Although cost are increasing, employees are not being asked to contribute more. This stability is largely due to the strong economy and the competitive labor market. According to a recent Buck Consultants Survey, cost projects vary according to the type of heath plan. Respondents cited several factors that are contributing to higher increases. These include providers raising their fees to make up for lower reimbursements from federal programs, tougher bargaining by providers when negotiating rates with health plans and a willingness by providers to drop out of networks if reimbursement rates are too low.
Many participants view the cash payment as a sudden windfall, and that is a big mistake.
It is important to realize that even a small balances in a qualified plan or IRA could grow substantially over time. The analysis points to the need to consider departing, as opposed to retiring, plan participants as a separate audience. Second, financial education needs to be viewed comprehensively, not just at initial enrollment and retirement. Employers need to do a better job of communicating the consequences of lump sum distributions when an employee leaves the company. This low figure is regrettable because it is often the most favorable option available to the plan participant.