information on the number of wor-
kers covered by specified benefit plans. Workers are count-
ed as covered by wholly employer-financed plans that require
a minimum amount of service prior to receiving benefits,
even if they had not met the minimum 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 accumula-
tion plans are thus limited to ‘‘participants.”” Plans for which
only administrative costs are paid by the employer are not
included in the survey.! .

Information on other benefits, such as severance pay, non-
production bonuses, financial counseling, and child care, was
not collected in the 1986 survey. Future plans call for resur-
veying these benefits in 1988.

* An exception, however, is made in tables 29, 30, and 53, 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.



Table 61. Defined benefit pension plans:' Average replacement rates for specified final earnings and years of service,’
medium and large firms, 1986

Years of service”

Final annual earnings
10 15 20 25 30 35 40

Private pension only

All participants

$15,000 .. WA 164 216 26.7 315 35.9 39.9
$20,000 . 10.0 148 19.5 24.2 28.5 82.4 35.9 i
$25,000 . 97 144 18.9 23.4 27.6 31.2 34.4 |
$30,000 . 97 144 18.9 23.3 27.4 30.9 34.0 i
$35,000 . o7 145 19.1 23.4 274 30.8 33.7
$40,000 98 146 19.2 23.5 275 30.8 33.6
Professional and
administrative
$15,000 .. 10.8 15.9 21.0 25.9 30.6 34.6 38.3
$20,000 . 10.3 15.4 19.8 24.5 28.9 32.6 35.9
$25,000 .. 10.3 15.2 19.9 24.8 28.9 32.5 35.6
$30,000 .. 10.6 15.7 20.5 25.2 296 33.1 36.0
$35,000 .. 10.9 16.2 212 25.9 30.3 33.7 36.5
$40,000 .. 11.2 16.6 217 26.6 31.0 34.4 37.4
Technical and
clerical
$15,000 .. 10.6 15.6 20.6 25.6 30.2 34.4 38.1
$20,000 .. 10.4 15.0 19.8 247 29.0 33.0 36.4
$25,000 .. 10.2 15.2 20.1 25.4 29.5 33.4 36.7
$30,000 .. 10.5 15.8 20.9 25.9 30.4 34.2 37.5
$35,000 .. 10.8 16.3 216 26.7 31.2 35.0 38.2
$40,000 . WA 16.7 22.1 27.3 31.9 35.6 38.7
Production
$15,000 .. 1.5 174 22.6 27.8 32.9 376 419
$20,000 .. 9.8 145 19.2 23.7 28.0 31.9 35.6
$25,000 .. 9.0 13.4 176 218 25.7 29.3 32.5
$30,000 .. 86 128 16.9 20.7 24.5 27.8 30.7
$35,000... 8.3 12.4 16.4 20.1 23.6 26.7 29.5
8.2 122 16.0 19.6 23.0 25.9 28.5

Combined private pension and primary‘ Social Security benefit

Ail participants
$15,000 .. 53.6 58.9 64.2 69.3 744 78.5 82.5
$20,000 .. 49.3 544 58.8 63.5 67.8 717 75.2
$26,000 .. 44.0 48.7 53.2 577 61.9 65.6 68.8
$30,000 .. 99.2 43.9 48.4 52.8 56.9 60.4 63.5
$35,000 .. 36.5 40.3 448 49.2 53.2 56.6 59.5
$40,000 .. 32.6 37.4 42.0 46.4 50.3 53.6 56.4
Professional and
administrative
$15,000 .. 53.4 58.5 63.5 68.5 73.1 772 80.9
$20,000 .. 49.5 544° 59.1 63.8 68.2 na 75.2
$25,000 44.7 49.5 54.2 58.9 63.2 66.8 69.9
$30,000 40.1 45.2 50.0 547 59.0 62.6 65.5
$35,001 36.7 42.0 46.9 517 56.0 59.5 62.3
$40,000 34.0 39.4 448 49.4 53.8 872 59.9
Technical and
clerical
$15,000 53.1 58.1 63.2 68.2 727 769 80.7
49.4 54.3 59.1 64.0 68.3 72.3 75.7
44.6 49.6 54.5 59.4 63.8 677 71.0
40.0 45.2 50.4 55.4 60.0 63.7 67.0
36.6 424 47.3 525 57.0 60.8 64.0

33.9 99.8 44.9 50.1 54.7 58.4 616

See footnotes at end of table.

67


Table 21. Sickness and accident insurance: Percent of full-time participants by type and duration of payments, medium and
large firms, 1986—Continued

Maximum weeks of coverage
No.
Type of payment Total | Loss Greater | Varies
peers than 13 14-25 26 27-51 52 than maximum
13 52 || service
Production
All types ... 100 1 7 5 82 1 7 - 6 uy
Fixed percent of earning 37 0) 5 3 26 (0) 1 - 2 )
Less than 50 0’) - - - () 0) - - - _
14 - 2 2 10 - 0) - 1 0)
Q - - ~ Y - - - - -
Q ~ - io) - - ~ - - -
: 0 1 1 ° ~ 0 - ) QO
1 - ) 10) 0) - - - 1 -
iV) - Y - i) - ~ - = -
7 0 1 - 6 - QO - Y -
3 - 1 () 2 - 1) - Oo -
1 - Y - 19) ) ~ - Q -
0) - - - 0 ~ - - ~ -
Percent of earnings varies 38 - 0) - 3 - - - °
By service . 2 - - - 1 - - - 0 :
By length of 1 - 0 - 1 - - - -
By both service and leng
disability . 1 - - - - - - ro) -
Fixed weekly dollar benefit 36 () 1t 2 7 1 3 - 2 -
Less than $60 5 0) 4 - 1 ) - - - 7
$60-§79 .. 4 - 3 - 1 - - - - -
$20-$99 . 2 - 0) - 2 - - - : 2
$100-$119 6 - 1 1 4 - 0 - - -
$120-$139 5 0) 2 0) 3 0 = - 7 =
$140-$159 4 - 1 ~ 2 iv) 1 - ) -
$160-$179 3 - - ) 2 (a) 0) - ~ :
$180-$199 2 - ~ - 1 - i) - 1 -
$200-$219 3 - ie) - 1 - 4 - 1 -
$220 or more 1 - = - 1 - Y - - -
Weekly dollar benefit varies 24 1 1 7 ) 14 2
By eamings.... 22 - 0 1 6 (0) 14 - 2 -
By service or length of
disability .. 1 - 1 QO ie) Q - - 0) -
* 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 6. Paid holidays: Percent of full-time employees by
number of paid holidays provided each year, medium and
large firms, 1986

Table 7. Paid holidays: Percent of full-time participants by
policy on holidays that fall on a regularly scheduled day off,

medium and large firms, 1986

Profes- Profes-
sional | Techni! produg- sional | Techni-|
Attem.| and {cal ana|Predt a ‘al par. |__2nd_ | cal and | Produé-
Number of days roves) admin | clrical nr, Holiday policy ee |adminis-| clerical | tion par-
Ployees listrative| employ-| "oo pants | “trative | partici- | ticipants
lemploy-| ees partic | pants
ees pants
Total 100 | 100 | 100 | 100 Total . 100 | 100 | 100
Provided paid holidays se | 99 | 100] 98 Holiday is not observed ... 2 2 2 1
Under 5 days 2 0 ) 3
8 days «. 1 1 1 2 Another day off granted ... as | 91 | oo | 76
6 days .. 4] 4! 6] 4
6 days plus 1, 2, or haifdays.| | O | Oo | © Additional day's pay in lieu of
6| s| 7] 7 holiday .. 3 1 2 6
i] 0 4 4
7] 7] 6| 7 Another day off or day's pay,
1 1 2} 0 depending on when holiday falls ..| 9 4 6 | 14
a] wz] wl os
1 1 2] 4 ‘Another day off or holiday not
2 | 25] 26] 23 ‘observed, depending on when
1 2} 2) 4 holiday falls 1 1 1 | o
wv] wl] wi 47
1 1 ar) Other provision applies® ofololo
wo] 3] 9] 9
0 1 1 r0) Holiday policy not determinable 1 1 1 1
4 | 4] 2
MO] OF} OL) O * Less than 0.5 percent.
oleolelo * includes plans where the policy differs by holiday.
Ne ee Bey for avai Oy gt] O | @ atOTE: Because of rounding, sums of individual toms may not equa
Not provided paid holidays. 1 i] o 2

* Less than 0.5 percent.

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



Chapter 5. Health Care 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. Health care benefits were provid-
ed to 95 percent and life insurance to 96 percent of all em-
ployees, and the extent of coverage was. nearly identical
within each of the three occupational groups.

Health care

Virtually all of the participants in health care plans were
covered for the major categories of medical.care, such as
hospital room and board, care by physicians and surgeons,
diagnostic X-ray and laboratory work, prescription drugs,
and private duty nursing (table 28). Among benefits less com-
monly provided were vision care (covering 40 percent of the
participants), hearing care (20 percent), and routine physi-
cal exams (18 percent). Unlike most other employee benefits,
there were few differences in health care provisions among
employee groups.

The various categories of medical care are covered under
1 of 3 benefit arrangements: Basic benefits only, major med-
ical benefits only, or basic benefits plus major medical. Basic
benefit plans: cover a specific medical service (such as
hospitalization) and generally do not require deductible or
coinsurance payments by insured individuals. Conversely,
major medical plans cover many categories of care and usual-
ly have both deductible and coinsurance features.

In-hospital care was most commonly covered by an ar-
Tangement that offered basic coverage plus supplemental
major medical 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 almost exclu-
sively covered as basic benefits. Regardless of the benefit
arrangement used, most health plans limited the size of
benefit payments.

Coverage for retired or laid-off workers (tables 29-31). One
of the goals of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985 (COBRA) was to reduce gaps in health care
benefits for employees who are laid off, retired, or other-

6 The deductible is a specified amount of medical expense that an in-
sured person must pay before benefits will be paid by the plan. Coinsur-
ance 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).

wise separated from employment. COBRA requires employ-
ers who maintain health insurance plans to continue insurance
to terminated workers for up to 18 months. Workers may
be charged up to 102 percent of the premium cost. The Em-
ployee Benefits Survey was conducted in the first half of
1986, immediately before the act went into effect.

About three-fourths of the participants were in health plans
extending coverage into retirement. These plans nearly al-
ways covered retirees up to age 65, and generally provided
the same benefits given to active employees. In nine-tenths
of the cases, retirees remained insured after 65. Again, there
was commonly no change in benefit levels, apart from coor-
dination with Medicare.

Regardless of the retiree’s age, premiums for retiree in-
surance were fully company-paid in plans covering over one-
half of covered participants; but for about 15 percent, pro-
tection continued only if the retiree paid the full cost. The
company shared the costs with the retirees for three-tenths
of the participants in plans covering retirees under age 65
and more than one-fifth in plans covering retirees age 65 and
older.

Group health coverage could continue for about 1 in 2 par-
ticipants following a layoff. For 1 in 3, benefits were whol-
ly or partly employer financed; the maximum period ‘of
protection in these cases was often 3 months or less. In some
plans, employees could extend their protection beyond that
point by paying the full premium.

Approximately 1 in 5 participants were in plans where no
continuation of group coverage was available. (Employees

. in commercially insured or Blue Cross-Blue Shield plans

2

could exercise rights to convert to a more expensive individu-
al policy at their own cost.) Remaining participants worked
for firms where layoffs had never occurred and no policy
had been established.

Hospital coverage (table 32). The most costly component
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 received coverage for hospital
expenses.®

7 Ross H. Amett II, 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.

A small number of participants, who elected only dental care cover-
age, were not covered for hospital expenses.


Chart A. Employee benefits survey generalized standard errors

Standard error
3.274 =

08
0.44

0.0

50 60 70 80 90 100

Percent estimate

Nonsampling errors also affect survey results. They can
be attributed to many sources: Inability to obtain informa-
tion about all establishments in the sample; definitional
difficulties; differences in the interpretation of questions; in-
ability or unwillingness of respondents to provide correct in-
formation; mistakes in recording or coding the data; and other
errors of collection, response, processing, coverage, and es-
timation for missing data. Through the use of computer edits
of the data and professional review of both individual and
summarized data, efforts are made to reduce the nonsam-
pling errors in recording, coding, and processing the data.
However, to the extent that the characteristics of nonrespond-
ents are not the same as those of respondents, nonsampling
errors are introduced in the development of estimates. Be-
cause the impact of these limitations on the Employee
Benefits Survey estimates is unknown, reliability measure-
ments are incomplete.

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

Mathematical details on estimates and generalized standard
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 presen-

96

tation, a curve was fitted to the standard error estimates, by
regression techniques.

The curve’s equation is:
§ <ela + b {1n(P)}? + ¢ {1n(100-P)}” + d In (P) In (100-P)]

where: .
= standard error
P = percentage estimate from the bulletin
exponential function
In = 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, differ-
ences between curves using 1982 and 1983 data are
negligible.

The equation of the curve was obtained empirically, by start-
ing with the equation:
S=a pb (100 - P)*
More information describing survey response and relia-
bility may be obtained from the Office of Wages and Indus-

trial Relations, Bureau of Labor Statistics, U.S. Department
of Labor, Washington, DC 20212.



Chapter 8. Plan Administration

Tn addition to the data on individual benefit plans, the sur-
vey looked at how various benefits are administered. The
great majority of the insurance and retirement plans were
sponsored by individual employers, and benefits typically
were offered independently, rather than as part of a flexible
benefits program.

Plan sponsor (table 86)

Single employers were the predominant sponsors of health,
life, sickness and accident, and long-term disability insur-
ance, and defined benefit pension plans in medium and large
firms. Nearly all plan participants in life insurance, health
insurance, long-term disability insurance, and defined benefit
pension plans were in single-employer plans. Eighty-seven
percent of sickness and accident insurance participants were
in single-employer plans; most of the remaining participants
were in State temporary disability benefit plans. (State disa-
bility plans are discussed in chapter 4.)

Multiemployer plans result from agreements between em-
ployers within an industry or related industries and one or
more labor unions. These plans allow employees moving
from one employer to another within the industry to receive
the same or similar benefits. Defined benefit pension and
health insurance plans were the most common benefits spon-
sored by multiemployer groups, and production employees
were the most likely recipients of such benefits. The scope
of the survey, which excludes several service industries and
small firms in other industries, such as contract construc-
tion and trucking, accounts for the small representation of
multiemployer plans.

Flexible benefits plans and reimbursement
accounts (table 87)

Traditionally, employers have offered their workers benefit
plans in a number of areas, such as health insurance, life
insurance, and retirement. Employees may have a choice be-
tween one or more plans in a benefit area, for example, be-
‘tween a commercial health insurance plan and a health
maintenance organization, but benefits in each area are
offered separately. In recent years, however, a new approach
to offering benefits has attracted considerable attention—
flexible benefits. In 1986, the Employee Benefits Survey

89

looked for the first time at two arrangements for offering
such benefits—flexible benefits plans and reimbursement ac-
counts.

Five percent of employees in medium and large firms were
offered flexible benefits plans, reimbursement accounts, or
both. These plans were more common among white-collar
workers (8 percent) than among blue-collar workers (2
percent).

Flexible benefits plans, also known as cafeteria plans, al-
low employees to choose between two or more types of
benefits.38 The most common choices offered were health,
life and long-term disability insurance, pretax savings (sal-
ary reduction plans), added vacation days, and the option
of receiving cash instead of benefits. Less common choices
were added sick leave days, sickness and accident insurance,
educational assistance, child care expenses, legal expenses,
and adoption assistance. Pensions are usually fixed benefits
and not part of a flexible benefits program.

A reimbursement account, also called a flexible spending
account, provides employer funds, employee pretax money,
or both, to be used for expenses not included in a benefits
package. Typical expenses that may be reimbursed through
the account include health care coinsurance, deductibles, and
other out-of-pocket health expenses; and insurance premi-
ums, child care costs, and legal assistance. Reimbursement
accounts may be part of a flexible benefits plan or they stand
alone.

A large majority of employees participating in flexible
benefits plans or reimbursement accounts were required to
contribute toward the cost of their benefits, or were allowed
to contribute to obtain additional benefits. Most of these
contributions were in the form of a salary reduction
arrangement.?°

Individual benefit plans offered through a flexible benefits
plan were analyzed and included in the tabulations for specific
benefit areas in this bulletin.

3 For this survey, a plan had to allow choices among two or more types
of benefits to be classified as a flexible benefits plan. Thus, plans that per-
mitted a selection in only one benefit (for example, a choice among several
health insurance options or plans) were not classified as flexible benefits

‘ans.
, 39 Regulations covering section 125 of the Internal Revenue Code allow
employees to designate a portion of their salary for full or partial payment
of certain benefit costs. Amounts so designated are known as salary reduc-
tion arrangements and are exempt from Federal income tax.



Table 8. Pald vacations: Percent of full-time employees by amount of pald vacation provided ai

service, medium and large firms, 1986

it selected periods of

Protes- Profes-
sional | Techni- sional '| Techni-
Altem. |. 394 | eal and | Product ‘Alem. | 294 | cal and | Produc-
Vacation policy Toyens |@dminis-| clerical | ion em, Vacation policy ! adminis-| clerical | tion em-
Ploys trative | employ- | ployees| Ployees | ‘trative | employ- | ployees
employ-} ees employ-} ees
ees ees
Total 100 | 100 | 100 | 100
lat 15 years of service:
in plans providing paid vacations! 100 99 | 100 | 100 5 days a) a) i) 1
10 days .. 4 2 2 G
At 6 months of servic ‘Over 10 and under 15 days a) G) a) ro)
Under 5 days 6 3 4 9 16 days .. 26 19 19 31
5 days .. 37 45 45 28 Over 15 and under 4 4 4 3
Over § and under 10 days 9 15 13 4 20 days . 62 69 70 52
4 5 6 2 Over 20 and under 25 days 2 2 1 2
a 1 e a 25 days .. 2 3 2 2
0 1 e - ‘Over 25 days 1 1 1 1
ca) 1 iy) i)
|At 20 years of service:
5 days @ io) to) 1
@ - - io) 10 days . 4 1 2 6
5 days . 30 9 13 81 ‘Over 10 and ur (0) ie) io) 19)
Over 5 and under 10 days 1 ® o) 2 15 days .. 9 5 8 13
10 days 62 80 81 42 Over 15 and under 20 days 1 io) 1 1
‘Over 10 and under 15 days .. 2 2 2 1 20 days 56 61 67 48
15 days 3 6 2 1 Over 20 and under 25 days 2 3 3 2
Over 15 days 1 2 1 1 25 days 24 a 20 25
Over 25 and under 30 days 1 1 2 2
At 8 years of service: 80 days i) ) i) 1
5 days .. 3) @ 1 6 ‘Over 30 1 ro) 6 1
Over 5 and under 10 days 1 (3) o) 1
10 days 80 79 87 77 ||At 26 years of service:
Over 10 and under 15 days .. 8 6 5 10 ro) ie) ie) 1
6 W 6 3 4 1 2 6
1 1 is) Q (9) is) is) (9)
1 2 1 9) 8 5 5 "
9) 1 i) @ 19) ia) a 1
33 35 37 29
2 3 3 i
5 days . 1 ) ro) 1 46 43 47 44
Over 5 and under 10 days 0. - ra) - 1 1 1 2
10 days 45 33 41 56 4 4 4 3
Over 10 and under 15 days .. 6 7 5 6 1 1 a) 1
43 52 50 33
1 2 1 1
3 6 3 1 is) co) i) 1
1 1 1 a 4 1 2 6
0 0 i) is)
8 5 5 4
days .. Q 19) is] 1 © i) @ 1
Over 5 and under 10 days @ - is) = ys 31 34 35 27
10 days 7 2 3 1 ‘Over 20 and under 25 days .. 1 1 1 1
Over 10 and under 15 days 1 ) 1 i 28 days ... 4 4 43 40
15 days 68 64 7 64 Over 25 and under 30 days .. 1 1 1 2
Over 15 7 5 4 10 80 days ... 1 4 "1 10
20 days ... 7 27 20 10 Over 30 days. 1 1 1 1
‘Over 20 days... 2 2 2 2

T Employees receiving no paid vacations in their early years of service
are included in the overall percentage of workers provided paid vaca-
tions; however, they are disregarded in computing the distributions by
length of service up to the service period at which they become eligible
for vacations.

? Less than 0.5 percent.

2 Provisions were virtually the same after longer years of service.

NOTE: Data include anniversary year bonus days. Dash indicates no

‘employees in this category.



The following summary is a composite picture of the es-
tablishment responses to the survey:

Number of establishments:
In sample 1,503
Out of business and out of scope . 54
Refusing to respond ........ 129
Nonresponse other than refusal . 12
Responding fully or partially . .. 1,308

There are three procedures used to adjust for missing data
from partial schedules and total refusals. First, imputations
for the number of plan participants are made for cases where
this number was not reported (about 4 percent of participants
in insurance and retirement plans and less than 1 percent in
paid leave plans in 1986). Each of these participant values
is imputed by randomly selecting a similar plan from another
establishment in a similar industry and geographic region. The
participation rate from the randomly selected plan is then used
to approximate the number of participants for the plan which
is missing a participation value but is otherwise usable.

Second, in the case of health insurance plans and retire-
ment and capital accumulation plans, imputations for plan
provisions are made when they were not available and plan
participation data are reported.

For other forms of missing data (or nonresponse), an ad-
justment is made using a weight adjustment technique based
on sample unit employment. This technique assumes that the
mean value of the nonrespondents is equal to the mean value
of the respondents at some detailed ‘‘cell’’ level. These cells
are defined in a manner that groups establishments together
that are homogeneous with respect to the characteristics of
interest. In most cases, these cells are the same as those used
for sample selection. The specific weight adjustments used
in this survey were calculated in four stages for each occupa-
tional group and benefit area combination. This allowed a
maximum amount of data from partially completed estab-
lishment 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 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 fac-

tor developed during the adjustment for nonresponse. The
general form of the estimator for a population total is:

where n = sample size

Yj = value for the characteristics of the ith unit
the probability of including the ith unit in
the sample

95

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

where n' = number of responding units

wh

= weight adjustment factor for the ith unit.

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

Reliability of estimates

The statistics in this bulletin are estimates derived from
a sample of approximately 1,500 establishments, rather than
tabulations based on all 45,500 medium and large establish-
ments within the scope of the survey. Consequently, the data
are subject to sampling errors, as well as nonsampling errors.

Sampling errors are the differences that can arise between
results derived from a sample and those computed from ob-
servations 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 ‘‘stand-
ard errors’’ can be calculated to measure possible sampling
errors.

This evaluation of survey results involves the formation
of confidence intervals that can be interpreted in the follow-
ing manner: Assume that repeated random samples of the
same size are drawn from a given population and an esti-
mate of some value, such as a mean or percentage, is made
from each sample. Then, the intervals described by one stand-
ard error below each sample’s estimate and one standard er-
ror above would include the population’s value for 68 per-
cent of the samples. Confidence rises to 90 percent if the
intervals surrounding the sample estimates are widened to
plus or minus 1.6 standard errors, and to 95 percent if the
intervals are increased to plus or minus 2 standard errors.
_ Chart A provides standard errors for use in evaluating the
estimates in the 82 tables of this bulletin containing percent-
age estimates. For example, table 1 shows that 70 percent
of all employees participated in sick leave plans in 1986.
Chart A shows a standard error of approximately 1.6 per-
cent for this estimate. Thus, at the 95-percent level, the con-
fidence interval for this estimate is 67 percent to 73 percent
(70 percent plus or minus 2 times 1.6 percent).

Standard errors, for tables 5, 17, 18, and 19 could not be
generalized into graphic representation. They are presented
as tables A-2, A-3, A-4, and A-S. For example, the first
entry on table 17 shows an average of 11.7 days of annual
sick leave at 6 months of service. According to table A-3,
the standard error for this estimate is 0.9 days. Standard er-
rors for table 61 are not yet availabie.


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
Effect of layoff on benefit coverage

Section B

Hospital and extended care coverage
Hospital room and board coverage
Hospital miscellaneous charges
Extended care coverage
Extended care—licensed extended care facility
Basis of extended care coverage
Extended care—home health care

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

Maternity care benefit
Who is covered

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”
Separate limitations
Accidental bodily injury—special benefit

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

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 dollars per day/visit by number of

days/visits

Maximum number of days/visits for specified expenses
Maximum dollars payable for specified covered expenses

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 consists of 15 sets of 7 ques-
tions. One set of questions is completed for each covered
expense, or group of covered expenses, with identical deduct-
ible, coinsurance, and maximum benefit provisions. In the
first question of each set, the group of expenses with com-
mon provisions is identified. The remaining six 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.

Mental health care benefits
Mental health care coverage
Hospital confinements due to mental disorders
Comparison with hospital confinements for
other illnesses
Selected coverages for mental health care
Coverage in special hospital

Dental care benefits
Dental care coverage
Coverage of employees
Coverage of spouses

100

‘© U.S. GOVERNMENT PRINTING OFFICE: 1967-1 81 -519/ 64270


Table 57, Defined benefit pension pians:' Percent of full-time participants in plans with percent of career earnings benefit
formulas by type and amount of formula, medium and large firms, 1986

Provision for Provision for |
Provision for integration with Provision for integration with |
maximum benefit? | Social Security maximum benefit’ | Social Security |
Type and amount of | rota benefit Type and amount of | rota) benefit |
formula? Without formula Without
Subject | Not sub- |With inte-| "jite. Subject | Not sub-|with inte-) “004
to maxi-| jectto | grated | crateg to maxi-| jectto | grated | ty
mum maximum} formula | Son mum |maximum| formula | ormen
Professional and
Atl participants “administrative
Total 400 100 100 100 400 Total .. 100 400 400 100 100
Flat percent per year of Flat percent per year of
service 40 9 42 14 98 |) service 45 9 48 12 98
Less than 1.00 1 - 2 2 - Less than 1.00 1 - 1 2 -
4.00-1.24 4 - 5 - 15 1.00-1.24 2 - 2 - 6 i
1.25-1.49 6 2 7 9 1 1.25-1.49 5 2 5 7 1
1.50-1.74 23 7 25 1 74 1.50-1.74 33 6 36 1 86
1.75-1.99 0) - 0) 0) - 1.75-1.93 “ - o) 0 -
2.00-2.24 3 - 3 oO 8 2.00-2.24 2 - 2 1 4
2.25 or greater 1 - 1 1 1 2.25 or greater .. 1 2 1
Percent per year IPercent per year
varies .. 60 a1 58 86 2 |) varies 85 91 82 88 2
By service . 4 - 5 6 2 By service 5 - 5 6 2
By eamings 56 1 53 80 - By earings 51 1 47 82 -
By age oO - “ oO - By age iv) - 1) ) -
Excludes supplemental pension plans,, ‘Code ceilings on pensions payable from defined benefit plans.
® Ifa plan contained more than one career eamings forenuila, a primary “Less than 0.5 percent. |
formula was selected and tabulated. This table includes plans with ca- H
reer earnings formulas that serve as an alternative to a terminal earings NOTE: Data were insufficent to show technical-clerical and production
formula. workers separately. Because of rounding, sums of individual items may |
2 These maximum provisions are independent of Intemal Revenue —_not equal totals. Dash indicates no employees in this category. |
i

63


Table 63. Defined benefit pension pians:' Percent of full-time participants by minimum age and associated service
requirements for early retirement,’ medium and large firms, 1986

Profes- Profes-
sional |Technical sional {Technical
all Produc- @!| Produc-
All par- | and ad- and cleri- f All par- | and ad- |and cleri-)
‘Age and service requirement | s°1.E0t. | ministe- | cal pare ton perl! Age and service requirement? | scipants | ministre. | cal par ton par-
tive par- | ticipants | "ipa! : tive par- | ticipants | Ucipants i
ticipants ticipants H
Total 100 100 400 100
Age 56-59 .. 1 1 1 1
Participants in plans permitting 30 years’ service 1 1 1 1
early retirement 98 98 99 98
Age 60 .. 7 2 3 12
No age requirement .... 6 9 4 3 No service requiremer iy) yl 1 ry)
5 years’ service 0 6 0) 0)
1 i) 7) 1 10 years’ service .. 1 1 7
5 9 4 2 18 years’ service «. 2 i) 0) 3
20 years’ service .. iv) 0 rv) 1
Less than age 55 6... 10 7 15
No service requirement .. iV) o 9] 1 |) Age 62 i) QO - 1
5 years’ service 0 oO 6 0 10 year: iy) 0 1
10 years’ servic 4 4 7 3
15 years’ service 2 2 3 2 || Sum of age plus service® 9 9 9 10
20 years’ service rv) V) i) 1 Equals 70 or less 2 3 2 1
26 years’ service 3 0 6 3 Equals 71-74 0 “ [¥) -
Equals 75 . 1 1 1 0
Age 55 . 66 70 67 62 Equals 76-79 1 1 2 1
No service requirement .. 10 12 9 9 Equals 80 . 1 2 2 1
5 years’ service 3 5 5 2 Equals 85 . 4 2 2 8
10 years’ service 41 4 40 42
11 years’ servic C) 1 0) = {iParticipants in plans without early
16 years’ service 7 8 8 7 |} retirement .. 2 2 1 2 |
20 years! service 4 4 4 3
*” Excludes supplemental pension plans. * Less than 0.5 percent.
® Early retirement is defined as the point at which a worker could re- * In most plans, participants must also satisfy a minimum age or serv-

tire and immediately receive accrued benefits based on service and ice requirement.
‘earnings but reduced for each year prior to normal retirement age.

> if'a plan had alternative age and service requirements, the earllest NOTE: Because of rounding, sums of individual items may not equal
age and associated service were tabulated; if one altemative did not totals, Dash Indicates no employees in this category.
specify an age, it was the requirement tabulated.

69


A ceiling on income during disability was a common limi-
tation 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 re-
habilitative employment and family Social Security payments,
exceeded a specified percentage (most commonly 70 or 75
percent) of predisability earnings. Seven-tenths of the LTD
Participants were limited by these income ceilings, by the
doliar maximums in plans that pay a percent of earnings,
or by a combination of both.

Survivor benefits after the death of a disabled employee

14

were available in plans covering 14 percent of the LTD par-
ticipants. A lump-sum payment, usually equal to 3 times the
monthly LTD benefit, was the most common survivor benefit
provided. .

Nearly four-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 participant was institution- .
alized. In a few cases, benefits were provided only if the
participant was institutionalized, or benefits were provided
for a limited period, regardless of institutionalization.



Table A-2. Standard errors for table 5—Paid holidays and vacations: Average
number of days for full-time particlpants, medium and large firms, 1986

Profes-

: Technical
item All par- | ional and) “and | Production
ticipants trative clerical jparticipants
participants| Participants
Paid holidays 074 O41 On 01
Paid vacation by length of service:
At 6 months 1 1 1 1
Att year a4 a A a
At 3 years 1 1 1 a
At 5 years a a a a
At 10 years a a 2 A
At 15 years a a a 2
At 20 years 2 a 2 2
At 25 years 2 a 2 3
At 30 years 2 2 2 3

Table A-3. Standard errors for table 17—Paid sick leave: Average number of
days at full pay for full-time participants by type of plan, medium and large

firms, 1986
Profes- a
s. Technical
stem All par- sion and and | Production
ticipants trative clerical |participants
participants| Participants
Paid annual sick leave by length of servic
At 6 months: 09 1.2 04 28
At 1 year .. 7 Ww 4 2.0
At3 years 7 14 6 1s
At5 years 2 15 ar) 19
At 10 years .. 14 19 2.2 2.0
At 15 years .. 18 25 27 19
At 20 years .. 23 3.2 3.4 2.0
At 25 years .. 24 3.2 34 22
At 30 years .. 24 3.2 34 22
Paid per disability sick leave by length of service:
At 6 months 45 54 35 79
At year ... 46 5.3 46 66
At3 years 32 39 3.3 54
At 5 years: 27 3.2 3.0 5.0
At 10 years .. 23 27 34 49
At 15 years .. 25 27 3.4 66
At 20 years .. 33 3.2 44 89
At 25 years .. 44 3.6 55 5.6
At 30 years .. 43 36 55 56

97



Table 19. Pald annual sick teave:' Average number of days
at full pay for full-time participants by sickness and accident
Insurance coordination, medium and large firms, 1986

Table 20. Paid annual sick leave: Percent of full-time

participants by unused sick leave policy and carryover
provisions, medium and large firms, 1986 -

Profes- Profes-
sional | Techni- sional | Techni-
‘and | cal and | Produc- , ‘and | cal and | Produc-
Item apes Jadminis-| clerical |tion par- Unused sick leave policy and na Jadminis-| clerical | tion par-
trative | partici- | ticipants ryover pro trative | partici. | ticipants
partici | pants ici- | pants
pants Pants
Unused sick leave policy
At 1 year of service:
Total 100 | 100 |. 100 | 100
With sickness and accident
insurance o4| 142] 97] 63 Carryover only a | 32 | 97 | 35
Without sickness and accident Cash-in only 9 2 6 | 18
insurance . 93| 251] 146| 174 Carryover and cast-in .. 8 3 8) 13
Unused benefit lost 4a | 62 | 50 | 34
At 5 years of service: Data not available ) - () ro}
With sickness and accident Carryover provisions
insurance . 147] 251] 160] 80
Without sickness and accident Total 100 | 100 | 100 | 100
insurance . 324] 416) 278) 247
Unlimited accumulation ... 31 se | a1 | 26
At 10 years of service:
Limit on total number of days
With sickness and accident accumulated .. ee |} so | 638 | 74
insurance . 195} 336] 221/ 100
Without sickness and accident Under 10 days 4 4 3 6
insurance .. 41s| 521] 376) 296 10 days 3 2 3 3
11-19 days 7 2 8 8
At 20 years of service: 3 2 1 4
1 1 iv) 0)
With sickness and accident 2 1 4 1
insurance .. zae| 403| a75| 124 0 | 0 (0) 0
Without sickness and accident 9 6 7 | 14
insurance .. s12| 634) 472] 374 3 1 4 5
1 +) 0 2
At 25 years of service: 7 6 4 | 1
2 3 2 1
With sickness and accident 2 3 3 | -
260| 41.8) 288] 130 2 1 1 3
1 2 2) 0
insurance . s27| 654) 483] 39.1 100 - 109 days 1 1} 0 2
110 - 119 days 2 2 2 2
"Paid sick leave plans with a specified number of days available each toodae 2; 2) 3 3
year. Over 130 days 6 3 8 6
NOTE: Coniputation of average excluded days paid at partial pay and Days not avaliable 1 2 1 '
workers with only partial pay days or zero days of sick leave. othee 2 5 ela

19

* Less than 0.5 percent.

? Carryover provisions vary by length of service.

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

tals. Dash indicates no employees in this category.



Table 47, Health care benefits: Percent of full-time participants by funding medium for selected types of coverage,

medium and large firms, 1986

i Basic | Basic | Basic | Major Basic | Basic | Basic | Major
Funding medium hospital’ | surgical’ | medical’ | medica? | °"@! | pospitat' | surgical’ | medical’ | medical | Cental
All participants Technical and clerical ‘
Total .. 100 400 100 100 100 100 100 100 100 100
Provided coverage 64 49 82 a 61 72 43 82 57
Blue Cross-Blue Shield 18- "1 9 4 17 9 8 9 4
Commercial carrier... 14 10 33 34 12 19 8 32 34
Independent health plans 32 27 39 32 31 43 26 40 34
Self-insured* 18 13 37 28 15 26 9 |. 39 30
Health maintenance
organizations" 13 13 0 2 15 16 15 6 2
Preferred provider
organization® . jo 4 1 1 1 1 1 1 2 1 )
| - - = - - 1
iv) 1 1 1 iv) 2 1 1 1
Not provided coverage .. 36 25 st 18 29 39 28 57 18 28
Professional and administrative Production
Total .. 100 100 100 100 100 100 100 100 100 100
Provided coverage ... 62 2 42 83 6 67 78 55 at 68
Blue Cross-Blue Shield 18 10 9 9 3 19 15 14 9 5
Commercial carrier 13 19 8 34 36 16 23 13 33 33
Indepenrtent health plans 30 4 25 98 35 33 39 28 39 30
Self-insu 14 25 8 36 30 22 29 7 38 26
Health maintenance
organizations‘ 15 18 15 ro) 2 10 10 10 oO 2
Preferred provider
organization’ ...... 1 1 1 2 1 ie) 1 1 1 eo
Other’ ~ - - - 2 - - - - 1
Combined io) 2 iv) 1 1 iv) 1 6 1 1
Not provided coverage 38 28 58 7 25 33 22 45 19 32

* 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 @ specified period of time, or until a
dollar 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,

® 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
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 HMO’s
delivering comprehensive health care on a prepayment rather than fee-
for-service basis. All HMO’s are included here regardless of sponsor-
ship, ¢.g., Blue Gross-Blue Shield or a commercial insurance carrier.

* ‘Less than 0.5 percent,

* A preferred provider organization (PPO) is a group of hospitals
and physicians who contract to provide comprehensive medical serv-
ices. To encourage use of these provider members, the PPO limits re-
imbursement rates when participants use nonmember services. All
PPO's are included here regardless of sponsorship, e.g., Blue Cross-
Blue Shield or a commercial insurance carrier.

T Dental benefits plans sponsored by local dental societies are in
this category.

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

48



Sampling design

To reduce the costs and resources required for data col-
lection, the sample for this survey was a subsample of the
1986 PaTC sample. The sample of 1,503 establishments? was
selected by first stratifying the sampling frame by broad in-
dustry group and establishment size group based on the
total employment in the establishment. The industry groups
consisted of the eight major industry divisions, as defined
by the Office of Management and Budget, which are covered
by the survey and shown in table A-1.

The establishment size groups are defined as follows:

Employment size Establishment

group employment

3 50-99

4 100-249

5 250-499

6. 500-999

7 1,000-2,499

8 2,500-4,999

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

The number of sample establishments allocated to each
stratum (defined by industry and size) was approximately
proportional to the total employment of ail sampling frame
establishments in the stratum. Thus, a stratum that contained
1 percent of the total employment within the scope of the
survey received approximately 1 percent of the total sample
establishments.

A sample was then selected within each stratum using a
probability technique to maximize the probability of retain-
ing the establishments selected in the 1985 survey. This
method of selection reduced collection costs by decreasing
the number of new establishments in the sample.

Each sampled establishment was selected with a probabil-
ity approximately proportional to the average establishment
employment within its stratum. For example, consider two
strata: A and B, with respective average establishment em-
ployment of 5,000 and 1,000. An establishment in stratum
‘A was 5 times more likely to be selected than an establish-
ment in stratum B.

Data collection

Data for the survey were collected by visits of Bureau field
representatives to the sampled establishments. To reduce the
reporting burden, respondents were asked to provide docu-
ments describing their flexible benefits plans and reimburse-
ment accounts, retirement and capital accumulation plans,

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.

3 This method modifies the method introduced by Nathan Keyfitz in “‘Sam-
pling with Probabilities Proportional to Size: Adjusting for Changes in the
Probabilities,” Journal of the American Statistical Association, 1951, No.
46, pp. 105-9.

and plans covering the four insured benefit areas within the
scope of the survey. These were analyzed by BLS staff in
Washington to obtain the required data on plan provisions.
Data on paid leave generally were obtained directly from the
employer at the time of the visit. _

Data were collected during the months of January through
June, reflecting an average reference period of April 1986.
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; partici-
pated in insurance, retirement, or capital accumulation plans;
or were eligible for flexible benefits plans or reimbursement
accounts. Except in table 87, counts of workers covered by
noncontributory benefit plans included those who had not
met possible minimum length-of-service requirements at the
time of the survey. Workers were counted as participants
in employee 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 tabulating the effect of retire-
ment 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 insurabil-
ity at group rates is considered a benefit.

Most of the tables in this bulletin show the percent of work-
ers covered by individual benefit plans or plan provisions.
Percentages are calculated in three ways. One technique, fol-
lowed in tables 1-4, 6, 8, 10-16, and 72-73, shows the num-
ber of covered workers as a percent of all workers within
the scope of the survey; table 87 shows the number of eligi-
ble workers as a percent of all workers. It is designed to show
the incidence of the individual employee benefit.

A second approach is followed in tables 7, 9, 21, 23-29,
31, 43-44, 46-48, 52-54, 59-60, 62-63, 66, 68-71, 74,
76-79, and 81-86. These tables show the number of work-
ers covered by specific features in a benefit area as a per-
cent of all employees who participate in that general benefit
area. They also give data concerning the typical coverage
provided to persons with a given insurance, retirement, or
capital accumulation plan; for example, the percent of all
employees with health insurance receiving dental coverage.

The third approach provides a close look at an important
aspect of a benefit (tables 22, 30, 32-42, 45, 49-51, 55-58,
and 64); for example, the percent of all employees with dental
coverage in their health insurance who are covered for or-
thodontic work. Tables 65, 67, 75, and 80 combine the sec-
ond and third types above, indicating in the first row of data
the percent of persons in the benefit area who have a partic-
ular coverage, while the remainder of the table is based on
all employees with that coverage. Table 20 uses a similar
approach.

93



Cost coniainment (table 44). In line with efforts to contain
costs of health care, an increasing number of plans provid-
ed less expensive alternatives to a hospital stay. Coverage
for treatment in extended care facilities increased from 67
percent of plan participants in 1985 to 70 percent in 1986;
coverage for home health care rose from 56 percent to 66
percent; and coverage of hospice care rose from 23 percent
to 31 percent.

Provisions for prehospitalization testing, a means of
decreasing the length of hospitalization, covered nearly half
of the participants in both 1985 and 1986. Sixteen percent
of participants were provided full plan coverage for hospi-
tal confinement only when the plan certified such stays as
necessary.

Other cost containment measures encouraged alternatives
to inpatient surgery. Twenty-eight percent of the participants
received higher reimbursements or paid lower deductible
amounts for certain surgical procedures performed at out-
patient facilities, including ambulatory’ surgical centers.
Higher payment for childbirth at a birthing center was avail-
able to 12 percent of participants in 1986, the first year this
provision was tabulated.

Fifty-seven percent of the participants were in plans that
paid for a second surgical opinion in 1986, compared to 50
percent in 1985. For 3 in 5 of the 1986 cases, incentives were
included for obtaining an additional surgeon’s opinion—plan
payments for many types of surgery were either lower or
not made at all if the second opinion was not obtained.

Provisions such as offering higher reimbursement rates for
generic prescription drugs, discouraging nonemergency
weekend hospital admissions, and incentives to audit hospi-
tal bills were less common than the other cost containment
measures previously described.'5

Employee contributions (table 45). The percent of employees
whose health insurance premiums are wholly paid by their
employers declined sharply in 1986. Fifty-four percent of
workers had individual coverage wholly financed by their
employers in 1986, down from 61 percent the previous year.
Thirty-five percent also could receive fully employer-paid
coverage for their families, a 7-percentage-point drop from
1985. The long-term decline in fully employer-financed
health insurance coverage is at least in part due to the in-
creased cost of medical care. Wholly paid health care for
individual and family coverage was available to 72 and 51
percent of employees, respectively, in 1980.

Exact data on the amount of an employee’s contributions
for health benefits occasionally were not available because
payroll deductions applied to an insurance policy covering
both health insurance and one or more other benefits.
However, where the amount was reported, employee premi-

13 Despite recent emphasis on cost containment, there have been coun-
tervailing improvements in health care coverage. Robert N. Frumkin tracked
developments in 209 plans over a 6-year period in ““Health Insurance Trends
in Cost Control and Coverage,” Monthly Labor Review, September 1986,
pp.3-8.

31

ums for individual and family coverage averaged $13 and
$41 a month, respectively (chart 3). These represented in-
creases of 6 and 8 percent from 1985, paralleling the
7.5-percent increase in the medical care component of the
Consumer Price Index for All Urban Consumers in 1986.
Employee premiums were somewhat lower for production
workers than for the two white-collar groups. Included in
the calculation of average employee premiums were some
employees contributing only to a supplemental plan, such
as an optional dental plan financed jointly by employer and
employees.

In addition, a new survey tabulation showed that 14 per-
cent of the employees required to contribute toward their
health benefits in 1986 could do so with pretax dollars. These
employees had the advantage of reducing their taxable in-
come while buying health care. Some of these employees
were in flexible benefit plans, in which they could set aside
a portion of their salary to purchase additional benefits. These
arrangements will be described in more detail in chapter 8.

Participation requirements (table 46). More than half of the
participants were allowed to join a health plan immediately
upon being hired. Coverage was more immediate for health
insurance than for vacations, retirement, capital accumula-
tion, or any other type of insurance plan. There has been
a gradual drop in the proportion of participants required to
complete a minimum length-of-service period since this pro-
vision was first tabulated in 1981—from 59 percent to 49
percent. 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 white-collar employees could participate im-
mediately, approximately the same percentage of production
workers had some waiting period.

Funding medium (table 47). Employer-provided health care
through independent health plans has gained equal footing
with commercial insurance policies and Blue Cross-Blue
Shield plans. Independent plans, which include health main-
tenance and preferred provider organizations, and plans
which are self-insured, covered 50 percent of the health in-
surance participants with basic hospitalization benefits (38
percent in 1985). The rise in coverage of independent health
plans with basic hospital benefits is largely due to the grow-
ing importance of health maintenance organizations (HMO’s).

An HMO is a prepaid health care plan that delivers com-
prehensive medical services to enrolled members for a fixed
periodic fee.'* Thirteen percent of the health insurance par-
ticipants covered by the survey were enrolled in HMO’s, up
from 7 percent in 1985 and 5 percent in 1984.

Preferred provider organizations (Ppo’s), analyzed
separately for the first time in 1986, accounted for 1 per-

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


Table 14. Short-term disability coverage: Percent of
full-time employees by participation In sickness and accident
Insurance plans and pald sick leave plans, medium and large
firms, 1986.

Profes-
sional | Techni-
‘and. | cal and | Produc-
Jioyees | aciinis-| clerical |tion om-

trative | employ-| ployees
employ-| ees
ees

‘Type of plan

Total 100 | 100 100 100

With short-term disability coverage 94 97 98 ot

Sickness and accident insurance

only 24 4 5 46
Wholly employer financed 21 3 4 40
Paid sick leave only .. 46 69 63 23

‘Combined sickness and accident.

insurance/paid sick leave 25 24 30 22

Wholly employer financed 20 18 23 19
Without short-term disability
coverage .. 6 3 2 9

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

Table 15. Pald sick leave: Percent of full-time employees by
type of provision, medium and large firms, 1986

Profes-

sional | Techni-

and | cal and | Produc-

oveoes | @dminis-| clerical |tion om-
trative | employ- | ployees

employ-| ees

ees

Provision

Total 100 | 100 | 100

Provided paid sick leave 70 93 93 45

Sick leave provided on:

An annual basis only’ 51 59 68 a7

A per disability basis only” 14 23 16 7
Both an annual and per

disability basis 3 4 6 1

As needed basis 3 7 2 1

Other basis" .. a) G) ) 0

Not provided paid sick leave .. 30 7 7 55

‘ Employees eam a specified number of sick leave days per year. This
number may vary by length of service.

? Employees eam a specified number of sick leave days for each il-
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
a certain service period.

* Less than 0.5 percent.

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



participants (up from 59 percent in 1980) had a choice of
two or more alternative percentages (frequently 50, 67, and
100 percent) to be continued to the spouse, with correspond-
ing reductions in their annuities.

Two percent of participants were in plans where the spouse
receives a joint-and-survivor annuity and either a monthly
cash payment or a portion of the retiree’s pension. A larger
group, 7 percent of participants, were in plans providing a
portion of the retiree’s benefit. In these latter plans, the
spousal annuity is close to what a 50-percent joint-and-
survivor annuity might provide. In both of these types of
plans, there is no reduction to the employee’s pension for
the joint-and-survivor annuity.

Preretirement survivor benefits (table 70). 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 nearly two-thirds 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 sur-
vivor pensions of this nature were based on an early retire-
ment benefit and were provided at no cost to the employee.
However, for 14 percent of participants (down from 24 per-
cent in 1980), preretirement joint-and-survivor protection in-
volved an extra cost to the employee and was available only
if elected. The cost was usually paid by the employee through
a small deduction in the pension ultimately payable to either
employee or spouse.

‘The remaining one-third of pension plan participants gener-
ally had a preretirement survivor annuity calculated as a por-
tion of the employee’s accrued benefit (the benefit earned
as of the date of the employee’s' death). The incidence of
this type of annuity increased by slightly over 40 percent be-
tween 1984 and 1986, in part due to the Retirement Equity
Act of 1984. If an active employee dies after completion of
the vesting requirement, a typical survivor would receive an
annuity equal to 50 percent of the employee’s accrued benefit
to date. Payments would be reduced by the early retirement
adjustment, and would begin when the employee would have

20 See footnote 27 for changes required by the Retirement Equity Act.

59

reached early retirement age. If the employee lives to be-
come eligible for early retirement, the survivor benefit in
many cases switches to the equivalent of a 50-percent joint-
and-survivor benefit calculated as if the employee had re-
tired on the day of death. (The earliest available preretire-
ment survivor annuity was tabulated.)

Employee contributions. The employer paid the full cost of
defined benefit pension plans for 94 percent of the par-
ticipants. Of the employees who had to pay part of the cost,
virtually all paid a percent of earnings. The majority of par-
ticipants in contributory plans paid one rate (usually 2 to 4
percent) on earnings above a specified level, and a lower
rate (or frequently zero) below that earnings level. The an-
nual earnings level at which this break occurred ranged from
$3,000 to the $42,000 Social Security taxable wage base in
effect during 1986. Plans with varying employee contribu-
tions usually coordinate private benefits with Social Securi-
ty payments; as discussed earlier, pension benefit
computation rates used in these plans are higher on earnings
above the Social Security taxable wage base. One-fourth of
the participants in contributory plans paid a flat rate—none
paid more than 3 percent.

Participation requirements (table 71). Two-fifths of the em-
ployees with pension plans had immediate coverage. Another
one-fifth could participate regardless of age but had a serv-
ice requirement, seldom more than 1 year. The remaining
employees could not enter the 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 plan participants were in plans with
a maximum age, usually 59, beyond which newly hired em-
ployees were not eligible. Maximum age conditions are per-
mitted under ERISA regulations as long as the specified age
is within 5 years of a plan’s normal retirement age.**

31 See footnote 27 regarding the Retirement Equity Act’s changes to
ERISA.

%2 The 1986 Budget Reconciliation Act (described in footnote 25) changes
the ERISA requirements beginning in 1988, Plans will no longer be allowed
to exclude employees from participation due to age. Instead, the plan may
require the employee to participate for 5 years before becoming eligible
for benefits, even if that date is beyond the normal retirement age.



Chapter 2. 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.

Most paid leave provisions studied in the survey were
available to a majority of employees. On the average, cov-
ered employees could expect to receive:

Rest periods of 26 minutes a day

10 holidays each year

Vacations of 9 days at 1 year of service, 16 days at

10 years, and 21 days at 20 years

© 3 days of funeral leave per occurrence

12 days of military leave per year

e Jury duty as needed

© Sick leave of 15 days per year with full pay at 1 year

of service

Sickness and accident insurance plans averaging about

26 weeks of coverage.

Ninety-four percent of the employees had some protec-
tion against temporary loss of income due to illness or acci-
dent through either sick leave (46 percent), sickness and
accident insurance (24 percent), or both (25 percent). Most
employees also had some protection against extended loss
of income due to disability:

¢ 48 percent had long-term disability insurance

¢ 37 percent were covered under pension plans that

provided immediate disability benefits.

Virtually all of the employees studied were participants
in health and life insurance programs. Of the participants
in these plans:

© 57 percent paid nothing for their own health insurance,

and 37 percent paid nothing for family coverage

All but 1 percent received benefits for hospitalization,

surgical care, diagnostic testing, and mental health
care

¢ 71 percent received dental care

80 percent were protected against catastrophic health

expenses, either through stop-loss provisions in major
medical plans or enrollment in health maintenance
organizations

© 34 percent would receive some employer-financed

health care during a layoff

© 66 percent were covered by an amount of life insurance

determined by earnings

e 17 percent received insurance on the lives of their
spouses.

Seventy-six percent of the employees in the survey were
covered by defined benefit pension plans, which have for-
mulas for determining an employee’s annuity:

72 percent of participants were in plans with formulas
based on earnings, most frequently on earnings dur-
ing the last 5 years of employment

Benefit formulas were integrated with Social Security
benefits in plans affecting 62 percent of participants

Common eligibility requirements for a normal, or un-
reduced, pension were age 65 with no specified length
of service, age 62 with 10 years’ service, and 30 years
of service with no age requirement

66 percent of covered workers could retire with a
reduced pension at age 55, most commonly after
10 years’ service.

Sixty percent of the employees participated in one or more
of the following defined contribution plans: Savings and
thrift, employee stock ownership, profit-sharing, money pur-
chase, or stock bonus plans. One-third of employees were
in plans with cash or deferred arrangements, authorized by
sections 401(k) and 403(b) of the Internal Revenue Code.
The majority of these employees were in salary reduction
plans, where current income is channeled to a retirement
plan, and taxes on that income are deferred until benefits
are distributed.

¢ Employers matched employee contributions to savings
and thrift plans most frequently at the rate of 50 per-
cent, up to the first 6 percent of earnings

e 28 percent of employees were in payroll-based stock
ownership plans (PAYSOP’s)

« Employer profit sharing was based on a predetermined
formula for 59 percent of participants in such plans,
and allocation of profits to individual accounts was
generally based on earnings.

Defined contribution plans that restricted employee access
to employer contributions were considered retirement plans
in the survey. Eighty-nine percent of employees had some
retirement income benefits, either through defined benefit
plans, defined contribution plans, or both.

Flexible benefits plans and reimbursement accounts were
included in the survey for the first time in 1986. While such -


Table 87. Flexible benefits plans and reimbursement
accounts:' Percent of full-time employees eligible, medium
and large firms, 1985

Profes-

sional | Techni-

and | cal and | Produe-

Coverage plovecs adminis-| clerical | tion em-

225 | ‘trative | eploy- | ployees

employ-| ees
ees

Total . 100 100 100 100

Provided flexible benefits and/or

reimbursement accounts 5 9 8 2
Flexible benofits 2 4 2 1
With reimbursement accounts; 2 3 2 a)
Reimbursement accounts 5 9 7 1

Freestanding reimbursement
accounts 3 5 5 1

Not provided flexible benefits or

reimbursement accounts 95 91 92 98

* Flexible benefits plans, also known as, flexible compensation and
cafeteria plans, allow employees to choose between two or more benefits
or benefit options, including cash, in determining their individual benefit
packages. Reimbursement (flexible spending) accounts, which are used to
finance benefits or expenses unpaid by insurance or benefit plans, may be
part of a flexible benefits program or stand alone (freestanding accounts).
These accounts may be financed by the employer, employee, or both. The
employee contribution is made through a salary reduction arrangement.

* Less than 0.5 percent.

91



Table 29. Health care benefits: Percent of full-time i
participants by provision for coverage after retirement,
medium and large firms, 1986

Profes-
sional | Techni- .
and | cal and | Produc-

Provision rice, | adminis-| clerical | tion par- '

Ipants | ‘trative | partici- | ticipants |

partici | pants !

‘pants

Total 100 100 100 100

With retiree coverage" 76 79 78 73 |
Without retires coverage .... 21 18 19 25
Provision not determinable 2 2 1 2
Retiree policy not established ‘ 1 ilo
Dental pian oniy? 1 1 1 | @

* These employees participate in employer-financed plans that provide

group health coverage during all or part of a worker's retirement lifetime.

‘Some benefits available to current employees may either be discontinued

at retirement or offered at reduced levels of protection, Coverage for retir-

ees may be wholly or partly employer financed or wholly retiree financed. |
® Less than 0.5 percent.
* Participants who elected dental coverage only were not included in

. this tabulation,

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

Table 30. Health care benefits: Percent of full-time participants in plans with coverage after retirement by benefit provisions |
and age of retiree, medium and large firms, 1986

‘ci Professional and Technical and clerical ‘ci
All participants administrative participants participants Production participants
Benefit provision
Retiree 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 90 99 94 99 92 99 86
Effect of retirement on
benefit level?
No change in coverage* 78 71 83 76 81 7 74 65
Reduced coverage . 18 16 14 16 15 13 24 18
increased coverage 1 1 1 1 2 1 1 1
Not determinable 1 1 1 2 1 1 1 1
Retiree share of cost
Full cost 15 14 14 14 13 "1 18 15
Partial cost 30 22 32 22 33 23 28 24
No cost 51 52 51 55 50 55 51 48
Not determinable 2 2 3 3 3 3 2 2
Without retiree coverage" 1 10 1 6 1 8 1 14
' This tabulation shows covered workers as a percent of alll partici- * For retirees eligible for Medicare, benefits may be calculated and re-
pants in plans with employer- or employee-financed group insurance for duced by the extent to which covered expenses are reimbursed by the
retirees under age 65, those 65 and over, or both groups. It covers plans Federal program. x
in which insurance was continued for longer than 1 month after retire- * Retiree coverage was provided to one age group but not the other.
ment. It excludes plans which provide only the retiree’s share of pro-
mium for medical insurance under Medicare (Part B). NOTE: Because of rounding, sums of individual items may not equal
® If dental insurance was provided under a separate plan, it was not totals.

used in comparing benefit levels.

36


Table A-4. Standard errors for 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, 1986

Profes- Profes-
sional | Techni- sional |Techni-
‘Attpar-| 2d jcal and Produc Al par| 24. {eal and’ Pregue-
Item feta] mini clvical | ar tem fcipante| 2¢mini-|clrical| 20".
strative| partici- | ts strative | partici- | P2" te
partici-| pants | partici-| pants | P8”
pants: pants
AL1 year of service:
Cumulative pian os | 07 | 04 | 07 |[At 10 years of service—Continued
With sickness and accident Noncumulative plan 2a{ 33 | 43) a4
insurance 4] 5 | 4] 4] With sickness and accident
Without sickness and accident insurance 20| 35] a1] 13
insurance z| 8 | 5 | 8] without sickness and accident
Noncumulative plan .. 13 | 23] 7) 34 insurance 36 | 36 | 56| 55
With sickness and accident
insurance 7 | 141 8 | 8 jlat20 years of service:
Without sickness and accident ‘Cumulative plan 16 | 23} 22} 14
insurance 19 | 28} 9 | 49] With sickness an
insurance 1g 3.2 23 15
ALS years of service: Without sickness and accident
‘Cumulative plan ..... 7{| wl] 9} 7 insurance 23| 24] 25 | 25 i
With sickness and acc! Noncumulative plan 37 | 50 | 581 34
insurance .. aj 12] 9 6 || With sickness and accident
Without sickness and accident insurance 24] 42] 34 | 20
insurance .. 10 | 10} 11 | 13 [| without sickness and accident
Noncumulative plan .. vo | 31) 32] 30 insurance - 55 | 58| 82] 57 H
With sickness and acci :
insurance ... 13 | 29 | 15 | 8 |iAt25 years of service:
Without sickness and accident Cumulative plan ... a7 | 25] 23} 44 i
insurance .. 29} 34 | 48] 49 || With sickness and accident |
insurance 22] a9} 26| 18
AL 10 years of service: Without sickness and accident
Cumulative plan 14 | 20] 19] 10 INSUFANCE en 24| 25 | 26 | 25
With sickness-and accident Noncumulative plan 38] 51) 58 | 33
insurance .. 13 | 21] 16 9 || With sickness and accident
Without sickness and accident insurance 25 | 42| 35 | 22
insurance . 22 | 23 | 24 | 25 || Without sickness and accident
insurance s6| 59 | 83| 57

Table A-5. Standard errors for table 19—Paid annual sick leave: Average
number of days at full pay for full-time participants by sickness and accident
Insurance coordination, medium and large firms, 1986

Profes- ,
: | Technical
: tern Al par- | Sonal 24) “and | Production
ticipants trati clerical [participants
Ve <|Participants'
participants}
AU 4 year of service:
‘With sickness and accident insurance .. 0.4 07 04 0.4
Without sickness and accident insurance 1a 13 Ss 42
At 5 years of service:
‘With sickness and accident insurance .. e 16 1.0 5
Without sickness and accident insurance 15 19 18 40
‘ At 10 years of service:
‘With sickness and accident insurance .. 1.5 25 2.0 a
‘Without sickness and accident insurance 22 22 28 43
At 20 years of service:
With sickness and accident insurance .. 21 3.3 25 1.2 i
Without sickness and accident insurance 36 39 47 44 i
At 25 years of service: :
With sickness and accident insurance: 23 3.5 26 1.5 if
Without sickness and accident insurance 36 39 47 45

98


Table 33. Health care benefits: Percent of full-time participants in plans with basic surgical benefits by maximum
allowance for selected procedures, medium and large firms, 1986

Profes- Profes-
sional | Techni- sional ] Techni-
Ail par. |_ 2nd cal and | Produc- All par- | 204. | cal and | Produc-
Maximum allowance teipants [@dminis-| clerical | ton par. Maximum allowance teipants |@arinis-| clerical | tion par-
trative | partici | tcipants| trative | partici. | ticipants
partici- | pants partici- | pants
pants pants
Total... 400 } 100 | 100 | 100
Appendectomy:—Continued
Usual, customary, and reasonable 1 1 “ 2
charge 82 89 89 75 $501-$750 | 4 1 3 5
With overall dollar limit on basic More than $750 1 1 1 1
surgical payments 2 3 2 3 Not determinable? 1 1 1 1
Without overall dollar fimi
basic surgical payments 80 86 87 72 Tonsillectomy:
Plan pays: $50 or less 1 1 1 2
3 4 4 2 $51-$100 4 3 2 6
10) vy ) 0) $101-$15 5 4 3 7
a 1 1 1 10) $151-$200 4 1 2 6
4 4 6 3 $201-$300 2 2 1 2
72 7 6 67 More than $300 rv) 0 0) vy
Not determinable’ 1 1 1 1
Maximum scheduled allowance . 18 1" " 28
Hysterectomy:
Most expensive surgical $200 oF less... 0) 0) 10) 0)
procedure: $201-$300 2 2 2 3
$201-$300 .. 1 i) 1 1 $301-$400 3a 2 2 3
$301-$400 .. 0) Q VW) 1 $401-$500 3 2 2 5
2 1 1 3 $501-$750 3 2 2 5
2 2 1 3 $751-$1,000 3 1 2 5
1 0) 0) 2 $1,001-$1,250 1 1 1 1
1 1 1 1 More than $1,250 (y) 0) 10) i)
2 1 2 3 Not determinable” 2 1 1 2
5 3 2 6
1 1 iv) 1 Normal delivery:
1 (0) 0) 2 $100 or less 1 iv) iv) 2
More than $3,000 1 1 1 2 $101-$150 1 1 1 1
Not determinable? r0) tO) iv) i¥) $151-$200 1 1 1 2
$201-$250 1 1 1 2
$251-$300 5 3 2 6
1 0 0) 2 $301-$400 3 1 2 5
2 1 1 2 $401-$500 1 1 1 1
3 2 2 4 $501-$750 2 2 1 2
5 3 3 8 More than $750 v) (Vy 0 1
Not determinable* 2 1 1 2

* Lass than 0.5 percent.

2 Information necessary to classify was not provided.

® Includes full service benefits provided by health maintenance orga-

nizations.

39

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

totals.