The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
L
< 3 .
IO
j
3
:
9% (e
Employee Benefits in Medium
and Large Firms, 1986
U.S. Department of Labor
Bureau of Labor Statistics
June 1987
Bulletin 2281
U B s ? A t7 ,
O 'S f T f r i v
-1
1
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 sa le by th e S u p erintendent o f D ocum ents, U.S. G overnm ent P rin tin g Office, W ashington, D.C. 20402
Preface
This bulletin presents results o f a 1986 Bureau o f Labor
Statistics survey o f the incidence and provisions o f 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 m illion full-time em ployees in a cross-section
o f the Nation’s private industries. Appendix A provides a
detailed description o f the scope and statistical procedures
used in the survey.
The analysis in this bulletin was prepared in the O ffice
o f W ages and Industrial Relations by the staff o f the D ivi
sion o f Occupational Pay and Em ployee Benefit Levels. In
dividual chapters o f the bulletin were prepared by Donald R.
Bell (chapter 6), Allan P. Blostin (chapters 3 and 5),
Douglas E. Hedger (chapter 5), James N . H ouff (chap
ters 2 and 4), Michael A . M iller (chapter 5), John W.
Thompson, Jr. (chapter 2), and William J. Wiatrowski (chap
ters 6-8). Appendix A was prepared by Larry L. Huff, D ivi
sion o f W age Statistical Methods. Text was prepared by
Margaret D . Simons.
Computer programming and systems design were provid
ed by the D ivision o f Directly Collected Periodic Surveys.
The D ivision o f W age 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 o f this bulletin is Take Your Medi
cine by Norman R ockw ell, reprinted with permission from
The Saturday Evening Post (c) 1936 by The Curtis Publish
ing Company.
Contents
Page
Chapter 1. Introduction .............................................................................................................................................
1
Chapter 2. Highlights
...............................................................................................................................................
2
Chapter 3. Work schedules and paid time o f f ..................................................................................................
Work schedules ......................................................................................................................................................
Paid lunch and rest periods ..............................................................................................................................
Paid holidays ...........................................................................................................................................................
Paid vacations ........................................................................................................................................................
Paid personal le a v e .................................................................................................................................................
Paid funeral leave, jury-duty leave, and military l e a v e ..........................................................................
5
5
5
5
5
5
6
Chapter 4. Disability benefits ................................................................................................................................. 12
Paid sick leave ...................................................................................................................................................... 12
Sickness and accident insurance ...................................................................................................................... 13
Long-term disability insurance ........................................................................................................................... 13
Chapter 5. Health care and life insurance ......................................................................................................... 27
Health care ............................................................................................................................................................... 27
Life insurance .......................................................................................................................................................... 32
Chapter 6. D efined benefit pension plans
..........................................................................................................
53
Chapter 7. D efined contribution plans .................................................................................................................
Cash or deferred arrangements .........................................................................................................................
Savings and thrift plans .......................................................................................................................................
Em ployee stock ownership plans ......................................................................................................................
Profit-sharing plans ................................................................................................................................................
Participation and vesting .....................................................................................................................................
77
77
78
79
79
79
Chapter 8. Plan administration ................................................................................................................................ 89
Plan sponsor ............................................................................................................................................................ 89
Flexible benefits plans and reimbursement a cco u n ts................................................................................... 89
Charts:
1. Major medical plans: Trends in selected deductible amounts, 1979-86 ....................................
2. Health care: Selected types o f medical care, 1984-86 .....................................................................
3. Contributory health care: Average monthly em ployee contributions, 1982-86 .....................
4. Private defined benefit pension plans: Average replacement rates based on 30
years o f service including and excluding Social Security payments .........................................
5. Private defined benefit pension plans: Distribution o f full-time participants
by monthly benefits based on earnings o f $30,000 in the final year o f service .................
Tables:
1. Summary: Participation in em ployee benefit programs, 1986 .......................................................
v
29
30
32
55
56
4
C o n te n ts — C o n tin u e d
Page
Work schedules:
2. Number o f hours scheduled per w e e k .......................................................................................................
7
Paid time off:
3. Lunch time: Minutes per day ......................................................................................................................
4. Rest time: Minutes per d a y ..........................................................................................................................
5. Holidays and vacations: Average number o f d a y s ...............................................................................
6. Holidays: Number o f days provided each y e a r ....................................................................................
7. Holidays: Policy on holidays that fall on a regularly scheduled day o f f ....................................
8. Vacations: Amount provided at selected periods o f s e r v ic e ............................................................
9. Vacations: Length o f service required to take v a c a t io n ...................................................................
10. Personal leave: Number o f days provided per y e a r .............................................................................
11. Funeral leave: Number o f days available per occurrence................................................................
12. Jury-duty leave: Number o f days available per o c c u r r e n c e ............................................................
13. Military leave: Number o f days available per y e a r .............................................................................
7
7
7
8
8
9
10
10
10
11
11
Short-term disability coverage:
14. Participation in sickness and accident insurance plans and paid sick leave p la n s ...................
15
Paid sick leave:
15. Type o f p r o v is io n .............................................................................................................................................
16. By provision .......................................................................................................................................................
17. Average number o f days at full pay by type o f p la n ...........................................................................
18. Annual plans: Average number o f days at full pay by accumulation policy and
sickness and accident insurance co o rd in a tio n ....................................................................................
19. Annual plans: Average number o f days at full pay by sickness and accident
insurance coordination..................................................................................................................................
20. Annual plans by unused sick leave policy and carryover p r o v isio n s...........................................
15
16
17
18
19
19
Sickness and accident insurance:
21. Type and duration o f p a y m en ts................................................................................................................... 20
22. Percent o f earnings formula by maximum weekly b e n e f it ............................................................... 23
23. Length-of-service requirements for p articip ation .................................................................................. 24
Long-term disability insurance:
24. Method o f determining p a y m e n t.................................................................................................................
25. Duration o f b e n e f it s .........................................................................................................................................
26. Length-of-service requirements for p articip ation ..................................................................................
27. Limitations on benefits for mental illn e s s ........................................................................................
Health care:
28. Coverage for selected categories o f medical c a r e ...............................................................................
29. Coverage after retirem ent...............................................................................................................................
30. Coverage after retirement by benefit provisions and age o f retiree ............................................
31. Coverage during a l a y o f f ......................
32. Basic hospital room and board coverage by type o f benefit payments and
limits to c o v e r a g e .........................................................................................................................................
33. Basic surgical benefits by maximum allowance for selected p ro ced u res......................................
34. Major medical coverage by amount o f deductible and applicable benefit p e r io d ...................
35. Major medical coverage by coinsurance p ro v isio n s.............................................................................
36. Major medical coverage by maximum benefit provisions ...............................................................
vi
25
25
26
26
34
36
36
37
38
39
40
41
42
C o n te n ts — C o n tin u e d
Page
Health care—Continued:
37. Dental benefits by extent o f coverage for selected p rocedures.......................................................
38. Dental benefits by deductible provision ..................................................................................................
39. Dental benefits by yearly maximum amount o f insurance ..............................................................
40. Orthodontic benefits by lifetim e maximum amount o f coverage ..................................................
41. Mental health benefits by extent o f b e n e fits...........................................................................................
42. V ision benefits by extent o f b e n e fits.........................................................................................................
43. Coverage for selected special b en efits......................................................................................................
44. Selected cost containment features..............................................................................................................
45. Contributory plans by type and amount o f em ployee contribution................................................
46. Length-of-service requirements for p articip ation .................................................................................
47. Funding medium for selected types o f c o v e r a g e .................................................................................
43
44
44
44
45
45
45
46
47
47
48
Life insurance:
48. Method o f determining amount o f basic life insurance and frequency o f
related c o v e r a g e s..........................................................................................................................................
49. M ultiple-of-eam ings formulas by amount o f basic insurance and maximum
coverage p r o v isio n s.....................................................................................................................................
50. Flat dollar insurance by amount o f basic insurance ..........................................................................
51. Dependent life insurance coverage ...........................................................................................................
52. Length-of-service requirements for p articip ation .................................................................................
53. Effect o f retirement on basic c o v e r a g e ....................................................................................................
50
51
52
52
52
D efined benefit pension plans:
54. Method o f determining retirement payments ........................................................................................
55. Terminal earnings benefit formulas by type and amount o f fo rm u la ............................................
56. Terminal earnings formulas by definition o f terminal e a r n in g s .....................................................
57. Career earnings benefit formulas by type and amount o f fo rm u la ................................................
58. Dollar amount benefit formulas by type and amount o f fo r m u la ..................................................
59. Provision for integration o f pension with Social Security benefit ................................................
60. Maximum benefit p r o v is io n s .......................................................................................................................
61. Average replacement rates for specified final earnings and years o f s e r v i c e ..........................
62. Minimum age and associated service requirements for normal re tir e m e n t................................
63. Minimum age and associated service requirements for early retirem en t.......................
64. Early retirement by reduction factor for immediate start o f payments ......................................
65. Provisions for disability retirem en t...........................................................................................................
66. Provision for credit for service after age 65 ........................................................................................
67. Ad hoc postretirement annuity in creases..................................................................................................
68. Vesting s c h e d u le s .............................................................................................................................................
69. Provision for postretirement survivor annuity ......................................................................................
70. Provision for preretirement survivor a n n u ity ........................................................................................
71. A ge and length-of-service requirements for participation ..............................................................
60
61
62
63
64
65
66
67
68
69
70
70
71
72
74
74
75
76
49
Defined contribution plans:
72.
73.
74.
75.
Retirement and capital accumulation plan co v era g e............................................................................
Type o f defined contribution and stock p la n s........................................................................................
Combinations o f retirement and capital accumulation plans .........................................................
Cash or deferred arran gem en ts..................................................................................................................
81
81
81
82
Savings and thrift plans:
76. Maximum allowable em ployee con trib u tion ........................................................................................... 82
vii
C o n te n ts — C o n tin u e d
77.
78.
79.
80.
81.
Pretax em ployee contributions......................................................................................................................
Provision for em ployer matching con trib u tio n s....................................................................................
Provision for investment o f em ployer and em ployee c o n trib u tio n s..............................................
Provisions for withdrawal o f em ployer c o n trib u tio n s........................................................................
Method o f distribution o f account at retirem ent....................................................................................
83
84
85
85
85
Selected defined contribution plans:
82. Provisions o f em ployee stock ownership plans ....................................................................................
83. Provisions o f profit-sharing p l a n s ................................................................................................................
84. A ge and length-of-service requirements for p articip ation .................................................................
85. Vesting s c h e d u le s .............................................................................................................................................
86
86
87
88
Plan administration:
86. Type o f plan s p o n s o r ...................................................................................................................................... 90
87. Flexible benefits plans and reimbursement accounts c o v e r a g e ....................................................... 91
Appendixes:
A . Technical n o te ....................................................................................................................................................... 92
B. Availability o f the survey’s data b a s e .......................................................................................................... 99
viii
Chapter 1. Introduction
The em ployee benefits survey collects data on em ployee
work schedules and develops information on the incidence
and detailed characteristics o f 14 private sector em ployee
benefits paid for at least in part by the em ployer. 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 em ployees in medium and
large establishments (generally those with at least 100 or 250
em ployees, depending upon the industry). Because data col
lection is limited to provisions o f formal plans, the extent
o f such benefits as rest periods and personal leave may be
understated. Furthermore, the data show the coverage o f
benefit plans but not the actual use o f these benefits; for ex
ample, that part o f available paid sick leave actually used.
Data are presented separately for three occupational
groups—professional-administrative, technical-clerical, and
production workers. This bulletin often discusses the first
two groups jointly as white-collar workers, in contrast with
production or blue-collar workers.
Respondents provide information on the number o f wor
kers covered by specified benefit plans. Workers are count
ed as covered by wholly employer-financed plans that require
a minimum amount o f service prior to receiving benefits,
even if they had not met the minimum service requirement
at the time o f the survey. W here plans—such as health oi
life insurance—require an em ployee to pay part o f the cost
(contributory plans), workers are counted only if they elect
the plan and pay their share o f 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 em ployer are not
included in the su rvey.1
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.
1
A n exception, however, is made in tables 29, 30, and 53, which tabu
late postretirem ent health and life insurance coverage. Plans under which
retirees pay the fu ll cost are included since the guarantee o f insurability
at group rates is, in itse lf, considered a benefit.
1
Chapter 2. Highlights
• 17 percent received insurance on the lives of their
spouses.
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
• 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.
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.
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.
• 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
• 28 percent of employees were in payroll-based stock
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
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
2
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.
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
3
Table 1. Summary: Percent of full-time employees by participation1 in employee benefit programs, medium and large
firms,2 1986
Employee benefit program
Paid:
Holidays ..............................................
Vacations............................................
Personal leave ....................................
Lunch period ......................................
Rest time ............................................
Funeral leave .....................................
Jury-duty leave...................................
Military leave ......................................
Sick le a ve ...........................................
All employees
Professional and
administrative employees
99
Technical and clerical
employees
Production employees
70
99
99
33
3
58
87
96
74
93
Sickness and accident insurance............
Wholly employer financed.................
Partly employer financed...................
49
41
22
8
6
Long-term disability insurance ................
Wholly employer financed.................
Partly employer financed...................
48
38
68
10
52
16
Health insurance1 *.....................................
3
2 .
Employee coverage:
Wholly employer financed.................
Partly employer financed...................
Family coverage:
Wholly employer financed.................
Partly employer financed...................
95
96
94
96
54
41
52
45
45
49
61
35
35
60
33
64
28
66
41
55
Life insurance...........................................
Wholly employer financed*................
Partly employer financed...................
96
87
97
87
10
10
Retirement5 ...............................................
Defined benefit pension........................
Wholly employer financed*................
Partly employer financed...................
Defined contribution p lan......................
Wholly employer financed®................
Partly employer financed...................
89
76
71
5
47
33
15
92
78
73
5
53
33
Capital accumulation7 ...............................
Wholly employer financed®................
Partly employer financed...................
100
25
10
72
88
93
66
28
98
100
35
4
69
87
96
72
93
90
58
45
35
28
7
69
59
9
60
47
13
30
24
15
17
82
88
6
96
87
9
86
20
92
78
74
3
55
36
19
87
74
69
5
40
31
9
23
31
29
6
6
6
16
5
18
25
23
11
1 Participants are workers covered by a paid time off, insurance,
retirement, or capital accumulation plan. Employees subject to a
minimum service requirement before they are eligible for a benefit are
counted as participants even if they have not met the requirement at
the time of the survey. If employees are required to pay part of the
cost of a benefit, only those who elect the coverage and pay their
share are counted as participants. Benefits for which the employee
must pay the full premium are outside the scope of the survey. Only
current employees are counted as participants; retirees are excluded.
2 See appendix A for scope of study and definitions of occupa
tional groups.
3 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.
5 The total is less than the sum of the individual items because
100
100
95
9
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 59 1/2, or hardship.
6 Employees participating in two or more plans are counted as
participants in wholly employer financed plans only if all plans are
noncontributory.
7 Includes plans in which employer contributions may be with
drawn from participant’s account prior to retirement age, death, dis
ability, separation from service, age 59 1/2, or hardship. Excludes
pure cash profit sharing, stock option, and stock purchase plans.
NOTE: Because of rounding, sums of individual items may not
equal totals.
4
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.
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.
Work schedules (table 2)
Weekly work schedules of 40 hours applied to 82 percent
of the employees covered by the survey.2 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)
Paid personal leave (table 10)
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
W ork schedules include regularly scheduled overtim e and paid lunch
and rest periods. O vertim e hours w ere excluded from the 1980-84 surveys.
5
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 twice the
proportion of production employees with this benefit. 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
(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.
Military leave, providing pay for absence from work to
fulfill military training or duty commitments, was available
in establishments employing two-thirds of the 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.
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.
The following tabulation shows the average lengths of
several paid leave benefits:
A ll
partici
pants
Lunch tim e—
m inutes per d a y .............
R est tim e—
m inutes per d a y .............
Personal lea v e—
days per year ..................
Funeral lea v e—
days per occurrence . . .
M ilitary lea v e—
days per y e a r ..................
6
P rofes
sional
and
adm in
istrative
T echnical
and
clerical P roduct
27
40
38
24
26
26
26
25
3 .7
3 .9
3 .6
3 .8
3 .2
3 .4
3 .5
3.1
1 1.5
11.7
11.7
11.2
Table 2. W ork schedules: Percent of full-tim e em ployees by
num ber of hours scheduled per w eek,1 medium and large
firm s, 1986
Work schedule
T ota l..........................................
Hours per week:
Under 3 5 .....................................
3 5 .................................................
Over 35 and under 37.5.............
3 7 .5 ..............................................
Over 37.5 and under 4 0 .............
4 0 .................................................
Over 40 .......................................
Hours per week not available...........
Profes
sional
and
All em
adminis
ployees
trative
employ
ees
100
1
4
2
100
Techni
cal and Produc
clerical tion em
employ ployees
ees
100
(2
)
5
3
7
4
79
82
2
ft
2
100
Provided paid rest tim e .......................
Under 15 m inutes..........................
15 m inutes.......................................
Over 15 and under 20 minutes ....
20 m inutes.......................................
Over 20 and under 30 minutes ....
30 m inutes.......................................
Over 30 and under 40 minutes ....
40 m inutes.......................................
Over 40 m inutes............................
Number of minutes not
available.......................................
1
1
3
ft
90
3
ft
1 Work schedule data included regularly scheduled overtime, paid
lunch, and paid rest periods. Regularly scheduled overtime was excluded
from the 1980-1984 surveys.
2 Less than 0.5 percent.
72
1
4
Not provided paid rest tim e................
1
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
Minutes per day
T o ta l...........................................
Provided paid lunch tim e ...................
Under 20 m inutes.........................
2 0 minutes....................................
Over 20 and under 30 minutes ....
30 minutes....................................
Over 30 minutes...........................
Number of minutes not
available.....................................
Not provided paid lunch tim e .............
1
100
10
1
3
(1
)
3
100
4
ft
90
_
1
1
2
Paid vacation by length of service:
At 6 months1 .................................
At 1 year1 ......................................
At 3 years......................................
At 5 years.....................................
At 10 years....................................
At 15 years...................................
At 20 years...................................
At 25 years....................................
At 30 years2 ..................................
6
2
1
1
Paid holidays......................................
17
3
7
ft
1
1
97
96
1
83
Less than 0.5 percent.
100
58
69
ft
82
3
4
ft
3
5
ft
-
-
25
4
34
ft
1
2
18
2
33
ft
-
19
3
40
ft
ft
ft
33
6
31
ft
1
5
ft
ft
ft
ft
28
-
42
31
ft
18
Profes
sional
All par and
admin
tici
pants istrative
partici
pants
1 0 .0
5.5
1 0 .2
9.8
1 0 .0
6 .0
5.7
9.6
10.5
13.0
16.0
18.9
20.7
22.5
23.0
5.0
7.5
8 .8
1 0 .1
10.5
12.7
15.8
18.5
1 1 .0
13.5
16.5
19.0
2 0 .6
2 1 .2
2 2 .2
22.7
23.4
22.7
Techni
Produc
cal and
tion
clerical
partici
partici
pants
pants
1 0 .2
1 2 .0
15.3
17.9
20.3
21.7
2 2 .1
1 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.
2 The average (mean) was essentially the same for longer lengths of
service.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
100
Less than 0.5 percent.
Item
100
3
(1
)
ft
100
Table 5. Paid holidays and vacations: Average number of
days for full-time participants, medium and large firms,
1986
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
100
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
NOTE: Because of rounding, sums of individual items may not equal
totals. 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
Profes
sional
and
All em
admin
ployees
istrative
employ
ees
Profes
sional
and
All em
admin
ployees
istrative
employ
ees
T o ta l..............................................
2
-
ft
Minutes per day
100
ft
7
5
13
5
69
ft
8
2
Table 4. Paid rest time: Percent of full-time employees by
minutes of paid rest time per day, medium and large firms,
1986
NOTE: Computation of average included half days and excluded
workers with zero holidays or vacation days.
7
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
Table 6. Paid holidays: Percent of full-time employees by
number of paid holidays provided each year, medium and
large firms, 1986
Number of days
T o ta l...........................................
Provided paid holidays.......................
Under 5 days.................................
5 days ...........................................
6 days ...........................................
6 days plus 1, 2, or 3 half days ...
7 days ...........................................
7 days plus 1, 2, or 3 half days ...
8 days ...........................................
8 days plus 1 or 2 half da ys........
9 days ...........................................
9 days plus 1 or 2 half da ys........
1 0 days .........................................
1 0 days plus 1 or 2 half days......
1 1 days .........................................
1 1 days plus 1 or 2 half days......
1 2 days .........................................
1 2 days plus 1 or 2 half days......
13 days .........................................
13 days plus 1 or 2 half days......
14 days .........................................
1 5 days .........................................
More than 15 d a ys.......................
Number of days not available......
Not provided paid holidays................
Profes
sional
and
All em
admin
ployees
istrative
employ
ees
100
100
100
99
100
99
2
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
0
0
1
1
4
6
T o ta l.......................................
100
100
100
100
98
3
Holiday is not observed ............... .....
2
2
2
1
2
Another day off gran ted.....................
84
91
89
78
Additional day’s pay in lieu of
holiday...............................................
3
1
2
6
Another day off or day’s pay,
depending on when holiday falls ...
9
4
6
14
Another day off or holiday not
observed, depending on when
holiday fa lls .......................................
1
1
1
0
100
1
4
5
6
1
(’)
7
4
(’)
7
1
0
0
Holiday policy
1
0
7
7
1
2
11
12
7
6
1
0
14
9
1
1
2
1
24
25
26
23
2
2
1
18
18
17
1
17
1
1
1
0
Other provision applies2 ....................
10
13
9
9
(1
)
5
Holiday policy not determ inable.......
O
1
1
4
4
0
2
0
0
4
5
1
0
0
0
1
)
0
1
(’)
(’)
-
(1
)
0
0
1
0
1
0
1
1
NOTE: Because of rounding, sums of individual items may not equal to
tals.
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.
0
0
1 Less than 0.5 percent.
2 Includes plans where the policy differs by holiday.
8
2
0
O
0
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
8
Table 8. Paid vacations: Percent of full-time employees by amount of paid vacation provided at selected periods of
service, medium and large firms, 1986
Vacation policy
All em
ployees
Profes
Techni
sional
and
cal and Produc
adminis clerical tion em
trative
employ ployees
ees
employ
ees
At 6 months of service:
Under 5 d a y s .....................................
5 days ..................................................
Over 5 and under 10 d a y s ............
10 days ...............................................
15 days ...............................................
Over 15 d a y s .....................................
At 1 year of service:
Under 5 d a y s .....................................
5 days ..................................................
10 days ...............................................
15 days ...............................................
Over 15 d a y s .....................................
100
100
100
100
100
Total ..................................................
99
100
100
6
37
9
4
3
45
15
5
1
1
1
4
45
13
6
9
28
4
2
ft
ft
ft
ft
o
O
ft
(*)
30
1
62
2
3
1
At 3 years of service:
5 days .................................................
Over 5 and under 10 d a y s ............
10 days ...............................................
Over 10 and under 15 d a y s ..........
15 days ...............................................
Over 15 and under 20 d a y s ..........
20 days ................................................
Over 20 d a y s ......................................
ft
At 5 years of service:
5 days ..................................................
Over 5 and under 10 d a y s ............
10 days ................................................
Over 10 and under 15 d a y s ..........
15 days ...............................................
Over 15 and under 20 d a y s ..........
20 days ...............................................
Over 20 d a y s .....................................
ft
45
6
43
1
3
1
At 10 years of service:
5 days ..................................................
Over 5 and under 10 d a y s ............
10 days ...............................................
15 days
Over 15
20 days
Over 20
................................................
and under 20 d a y s ..........
...............................................
d a y s .....................................
Vacation policy
3
1
80
8
6
1
1
1
ft
ft
7
1
66
7
17
2
9
13
ft
80
2
6
2
ft
81
2
2
1
ft
ft
79
6
11
1
2
1
1
33
7
52
2
6
1
ft
2
ft
64
5
27
2
ft
4
ft
2
ft
2
1
6
ft
25
4
62
2
2
1
ft
19
4
69
2
3
1
ft
19
4
70
1
2
1
ft
31
3
52
2
2
1
ft
4
ft
ft
2
1
6
ft
9
1
56
2
24
1
ft
5
ft
61
3
27
1
ft
6
1
67
3
20
2
ft
ft
ft
ft
ft
13
1
48
2
25
2
1
1
ft
_
ft
At 15 years of service:
5 days ..................................................
10 days ...............................................
Over 10 and under 15 d a y s ..........
15 days ...............................................
Over 15 and under 20 d a y s ..........
20 days ................................................
Over 20 and under 25 d a y s ..........
25 days ................................................
Over 25 d a y s ......................................
ft
87
5
6
ft
1
ft
ft
ft
41
5
50
1
3
1
ft
ft
3
1
71
4
20
2
ft
51
2
42
1
1
1
6
1
77
10
3
ft
ft
ft
1
56
6
33
1
1
ft
1
11
1
64
10
10
2
At 20 years of service:
5 days ..................................................
10 days ...............................................
Over 10 and under 15 d a y s ..........
15 days ...............................................
Over 15 and under 20 d a y s ..........
20 days ................................................
Over 20 and under 25 d a y s ..........
25 days ................................................
Over 25 and under 30 d a y s ..........
30 days ................................................
Over 30 d a y s .....................................
At 25 years of service:
5 days ..................................................
10 days ................................................
Over 10 and under 15 d a y s ..........
15 days ................................................
Over 15 and under 20 d a y s ..........
20 days ................................................
Over 20 and under 25 d a y s ..........
25 days ................................................
Over 25 and under 30 d a y s ..........
30 days ................................................
Over 30 d a y s ......................................
At 30 years of service:3
5 days ..................................................
10 days ...............................................
Over 10 and under 15 d a y s ..........
15 days ...............................................
Over 15 and under 20 d a y s ..........
20 days ................................................
Over 20 and under 25 d a y s ..........
Over 25 and under 30 d a y s ..........
30 days ...............................................
Over 30 d a y s ......................................
1 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.
Profes
Techni
sional
and
cal and Produc
All em
adminis clerical tion em
ployees
trative employ ployees
ees
employ-
ft
1
1
ft
4
ft
ft
8
ft
5
ft
ft
33
2
46
1
4
1
ft
35
3
49
1
4
1
ft
37
3
47
1
4
ft
4
ft
ft
8
ft
5
ft
ft
31
1
41
1
11
1
ft
34
1
41
1
14
1
ft
35
1
43
1
11
1
1
1
ft
2
5
ft
ft
2
5
1
6
ft
11
1
29
1
44
2
3
1
1
6
ft
11
1
27
1
40
2
10
1
* Less than 0.5 percent.
3 Provisions were virtually the same after longer years of service.
NOTE: Data include anniversary year bonus days.
employees in this category.
9
Dash indicates no
Table 10. Paid personal leave: Percent of full-time
employees by number of paid personal leave days
provided per year, medium and large firms, 1986
Table 9. Paid vacations: Percent of full-time participants by
length of service required to take vacation, medium and
large firms, 1986
Length of service requirement
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Profes
sional
and
All em
admin
ployees
istrative
employ
ees
Number of days
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
T o ta l..........................................
100
100
100
100
Total ..................................................
100
100
100
100
With service re q u ire m e n t....................
1 m o n th .............................................
2 m o n th s ...........................................
3 m o n th s ...........................................
4-5 m o n th s ........................................
6 m o n th s ...........................................
7-11 m onths......................................
1 y e a r ..................................................
Over 1 y e a r .......................................
97
5
3
9
2
37
1
39
95
8
4
10
1
45
1
26
-
96
7
2
11
1
45
2
29
98
3
2
9
3
29
2
51
0
0
Provided paid personal le a v e ...............
1 d a y ....................................................
2 days ..................................................
3 days ..................................................
4 days ..................................................
5 days ..................................................
More than 5 d a y s .............................
No maximum specified1 ..................
Varies by length of service ...........
25
2
5
3
4
4
2
3
2
33
2
8
4
4
6
3
7
1
35
3
8
4
6
5
3
4
2
15
1
2
2
3
2
1
1
3
Not provided paid personal le a v e ......
75
67
65
85
0
3
Without service requirem ent..............
Service requirement not determina b l e .........................................................
0
5
0
1
3
0
1 Workers were provided as much personal leave as they needed.
0
NOTE: Because of rounding, sums of individual items may not equal
totals.
1 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
Table 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
and
All em
admin
ployees
istrative
employ
ees
Number of days
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
Total ..................................................
100
100
100
100
Provided paid funeral le a v e ..................
1 d a y ....................................................
2 days ..................................................
3 days ..................................................
4 days ..................................................
5 days ..................................................
More than 5 d a y s .............................
Varies by length of service ...........
Number of days not a v a ila b le .......
88
1
2
63
3
10
87
1
2
55
3
13
87
1
2
54
3
17
1
9
88
2
3
73
2
5
(’)
7
0
0
11
0
(’)
0
3
0
Not provided paid funeral le a v e .........
12
13
13
12
Number of days varies by relationship to deceased2 ................................
23
24
30
19
1 Less than 0.5 percent.
2 The maximum number of days provided for any occurrence was in
cluded in the distribution of funeral leave days.
NOTE: Because of rounding, sums of individual items may not equal
totals.
10
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
and
All em
admin
ployees
istrative
employ
ees
Number of days
T o t a l..................................................
100
Provided paid jury-duty le a v e ..............
Under 10 days ..................................
10 days ................................................
11-19 d a y s ..........................................
20 days ................................................
21-30 d a y s ..........................................
More than 30 d a y s ..........................
No maximum specified2 ..................
Number of days not a v ailab le.......
93
1
2
ft
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
100
100
100
96
96
1
2
90
1
2
0
2
0
0
ft
2
3
2
3
2
2
1
3
ft
85
0
87
0
89
0
83
0
0
(')
ft
Not provided paid jury-duty le a v e .......
7
4
4
10
1 Less than 0.5 percent.
2 Jury-duty leave is provided as needed.
NOTE: Because of rounding, sums of individual items may not equal
totals.
Table 13. Paid military leave: Percent of full-time
employees by number of paid military leave days available
per year, medium and large firms, 1986
Profes
sional
and
All em
admin
ployees
istrative
employ
ees
Number of days
Techni
Produc
cal and
tion
clerical
employ
employ
ees
ees
Total ..................................................
100
100
100
100
Provided paid military le a v e .................
5 days ..................................................
6-9 d a y s ..............................................
10 days ................................................
11-14 d a y s ..........................................
1 5 days ................................................
16-29 d a y s ..........................................
30 days ................................................
More than 30 d a y s ..........................
No maximum specified2 ..................
Number of days not a v ailab le.......
66
74
1
1
72
2
58
O
Not provided paid military le a v e .........
(’)
39
4
-
0
40
-
2
1
42
4
3
2
2
(')
16
0
19
0
17
ft
0
0
ft
0
3
34
26
5
3
3
2
28
37
3
2
2
1
14
42
1 Less than 0.5 percent.
2 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.
11
Chapter 4. Disability Benefits
Paid sick leave (tables 14-20)
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 (L T D ), which typically pays
50 or 60 percent of earnings, was available to 48 percent
of the employees; 37 percent (some with L T D 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.3
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 l t d insurance,
have ceased. (Disability provisions of pension plans are dis
cussed in chapter 5.)
Paid sick leave and L T D 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 o f short-term disability protection, see W illiam J.
W iatrow ski, “ E m p loyee Incom e Protection A gainst Short-term D isab ili
t ie s ,” Monthly Labor Review, February 1985, pp. 3 2 -3 8.
12
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 cf 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 noncumulative 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 fullpay 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
benefit ($145 in New York and $200 in New Jersey during
1986).4
ly had to wait 1 to 5 workdays, with the waiting period often
eliminated after 10 years of service.
Long-term disability insurance (tables 24—27)
Sickness and accident insurance (tables 14,21-23)
Long-term disability insurance continues the income of em
ployees during extended periods of disability. Generally, LT D
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, l t d benefits usually continue for 5 years or to age
70, whichever is earlier.
Forty-eight percent of the employees covered by the study
had l t d 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.5 The rate was typi
cally between 20 and 40 cents per $100 of coverage.
Service requirements found in L T D 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 l t d insurance as blue-collar workers. However, many
employees not covered under l t d 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 maximums 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 threetenths 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.
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 eamings-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
4 Both States permit an em ployer to substitute a private plan for the State
plan if the benefits provided are at least equivalent. In N ew Y ork, many
em ployers agree to pay the e m p lo y ee’s share o f plan costs. C alifornia and
R hode Island also have m andated temporary disability insurance plans, but
these plans require no em ployer contribution and, thus, are not included
in this survey.
5 Covered earnings refers to that portion o f a worker’s earnings replaced
by LTD benefits. For exam ple, if an LTD plan pays 6 0 percent o f earnings
up to $ 3 ,0 0 0 , covered earnings are $ 5 ,0 0 0 (60 percent o f $ 5 ,0 0 0 equals
$ 3 ,0 0 0 .)
13
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
dollar maximums in plans that pay a percent of earnings,
or by a combination of both.
Survivor benefits after the death of a disabled employee
were available in plans covering 14 percent o f 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.
14
Table 14. Short-term disability coverage: Percent of
full-time employees by participation in sickness and accident
insurance plans and paid sick leave plans, medium and large
firms, 1986
Profes
Techni
sional
and
cal and Produc
All em
adminis clerical tion em
ployees
trative employ ployees
ees
employ
ees
Type of plan
T o ta l.................................................
100
100
100
100
With short-term disability coverage ..
94
97
98
91
Sickness and accident insurance
o n ly ..................................................
Wholly employer financed ....
24
21
4
3
5
4
46
40
Paid sick leave o n ly .......................
46
69
63
23
Combined sickness and accident
insurance/paid sick le a v e .........
Wholly employer financed ....
25
20
24
18
30
23
22
19
Without short-term disability
c o v e ra g e ................................................
6
3
2
9
NOTE: Because of rounding, sums of individual items may not equal to
tals.
Table 15. Paid sick leave: Percent of full-time employees by
type of provision, medium and large firms, 1986
Provision
Profes
Techni
sional
and
cal and Produc
All em
adminis clerical tion em
ployees
trative employ ployees
employ
ees
ees
T o ta l.................................................
100
100
100
100
Provided paid sick le a v e .....................
70
93
93
45
51
14
59
23
68
16
37
7
3
3
4
7
6
2
1
1
Sick leave provided on:
An annual basis only1 .................
A per disability basis only2 ........
Both an annual and per
disability basis ...........................
As needed basis3 ........................
Other basis4 ..................................
(5)
Not provided paid sick le a v e .............
30
(5)
7
(5)
7
(5)
55
1 Employees earn a specified number of sick leave days per year. This
number may vary by length of service.
2 Employees earn a specified number of sick leave days for each ill
ness or disability. This number may vary by length of service.
3 Plan does not specify maximum number of days.
4 Includes formal plans with provisions that change from a specified
number of days per year to a specified number of days per absence after
a certain service period.
5 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal to
tals.
15
Table 16. Paid sick leave: Percent of full-time employees by sick leave provision, medium and large firms, 1986
Sick leave policy’
T o ta l.................................................
Provided paid sick
leave1 .....................................................
2
Sick leave provided
annually3 .........................................
At 6 months of service;
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
3 0 and under 6 0 d a y s ......
60 and under 120 d a y s ....
120 days or m o r e .............
At 1 year of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
30 and under 6 0 d a y s ......
60 and under 120 d a y s ....
120 days or m o r e .............
At 5 years of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
30 and under 6 0 d a y s ......
60 and under 120 d a y s ....
120 days or m o r e .............
At 10 years of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
30 and under 60 d a y s ......
60 and under 120 d a y s ....
120 days or m o r e ..............
Profes
Techni
sional
and
cal and Produc
All em
adminis clerical tion em
ployees
trative employ ployees
employ
ees
ees
100
70
54
14
18
10
1
1
1
3
22
23
2
1
1
2
19
18
7
4
2
2
19
16
5
7
4
At 15 years of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 3 0 d a y s ......
30 and under 6 0 d a y s ......
60 and under 120 d a y s ....
120 and under 180 d a y s ..
180 days or more ..............
2
19
16
3
8
4
2
At 20 years of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
30 and under 6 0 d a y s ......
6 0 and under 120 d a y s ....
120 and under 180 d a y s ..
180 days or m o r e .............
2
19
16
3
7
5
2
At 25 years of service:8
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 3 0 d a y s ......
30 and under 6 0 d a y s ......
60 and under 120 d a y s ....
120 and under 180 d a y s ..
180 days or m o r e .............
1
19
16
3
5
7
2
100
93
63
10
22
19
2
2
2
1
16
36
4
3
3
1
11
25
12
9
5
O
11
22
9
11
9
O
11
22
4
14
9
2
O
11
22
4
13
10
3
O
11
22
4
9
13
3
100
93
74
20
28
14
1
1
1
2
29
36
3
1
1
2
23
28
12
6
2
1
24
25
8
10
5
Sick leave policy'
100
Sick leave provided on a per
disability basis8 .............................
45
At 6 months of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
30 and under 6 0 d a y s ......
6 0 and under 120 d a y s ....
120 and under 180 d a y s ..
180 days or m o r e .............
37
13
10
2
At 1 year of service:
Under 5 d a y s ......................
5 and under 10 d a y s ........
10 and under 30 d a y s ......
30 and under 60 d a y s ......
60 and under 120 days ....
120 and under 180 d a y s ..
180 days or m o r e .............
O
0
1
4
21
8
1
At 5 years of service:
Under 10 days ....................
10 and under 30 d a y s ......
30 and under 6 0 d a y s ......
6 0 and under 120 days ....
120 and under 180 d a y s ..
180 days or m o r e .............
rt
1
3
21
8
2
1
1
27
O
O
4
3
6
5
1
3
6
1
0
1
2
(4)
1
2
4
2
1
3
0
1
5
6
0
1
2
10
8
I
(4)
(4)
3
1
0
(4)
1
2
4
1
1
1
6
15
2
2
2
1
5
11
1
At 20 years of service:
Under 10 days ....................
10 and under 30 d a y s ......
30 and under 6 0 d a y s ......
60 and under 120 days ....
120 and under 180 d a y s ..
180 days or m o r e ..............
1
1
1
3
6
4
1
1
1
6
11
6
2
2
1
6
6
1
At 25 years of service:5
Under 10 d a y s ....................
10 and under 30 d a y s ......
30 and under 60 d a y s ......
6 0 and under 120 d a y s ....
120 and under 180 d a y s ..
180 days or more .............
1
1
1
3
6
5
1
1
1
5
12
6
2
2
1
4
7
7
21
8
1
As needed basis7 .................. ..........
Other b a s is *......................................
(4)
Not provided paid sick le a v e .............
30
2
2
1
3
7
O
4
2
(4)
7
1
1
1
0
1
1
1
3
9
1
3
20
8
1
3
1
1
(4)
0
(4)
2
2
3
10
4
3
7
1
A t 15 years of service:
Under 10 d a y s ....................
10 and under 3 0 d a y s ......
30 and under 60 d a y s ......
60 and under 120 d a y s ....
120 and under 180 d a y s ..
180 days or m o r e .............
1
24
25
5
10
7
2
1
1
(4)
(4)
1
4
2
2
1
10
5
1
3
20
6
1
3
1
1
-
1
3
7
2
1
3
3
6
1
1
2
9
10
2
3
20
8
2
2
1
8
(4)
0
0
1
1
2
7
4
22
1
1
1
7
5
1
1 Employees receiving partial pay only or no sick leave in their early
years of service are included in the overall percentages of workers 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.
2 The total is less than the sum of the individual breakdowns be
cause some employees had annual and per disability plans.
17
A t 10 years of service:
Under 10 d a y s ....................
10 and under 3 0 d a y s .....
30 and under 60 d a y s .....
6 0 and under 120 days ....
120 and under 180 d a y s ..
180 days or m o r e .............
1
24
25
5
11
5
2
1
24
25
5
7
9
2
Profes
sional
Techni
and
cal and Produc
All em
adminis clerical tion em
ployees
trative
employ ployees
employees
60S
7
1
1
(4)
(4)
4
2
(4)
1
<
4)
0
1
4
(4)
1
(4)
(4)
1
2
2
1
0
0
1
2
2
1
<
4)
55
3 Employees earn a specified number of sick leave days per year.
4 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.
7
16
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
Techni
sional
and
cal and Produc
All paradminis clerical tion par
ticipants
nnrtlni
trative
paroci- ticipants
partici
pants
pants
Item
Paid annual sick leave1 by length of
service:
At 6 m o n th s ......................................
At 1 y e a r ...........................................
At 3 y e a r s .........................................
At 5 y e a r s .........................................
At 10 y e a r s .......................................
At 15 y e a r s .......................................
At 20 y e a r s .......................................
At 25 y e a r s .......................................
At 30 years2 ......................................
11.7
15.2
19.1
25.1
32.2
37.0
39.8
41.2
41.8
16.4
21.6
27.2
36.4
46.2
52.3
56.2
58.0
58.7
9.0
12.8
17.1
23.6
31.9
37.1
40.1
41.2
41.8
9.3
11.1
12.8
15.1
18.2
21.1
22.8
24.1
24.6
Paid per disability sick leave3 by
length of service:
At 6 m o n th s ......................................
At 1 year ...........................................
At 3 years .........................................
At 5 y e a r s .........................................
At 10 y e a r s .......................................
At 15 y e a r s .......................................
At 20 y e a r s .......................................
At 25 y e a r s .......................................
At 30 years2 ......................................
46.6
52.2
58.1
74.6
89.2
106.6
121.5
137.4
137.5
58.1
63.1
68.7
82.7
100.5
112.4
121.2
132.1
132.2
31.7
39.7
46.7
65.1
80.9
101.1
118.8
136.8
136.9
32.3
42.9
52.4
72.2
76.8
102.2
126.9
151.5
151.5
1 Employees earn a specified number of sick leave days per year. This
number may vary by length of service.
2 The average (mean) was virtually the sam e after longer years of serv
ice.
3 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 a t partial pay and
workers with only partial pay days or zero days of sick leave.
17
Table 18. Paid annual sick leave:1 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
Item
At 1 year of service:
Cumulative p la n ...............................
With sickness and accident
in surance.................................
Without sickness and
accident in surance...............
Noncumulative p l a n .......................
With sickness and accident
in surance.................................
Without sickness and
accident insurance................
At 5 years of service:
Cumulative p la n ...............................
With sickness and accident
insurance.................................
Without sickness and
accident insurance................
Noncumulative p l a n .......................
With sickness and accident
insurance.................................
Without sickness and
accident insurance...............
At 10 years of service:
Cumulative p la n ...............................
With sickness and accident
insurance.................................
Without sickness and
accident insurance................
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
9.3
11.2
9.6
7.4
7.6
9.4
8.5
6.1
10.5
19.8
12.1
27.5
10.2
15.4
9.0
14.8
10.8
17.1
10.6
6.5
26.1
32.1
18.3
26.9
12.4
15.6
13.4
14.5
12.2
16.2
47.9
14.1
31.6
11.8
20.9
18.3
31.6
18.8
9.3
46.1
55.1
39.4
At 20 years of service:
Cumulative p la n ...............................
With sickness and accident
in surance.................................
Without sickness and
accident in surance................
Noncumulative p l a n .......................
With sickness and accident
in surance.................................
Without sickness and
accident in surance................
6.6
14.1
34.6
At 10 years of service — Continued
Noncumulative p l a n .......................
With sickness and accident
in surance.................................
Without sickness and
accident in suran ce................
8.9
10.0
38.6
15.7
20.2
17.4
19.1
15.6
7.1
18.2
20.7
18.4
At 25 years of service:
Cumulative p la n ...............................
With sickness and accident
insurance.................................
Without sickness and
accident in suran ce...............
Noncumulative p l a n .......................
With sickness and accident
insurance.................................
Without sickness and
accident in suran ce................
10.7
12.3
Item
15.1
1
Paid sick leave plans with a specified number of days available
each year. Per disability plans were excluded from this table because
(1) only one-fifth of the employees with per disability plans were also
covered under a sickness and accident insurance plan, and (2) only an
nual sick leave plans allow the employee to carry over and accumulate
unused sick leave from one year to the next year. Instead, the number
18
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
44.6
60.7
43.5
25.4
25.0
42.3
26.8
12.5
58.6
68.7
53.6
45.0
17.3
22.6
19.3
11.3
14.6
23.8
18.7
7.9
19.2
56.7
22 0
747
19.6
56.6
15.5
33.7
30.8
50.2
33.9
15.8
75.1
85.4
70.3
60.9
17.8
23.4
19.7
11.6
15.5
25.7
19.5
8.4
19.4
58.8
22.3
77.1
19.8
58.3
15.6
35.9
32.2
51.6
35.6
17.0
77.7
88.2
72.0
64.5
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.
Table 20. Paid annual sick leave: Percent of full-time
participants by unused sick leave policy and carryover
provisions, medium and large firms, 1986
Table 19. Paid annual sick leave:1 Average number of days
at full pay for full-time participants by sickness and accident
insurance coordination, medium and large firms, 1986
Item
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
Unused sick leave policy and
carryover provisions
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
Unused sick lea ve policy
At 1 year of service:
T o ta l.................................................
25.1
9.7
14.6
17.4
At 5 years of service:
With sickness and accident
insurance........................................
Without sickness and accident
insurance........................................
100
Carryover o n ly .................................
Cash-in o n ly .....................................
Carryover and c a s h -in ...................
Unused benefit lo s t........................
Data not a v a ila b le ..........................
6.3
100
35
9
8
48
32
2
3
62
37
8
50
35
18
13
34
0
-
0
O
100
100
100
100
31
36
31
26
Limit on total number of days
accumulated .................................
19.3
14.2
100
T o ta l.................................................
9.4
100
Unlimited accum ulatio n.................
With sickness and accident
insurance........................................
Without sickness and accident
insurance........................................
68
59
68
74
4
3
7
3
1
2
4
2
2
2
1
1
3
3
8
1
6
3
8
4
4
(1
)
1
6
C a rry o v e r provisions
14.7
25.1
16.0
8.0
32.4
41.6
27.8
24.7
At 10 years of service:
With sickness and accident
insurance........................................
Without sickness and accident
insurance........................................
19.5
33.6
22.1
10.0
41.3
52.1
37.6
29.5
At 20 years of service:
With sickness and accident
insurance........................................
Without sickness and accident
insurance........................................
23.8
40.3
27.5
12.1
51.2
63.4
47.2
37.4
At 25 years of service:
With sickness and accident
insurance........................................
Without sickness and accident
insurance........................................
1
year.
25.0
41.8
28.8
13.0
52.7
65.4
48.3
39.1
Paid sick leave plans with a specified number of days available each
NOTE: Computation of average excluded days paid at partial pay and
workers with only partial pay days or zero days of sick leave.
Under 10 days ..............................
10 days ...........................................
1 1 - 1 9 d a y s .................................
20 days ...........................................
21 - 24 days .................................
25 days ...........................................
26 - 29 d a y s .................................
30 - 39 days .................................
40 - 49 d a y s .................................
50 days ...........................................
51 - 64 days .................................
65 days ...........................................
66 - 79 days .................................
80 - 89 days .................................
90 - 99 days .................................
100 - 109 d a y s .............................
1 1 0 - 1 1 9 d a y s .............................
120 - 129 d a y s .............................
130 days .........................................
Over 130 d a y s ..............................
Days not a v a ila b le ......................
Other2 ..................................................
0
0
0
0
9
3
1
7
2
2
2
1
1
2
3
9
6
1
6
1
1
6
3
3
1
2
1
2
3
14
3
2
2
5
7
4
0
4
2
3
1
2
0
14
5
2
11
1
3
0
2
2
2
2
6
1
0
2
3
11
8
1
2
0
1 Less than 0.5 percent.
2 C a r r y o v e r p ro v is io n s v a r y b y le n g th o f s e r v ic e .
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
19
Table 21. Sickness and accident insurance:
large firms, 1986
Percent of full-time participants by type and duration of payments, medium and
Maximum weeks of coverage
Type of payment
Total
Less
than
13
13
1
14
14-25
26
27-51
52
Greater
than
52
Varies
by
service
No
All pa rticip ants
All ty p e s ...............................................
Fixed percent of earn ing s...............................
Less than 50 ................................................
5 0 .....................................................................
5 5 .....................................................................
5 7 ....................................................................
6 0 .....................................................................
6 2 .....................................................................
6 5 .....................................................................
6 6 .....................................................................
6 7 .....................................................................
7 0 .....................................................................
7 5 .....................................................................
80 and o v e r ..................................................
100
48
0
20
0
0
11
6
0
-
-
0
-
-
0
16
-
0
-
0
1
1
7
3
ft
1
-
-
3
2
0
-
0
0
9
4
2
1
0
-
0
-
6
3
1
-
1
-
0
Fixed weekly dollar b e n e fit.............................
Less than $ 6 0 .............................................
$60-$79 ..........................................................
$ 8 0 -$ 9 9 ..........................................................
$100-$ 119 .....................................................
$120-$ 139 .....................................................
$1 40-$159 .....................................................
$160-$ 179 .....................................................
$1 80-$ 1 9 9 .....................................................
$ 2 0 0 -$ 2 1 9 .....................................................
$2 20 or more ...............................................
27
5
3
2
4
4
3
2
2
2
1
1
1
0
0
0
-
8
3
2
0
1
1
0
-
0
0
0
0
-
ft
ft
-
ft
-
ft
-
ft
-
-
ft
ft
-
-
1
-
0
ft
0
7
7
0
1
ft
ft
ft
-
2
ft
1
ft
ft
1
9
9
ft
ft
-
-
_
-
2
ft
1
1
-
-
_
1
1
-
1
_
-
ft
ft
0
ft
-
-
14
2
1
2
3
2
1
2
1
1
1
0
0
ft
-
-
-
0
0
ft
-
ft
-
-
19
18
0
-
_
-
2
1
1
-
1
ft
-
. -
-
0
-
ft
-
-
0
1
2
-
ft
ft
ft
-
0
-
ft
ft
-
1
1
5
ft
ft
0
0
ft
-
0
ft
0
-
ft
-
-
-
0
-
1
-
-
0
0
0
-
ft
ft
-
1
-
8
14
1
(’)
ft
ft
0
-
-
ft
2
35
1
2
-
0
59
3
-
0
-
Percent of earnings v a rie s ..............................
By s e rv ic e .....................................................
By length of disability................................
By both service and length of
disability .....................................................
By ea rnings...................................................
W eekly dollar benefit v a rie s ...........................
By earn ing s...................................................
By service or length of
disability .....................................................
4
_
-
ft
Pro fession al and ad m inistrative
All ty p e s ...............................................
Fixed percent of ea rn ing s...............................
Less than 50 ................................................
5 0 .....................................................................
5 7 .....................................................................
6 0 .....................................................................
6 2 .....................................................................
6 5 .....................................................................
6 6 .....................................................................
6 7 .....................................................................
7 0 .....................................................................
7 5 .....................................................................
80 and o v e r ..................................................
Percent of earnings v a rie s ..............................
By s e rv ic e .....................................................
By length of disability................................
By both service and length of
disability .....................................................
By earn ing s...................................................
100
1
68
0
26
0
20
0
2
1
0
0
ft
-
0
11
5
3
1
0
-
11
6
3
-
1
-
0
6
-
75
3
3
55
24
16
-
-
ft
ft
1
-
1
1
2
0
0
0
0
0
0
0
0
0
(')
9
4
0
0
-
-
“
20
3
ft
1
ft
-
ft
2
-
1
“
ft
ft
-
3
ft
2
-
ft
-
ft
-
ft
1
ft
-
ft
-
ft
-
ft
-
-
-
ft
-
-
ft
ft
-
-
”
ft
“
“
-
0
0
8
3
ft
ft
-
3
2
-
“
S ee footnotes at end of table.
3
7
4
3
“
ft
ft
-
ft
-
-
Table 21. Sickness and accident insurance:
large firms, 1986—Continued
Percent of full-time participants by type and duration of payments, medium and
Maximum weeks of coverage
Type of payment
Total
Less
than
13
13
14-25
26
Greater
Varies
than
by
52
service
No
27-51
52
0
0
-
_
_
-
-
-
-
-
-
0
-
-
-
P rofessional and adm inistrafiv e— C on tin ued
Fixed weekly dollar b e n e fit.............................
Less than $ 6 0 .............................................
$ 6 0 -$ 7 9 .........................................................
$ 8 0 -$ 9 9 .........................................................
$1 0 0 -$ 1 1 9 .....................................................
$120-$ 1 3 9 .....................................................
$140-$ 1 5 9 .....................................................
$1 60-$179 .....................................................
$180-$ 1 9 9 .....................................................
$ 2 0 0 -$ 2 1 9 .....................................................
$220 or more ..............................................
W eekly dollar benefit v a rie s ..........................
By ea rnings...................................................
11
4
1
1
1
1
2
0
8
4
0
0
0
1
0
10
10
0
0
0
-
-
-
0
-
0
0
0
0
-
0
-
-
O
-
-
0
-
-
(1)
1
(')
0
1
1
1
1
-
-
(’)
(’ )
0
0
9
9
-
( ')
_
0
0
0
-
0
_
0
-
Te chnical and clerical
ty p e s ..............................................
100
1
14
2
68
4
7
Fixed percent of ea rnings...............................
Less than 50 ...............................................
5 0 ....................................................................
5 5 ....................................................................
5 7 ....................................................................
6 0 ....................................................................
6 2 ....................................................................
6 5 ....................................................................
6 6 ....................................................................
6 7 ....................................................................
7 0 ....................................................................
7 5 ....................................................................
8 0 and over ..................................................
73
1
11
-
2
3
1
-
52
-
0
-
5
0
30
0
(’)
-
0
(’)
0
-
-
-
9
0
0
-
9
2
-
1
-
A ll
Percent of earnings v a rie s ..............................
By s e rv ic e .....................................................
By length of disability................................
By both service and length of
disability .....................................................
By ea rnings...................................................
Fixed weekly dollar b e n e fit.............................
Less than $ 6 0 .............................................
$ 6 0 -$ 7 9 .........................................................
$ 8 0 -$ 9 9 .........................................................
$1 0 0 -$ 1 1 9 .....................................................
$ 1 2 0 -$ 1 3 9 .....................................................
$140-$ 1 5 9 .....................................................
$160-$ 179 .....................................................
$180-$ 1 9 9 .....................................................
$ 2 0 0 -$ 2 1 9 .....................................................
$220 or more ..............................................
Weekly dollar benefit v a rie s ...........................
By earn ing s...................................................
By service or length of
disability .....................................................
0
35
(’)
O
14
0
1
0
14
3
-
2
1
-
-
0
0
(’)
0
-
0
1
3
0
4
1
-
0
10
-
6
-
2
0
-
1
1
_
1
-
-
9
3
-
-
2
0
( ')
6
2
0
( 1)
0
0
0
-
-
-
(’ )
0
-
0
-
1
0
1
0
8
0
0
0
8
0
0
-
“
(’)
-
21
-
( ’)
0
-
1
-
2
_
(’ )
1
-
_
-
-
-
0
-
-
-
-
-
-
-
0
0
(’ )
( ’)
-
0
-
-
0
-
1
1
-
_
_
-
_
_
_
_
_
_
_
_
_
_
_
-
-
( ')
1
1
2
_
-
0
1
1
-
-
-
0
1
-
0
-
-
0
_
-
0
0
3
2
1
0
1
-
-
0
0
0
-
-
0
5
1
0
-
0
5
1
0
0
0
2
0
0
2
1
1
4
-
1
0
-
-
S ee footnotes at end of table.
5
3
-
-
3
O
-
2
0
-
0
(’)
-
-
_
0
_
-
( ')
-
-
-
-
Table 21. Sickness and accident insurance:
large firms, 1986—Continued
Percent of full-time participants by type and duration of payments, medium and
Maximum weeks of coverage
Type of payment
Total
Less
than
13
13
1
17
26
27-51
52
5
52
1
3
26
0
10
O
6
1
0
Greater
than
52
Varies
by
service
17
14-25
No
maximum
Production
All typ e s........................................
100
Fixed percent of earnings...........................
Less than 5 0 .........................................
5 0 ...........................................................
5 5 ...........................................................
5 7 ...........................................................
6 0 ...........................................................
6 2 ...........................................................
6 5 ...........................................................
6 6 ...........................................................
6 7 .....................................................................
7 0 .....................................................................
7 5 .....................................................................
80 and over ..................................................
37
0
14
0
0
8
1
1
0
7
3
1
-
-
-
0
-
0
-
-
0
5
0
-
-
2
2
0
1
1
-
-
o
0
-
0
1
1
-
-
-
1
-
-
-
0
1
2
1
1
0
-
0
0
-
-
-
3
-
0
-
-
_
1
2
2
1
1
1
1
1
0
1
0
' Less than 0.5 percent.
-
-
7
6
0
1
0
0
0
(1
)
-
-
0
0
0
3
1
1
17
1
1
2
4
-
0
0
0
0
-
_
2
-
-
-
-
-
3
0
-
1
0
0
1
0
1
-
_
-
-
2
0
1
1
-
_
0
14
14
-
0
-
-
(’)
-
_
-
-
_
11
4
3
0
-
-
-
_
-
0
0
-
1
0
0
0
0
36
5
4
2
6
5
4
3
2
-
-
0
Fixed weekly dollar b e n e fit.............................
Less than $ 6 0 .............................................
$60-$79 ..........................................................
$80-$99 .........................................................
$100-$11 9 .....................................................
$120-$139 .....................................................
$140-$ 159 .....................................................
$160-$179 .....................................................
$180-$199 .....................................................
$200-$219 .....................................................
$220 or more ...............................................
1
0
-
-
0
-
-
-
-
-
-
0
1
24
22
-
0
0
-
3
2
1
Weekly dollar benefit v a rie s ...........................
By earn ing s...................................................
By service or length of
disab ility.....................................................
0
-
-
6
2
O
Percent of earnings v a rie s ..............................
By s e rv ic e .....................................................
By length of disability................................
By both service and length of
disability .....................................................
1
-
(’)
2
1
0
0
-
0
-
-
3
0
6
2
2
0
-
_
-
_
-
-
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
22
Table 22. Sickness and accident insurance: Percent of full-tim e participants with benefits based on percent of earnings
formula by maximum weekly benefit, medium and large firms, 1986
Maximum weekly benefit
Type of payment
Total
Total
with
maximum
Less
than
$100
$100
to
$119
$120
to
$139
$140
to
$159
$160
to
$199
$200
to
$249
$250
to
$299
$300
to
$349
$350
to
$399
$400
or
more
3
7
1
23
9
5
5
4
1
10
1
23
20
1
-
No
All participants
T o t a l..............................................
Fixed percent of earnings ................
Less than 5 0 ..................................
5 0 .......................................................
5 5 .......................................................
5 7 .......................................................
6 0 .......................................................
6 2 .......................................................
6 5 .......................................................
6 6 .......................................................
6 7 .......................................................
7 0 .......................................................
7 5 .......................................................
80 and o v e r ....................................
Percent of earnings v a r ie s ...............
100
68
89
67
31
1
0
37
1
ft
21
1
2
0
17
7
4
1
ft
15
ft
ft
ft
14
5
7
3
-
-
4
2
-
-
ft
-
-
1
ft
1
1
ft
ft
-
ft
-
11
2
100
61
25
1
1
-
1
-
ft
1
1
ft
-
3
1
2
-
ft
ft
-
-
ft
ft
-
4
5
-
ft
ft
ft
2
-
-
-
-
-
-
-
-
ft
-
3
2
3
1
-
-
ft
ft
ft
ft
9
(’)
ft
-
-
ft
-
-
-
1
ft
ft
22
1
ft
-
ft
-
ft
-
ft
-
22
21
-
6
1
1
1
1
6
-
ft
ft
ft
-
-
23
ft
1
ft
-
-
ft
-
9
-
-
ft
-
ft
-
61
86
1
ft
-
4
5
-
-
-
1
2
ft
-
ft
ft
4
9
-
32
3
1
P rofessional and ad m in istrative
T o t a l..............................................
Fixed percent of earnings .................
Less than 5 0 ..................................
5 0 .......................................................
5 7 .......................................................
6 0 .......................................................
6 2 .......................................................
6 5 .......................................................
6 6 .......................................................
6 7 .......................................................
7 0 .......................................................
7 5 .......................................................
80 and o v e r ....................................
Percent of earnings v a r ie s ...............
0
32
0
26
0
2
0
15
6
4
1
14
ft
20
12
4
-
ft
ft
-
ft
-
4
8
8
-
4
-
ft
-
-
-
6
1
25
ft
7
ft
ft
-
39
6
5
-
-
ft
ft
-
-
ft
2
ft
-
-
ft
-
-
-
-
-
-
-
-
2
2
4
1
-
-
-
-
ft
-
-
14
12
33
ft
-
ft
ft
-
-
-
-
-
ft
-
-
-
1
ft
1
1
-
-
ft
ft
-
7
ft
-
4
3
10
-
-
ft
-
10
1
2
-
1
7
6
-
1
ft
-
7
6
3
2
Te chnical and clerical
T o t a l..............................................
Fixed percent of earnings ................
Less than 5 0 ..................................
5 0 .......................................................
5 5 .......................................................
5 7 .......................................................
6 0 .......................................................
6 2 .......................................................
6 5 .......................................................
6 6 .......................................................
6 7 .......................................................
7 0 .......................................................
7 5 .......................................................
80 and o v e r .....................................
Percent of earnings v a r ie s ...............
100
67
87
66
37
0
42
0
0
17
0
1
ft
17
3
5
1
13
ft
ft
12
ft
13
7
2
1
5
-
-
ft
-
-
ft
ft
ft
-
ft
1
1
ft
-
ft
1
ft
2
-
-
-
2
-
-
-
-
29
28
1
ft
-
ft
ft
6
6
2
-
ft
ft
-
ft
ft
-
-
1
-
1
-
5
ft
ft
1
2
-
-
ft
1
1
11
-
ft
-
ft
ft
-
-
-
-
(’)
-
-
-
-
-
-
-
-
ft
ft
-
-
-
-
22
ft
6
-
4
5
ft
1
ft
5
1
1
ft
ft
ft
ft
ft
2
-
1
1
3
4
-
-
23
4
2
-
-
See footnotes at end of table.
29
1
7
2
-
1
-
4
1
4
1
1
11
-
Table 22. Sickness and accident insurance: Percent of full-tim e 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
Total
Total
with
maximum
Less
than
$100
$100
$140
to
$159
$120
to
$119
to
$139
$160
to
$199
$200
to
$249
$250
to
$299
$300
to
$349
5
4
$350
to
$399
$400
or
more
No
maximum
Production
T o ta l........................................
Fixed percent of earnings..............
Less than 5 0 ..............................
5 0 ................................................
5 5 ................................................
5 7 ................................................
6 0 ................................................
6 2 ................................................
6 5 ................................................
6 6 ................................................
6 7 ................................................
7 0 ................................................
7 5 ................................................
80 and o v e r................................
Percent of earnings v a rie s .............
1
100
72
92
35
70
30
1
1
0
0
5
5
15
1
1
2
0
1
1
18
3
0
3
1
0
8
5
2
1
0
-
-
-
-
1
-
1
ft
4
6
4
1
1
1
2
0
1
4
-
1
-
-
0
1
1
1
4
-
-
-
ft
-
-
4
-
1
-
0
6
2
1
-
Less than 0.5 percent.
-
1
1
-
10
15
-
1
2
1
21
-
2
10
2
3
-
21
-
-
-
0
2
-
-
15
7
9
11
-
0
21
11
1
-
1
ft
-
8
-
1
22
5
2
-
0
4
-
28
(')
-
0
0
0
8
-
5
1
2
0
1
4
ft
ft
0
-
-
-
-
3
-
1
2
1
6
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no em ployees in this category.1
2
Table 23. Sickness and accident insurance: Percent of
full-time participants by length-of-service requirements for
participation,1 medium and large firms, 1986
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
Length-of-service requirement
T ota l.....................................
100
100
100
100
76
24
13
25
80
6
12
5
4
ft
64
24
9
19
5
4
3
ft
7
4
ft
Without service requirement.............
23
36
24
20
Service requirement not
determinable...................................
ft
“
“
ft
With service requirement.................
1 m on th .......................................
2 m onths....................................
3 m onths.....................................
4-5 m onths...................................
6 m onths....................... ..............
1 year...........................................
Over 1 ye a r..................................
76
21
11
24
10
6
2
1
20
12
25
1 Length of time employees must be on the job before they are cov
ered by a plan that is at least partially employer financed. There is fre
quently an administrative time lag between completion of the requirement
and the actual start of participation. If the lag was 1 month or more, it
was included in the service requirement. Minimum age requirements are
rare.
2 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 24. Long-term disability insurance: Percent of full-time participants by method of determining payment, medium and
large firms, 1986
Professional and
administrative participants
All participants
Method
Total
With
Without
maximum maximum
coverage coverage
provi
provi
sions’
sions
Total
Without
With
maximum maximum
coverage coverage
provi
provi
sions'
sions
All methods......................
100
71
29
100
75
25
Fixed percent of earnings.............
Less than 50 percent..............
50 percent.................................
55 percent.................................
60 percent................................
65 or 67 percent......................
70 percent or m ore..................
76
60
62
2
2
1
20
15
16
O
5
82
2
19
12
2
2
2
2
39
30
9
46
36
12
11
1
11
10
2
2
2
2
Percent varies by earnings...........
10
6
11
6
Percent varies by service..............
O
0
0
0
4
ft
0
100
78
22
82
67
2
2
7
21
18
15
3
ft
ft
4
6
-
Other1 ..............................................
3
2
4
4
1
5
5
12
1
2
3
3
0
-
10
0
-
0
100
58
42
61
50
11
2
2
-
21
17
2
1
1
25
20
5
11
1
6
4
-
1
4
9
6
-
1
0
3
-
29
2
26
4
2
2
ft
ft
Without
With
maximum maximum
coverage coverage
provi
provi
sions’
sions
1
1
ft
0
Total
0
1
1
1 Includes dollar maximums in plans that pay a percent of earnings,
ceilings on income during disability that limit the amount payable from
the long-term disability insurance plans plus other income, or a combina
tion of both.
2 Less than 0.5 percent.
2
(2
)
1
ft
32
13
2
2
O
2
41
14
(2
)
8
ft
2
11
1
-
Without
With
maximum maximum
coverage coverage
provi
provi
sions
sions’
1
9
(2
)
Total
Production participants
20
Scheduled dollar amount
varies by earnings.......................
Data not available..........................
Technical and clerical
participants
-
-
-
3
Includes flat dollar amounts and scheduled percent of earnings
varying by length of disability.
NOTE: Because of rounding, sums of individual items may not equal
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
and
All par
adminis
ticipants
trative
partici
pants
Duration of benefits
T o ta l..........................................
100
100
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
100
Until a specified age1 ........................
Under age 6 5 ...............................
Age 6 5 .........................................
Age 7 0 .........................................
16
ft
15
ft
15
ft
12
12
11
4
3
4
6
Duration of benefit varies.................
By length of service....................
By age at time of disability3 ........
Single reduction ....................
Gradual reduction .................
78
ft
78
36
42
79
ft
79
34
45
79
ft
79
30
48
75
ft
75
44
30
Other4 .................................................
6
6
6
19
ft
13
6
The age may be directly specified or the designated retirement age.
Less than 0.5 percent.
3 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.
4 Includes benefits lasting for life, for a specified number of months, or
until some unspecified retirement age.
1
2
NOTE: B e c a u se of rounding, su m s of individual item s m ay not equal to
tals.
25
Table 26. Long-term disability insurance: Percent of full-time
participants by length-of-service requirements for participa
tion,1 medium and large firms, 1986
Profes
sional Techni
cal and Produc
and
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Length-of-service requirement
T ota l..........................................
100
100
100
100
With service requirement.................
1 m on th.......................................
2 m onths......................................
3 m onths......................................
4-5 months...................................
6 m onths......................................
1 year...........................................
2 years..........................................
3 years.........................................
Over 3 years...............................
67
66
73
62
10
13
11
4
15
2
2
8
14
17
13
4
14
9
2
1
1
14
13
11
11
6
3
3
16
14
3
1
1
2
7
7
7
6
Without service requirement.............
33
34
27
38
Service requirement not
determinable...................................
0
“
“
0
2
O
1 Length of time employees must be on the job before they are cov
ered by a plan that is at least partially employer financed. There is fre
quently an administrative time lag between completion of the requirement
and the actual start of participation. If the lag was 1 month or more, it
was included in the service requirement.
2 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 27. Long-term disability insurance: Percent of full-time participants in plans with limitations on benefits for
mental illness, medium and large firms, 1986
All participants
Professional and
administrative partici
pants
Technical and clerical
participants
Production participants
T ota l.....................................
100
100
100
100
Without lim its .....................................
63
60
59
73
Benefits lim ited..................................
37
40
41
27
Benefits provided only if
institutionalized.........................
1
2
2
Limitation
Unless institutionalized, benefit
amount reduced.......................
O
Unless institutionalized, benefits
provided only for limited period
1 2 months ............................
24 m onths............................
O th e r.....................................
30
3
27
O
Benefits provided only for limited
period........................................
1 2 months ............................
24 months ............................
O th e r.....................................
0
1
4
35
1
28
21
-
0
4
5
1
0
4
0
5
-
-
4
4
22
6
O
0
1 Less than 0.5 percent.
0
0
34
3
30
0
4
1
NOTE: Because of rounding, sums of individual items may not
equal totals. Dash indicates no employees in this category.
26
Chapter 5. Health Care and
Life Insurance
w ise separated from employment, c o b r a requires em ploy
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 o f the premium cost. The Em
ployee Benefits Survey was conducted in the first half o f
1986, immediately before the act went into effect.
About three-fourths o f the participants were in health plans
extending coverage into retirement. These plans nearly al
w ays covered retirees up to age 65, and generally provided
the same benefits given to active em ployees. In nine-tenths
o f the cases, retirees remained insured after 65. Again, there
was commonly no change in benefit levels, apart from coor
dination with Medicare.
Regardless o f the retiree’s age, premiums for retiree in
surance were fully company-paid in plans covering over onehalf o f 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
o f 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 follow ing a layoff. For 1 in 3, benefits were w hol
ly or partly employer financed; the maximum period o f
protection in these cases was often 3 months or less. In some
plans, em ployees could extend their protection beyond that
point by paying the full premium.
Approximately 1 in 5 participants were in plans where no
continuation o f group coverage was available. (Em ployees
in com m ercially insured or Blue Cross-Blue Shield plans
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.
A long with paid holidays and paid vacations, health and
life insurance are the most widespread em ployee benefits in
medium and large firms. Health care benefits were provid
ed to 95 percent and life insurance to 96 percent o f all em
ployees, and the extent o f coverage was nearly identical
within each o f the three occupational groups.
Health care
Virtually all o f the participants in health care plans were
covered for the major categories o f 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 o f 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
em ployee groups.
The various categories o f medical care are covered under
1 o f 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.6 Conversely,
major medical plans cover many categories o f care and usual
ly have both deductible and coinsurance features.
In-hospital care was most com m only covered by an ar
rangement that offered basic coverage plus supplemental
major medical coverage. Certain categories o f 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 o f the benefit
arrangement used, most health plans limited the size o f
benefit payments.
Hospital coverage (table 32). The most costly component
o f health care is that provided by a hospital. Nearly one-half
o f all personal health care expenditures in the United States
are for hospital care.7 Virtually all o f the participants in health
plans analyzed in this study received coverage for hospital
exp en ses.8
Coverage for retired or laid-ojf workers (tables 29-31). One
o f the goals o f the Consolidated Omnibus Budget R econcili
ation Act o f 1985 ( c o b r a ) was to reduce gaps in health care
benefits for em ployees who are laid off, retired, or other
7
Ross H. Arnett ID, David R. McKusick, Sally T. Sonnefeld, and Carol S.
6
T he deductible is a sp ecified am ount o f m edical ex p en se that an in
sured person m ust pay b efore benefits w ill be paid by the plan. C oinsur
C o w ell, “ P rojections o f Health C are Spending to 1 9 9 0 ,” Health Care
Financing Review, Spring 1986, pp. 1-36.
ance is a provision where both the (insured) participant and the insurer share,
8A sm all number o f participants, w ho elected only dental care cover
in a sp ecified ratio, the health care exp en ses resulting from an illn ess or
injury. The coinsurance percentage is the share paid by the plan (insurer).
age, w ere not covered for hospital exp en ses.
27
For a majority o f em ployees, insurance covers all initial
hospital room expenses; how ever, a growing minority must
pay part o f the first-dollar costs. The percent o f 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 em ployees typically
must pay both an initial deductible and a percentage o f sub
sequent hospital room charges. O f the 64 percent o f health
insurance participants with basic hospital coverage, 14 per
cent must pay a specified amount per adm ission or, in som e
cases, pay for the first day o f confinement.
O f those who received basic hospital coverage, 96 per
cent w ere in plans that paid room and board expenses up
to the semiprivate rate, providing som e protection against
rising hospital charges. Seventy-five percent o f the par
ticipants in basic hospital plans had ceilings on the duration
o f coverage. A lm ost three-fifths had plans which specified
the maximum number o f days covered per confinement, most
com m only 120 or 365 days. M ost o f the remaining plans
limited the duration o f coverage by specifying a maximum
dollar amount per admission or per year.9 Additional cover
age was usually available under a major medical plan for
cases that exceeded these limitations.
paid by the basic plan; the other is comprehensive and stands
alone without basic plan coverage. C om prehensive major
medical policies have been embraced by em ployers seeking
to contain costs o f providing health care, because they may
eliminate first-dollar co v era g e.10*
With very few exceptions, major medical benefits are not
paid until the participants have paid a deductible. The pur
pose o f this deductible is to keep the premium cost down
and discourage unnecessary use o f m edical services. A
deductible amount o f $100 has been the m ost com m on since
the survey’s inception in 1979, applying to nearly half o f
all plan participants. H ow ever, 36 percent were required to
pay deductibles o f $150 or m ore in 1986, up from 29 per
cent in 1985, 21 percent in 1984, and 12 percent in 1983
(chart 1). Higher deductibles w ere less prevalent for bluecollar workers than for white-collar workers.
Once the worker meets the deductible requirement, the plan
pays a specified percentage (coinsurance) o f incurred ex
penses. Almost seven-eighths o f the participants were in plans
that paid 80 percent o f expenses, with the remaining 20 per
cent to be paid by the worker. For over four-fifths o f the
participants, how ever, the percentage paid by the plan in
creased to 100 percent after a specified level o f expenses was
incurred during a year. For exam ple, a plan might pay 80
percent o f the first $ 5 ,0 0 0 o f covered expanses and 100 per
cent thereafter, thus limiting the em ployee’s “ out-of-pocket”
cost to $ 1 ,0 0 0 (in addition to the deductible). Incidence o f
this protection has increased each year since 1979, when less
than one-half o f the major medical participants w ere co
v ered .11 In 1986, outlays for covered expenses w ere capped
at $ 1 ,2 0 0 or less per year for 3 out o f 4 participants with
‘ ‘stop-loss’ ’ coverage.
Benefits for 80 percent o f major medical participants were
subject to a ceiling on the amount payable by the plan, usually
a lifetim e maximum. In 1986, the m ost com m on limitation
was $1 m illion; $ 2 5 0 ,0 0 0 had been the m ost com m on limit
until 1 9 8 5 . T h e a v era g e life tim e m axim u m w as
$570,000—an increase o f 67 percent since 1982. The propor
tion o f participants in plans with unlimited payments also
increased in that period, from 14 to 20 percent.
Surgical coverage (table 33). Seventy-five percent o f health
plan participants had basic coverage for surgery in 1986.
Over four-fifths o f 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 m ost o f these plans paid 100
percent o f such charges, 12 percent o f the participants were
in plans that paid between 80 and 95 percent or imposed an
overall dollar limit on surgical payments. The remaining onefifth o f participants with basic surgical benefits were covered
by a schedule o f payments, listing the maximum amount pay
able for each operation. Charges in excess o f the scheduled
amount were usually covered by a major medical plan.
Major medical coverage (tables 34-36). Major medical
benefits, provided to 82 percent o f the health insurance par
ticipants, generally covered a w ide range o f medical serv
ices both in and out o f the hospital. Because more employees
are selecting health maintenance organizations (H M O ’s ) , the
proportion o f major medical participants has dropped from
92 percent in 1983. (H M O ’ s typically provide first-dollar or
basic coverage for most health services and, therefore, rarely
provide major m edical benefits.)
There are tw o types o f major medical plans: One supple
ments basic benefits either by covering expenses which ex
ceed basic benefit limitations or by covering expenses not
Dental coverage (tables 37-40). Seventy-one percent o f the
participants in health insurance plans received coverage for
dental expenses, a slight decline from 1985. Nearly all den
tal plans covered a w ide range o f services including exam i
nations, X -rays, and restorative procedures such as fillings,
periodontal care, and inlays. Plans covering orthodontic ex-
10 C om prehensive m ajor m edical plans can b e broken d ow n into strict
and m odified varieties. A ll ex p en ses covered are subject to the deductible
and coinsurance p rovision s under the strict version , w hereas the m odified
version m ight co v er hospital, or hospital and su rgical, exp en ses in full up
to a sp ecified dollar am ount w ithout the application o f a deductible. (A lso ,
se e footnote 9 .)
11 Trends in m ajor m edical b enefits are exam ined by D ou glas H edger
and Donald Schmitt in “ Trends in M ajor M edical C overage During a Period
o f R ising C o s ts ,” Monthly Labor Review , July 1983, pp. 11-16.
9 T his lim itation is com m on ly found in com prehensive m ajor m edical
plans. T h ese plans usually co v er hospital exp en ses in full up to a sp ecified
dollar am ount per confinem ent or per year (typically b etw een $ 1 ,0 0 0 and
$ 1 0 ,0 0 0 ) and 80 percent thereafter. For this study, the full-coverage por
tion w as treated as a basic benefit and the 80-percent portion as m ajor
m edical.
28
Chart 1. Trends in selected deductible amount: Percent of full-time participants
in major medical plans, medium and large firms, 1979-86
Percent
Percent
ered by an incentive schedule. Under this arrangement, the
percentage o f 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. H ow ever, som e plans required the participant to
pay a deductible (usually $50) only once while a member
o f 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 o f dental plan participants were en
rolled in plans that limited the amount o f payment each 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 lifetim e maximums, which have increased
since first tabulated in 1980. Lifetim e maximums o f $ 1 ,000
penses, at least for dependent children, covered 75 percent
o f em ployees with dental benefits in 1986.
Dental payments were most commonly based on a percent
age o f the usual, customary, and reasonable charge for a
procedure. The percentage covered by a plan generally de
pended on the type o f procedure performed. Less costly
procedures such as examinations and X-rays were usually
covered at 80 or 100 percent. F illings, surgery, and perio
dontal care w ere more likely to be covered at 80 percent.
M ore e x p e n siv e p ro ced u res—in la y s, c r o w n s, and
orthodontia—were often covered at 50 percent o f the usual,
customary, and reasonable charge.
About one-fifth o f the dental plan participants were offered
reimbursement based on a schedule o f cash allow ances. In
this type o f 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 o f schedule than restorative
procedures.
Three percent o f dental plan participants had services cov
29
medical expenses usually did not apply to outpatient mental
health care.1
2
or more for orthodontia applied to 50 percent of participants
in dental plans providing this benefit in 1986, up from 17
percent in 1980.
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.
Mental health coverage (table 41). Of the participants in plans
with mental health benefits, 61 percent had more restrictive
hospital coverage for mental illnesses 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
Chart 2.
12
A m ore detailed exam ination o f mental health care provisions in health
care plans is provided by A llan P. B lostin in a Monthly L abor Review arti
c le scheduled for publication in the sum m er o f 1987.
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
0
10
20
30
40
Percent
30
50
60
70
80
urns 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.
Cost containment (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.1
3
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.
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-
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.1 Thirteen percent of the health insurance par
4
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-
13
D esp ite recent em phasis on cost containm ent, there have been coun
tervailing im provements in health care coverage. Robert N . Frumkin tracked
developm ents in 2 0 9 plans over a 6-year period in ‘ ‘Health Insurance Trends
in C ost C ontrol and C o v e r a g e ,” Monthly Labor Review, Septem ber 1986,
p p .3 -8 .
31
14
HMO plans and plans provided through the m ore traditional health in
surers are com pared by A llan B lostin and W illiam M arclay in “ H M O ’s
and Other Health Plans: C overage and Em ployee Premiums, ’ ’ Monthly Labor
Review, June 1983, pp. 2 8 -3 3 .
Chart 3. Average employee contributions for health care benefits,
medium and large firms, 1982-86
Monthly contribution
(in dollars)
Monthly contribution
(in dollars)
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-eamings plans had
insurance equal to their annual earnings. Two in five had
coverage equal to twice annual earnings or more. Multipleof-eamings formulas tended to be higher when employee con
tributions were required, providing insurance at two or more
cent of employees. With a p p o , 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. Selfinsurance 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 all participants (92 percent) had the cost of a basic
32
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.1 Other
6
forms of life insurance—accidental death and dismember
ment, supplemental, and dependent coverage—were seldom
available after retirement.
times earnings for 3 in 5 participants.1 Professional5
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-eamings 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 eamings-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 1 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 em p lo y ee contribution rate w as com m only expressed as a fixed
m onthly rate for each $ 1 ,0 0 0 o f insurance. R eported rates varied w idely
from 9 cents to 9 9 cents per $ 1 ,0 0 0 , and, in som e plans, applied only to
am ounts o f b asic scheduled insurance in e x cess o f a free portion (for e x
am ple, the first $ 5 ,0 0 0 o f coverage). D ata w ere not available for one-third
o f contributory plan participants, how ever, because payroll deductions som e
times applied to an insurance policy covering life insurance and one or more
other benefits.
33
16
For on e-h alf o f the participants, coverage is reduced if they continue
w orking beyond retirem ent age. H ow ever, the reduction in the am ount of
coverage is usually not as severe as for retirees. For details, see M ichael A .
M iller, “ A ge-related R eductions in W orkers’ L ife In su ran ce,” Monthly
Labor Review, Septem ber 1985, pp. 2 9 -3 4 .
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
All
By basic
benefits only2
By major
medical only3
By basic
benefits and
major medical
Care not
provided1
All pa rticip ants
Hospital room and b o a rd .........................................
Hospitalization— miscellaneous se rv ic e s ............
Outpatient care4 ..........................................................
Extended care facility5 .............................................
Home health care5 ....................................................
S u rg ic a l.........................................................................
Physician visits— in h o s p ita l...................................
Physician visits— office ............................................
Diagnostic X-ray and laboratory6 ...........................
Prescription drugs— nonhospital............................
Private-duty nursing...................................................
Mental health c a r e ....................................................
D e n ta l............................................................................
Vision ............................................................................
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99
99
99
70
66
99
99
96
99
97
94
99
71
40
24
24
21
29
30
37
21
16
29
25
14
19
68
35
35
36
38
30
25
25
51
75
47
69
80
35
3
5
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99
99
99
74
71
99
99
99
99
97
97
99
75
39
25
25
20
31
33
37
21
18
29
25
15
18
71
33
38
39
40
31
27
28
58
78
51
69
81
38
4
6
100
100
100
100
100
100
100
100
100
100
100
100
100
99
99
24
24
20
28
31
37
21
18
30
38
39
42
31
27
27
36
36
37
11
11
36
56
22
1
1
1
31
31
1
1
3
2
40
40
41
11
11
38
27
5
24
3
1
45
-
0
1
1
1
30
34
1
1
4
1
3
6
1
29
60
Pro fession al and ad m in istrative
Hospital room and b o a rd .........................................
Hospitalization— miscellaneous se rv ic e s ............
Outpatient care4 ..........................................................
Extended care facility5 .............................................
Home health care5 ....................................................
S u rg ic a l.........................................................................
Physician visits— in h o s p ita l...................................
Physician visits— office ............................................
Diagnostic X-ray and laboratory6 ...........................
Prescription drugs— nonhospital............................
Private-duty nursing...................................................
Mental health c a r e ....................................................
D e n ta l.............................................................................
Vision .............................................................................
36
36
39
11
11
35
21
2
19
3
O
43
(7)
1
1
1
26
29
1
1
1
1
3
3
1
25
61
Te chn ica l and clerical
Hospital room and b o a rd .........................................
Hospitalization— miscellaneous se rv ic e s ............
Outpatient care4 ..........................................................
Extended care facility5 .............................................
Home health care5 ....................................................
S u rg ic a l.........................................................................
Physician visits— in h o s p ita l....................................
Physician visits— office ............................................
Diagnostic X-ray and laboratory6 ...........................
Prescription drugs— nonhospital............................
Private-duty nursing...................................................
Mental health c a r e ....................................................
D e n ta l............................................................................
Vision ............................................................................
100
99
69
69
99
99
98
99
95
96
99
72
41
S e e fo o t n o t e s a t e n d o f ta b le .
34
22
15
18
68
34
77
50
71
81
40
4
6
20
1
3
4
4
41
-
1
28
59
O
0
Table 28. Health care benefits: Percent of full-time participants by coverage for selected categories of medical care,
medium and large firms, 1986—-Continued
Care provided
Category of medical care
Total
All
By basic
benefits only2
By major
medical only3
By basic
benefits and
major medical
Care not
provided'
Production
Hospital room and b o a rd .........................................
Hospitalization— miscellaneous se rv ic e s ............
Outpatient care4 ..........................................................
Extended care facility5 .............................................
Home health care5 ....................................................
S u rg ic a l.........................................................................
Physician visits— in h o s p ita l...................................
Physician visits— o f fic e ............................................
Diagnostic X-ray and laboratory6 ...........................
Prescription drugs— nonhospital............................
Private-duty nursing...................................................
Mental health c a r e ....................................................
D e n ta l............................................................................
Vision ............................................................................
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
68
61
100
100
93
100
97
92
99
68
40
' Includes employees who elected to waive participation in their em
ployer’s medical program but who enrolled in dental an d /o r vision
plans.
2 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 covered expenses in one of several ways: (1) In
full with no limitation; (2) in full for a specified period of time, or until a
dollar limit was reached; or (3) a cash scheduled allowance benefit that
provided up to a dollar amount for a service performed by a hospital or
physician. For a specific category of care, a plan may require the par
ticipant to pay a specific amount each disability or year (deductible) or a
nominal charge each visit or procedure (copayment) before reimburse
ment begins or services are rendered.
3 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
23
23
21
28
27
37
22
13
28
26
12
21
66
36
32
33
35
30
23
22
45
73
42
69
79
31
3
4
44
44
44
10
10
41
33
7
29
3
1
47
-
0
O
(7)
0
32
39
O
0
7
0
3
8
1
32
60
ized by deductible and coinsurance provisions that are applied across
categories of care.
4 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.).
5 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 hospice care that
are shown in table 43.
6 Charges incurred in the outpatient department of a hospital and
outside of the hospital.
7 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
35
Table 29. Health care benefits: Percent of full-time
participants by provision for coverage after retirement,
medium and large firms, 1986
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
Provision
T o ta l.................................................
100
100
100
100
With retiree c o v e ra g e '..........................
76
79
78
73
Without retiree c o v e ra g e .....................
21
18
19
25
Provision not d e term in ab le.................
2
2
1
2
Retiree policy not estab lish ed ...........
1
1
1
0
Dental plan only3 ....................................
1
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.
Som e 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.
2 Less than 0.5 percent.
3 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
All participants
Professional and
administrative participants
Technical and clerical
participants
Production participants
Benefit provision
Retiree under
65
Retiree 65
and over
Retiree under
65
Retiree 65
and over
Retiree under
65
Retiree 65
and over
Retiree under
65
Retiree 65
and over
T o ta l.................................................
100
100
100
100
100
100
100
100
With retiree c o v e ra g e '..........................
99
90
99
94
99
92
99
86
78
18
1
1
71
16
1
1
83
14
1
1
76
16
1
2
81
15
2
1
77
13
1
1
74
24
1
1
65
18
1
1
Full cost ..........................................
Partial c o s t......................................
No c o s t............................................
Not determinable .........................
15
30
51
2
14
22
52
2
14
32
51
3
14
22
55
3
13
33
50
3
11
23
55
3
18
28
51
2
15
21
48
2
Without retiree coverage4 ....................
1
10
1
6
1
8
1
14
E ffe c t o f re tire m e n t on
b e n e fit level1
2
No change in coverage3 ............
Reduced coverage ......................
Increased c o v e ra g e .....................
Not determinable ..........................
R e tiree sh are o f co st
3 For retirees eligible for Medicare, benefits may be calculated and re
duced by the extent to which covered expenses are reimbursed by the
Federal program.
4 Retiree coverage was provided to one age group but not the other.
1 This tabulation shows covered workers as a percent of all partici
pants in plans with employer- or employee-financed group insurance for
retirees under age 65, those 65 and over, or both groups. It covers plans
in which insurance was continued for longer than 1 month after retire
ment. It excludes plans which provide only the retiree’s share of pre
mium for medical insurance under Medicare (Part B).
2 If dental insurance was provided under a separate plan, it was not
used in comparing benefit levels.
NOTE: Because of rounding, sums of individual items may not equal
totals.
36
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 par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Benefit provision
T o ta l.................................................
100
100
100
100
With coverage continuation during
layoff1 .....................................................
52
47
46
59
Initial cost for employees on
layoff2 paid by:
Employee o n ly ...........................
Employer and e m p lo y e e ........
Employer o n ly ............................
Not determinable .....................
15
7
27
3
14
8
23
3
15
8
20
2
17
6
33
3
10
5
8
4
11
5
(*)
3
0
3
9
5
1
4
(3
)
5
1
3
3
4
(3)
5
1
2
2
2
(*)
3
1
2
2
4
O
Without coverage continuation
during la y o ff.........................................
22
23
23
22
No policy established ...........................
24
29
30
18
Layoff policy not de term inab le..........
1
2
1
1
Duration of employer-financed
coverage:
1 -2 m o n th s................................. '
3 m o n th s .....................................
4-5 m on th s.................................
6 m o n th s ....................................
7-11 months ..............................
1 year ..........................................
Over 1 y e a r ................................
Varies by se rv ic e ......................
Until rehire .................................
Not determinable .....................
0
3
6
2
3
5
4
1 Benefits may be financed by employer, employer and employee
jointly, or employee only.
2 Administrative costs were excluded from the tabulations.
3 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal to
tals.
37
i
Table 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 confinement1
Type of payment
Total
Under 120
days
All
120 days
121 - 364
days
365 days
36 6 days
or more
Subject to
other
limits1
2
Unlimited
All particip ants
Total ........................................................
Daily dollar a llo w a n c e ..................................
Less than $ 5 0 ..........................................
$ 5 0 -$ 9 9 ......................................................
$100-$ 1 4 9 ..................................................
$150-$ 1 9 9 ..................................................
$200 or more ...........................................
Semiprivate r a t e .............................................
100
58
4
(3)
7
4
2
1
2
2
(3)
54
100
1
(3)
(3)
-
(3)
5
(3)
16
(3)
4
(3)
26
5
17
3
3
51
(3)
(3)
1
17
_
24
1
1
1
1
2
1
O
96
27
(3)
-
(3)
(3)
4
16
1
25
_
3
(3)
0
(3)
16
25
3
20
28
_
_
_
3
20
28
2
17
30
-
(3)
-
Pro fession al and ad m in istrative
T o t a l.........................................................
Daily dollar a llo w a n c e ..................................
Less than $ 5 0 ..........................................
$ 5 0 -$ 9 9 ......................................................
$100-$ 1 4 9 ..................................................
$ 1 5 0 -$ 1 9 9 ..................................................
$200 or more ...........................................
Semiprivate r a t e .............................................
2
2
(3)
(3)
(3)
(3)
1
(3)
(3)
1
1
1
1
(3)
98
(3)
49
100
1
53
(3)
-
4
(3)
17
4
1
(3)
-
(3)
-
20
-
(3)
1
3
(3)
23
3
24
(*)
Techn ical and clerical
Total ........................................................
Daily dollar a llo w a n c e ..................................
Less than $ 5 0 ..........................................
$ 5 0 -$ 9 9 ......................................................
$100-$ 149 ..................................................
$1 50-$ 1 9 9 ..................................................
$200 or m o r e ...........................................
Semiprivate r a t e .............................................
2
1
1
1
1
1
(3)
98
(3)
51
(3)
(3)
(3)
(3)
3
Total .........................................................
100
64
11
Daily dollar allowance ..................................
Less than $ 5 0 ..........................................
$ 5 0 -$ 9 9 ......................................................
$100-$ 1 4 9 ..................................................
$ 1 5 0 -$ 1 9 9 ..................................................
$200 or more ...........................................
Semiprivate r a t e .............................................
7
1
1
3
2
(3)
(3)
(3)
(3)
(3)
(3)
20
1
(3)
-
14
(3
)
(3)
1
(3)
3
(3)
23
6
2
4
30
(3)
17
_
30
15
21
(3)
-
Pro du ctio n
(3)
93
4
6
(3)
(3)
1
3
2
(3)
58
1
2
1
(3)
7
(3)
14
1
-
1
-
1
(3)
5
(3)
29
-
1
_
-
1
1
-
4
(3)
(3)
(3)
14
_
21
specified time period.
3 Less than 0.5 percent.
1 In some plans, the limit on days of coverage varied by length of
participation in the plan; in these cases, the participant was assumed to
have been in the plan for 15 years.
2 Includes workers in plans where the basic benefit is limited by a
maximum dollar amount per confinement or per year, and other plans
where the limit on the number of days of coverage applies within a
(3)
-
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
38
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
Maximum allowance
T o ta l.................................................
Profes
Techni
sional
cal and Produc
and
All par
adminis clerical tion par
ticipants
partici ticipants
trative
pants
partici
pants
100
100
100
Usual, customary, and reasonable
c h a r g e .....................................................
With overall dollar limit on basic
surgical pa ym ents.........................
Without overall dollar limit on
basic surgical p a y m e n ts .............
Plan pays:
80 p e rc e n t............................
85 p e rc e n t............................
90 p e rc e n t............................
95 p e rc e n t............................
100 percent3 .......................
(’)
1
4
72
o
0
1
4
77
1
6
76
Maximum scheduled a llo w a n c e ........
18
11
11
Most expensive surgical
procedure:
$2 01-$300 ..................................
$3 01-$400 ..................................
$4 01-$500 ..................................
$5 01-$750 ..................................
$ 7 5 1 -$ 1 ,0 0 0 ...............................
$1,001 -$ 1 ,2 5 0 ............................
$ 1 ,2 5 1 -$ 1 ,5 0 0 ............................
$ 1 ,5 0 1 -$ 2 ,0 0 0 ............................
$ 2 ,0 0 1 -$ 2 ,5 0 0 ............................
$ 2 ,5 0 1 -$ 3 ,0 0 0 ............................
More than $3,000 ....................
Not determinable2 ....................
Appendectomy:
$ 1 0 1 -$ 1 5 0 ..................................
$151-$ 200 ..................................
$201-$ 300 ..................................
$3 01-$400 ..................................
Maximum allowance
89
89
2
3
2
3
80
86
87
72
3
4
4
Appendectomy:— Continued
$4 01-$500 ..................................
$5 01-$750 ..................................
More than $ 7 5 0 ........................
Not determinable2 ....................
75
2
0
2
2
1
1
2
5
1
1
1
0
o
o
1
1
3
1
o
1
1
3
3
2
1
3
6
1
2
2
(’)
1
2
2
0
o
1
0
0
Hysterectomy:
$200 or le s s ...............................
..................................
$201-$300
$3 01-$400 ..................................
$4 01-$500 ..................................
$501-$750 ..................................
$ 7 5 1 -$ 1 ,0 0 0 ..............................
$ 1 ,0 0 1 -$ 1 ,2 5 0 ............................
More than $1,250 ....................
Not determinable2 ....................
Normal delivery:
$100 or le s s ...............................
$ 1 0 1 -$ 1 5 0 .....................
$1 51-$200 ..................................
$201-$ 250 ..................................
$2 51-$300 ..................................
$3 01-$400 .................
$4 01-$500 ..................................
$5 01-$750 ...............................
More than $750
Not determinable2 ....................
0
0
1
2
3
1
2
3
2
2
4
8
' Less than 0.5 percent.
2 Information necessary to classify was not provided.
3 Includes full service benefits provided by health maintenance orga
nizations.
1
4
1
1
1
1
1
1
1
4
5
4
2
1
3
4
1
2
0
0
1
3
1
1
2
5
1
1
1
2
3
2
1
2
6
7
6
2
O
0
O
1
1
2
2
2
2
1
1
2
2
2
2
2
1
(’)
3
3
5
5
5
1
1
(1
)
1
1
1
(’)
1
1
1
25
1
1
1
0
1
2
3
5
3
67
0
0
Tonsillectomy:
.................................
$50 or le s s
$ 5 1 -$ 1 0 0 ....................................
$101-$150 ..................................
$151-$200 ..................................
$2 01-$300 ..................................
More than $ 3 0 0 ........................
Not determinable2 ....................
0
0
1
1
2
Produc
tion par
ticipants
100
82
1
Profes
sional
Techni
and
cal and
All par
adminis clerical
ticipants
trative
partici
partici
pants
pants
0
O
2
3
3
3
3
1
O
0
0
2
1
1
1
1
5
3
1
2
o
2
1
3
1
1
2
1
2
2
1
1
(i)
2
1
2
2
6
5
1
2
1
1
1
2
0
o
2
0
NOTE: Because of rounding, sums of individual items may not equal
totals.
39
Table 34. Health care benefits: Percent of full-time participants in plans with major medical coverage by amount of deductible
and applicable benefit period,1 medium and large firms, 1986
Professional and
administrative participants
All participants
Benefit period
Amount of deductible2
Total
1-year
period
Other
period
Technical and clerical
participants
Benefit period
Benefit period
Total
1-year
period
Other
period
Production participants
Total
1-year
period
Other
period
Benefit period
Total
1 -year
period
Other
period
Total ........................................................
100
96
4
100
97
3
100
97
3
100
94
6
Deductible specified ......................................
100
96
4
100
97
3
100
97
3
100
94
6
Based on earnings3 ................................
4
4
4
4
6
6
3
3
96
(4)
2
13
91
1
13
0
O
3
46
1
11
3
43
1
11
(4)
15
2
(4)
14
2
0
(4)
2
1
Flat dollar a m o u n t..................................
Less than $ 2 5 ...................................
$ 2 5 .........................................................
$ 5 0 .........................................................
$ 5 1 -$ 7 4 ................................................
$ 7 5 .........................................................
$ 7 6 -$ 9 9 ................................................
$100 .....................................................
$125 .....................................................
$150 .....................................................
$ 1 5 1 -$ 1 9 9 ...........................................
$200 .....................................................
$ 2 0 1 -$ 2 4 9 ...........................................
$250 .....................................................
$ 2 5 1 -$ 2 9 9 ...........................................
$300 .....................................................
Over $ 3 0 0 ...........................................
No d e d u c tib le ..................................................
-
96
91
4
O
1
10
(4)
1
10
(4)
1
(4)
3
(4)
2
O
44
1
15
O
42
1
15
0
15
(4)
14
0
O
0
-
95
92
0
O
0
1
9
0
(4)
2
0
1
-
2
2
0
41
1
17
1
13
1
3
<
4)
2
1
1
8
(4)
2
(4)
1
(4)
40
1
20
(4)
39
1
20
(4)
15
1
3
0
14
1
3
O
(4)
2
2
0
-
-
3
2
1
(4)
(4)
2
1
-
-
(4)
(4)
2
(4)
(4)
-
-
2
2
0
-
3
O
(4)
0
(4)
1
(4)
(4)
(4)
-
2
1
(4)
-
6
(4)
1
(4)
0
3
0
1
-
3 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.
4 Less than 0.5 percent.
1 The deductible is the amount of covered expenses that an individual
must pay before any charges are paid by the insurance plan. The benefit
period is the length of time within which a single deductible requirement
applies. Some plans require that expenses equal to the deductible be in
curred within a shorter period, such as 90 days.
2 Amount of deductible described is for each insured person. However,
many plans contain a maximum family deductible. In some plans, the indi
vidual and family deductibles are identical.
(4)
-
-
91
(4)
O
7
1
9
0
43
1
17
1
14
1
3
(4)
2
1
(4)
94
O
3
0
0
3
O
-
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no em ployees in this category.
40
Table 35. Health care benefits: Percent of full-time participants in plans with major medical coverage by coinsurance
provisions,1 medium and large firms, 1986
Professional and
administrative
participants
All participants
Final coinsurance provision
Total ........................................................
Final coinsurance changes to 100
p e rc e n t..........................................................
When covered expenses2 reach:
$ 1 -$ 2 ,0 0 0 ............................................
$2,001-$4,000 ...................................
$4,001-$6,000 ...................................
$6,001-$8,000 ...................................
$8,001-$10,000 .................................
More than $10,000 ..........................
Final coinsurance changes to other than
100 p e rc e n t..................................................
Coinsurance u n c h a n g e d ..............................
Initial coinsurance
Initial coinsurance
To
tal
Production participants
Initial coinsurance
Initial coinsurance
To
To
To
80
85
90
80
80
90
85
85
90
80
85
90
Oth tal
Oth tal
Oth tal
Oth
per per per
per per per
per per per
per per per
er
er
er
er
cent cent cent
cent cent cent
cent cent cent
cent cent cent
100
86
5
6
3 100
85
5
7
2 100
84
5
8
2 100
88
5
5
3
81
69
5
6
2
86
72
5
7
1
88
73
5
8
1
74
64
5
4
2
10
22
30
6
9
9
21
24
4
7
3
10
26
33
7
7
5
9
25
25
5
5
3
9
24
31
8
23
26
5
9
2
10
19
28
5
9
3
10
18
23
3
4
(3)
19
(3)
17
(3)
l3)
(3)
(3)
(3)
(3)
(3)
1
2
1
2
1
3
1
-
(3)
-
(3)
(3)
(3)
(3)
(3)
(3)
1
(3)
13
1 Coinsurance is the percent of covered expenses paid by the
plan. The balance is paid by the employee. If coinsurance provi
sions varied by the category of medical care, the provision applying
to hospital room and board charges was tabulated.
2 Amount of covered expenses described is for each insured per
son. In rare cases, the limits for the individual and family are identi
Technical and clerical
participants
12
(3)
(3)
(3)
(3)
0
(3)
3
1
1
2
-
-
-
(3)
4
1
(3)
(3)
(3)
1
7
-
12
-
4
(3)
(3)
1
12
(3)
11
ft
3
f t
(3)
(3)
(3)
(3)
2
1
3
1
1
(3)
(3)
(3)
0
(3)
(3)
-
ft
-
(3)
1
26
ft ft
l3
)
0
7
ft
2
(3)
-
(3
)
24
0
1
0
3
1
2
O
1
(3)
(3)
-
0
-
1
1
cal. In nearly all instances, covered expenses must reach specified
amounts within a calendar year; 2 year periods are infrequent.
3 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not
equal totals. Dash indicates no employees in this category.
41
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
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Type and dollar amount of
maximum1
T o ta l.................................................
100
100
100
100
With maximum limits2 ............................
80
76
74
86
68
66
66
70
(3)
1
-
-
Lifetime maximum o n ly ..................
Less than $25,000 ...................
$25,000 .......................................
$2 5,001-$49,999 ......................
$50,000 .......................................
$5 0,001-$99,999 ......................
$100,000 .....................................
$1 00,0 01-$249 ,999 ..................
$250,000 .....................................
$2 50,0 01-$499 ,999 ..................
$500,000 .....................................
$5 00,0 01-$999 ,999 ..................
$1,000,000 .................................
More than $1,000,000 ............
(3)
3
(3)
(3)
1
(3)
(3)
1
(3)
2
5
(3)
2
3
16
5
13
2
22
1
(3)
1
2
15
5
14
2
25
1
(3)
1
3
13
5
14
2
26
1
(3)
3
4
18
6
12
2
18
1
Annual or disability maximum
only ..................................................
7
7
5
8
Both lifetime and annual or
disability m axim um s....................
5
3
2
9
Without maximum limits ......................
20
24
26
14
1 Maximum described is for each insured person.
2 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.
3 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 37. Health care benefits: Percent of full-time participants in plans with dental benefits by extent of coverage for
selected procedures, medium and large firms, 1986
Type of dental procedure
Total
Sched
Incen Subuled
ject to
tive
cash
sched copay
allow
ment1
2
ule1
ance
Percent of usual, customary, and reasonable charge
Total
Less
than
50
50
60
61-74
75
80
85
1003
Not
cov
ered
57
44
9
10
9
4
4
3
(4)
(4
)
1
1
2
3
2
25
1
3
3
3
3
2
2
54
45
8
10
9
3
3
3
(4)
(4)
1
1
2
2
1
24
1
3
3
3
3
2
2
54
44
8
9
8
3
3
2
0
2
11
10
10
10
10
10
61
43
9
11
10
5
5
2
0
0
(4)
2
1
4
3
24
90
Not
deter
min
able
All particip ants
E xam inations.........................
Dental X -ra y s .........................
Fillings .....................................
Dental s u rg ery.......................
Periodontal c a r e ....................
In la y s ........................................
Crowns ....................................
Orthodontia5 ...........................
100
100
100
100
100
100
100
100
17
17
27
25
25
27
27
15
100
100
100
100
100
100
100
100
18
18
29
26
26
29
29
17
100
100
100
100
100
100
100
100
16
16
27
26
25
28
28
17
100
100
100
100
100
100
100
100
17
17
26
24
25
26
26
14
3
3
3
2
2
1
1
-
0
(4)
1
1
1
1
2
2
80
80
69
70
69
68
68
58
0
0
1
2
2
1
2
2
79
79
68
70
69
68
68
56
1
2
2
1
2
2
81
81
69
70
69
69
69
53
0
0
(4)
1
1
1
1
1
80
80
70
71
70
68
68
62
_
1
1
4
5
8
34
34
47
-
0
_
(4)
(4)
1
5
5
3
2
2
3
3
3
3
3
1
1
2
5
4
4
2
2
1
18
21
38
37
35
12
12
3
0
1
3
3
3
3
4
4
1
1
2
3
2
2
2
2
1
21
24
44
43
40
14
14
2
0
1
2
2
2
2
4
4
1
1
1
4
3
3
1
1
2
23
27
44
44
41
14
14
1
0
2
2
3
3
3
2
2
2
2
3
6
6
6
3
3
12
15
30
30
28
10
10
5
0
1
7
6
6
6
6
6
4
4
4
4
2
2
-
(4)
_
(4)
(4)
(4)
0
(4)
P rofessional and
ad m in istrative
E xam inations.........................
Dental X -ra y s .........................
F illin g s ......................................
Dental s u rg ery.......................
Periodontal c a r e ....................
In la y s ........................................
Crowns ....................................
Orthodontia5 ...........................
2
2
2
1
1
O
n
-
_
1
1
4
6
8
36
36
46
-
(4)
_
-
0
(4)
1
5
5
3
2
3
3
3
1
1
-
0
_
-
(4)
(4)
(4)
0
(4)
Techn ical and clerical
E xam inatio ns.........................
Dental X -ra y s .........................
F illin g s .......................... ..........
Dental s u rg ery.......................
Periodontal c a r e ....................
In la y s ........................................
C ro w n s ....................................
Orthodontia5 ............................
2
2
2
2
2
O
0
-
0
0
_
1
1
4
6
8
38
38
44
-
(4)
_
-
(4)
0
1
5
5
3
2
3
3
3
1
1
-
0
1
1
1
3
2
1
27
_
-
(4)
(4)
(4)
(4)
(4)
P roduction
E xam inations.........................
Dental X -ra y s .........................
F illin g s .....................................
Dental su rg e ry .......................
Periodontal c a r e ....................
In la y s ........................................
C ro w n s ....................................
Orthodontia5 ............................
3
3
3
3
3
1
2
_
1
1
5
5
7
30
30
50
-
-
1 Reimbursement arrangement in which the percentage of dental ex
penses paid by the plan increases if regular dental appointments are
scheduled.
2 Participant pays a specific amount per procedure and plan pays all
remaining expenses.
3 Includes plans which paid the full cost.
_
-
(4)
(4)
0
5
5
2
0
5
6
5
5
3
3
“
(4)
_
-
-
4 Less than 0.5 percent.
5 Participants were included as having coverage for orthodontia in
cases where benefits were limited to children.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
43
Table 38. Health care benefits: Percent of full-time
participants in plans with dental benefits by deductible
provision,1 medium and large firms, 1986
Type of deductible2
Table 39. Health care benefits: Percent of full-time
participants in plans with dental benefits by yearly maximum
amount of insurance,1 medium and large firms, 1986
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion p a r
ticipants
trative
partici ticipants
partici
pants
pants
Dollar amount
T o ta l.................................................
100
100
100
100
T o ta l.................................................
Subject to basic dental deductible3 ..
63
65
70
59
Yearly maximum specified2 .................
Less than $500 ...............................
$500 ....................................................
$501-$ 749 .........................................
$750 ....................................................
$751-$ 999 .........................................
$1,000 .................................................
$1 ,001-$1,499 ...................................
$ 1 ,5 0 0 .................................................
$1 ,501-$1,999 ...................................
$ 2 ,0 0 0 .................................................
$2,001-$2,999 ...................................
$ 3 ,0 0 0 .................................................
Greater than $3,000 ......................
100
100
100
100
Lifetime deductible o n ly ................
$ 5 0 ................................................
Over $ 5 0 .....................................
Both yearly and lifetime
deductibles.....................................
53
1
23
1
25
1
2
56
2
20
1
28
1
3
51
1
22
1
25
1
1
0
0
0
0
5
4
0
0
6
6
6
5
5
0
6
8
4
3
1
85
90
4
(3)
2
(3)
19
1
42
4
10
1
3
(3)
19
1
40
4
13
1
3
(3)
20
1
41
3
12
(3)
5
1
19
2
44
5
8
1
3
f)
(3)
1
0
(3)
(3)
(3)
(3)
2
1
No yearly m a x im u m ..............................
53
1
22
1
26
1
2
86
(3)
2
12
14
15
10
Maximum provision not determinable
Yearly deductible o n ly ...................
Linder $ 2 5 ..................................
$ 2 5 ................................................
$26-$49 .......................................
$ 5 0 ................................................
$51-$99 .......................................
$ 1 0 0 ..............................................
Over $ 1 0 0 ..................................
88
0
(3)
(3)
(3)
-
3
2
4
Subject to major medical
de du ctib le.............................................
4
5
5
4
No deductible .........................................
32
30
25
38
1 Includes all covered dental procedures except orthodontia. Amount
of maximum specified is for each insured person.
2 If separate yearly maximums applied to different procedures, the sum
of the maximums was tabulated.
3 Less than 0.5 percent.
1 Excludes separate deductibles for orthodontic procedures.
2 Amount of deductible described is for each insured person. In some
plans, the individual and family deductibles are identical.
3 Deductibles may not apply to all covered dental procedures. If sepa
rate deductibles applied to different procedures, the sum of the deductible
amounts was tabulated.
4 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no em ployees in this category.
NOTE: Because of rounding, sums of individual items may not equal to
tals.
1
0
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
Dollar amount
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
100
100
100
T o ta l.................................................
100
Lifetime maximum specified ..............
Less than $500 ...............................
$500 ....................................................
$5 01-$749 .........................................
$750 ....................................................
$7 51-$999 .........................................
$1,000 .................................................
$1,001-$1,499 ..................................
$1,500 .................................................
Greater than $1,500 ......................
94
94
94
94
(1
)
9
6
19
10
39
4
5
2
0
0
9
5
21
6
37
7
5
2
8
4
21
5
40
5
8
3
0
10
8
17
14
39
2
2
1
No lifetime m axim um ............................
6
6
6
6
1 Less than 0.5 percent.
NOTE: B e c a u se of rounding, su m s of individual item s m ay not e qual to
tals.
44
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
Professional and adminis
trative participants
All participants
Production
participants
Technical and clerical
participants
Coverage limitation
Hospital
care
Outpatient
care
Hospital
care
Outpatient
care
Hospital
care
Outpatient
care
Hospital
care
Outpatient
care
T o t a l..................................................
100
100
100
100
100
100
100
100
With c o v e ra g e ..........................................
99
97
99
99
98
98
99
96
Covered the same as other
illn ess es...........................................
37
6
37
7
34
5
39
5
Subject to separate limitations’ ....
Limit on days or v is its ..............
Limit on d o lla rs ..........................
Major medical coinsurance
limited to 50 p e rc e n t.............
No major medical ceiling on
out-of-pocket e x p e n s e s ........
Other limitations2 .......................
61
38
26
91
33
68
62
36
26
92
31
66
64
38
28
93
34
66
60
40
26
90
34
70
2
48
2
46
2
51
3
47
13
7
49
22
16
8
53
22
14
9
55
22
10
6
44
22
Not c o v e re d ..............................................
1
3
1
1
2
2
1
4
1 The total is less than the sum of the individual items because
for outpatient care varied during the treatment period,
many plans had more than one type of limitation on mental health cov
erage.
NOTE: Because of rounding, sums of individual items may not equal
2 Includes plans requiring copayments or a separate deductible for
totals,
inpatient or outpatient care, and plans where 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
Benefit
Table 43. Health care benefits: Percent of full-time
participants by coverage for selected special benefits,
medium and large firms, 1986
Profes
sional
Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Benefit item
Profes
sional
Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
T o ta l.................................................
100
100
100
100
T o ta l.................................................
100
100
100
100
Eye examinations o n ly .........................
19
26
26
13
Covered by at least one of the
listed special benefits’ ......................
89
93
92
85
Examinations and e y e g la s s e s ...........
7
6
7
7
Second surgical op inio n...............
Alcoholism tre a tm e n t.....................
Drug abuse treatm e n t....................
Hearing care2 ...................................
Hospice c a r e ....................................
Physical exam ination s...................
57
70
66
20
31
18
62
74
70
18
36
22
62
73
69
17
32
22
51
65
63
22
28
14
Not covered by any one of the
listed special b e n e fits .......................
11
7
8
15
Examinations, eyeglasses, and
contact le n s e s ....................................
64
59
56
71
Orthoptics' o n ly ......................................
3
5
3
3
Other com binations...............................
7
6
8
6
1 Exercises to improve the function of the eye muscles.
NOTE:
tals.
Because of rounding, sums of individual items may not eaual to
1 The total is less than the sum of the individual items because many
participants receive more than one benefit.
2 Plan provided, as a minimum, coverage for hearing examination ex
penses.
45
Table 44. Health care benefits: Percent of full-time
participants by coverage with selected cost containment
features, medium and large firms, 1986
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Cost containment feature
T o ta l.................................................
100
100
100
100
Covered by at least one of the
listed cost containment features1 ..
68
70
70
65
35
40
40
28
28
31
33
23
7
7
7
6
10
13
13
8
9
47
10
51
9
52
7
43
16
18
15
16
12
15
12
11
2
3
2
1
Not covered by any of the listed
cost containment fe a tu re s ..............
32
29
29
34
Dental plan only2 ....................................
1
1
1
(3)
Incentive to seek second
surgical opinion ............................
Higher coinsurance, or lower or
no deductible for outpatient
surgery............................................
Higher payment for generic
prescription d r u g s .......................
No or limited reimbursement for
nonemergency weekend
admissions to hosp ital................
Separate deductible for hospital
a d m is sio n.......................................
Urging prehospitalization testing .
Preadmission certification
requ irem ent....................................
Higher payment for delivery at
birthing c e n te r...............................
Incentive to audit hospital
s ta te m e n t.......................................
1 The total is less than the sum of the individual items because many
workers participate in plans with more than one feature.
2 Participants who elected dental coverage only were not included in
this tabulation.
3 Less than 0.5 percent.
46
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
Professional and
administrative participants
All participants
Technical and clerical
participants
Production participants
Type and amount of contribution'
Single
coverage
Family
coverage2
Single
coverage
Family
coverage2
Single
coverage
Family
coverage2
Single
coverage
Family
coverage2
T o ta l................................................
100
100
100
100
100
100
100
100
Flat monthly a m o u n t.............................
Less than $5.00 ..............................
$ 5 .0 0 -$ 9 .9 9 .......................................
$ 1 0 .0 0 -$ 1 4 .9 9 ..................................
$ 1 5 .0 0 -$ 1 9 .9 9 ..................................
$ 2 0 .0 0 -$ 2 9 .9 9 ..................................
$ 3 0 .0 0 -$ 3 9 .9 9 ..................................
$ 4 0 .0 0 -$ 4 9 .9 9 ..................................
$50.00-$59.99 ..................................
$ 6 0 .0 0 -$ 6 9 .9 9 ..................................
$ 7 0 .0 0 -$ 7 9 .9 9 ..................................
$ 8 0 .0 0 -$ 8 9 .9 9 ..................................
$ 9 0 .0 0 -$ 9 9 .9 9 ..................................
$100.00 or g r e a te r .........................
Composite rate4 ...............................
89
19
20
15
11
13
2
1
89
4
7
7
7
11
11
10
8
6
5
2
2
5
4
89
18
18
17
12
16
3
1
89
3
6
7
8
11
12
11
8
5
5
3
2
5
3
87
16
16
16
14
16
3
2
88
3
5
5
6
10
12
13
9
6
5
4
2
6
3
89
21
26
13
8
10
2
1
89
5
9
9
6
12
10
7
6
6
4
1
2
4
6
Amount varies by e a rn in g s .................
0
ft
-
6
(3)
-
(3)
(3)
-
4
(3)
1
-
4
-
(3)
-
(3)
(3)
8
-
-
Amount varies by employee5 .............
5
4
5
4
9
6
3
2
Contribution not d e term in ab le...........
6
8
5
7
4
6
8
9
1 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.
3 Less than 0.5 percent.
4 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.
5 Amount varies by options selected under a cafeteria plan or balance
of employer-sponsored reimbursement account.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
Table 46. Health care benefits: Percent of full-time
participants by length-of-service requirements for participa
tion,1 medium and large firms, 1986
Profes
Techni
sional
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Length-of-service requirement
T o ta l.................................................
100
100
100
100
With service requirement ....................
1 month .............................................
2 m o n th s ...........................................
3 m o n th s ...........................................
4-5 m o n th s ........................................
6 months ...........................................
7-11 m on th s.....................................
1 y e a r ..................................................
49
15
8
17
3
5
1
39
15
5
13
1
5
1
44
14
5
17
1
6
ft
ft
ft
ft
58
16
11
19
5
5
1
ft
Without service requirem ent..............
50
60
55
41
Service requirement not
d e term in ab le........................................
1
1
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 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.
2 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal to
tals.
47
Table 47. Health care benefits: Percent of full-time participants by funding medium for selected types of coverage,
medium and large firms, 1986
Basic
medical1
Major
medical2
Basic
surgical1
Dental
Basic
hospital1
Basic
surgical1
T o t a l...............................................
100
100
100
100
100
100
100
100
100
100
Provided co v e ra g e ...............................
Blue Cross-Blue S h ie ld ................
Commercial c a rrie r.......................
Independent health p la n s ...........
Self-insured3 .............................
Health maintenance
organizations4 .......................
Preferred provider
organization6 .........................
Other7 .........................................
Combined ........................................
64
18
14
32
18
75
12
21
41
27
49
11
10
27
13
82
9
33
39
37
71
4
34
32
28
61
17
12
31
15
72
9
19
43
26
43
8
8
26
9
82
9
32
40
39
72
4
34
34
30
13
13
13
(6)
2
15
16
15
(5)
-
1
1
2
1
(5)
1
1
Not provided c o v e ra g e ......................
36
25
51
18
29
T o t a l...............................................
100
100
100
100
Provided co v e ra g e ...............................
Blue Cross-Blue S h ie ld ................
Commercial c a rrie r.......................
Independent health p la n s ...........
Self-insured3 .............................
Health maintenance
organizations4 .......................
Preferred provider
organization8 ..........................
Other7 .........................................
Combined ........................................
62
18
13
30
14
72
10
19
41
25
42
9
8
25
8
83
9
34
38
36
15
15
15
(5)
(5
)
2
(5)
1
1
(5)
1
(5)
1
1
1
Not provided c o v e r a g e ......................
38
28
58
17
25
33
22
45
19
32
All participants
1
-
1
-
1
1
1
1
1
-
2
1
1
(5)
1
1
39
28
57
18
28
100
100
100
100
100
67
19
16
33
22
78
15
23
39
29
55
14
13
28
17
81
9
33
39
38
68
5
33
30
26
2
10
10
10
(5)
1
(5)
-
-
0
-
Production
2
-
-
1
-
1
-
1
-
2
(5)
ministrative Services Only-Minimum Premium Plan (ASO-M PP) con
tracts and plans in which a commercial carrier provides protection only
against extraordinary claims.
4 Includes federally qualified (those meeting standards of the Health
Maintenance Organization Act of 1973, as am ended) and other H M O ’s
delivering comprehensive health care on a prepayment rather than feefor-service basis. All H M O ’s are included here regardless of sponsor
ship, e.g., Blue Cross-Blue Shield or a commercial insurance carrier.
5 Less than 0.5 percent.
6 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 CrossBlue Shield or a commercial insurance carrier.
7 Dental benefits plans sponsored by local dental societies are in
this category.
1 A plan provision was classified as a basic benefit when it covered
the initial expenses incurred for a specific medical service. Under these
provisions, a plan paid covered expenses in one of several ways: 1) in
full with no limitation; 2) in full for a specified period of time, or until a
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.
2 Major medical benefits cover many categories of expenses, some
of which are not covered under basic benefits, and others for which
basic coverage limits have been exhausted. These benefits are charac
terized by deductible and coinsurance provisions that are applied
across categories of care.
3 Includes plans that are financed by general revenues of a com
pany on a pay-as-you-go basis, plans financed through contributions to
a trust fund established to pay benefits, and plans operating their own
facilities if at least partially financed by employer contributions.
In
cludes plans that are administered by a commercial carrier through Ad
1
75
3
36
35
30
2
-
2
2
100
-
Professional and administrative
-
Dental
Technical and clerical
1
1
-
Basic
medical1
Major
medical2
Basic
hospital1
Funding medium
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
48
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
Techni
sional
cal and Produc
and
All par
adminis clerical tion par
ticipants
partici ticipants
trative
pants
partici
pants
Item
T o ta l.................................................
100
100
100
100
Basic life insurance1 .............................
Based on ea rn ing s.........................
Multiple2 .......................................
Graduated s c h e d u le ...............
Flat a m o u n t.......................................
Flat amount based on service ....
Other3 ..................................................
100
66
54
12
30
4
100
83
73
10
12
4
100
80
72
8
15
5
100
48
32
15
50
2
0
0
0
(4)
With accidental death and
dismemberment co v e ra g e ...............
72
65
65
79
With survivor income benefit5 ............
10
12
9
10
With availability of partly employer-fi
nanced supplemental life
insurance...............................................
11
13
12
8
With dependent c o v e ra g e ...................
17
19
18
16
1 A few participants received only accidental death and dismemberment
insurance.
2 Includes participants in plans in which insurance equaled a multiple of
earnings, plus or minus a specific amount.
3 Includes participants in plans with insurance based on family size.
4 Less than 0.5 percent.
5 Consists of monthly income, usually a percent of earnings, 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
Table 49. Life insurance: Percent of full-time participants in plans with multiple-of-earnings formulas1 by amount of
basic insurance and maximum coverage provisions, medium and large firms, 1986
Formula
Total
In plans
without
maximum
coverage
In plans with maximum coverage
All
Less than
$50,000
$50,000$99,999
$100,0 00$2 49,9 99
$250,0 00$4 99,9 99
$5 00,0 00 or
more
All particip ants
T o t a l..................................................
Life insurance is equal to annual
earnings times:2
Less than 1 . 0 ........................................
1 . 0 .............................................................
1 .1 -1 .4 .....................................................
1 . 5 .............................................................
1.6-1.9 .....................................................
2 . 0 .............................................................
2.1-2.4 .....................................................
2 . 5 .............................................................
2.6-2.9 ................................... .................
3 . 0 .............................................................
More than 3 . 0 ........................................
Multiple varying with ea rn ing s..........
100
48
52
3
45
1
7
1
34
2
2
2
26
2
19
1
4
1
19
1
1
(3)
3
1
1
(3)
2
14
1
1
1
(3)
(3)
(3)
2
1
1
4
9
3
-
1
10
1
1
1
6
-
-
(3)
-
11
1
2
(3)
20
-
2
3
(3)
-
-
1
-
ft
2
2
-
ft
ft
-
-
1
7
1
ft
-
ft
-
ft
ft
ft
1
ft
-
8
ft
ft
3
ft
-
1
1
ft
-
P rofessional and ad m in istrative
T o t a l..................................................
Life insurance is equal to annual
earnings times:2
Less than 1 . 0 ........................................
1 . 0 .............................................................
1 .1 -1 .4 .....................................................
1 . 5 .............................................................
1.6-1.9 .....................................................
2 . 0 .............................................................
2.1-2.4 .....................................................
2 . 5 .............................................................
2.6-2.9 .....................................................
3 . 0 .............................................................
More than 3 . 0 ........................................
Multiple varying with earn ing s..........
100
47
53
3
36
2
7
1
41
2
2
1
21
2
15
1
4
1
22
1
1
(3)
3
1
1
ft
3
19
1
1
1
1
(3)
(3)
2
1
1
2
9
19
2
1
3
1
6
1
2
1
6
(3)
-
1
3
(3)
-
ft
ft
-
ft
-
-
ft
-
14
-
9
ft
2
1
9
1
2
ft
ft
4
1
ft
1
ft
1
1
ft
ft
1
ft
-
Techn ical and clerical
Total ..................................................
Life insurance is equal to annual
earnings times:2
Less than 1 . 0 ........................................
1 . 0 .............................................................
1.1-1.4 .....................................................
1 . 5 .............................................................
1.6-1.9 .....................................................
2 . 0 .............................................................
2.1-2.4 .....................................................
2 . 5 .............................................................
2.6-2.9 .....................................................
3 . 0 .............................................................
More than 3 . 0 ........................................
Multiple varying with ea rn ing s..........
100
47
53
3
45
1
6
1
32
2
2
1
28
1
18
1
5
1
18
1
2
(3)
4
2
1
(3)
2
13
1
1
1
1
(3)
(3)
3
1
1
S e e footnotes at end of table.
50
2
9
21
12
1
3
1
11
1
1
1
5
-
1
ft
-
2
3
ft
-
ft
1
ft
2
1
-
7
1
ft
1
9
ft
2
ft'
1
3
ft
1
1
1
1
ft
ft
2
ft
T a b le 49. L ife in s u ra n c e : P e rc e n t o f fu ll-tim e p a rtic ip a n ts in p la n s w ith m u ltip le -o f-e a rn in g s fo rm u la s 1 b y a m o u n t o f
b a s ic in s u ra n c e a n d m axim u m c o v e ra g e p ro v is io n s , m e d iu m a n d la rg e firm s , 1986— C o n tin u e d
F o rm ula
T o ta l
In p lans w ith m axim um co v e ra g e
In p lans
w ithout
m axim um
co v e ra g e
Less than
$ 5 0 ,0 0 0
All
$ 1 0 0 ,0 0 0 -
$ 5 0 ,0 0 0 $ 9 9 ,9 9 9
$ 2 4 9 ,9 9 9
$ 2 5 0 ,0 0 0 $ 4 9 9 ,9 9 9
$ 5 0 0 ,0 0 0 or
m ore
P r o d u c tio n
T o t a l .......................................................
Life insurance is eq u al to ann ual
earn in g s tim es:2
Les s th a n 1 . 0 ............................................
1 . 0 ...................................................................
1 .1 -1 .4 ...........................................................
1 . 5 ...................................................................
1 . 6 - 1 . 9 ...........................................................
2 . 0 ...................................................................
2 . 1 - 2 . 4 ...........................................................
2 . 5 ...................................................................
100
48
4
56
1
7
1
26
3
31
1
2
ft
2
1
2
2 . 6 - 2 .Q ...........................................................
3 . 0 ...................................................................
M o re th a n 3 . 0 ............................................
M ultiple varying w ith e a r n in g s ...........
-
10
1
1
ft
25
5
1
16
1
3
-
-
1
-
1
0
-
5
2
-
-
1
1
ft
-
ft
-
ft
ft
ft
ft
ft
“
-
-
”
-
1
2
ft
ft
-
-
-
"
ft
-
-
0
ft
5
2
-
1
1
6
3
-
-
ft
-
ft
0
sumed to have 15 years of service.
3
Less than 0.5 percent.
1 Includes participants in plans in which insurance equaled a multi
ple of earnings, plus or minus a specific amount.
2 When the multipie-of-eamings formula varied with age, the maxi
mum multiple was tabulated. A few plans varied the multiple-of-eamings formula according to service; in these cases, a participant was as
-
-
8
1
12
2
-
0
21
ft
7
2
1
10
9
-
ft
ft
-
ft
52
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 insurance1 by amount of basic
insurance, medium and large firms, 1986
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Amount of insurance
T ota l..........................................
Less than $2,000 ..............................
$2,000-$4,999....................................
$5,000-$9,999....................................
$10,000-$14,999 ...............................
$15,000-$19,999 ...............................
$20,000-$24,999 ...............................
$25,000-$29,999 ...............................
$30,000 and o v e r..............................
100
2
17
29
30
12
3
4
3
100
3
19
33
25
9
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
3
27
27
29
7
100
2
15
30
30
13
6
2
2
3
3
2
2
5
4
1
Excludes participants in plans where insurance was a flat amount
based on service.
NOTE: Because of rounding, sums of individual items may not equal to
tals.
51
T a b le 51. L ife in s u ra n c e : P e rc e n t o f fu ll-tim e p a rtic ip a n ts
w ith d e p e n d e n t c o v e ra g e b y ty p e a n d a m o u n t o f c o v e ra g e ,
m e d iu m a n d la rg e firm s , 1986
Type and amount of coverage
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
T a b le 5 2 .
L ife in s u r a n c e :
P e r c e n t o f f u ll-tim e p a r tic ip a n ts
b y le n g th -o f-s e r v ic e r e q u ir e m e n ts f o r p a r t ic ip a t io n ,1
m e d iu m a n d la r g e f ir m s , 1 9 8 6
Techni
cal and Produc
clerical tion par
partici ticipants
pants
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
Length-of-service requirement
T ota l..........................................
100
100
100
100
T o ta l......................................
Death of spouse................................
Flat benefit...................................
Less than $1,000 ..................
$ 1 , 0 0 0 ....................................
$1,500.....................................
$2 , 0 0 0 ....................................
$2,500....................................
$3,000....................................
$4,000....................................
$5,000.....................................
More than $5,000 .................
100
100
100
100
88
86
84
1
With service requirement..............
1 month ...................................
2 months..................................
3 months..................................
4-5 m onths..............................
6 months..................................
7-11 m onths............................
1 ye a r......................................
Over 1 year .............................
13
(')
Benefit varies...............................
By age of spouse..................
By employee earnings...........
By employee option..............
Benefit varies...............................
By age of child2 .....................
By employee earnings...........
By employee option...............
8
8
3
1
2
4
2
26
12
14
2
0
1
1
21
2
30
4
23
3
12
14
16
1
1
0
9
0
3
2
Amount of coverage not
determinable.............................
Death of c h ild ....................................
Flat benefit...................................
Less than $1,000 ..................
$ 1 , 0 0 0 .....................................
$1,500.....................................
$2 , 0 0 0 .....................................
$2,500.....................................
$3,000.....................................
$4,000.....................................
$5,000.....................................
More than $5,000 .................
23
14
9
8
15
16
13
7
91
3
36
7
18
(')
97
65
99
68
98
63
5
2
6
6
34
19
19
13
10
10
11
-
20
2
7
1
1
1
1
1
1
1
1
1
46
58
46
38
ft
0
0
ft
ft
ft
ft
ft
9
9
3
20
10
6
9
1
2
2
0
1
(’)
3
0
1
0
0
2
2
0
O
32
23
30
2
3
7
11
34
21
22
2
7
1
3
10
0
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
T a b le 5 3 .
31
24
L ife in s u ra n c e :
P e r c e n t o f f u ll-tim e p a r tic ip a n ts
b y e f f e c t o f r e t ir e m e n t o n b a s ic lif e in s u r a n c e c o v e r a g e ,
m e d iu m a n d la r g e f ir m s , 1 9 8 6
2
5
2
0
Effect of retirement
2
1
Less than 0.5 percent.
Amount of insurance increases at some point after
1
4
year of age.
T o ta l..........................................
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
2
24
ft
9
ft
6
ft
62
19
1 Length of time employees must be on the job before they are cov
ered by a plan that is at least partially employer financed. There is fre
quently an administrative time lag between completion of the require
ment and the actual start of participation. If the lag was 1 month or
more, it was included in the service requirement. Minimum age require
ments are rare.
2 Less than 0.5 percent.
96
63
26
14
Insurance on child not provided .
1
1
7
54
16
Not applicable—plan not
available to new employees......
5
(’)
Amount of coverage not
determinable.............................
2
42
17
3
14
ft
100
2
1
6
54
17
7
19
100
Service requirement not
determinable......................... .....
7
2
100
Without service requirement........
-
13
11
100
Insurance continues’ ........................
Continues for life .........................
Continues in full ....................
Reduced once .......................
Reduced more than once
during retirement................
Continues in form of paid-up
insurance2 ...........................
Ceases during retirement............
Provision not determinable.........
Insurance discontinued immediately.
Effect not determinable....................
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
100
100
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
100
29
64
61
3
29
60
59
3
28
29
25
29
27
21
59
57
2
ft
56
53
2
ft
ft
ft
ft
3
ft
39
34
38
43
1
2
2
1
1
2
1
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.
3 Less than 0.5 percent.
1
2
NOTE: Because of rounding, sums of individual items may not equal to
tals.
52
Chapter 6. Defined Benefit
Pension Plans
Social Security payments. (See next section.)
Most plans that did not use a percent-of-eamings 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 bluecollar 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.
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
defined benefit pension plans—down slightly from earlier
years. (Other 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). Eamings-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 eamings-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. Careerearnings 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.1 Conversely, benefits under a terminal7
earnings formula are more likely to be offset by a retiree’s
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
1 An employee who worked 30 years with a 5-percent pay increase each
7
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.
53
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 dollaramount 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 eamingsbased 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.2
1
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; bluecollar employees, therefore, were less likely to have integrat
ed benefits.1
8
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 1985.1
9
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).20 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.)
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 fiill private pensions (normal retirement). Thirtysix 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).2
2
Another 11 percent of participants could qualify when the
sum of age plus service reached a specific amount, such as
1 For a comprehensive analysis of formulas with Social Security integra
8
tion characteristics, see Donald Bell and Diane Hill, “How Social Security
Payments Affect Private Pensions,” Monthly Labor Review, M 1984,
ay
pp. 15-20.
1 Earnings histories, necessary for applying the pension formulas, were
9
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
0
benefit, is paid in addition to the primary benefit while both partners are
alive (unless the spouse is eligible for a larger primary benefit).
2 For a more complete discussion of replacement rates, see Donald G.
1
Schmitt, “Today’s Pension Plans: How M Do They Pay?” Monthly
uch
Labor Review, December 1985, pp. 19-25.
2 In 1980, 45 percent of participants had to work until age 65 to be eligible
2
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 W
il
liam Marclay, “Trends in Retirement Eligibility and Pension Benefits,
1974-1983,” Monthly Labor Review, April 1987, pp. 18-25.
54
C h a r t 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
rate (percent)
Average replacement
rate (percent)
80
70
60
80
Combined
private
pension
and
primary
Social
Security
payment
70
60
50
50
40
40
Private
pension
only
30
30
20
20
10
10
0
0
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
W
orker’s final year’s earnings
benefit formula because an employee has not worked until
normal retirement age. Second, because benefits begin at an
earlier age, the retiree 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
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
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
participants
Percent of
participants
Less than $200
$200-$399
$400-$599
$600-$799
$800-$999
$1,000 and greater
M
onthly pension benefit
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.2
3
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-ofservice requirement higher than the minimum needed to re
tire. Plan sponsors include these special early retirement
Disability retirement (table 65). A career-ending disability
may entitle an employee to a pension before the normal retire2 For the results of a survey of the incidence of early retirement incen
3
tive programs, the types of incentives offered, and how successful they have
been, see Hewitt Associates, Plan Design and Experience in Early Retire
ment W
indows and Other Voluntary Separation Plans (Lincolnshire, Illinois:
H e w itt A s so ciates, 1 9 8 6 ).
56
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.)2
5
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
lated 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-percentagepoint 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.24 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
length 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.
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
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-
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
eamings-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
2 The 1986 Budget Reconciliation Act requires most qualified plans to
5
credit service after a plan’s normal retirement age, beginning in 1988, sub
ject to any maximumcredited service provisions in the plan (see table 60).
In addition, a February 1987 court ruling indicates that employers m have
ay
to begin crediting service im ediately after norm retirem age, although
m
al
ent
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).
2 For a more complete discussion of disability retirement, see Donald
4
Bell and W
illiam W
iatrowski, “Disability Benefits for Employees in Pri
vate Pension Plans," Monthly Labor Review, August 1982. pp. 36-40.
57
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.2
7
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 t he
corresponding service requirement when leaving the plan.
For terminated and vested employees who wish to receive
a pension beginning at the early retirement age, E R ISA 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 e r i s a 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.2
8
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
Decem ber 31, 1980
Years o f retirement
j
Jo
^
$250:
A verage pension on D ecem b er 3 1 , 1985 ............. $292
Percent change, D ecem b er 3 1 , 1980-85 ...............
17
$750:
A verage pension on D ecem ber 3 1 , 1985 .............
Percent change, D ecem ber 3 1 , 1980-85 ...............
$83 2
11
$31 9
27
$ 344
37
$91 4 $988
22
32
The BLS Consumer Price Index for All Urban Consumers
rose 31 percent over the 5-year period studied.2 For
6
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 B L S 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.
(C P I-U )
Postretirement survivor benefits (table 69). E R ISA 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.2
9
Joint-and-survivor annuities are based on an actuarial or
arithmetic reduction of the employee’s pension. Nearly onefifth of the participants were in plans offering only a jointand-survivor option that provides a surviving spouse 50 per
cent of the retiree’s adjusted pension. Sixty-six percent of
27 A m ong other provision s, the Retirem ent Equity A ct o f 1984 am ended
ERISA by low erin g from 25 to 21 the age after w hich em ployers m ust en
roll w orkers in defined benefit and defined contribution plans, and low er
ing from 22 to 18 the age after w hich em p loyees m ust earn vesting credits.
In addition, the act requires that the spouse o f a deceased vested em p loyee
be entitled to survivor b enefits regardless o f em p lo y e e ’s age at death. For
m ost plans, the Internal R evenue S ervice extended the deadline for co m
pliance w ith p rovision s o f the act until June 3 0 , 1986. (C ollectively bar
gained plans had to com ply by January 1, 19 8 7 .) Since the survey w as
conducted from January to June 1986. p revious ERISA rules w ere in effect
when the surveyed establishm ents w ere visited .
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
o f 1974 (ERISA), some variations exist as to when this oc
28 D ue to changes in the Tax R eform A ct o f 1986, benefits from m ost
defined benefit plans w ill vest m ore rapidly beginning in 1989. V esting pro
v ision s d iffer significantly betw een defined benefit and som e types o f d e
fined contribution plans. T he next chapter d iscu sses these d ifferen ces.
29 ERISA requires that the joint-and-survivor coverage be autom atic for
m arried retirees, and that w aiver o f this option m ust be requested in w rit
ing. The Retirem ent Equity A ct (see footnote 27) further directs that spouse
coverage can be w aived on ly if both husband and w ife sign the request.
For a m ore com p lete d iscu ssion o f survivor ben efits, se e D onald B ell and
A vy Graham, “ Surviving S p o u se’s B enefits in Private P ension P la n s,”
Monthly Labor Review, A pril 1984, pp. 23-31.
26 The rate o f increase w as determ ined by d ividing the annual average
CPI-U for 1985 by the annual average CPI-U for 1980. For a discu ssion o f
postretirement increases, see Donald G . Schmitt, “ Postretirement Increases
U nder Private P ension P la n s,” Monthly Labor Review, Septem ber 1984,
pp. 3-8.
58
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 jointand-survivor benefit calculated as if the employee had re
tired on the day of death. (The earliest available preretire
ment survivor annuity was tabulated.)
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-andsurvivor 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.
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.
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.3
0
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
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 E R IS A .31
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 e r i s a regulations as long as the specified age
is within 5 years of a plan’s normal retirement age.3
2
31 S ee footnote 27 regarding the R etirem ent Equity A c t’s changes to
ERISA.
32 The 1986 Budget Reconciliation A ct (described in footnote 25) changes
the ERISA requirements beginning in 1988. Plans w ill no longer be allow ed
to exclu d e em p loyees from participation due to age. Instead, the plan m ay
require the em p loyee to participate for 5 years b efore becom ing eligib le
for benefits, even if that date is beyond the normal retirem ent age.
30 S ee footnote 2 7 for changes required by the Retirem ent Equity A ct.
59
Table 54. Defined benefit pension plans:1 Percent of
full-time participants by method of determining retirement
payments, medium and large firms, 1986
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Basis of payment2
T o ta l..........................................
100
Terminal earnings form ula...............
No alternative form ula................
Terminal earnings alternative.....
Career earnings alternative........
Dollar amount alternative3 ...........
Percent of contributions
alternative..................................
57
29
Career earnings formula...................
No alternative form ula................
Career earnings alternative ........
Dollar amount alternative3 ...........
Percent of contributions
alternative..................................
100
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
15
72
35
13
3
19
1
1
15
23
15
8
12
8
10
2
O
0
7
10
72
40
13
100
40
18
7
2
17
2
12
(4
)
(4
)
6
1
11
6
(4
)
5
O
(4
)
(4
)
26
25
5
4
(4)
11
11
48
46
(4
)
2
Dollar amount formula3 .....................
No alternative form ula................
Dollar amount alternative3 ...........
Percent of contributions
alternative..................................
O
(4)
(4
)
Percent of contributions form ula......
No alternative form ula................
0
O
(4
)
(4)
(4
)
(4
)
1
1
(4
)
Other formula.....................................
1
1
0
1
1
-
1 Excludes supplemental pension plans.
2 Alternative formulas are generally designed to provide a minimum
benefit for employees with short service or low earnings.
3 Includes formulas based on dollar amounts for each year of service
and schedules of benefits that vary by length of service.
4 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 55. Defined benefit pension plans:1 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
maximum benefit3
Type and amount of
formula2
Provision for
integration with
Social Security
benefit
Flat percent per year of
service........................
Less than 1 .0 0 ........
1.00-1.24 .................
1.25-1.49 .................
1.50-1.74 .................
1.75-1.99 .................
2.00-2.24 .................
2.25 or greater........
Percent per year
varies ............. ........ .
By service...............
By earnings.............
By a g e .....................
By earnings and
service..................
Type and amount of
formula2
Total
Without
Subject Not sub With inte
inte
grated
to maxi ject to
grated
mum
maximum formula
formula
100
100
57
65
1
6
8
24
5
10
3
3
29
7
18
3
43
16
49
3
9
13
19
3
2
100
53
82
2
5
2
T o ta l.....................
100
10
37
0
8
12
25
21
6
3
11
3
6
35
15
18
-
20
100
51
17
23
4
47
16
24
7
5
2
18
18
-
Flat percent per year of
service.................... .
Less than 1 .0 0 ........
1.00-1.24 .................
1.25-1.49 .................
1.50-1.74 .................
1.75-1.99 ..................
2.00-2.24 .................
2.25 or greater........
Percent per year
varies .......................
By service...............
By earnings.............
By a g e .....................
By earnings and
service..................
100
100
100
100
57
O
71
43
54
2
2
95
4
23
27
34
11
24
5
11
1
4
32
7
19
2
(4
)
20
10
15
4
23
2
11
6
7
4
4
8
43
17
18
3
29
57
12
22
46
18
16
-
21
20
6
3
5
1
8
5
100
100
100
100
60
3
60
61
56
74
12
4
4
1
42
5
5
-
Production
100
55
100
65
1
3
3
32
6
8
9
3
15
5
2
4
43
100
51
2
4
5
27
45
16
24
100
35
14
20
2
4
9
21
4
3
93
10
37
O
5
26
7
100
100
8
34
4
10
Flat percent per year of
service........................
Less than 1 .0 0 ........
1.00-1.24 .................
1.25-1.49 .................
1.50-1.74 .................
1.75-1.99 .................
2.00-2.24 .................
2.25 or greater........
8
22
4
10
2
6
22
19
12
26
5
12
8
22
7
20
_
2
8
10
1
12
0
5
3
3
57
17
29
3
49
16
26
7
Percent per year
varies..........................
By service...............
By earnings.............
By a g e .....................
By earnings and
service..................
40
15
18
40
19
17
39
44
12
12
18
3
24
26
26
5
2
7
7
-
1 Excludes supplemental pension plans.
2 If a plan contained more than one terminal earnings formula, a pri
mary formula was selected and tabulated.
3 These maximum provisions are independent of Internal Revenue
Code ceilings on pensions payable from defined benefit plans.
Without
inte
grated
formula
100
Percent per year
varies..........................
By service...............
By earnings..............
By a g e .....................
By earnings and
service..................
T o ta l.....................
Flat percent per year of
service........................
Less than 1 .0 0 ........
1.00-1.24 .................
1.25-1.49 .................
1.50-1.74 .................
1.75-1.99 .................
2.00-2.24 .................
2.25 or greater........
Total
Subject Not sub With inte
grated
to maxi ject to
mum
maximum formula
Professional and
administrative
T o ta l.....................
Provision for
integration with
Social Security
benefit
Technical and clerical
All participants
Total .....................
Provision for
maximum benefit3
2
5
4
6
2
-
7
-
4 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
61
Table 56. Defined benefit pension plans:1 Percent of
full-time participants in plans with terminal earnings formulas
by definition of terminal earnings, medium and large firms,
1986
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Definition of terminal earnings
T ota l..........................................
Three years.......................................
Last 3 ...........................................
High 3 ..........................................
Of last 5 .......................................
Of last 1 0 ...............................
High consecutive 3 .....................
Of last 5 .......................................
Of last 1 0 ...............................
Of career................................
Five years..........................................
Last 5 ...........................................
High 5 ..........................................
Of last 1 0 ...............................
Of career................................
O ther......................................
High consecutive 5 .....................
Of last 1 0 ...............................
Of last 1 5 ...............................
Of career................................
Other period3 ......................................
100
100
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
13
14
11
1
1
1
1
2
ft
1
100
14
-
1
ft
1
ft
1
1
1
1
11
11
8
13
-
ft
ft
ft
8
8
6
8
3
3
2
5
84
4
84
87
5
5
80
3
10
9
12
10
5
5
6
5
4
3
7
ft
69
51
1
16
3
ft
70
5
ft
ft
51
2
15
69
51
1
16
68
51
3
3
ft
16
5
1 Excludes supplemental pension plans.
2 Less than 0.5 percent.
3 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
Table 57. Defined benefit pension plans:1 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
maximum benefit3
Type and amount of
formula2
Provision for
integration with
Social Security
benefit
Provision for
maximum benefit3
Type and amount of
formula2
Total
Without
Subject Not sub With inte
inte
grated
to maxi ject to
grated
maximum formula
mum
formula
Flat percent per year of
service........................
Less than 1 .0 0 ........
1.00-1.24 .................
1.25-1.49 .................
1.50-1.74 .................
1.75-1.99 .................
2.00-2.24 .................
2.25 or greater........
Percent per year
varies............... ..........
By service...............
By earnings.............
By a g e .....................
Without
inte
grated
formula
Professional and
administrative
100
100
9
100
42
14
2
5
7
25
9
1
1
74
1
4
6
2
7
23
(4
)
3
60
4
56
0
3
91
91
98
15
o
0
8
0
Total .....................
100
2
40
1
100
1
1
1
58
5
53
(4
)
86
2
5
80
2
0
Flat percent per year of
service........................
Less than 1 .0 0 ........
1.00-1.24 .................
1.25-1.49 .................
1.50-1.74 .................
1.75-1.99 .................
2.00-2.24 .................
2.25 or greater........
Percent per year
varies..........................
By service...............
By earnings.............
By a g e .....................
Excludes supplemental pension plans.
If a plan contained more than one career earnings formula, a primary
formula was selected and tabulated. This table includes plans with ca
reer earnings formulas that serve as an alternative to a terminal earnings
formula.
3 These maximum provisions are independent of Internal Revenue
100
100
1
2
2
6
0
0
48
12
98
2
5
36
(4
)
6
7
1
1
86
(4
)
2
2
55
5
51
100
2
5
33
1
100
1
9
45
100
91
91
1
4
2
2
1
88
2
6
2
52
5
47
(4
)
82
(4
)
Code ceilings on pensions payable from defined benefit plans.
4 Less than 0.5 percent.
1
2
Total
Subject Not sub With inte
to maxi ject to
grated
mum
maximum formula
All participants
T o ta l.....................
Provision for
integration with
Social Security
benefit
NOTE: Data were insufficent to show technical-clerical and production
workers separately. Because of rounding, sums of individual items may
not equal totals. Dash indicates no employees in this category.
63
Table 58. Defined benefit pension plans:' Percent of full-time participants in plans with dollar amount benefit formulas2 by
type and amount of formula, medium and large firms, 1986
Provision for maximum
benefit4
Type and amount of formula3
Provision for maximum
benefit4
Type and amount of formula3
Total
Total
Subject to Not subject
maximum to maximum
Subject to Not subject
maximum to maximum
Production
All participants
T ota l..........................................
100
59
4
73
55
11
2
10
12
9
T ota l..........................................
100
100
100
100
100
58
5
72
54
12
2
11
11
10
10
7
18
7
23
5
10
1
2
6
1
Flat monthly amount per year of
service............................................
Less than $5.00 ..........................
$5.00-$9.99..................................
$10.00-$14.99..............................
$15.00-$19.99..............................
$20.00-$24.99..............................
$25.00-529.99..............................
$30.00 or greater.......................
Amount per year varies by service ...
6
11
5
Amount per year varies by service ...
7
Amount per year varies by
earnings..........................................
34
13
40
Amount per year varies by
earnings..........................................
Scheduled dollar amount varies by
service............................................
(*)
Scheduled dollar amount varies by
service............................................
Flat monthly amount per year of
service............................................
Less than $5.00 ..........................
$5.00-$9.99..................................
$10.00-514.99..............................
$15.00-$19.99..............................
$20.00-$24.99 ..............................
$25.00-529.99..............................
$30.00 or greater.......................
1
10
21
10
3
7
20
7
11
21
11
2
Excludes supplemental pension plans.
5
22
5
3
3
11
11
1
6
1
12
6
34
14
40
1
2
Less than 0.5 percent.
2 Excludes plans with dollar amount formulas that serve as a mini
mum benefit alternative to a percent of earnings formula.
3 If a plan contained more than one dollar amount formula, a primary
formula was selected and tabulated.
4 These maximum provisions are independent of Internal Revenue
Code ceilings on pensions payable from defined benefit plans.
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 59. Defined benefit pension plans:1 Percent of full-time participants by provision for integration of pension with
Social Security benefit, medium and large firms, 1986
Type of benefit formula2
Type of benefit formula1
2
Provision
Total3
Provision
Dollar
Terminal Career
earnings earnings amount
Total3
T o ta l.................................................
100
100
100
100
T o ta l.................................................
With integrated form ula....................
62
90
69
1
With integrated fo rm u la .......................
43
36
7
71
60
1
Rased on service5 .................
Not based on service8 ...........
Dollar a m o u n t.....................
Percent of p a y m e n t..........
Pure excess8 ....................................
Step-rate excess9 ............................
Integrated with a Social
Security b rea kpo int..............
Integrated with a specific
dollar b rea kp o in t...................
Without integrated fo rm ula..................
Dollar
amount
Technical and clerical
All participants
Offset by Social Security
payment4 ........................................
Terminal Career
earnings earnings
7
11
13
9
5
o
4
1
1
1
23
25
54
10
10
23
14
15
32
_
Offset by Social Security
payment4 ........................................
Based on service5 ....................
Not based on service8 ............
Dollar a m o u n t.....................
Percent of p a y m e n t..........
Pure excess8 ....................................
Step-rate excess9 ............................
Integrated with a Social
Security b rea kpo int..............
Integrated with a specific
dollar b re a k p o in t...................
38
10
31
99
Without integrated fo rm ula..................
11
1
0
1
-
_
100
100
100
100
74
79
93
58
50
75
19
1
66
10
1
9
8
0
0
1
10
0
_
_
8
9
9
1
1
1
25
23
54
13
11
29
13
13
25
7
26
99
100
21
_
Production
Professional and administrative
T o ta l..........................................
100
100
100
100
T o ta l................................................
100
100
100
With integrated fo rm u la .......................
81
94
62
1
With integrated fo rm u la .......................
42
83
74
0
55
46
9
72
62
12
1
28
65
50
15
11
0
10
(7
)
0
0
Offset by Social Security
payment4 ........................................
Based on service5 ....................
Not based on service8 ............
Dollar am ount .....................
Percent of p a y m e n t..........
Pure excess8 ....................................
Step-rate excess9 ............................
Integrated with a Social
Security brea kpo int..............
Integrated with a specific
dollar b re a k p o in t...................
Without integrated form ula..................
10
5
2
2
1
31
27
49
14
13
20
-
19
16
30
_
Offset by Social Security
payment4 ........................................
Based on service5 ....................
Not based on service8 ............
Dollar a m o u n t.....................
Percent of p a y m e n t..........
Pure excess8 .....................................
Step-rate excess9 ............................
Integrated with a Social
Security brea kpo int..............
Integrated with a specific
dollar b re a k p o in t...................
19
6
38
99
Without integrated fo rm ula..................
9
7
5
10
1
o
-
_
6
1
o
1
2
5
13
1
0
1
0
17
24
62
6
7
24
12
18
38
58
17
26
-
-
100
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.
7 Less than 0.5 percent.
9 Formula does not apply to earnings subject to FICA (Social Secu
rity) taxes or below a specific dollar breakpoint
* Formula applies lower benefit rate to earnings subject to FICA (So
cial Security) taxes or below a specific dollar breakpoint.
Excludes supplemental pension plans.
If a plan contained more than one benefit formula based on termi
nal earnings, career earnings, or dollar amounts, each integrated for
mula was tabulated. Participants were included as under nonintegrated
formulas only if none of the formulas was integrated.
3 Includes plans with benefit formulas based on a percent of em
ployee or employer contributions.
4 Benefit as calculated by formula is reduced by portion of primary
Social Security payment.
9 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
1
2
22
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.
65
Table 60. Defined benefit pension plans:1 Percent of full-time participants by maximum benefit provisions,2 medium and
large firms, 1986
Type of benefit formula3
Type of benefit formula3
Maximum benefit provision
Total4
Maximum benefit provision
Dollar
Terminal Career
earnings earnings amount
Total4
Technical and clerical
All participants
Total .........................................
100
100
100
56
8
26
36
50
8
20
2
1
1
1
2
1
T ota l..........................................
100
41
Not subject to maximum..................
6
8
4
2
1
1
2
1
7
Limit on years of credited
service......................................
Less than 2 0 ..........................
2 0 ...........................................
2 5 ...........................................
26-29 .....................................
3 0 ...........................................
31-34 .....................................
3 5 ...........................................
36-39 .....................................
4 0 ...........................................
More than 4 0 .........................
9
(5
)
9
Subject to maximum.........................
Limit on years of credited
service.......................................
Less than 2 0 ..........................
2 0 ...........................................
2 5 ...........................................
26-29 ......................................
3 0 ...........................................
31-34 ......................................
35 ...........................................
36-39 ......................................
4 0 ...........................................
More than 4 0 .........................
Other maximum6 ..........................
59
44
92
74
Not subject to maximum..................
5
(5
)
5
(5
)
4
1
12
17
1
1
9
(5
)
14
(5
)
1
(5
)
7
(5
)
2
O
T ota l..........................................
100
100
100
Subject to maximum.........................
Limit on years of credited
service......................................
Less than 2 0 ..........................
2 0 ...........................................
2 5 ...........................................
26-29 .....................................
3 0 ...........................................
31-34 .....................................
3 5 ...........................................
36-39 .....................................
4 0 ...........................................
More than 4 0 .........................
Other maximum6 ..........................
47
59
8
27
42
54
8
2
1
17
3
(5
)
4
T ota l..........................................
100
1
1
1
8
8
(5
)
10
Subject to maximum.........................
Limit on years of credited
service.......................................
Less than 2 0 ..........................
2 0 ...........................................
2 5 ............................................
26-29 ......................................
3 0 ...........................................
31-34 ......................................
3 5 ...........................................
36-39 ......................................
4 0 ............................................
More than 4 0 .........................
Other maximum6 ..........................
52
41
92
73
Not subject to maximum..................
1
1
4
4
1
1
15
19
1
1
12
16
(5
)
1
(5
)
8
10
1
5
(*)
1
0
5
3
100
100
100
45
56
7
26
41
53
7
20
2
2
1
1
7
7
3
(*)
7
1
1
14
16
1
1
10
(5
)
14
(5
)
8
10
4
1
1
1
6
7
(5
)
44
93
74
100
100
100
54
1
7
(5
)
1
2
6
100
34
52
9
29
43
8
1
2
2
3
5
4
(5
)
27
20
(5
)
2
3
0
10
16
1
1
(s)
10
2
6
(5
)
3
(*)
4
2
1
2
2
8
11
3
3
(5
)
48
91
66
8
2
73
1
9
5 Less than 0.5 percent.
6 The benefit yielded under the formula is limited to either a percent
of terminal or career earnings, often coordinated with primary Social S e
curity payments, or to a flat dollar amount.
1 Excludes supplemental pension plans.
2 These maximum provisions are independent of Internal Revenue
Code ceilings on pensions payable from defined benefit plans.
3 If a plan contained more than one benefit formula based on termi
nal earnings, career earnings, or dollar amounts, each formula contain
ing a maximum benefit provision was tabulated. Participants were in
cluded as under formulas without maximum benefit provisions only if
none of the formulas contained a maximum.
4 Includes plans with benefit formulas based on a percent of em
ployee or employer contributions.
100
Production
Professional and administrative
Not subject to maximum..................
Terminal Career
Dollar
earnings earnings amount
NOTE: Sums of individual items may not equal totals because more
than one benefit formula within a plan may have a maximum benefit
provision. Also, some benefit formulas contain a limit on years of cred
ited service and another maximum provision. Dash indicates no em
ployees in this category.
66
Table 61. Defined benefit pension plans:1 Average replacement rates for specified final earnings and years of service,2
medium and large firms, 1986
Years of service3
Final annual earnings
10
15
25
20
30
35
40
26.7
24.2
23.4
23.3
23.4
23.5
31.5
28.5
27.6
27.4
27.4
27.5
35.9
32.4
31.2
30.9
30.8
30.8
39.9
35.9
34.4
34.0
33.7
33.6
25.9
24.5
24.6
25.2
25.9
26.6
30.6
28.9
28.9
29.6
30.3
31.0
34.6
32.6
32.5
33.1
33.7
34.4
38.3
35.9
35.6
36.0
36.5
37.1
25.6
24.7
25.1
25.9
26.7
27.3
30.2
29.0
29.5
30.4
31.2
31.9
34.4
33.0
33.4
34.2
35.0
35.6
38.1
36.4
36.7
37.5
38.2
38.7
27.8
23.7
32.9
28.0
25.7
24.5
23.6
23.0
37.6
31.9
29.3
27.8
26.7
25.9
41.9
35.6
32.5
30.7
29.5
28.5
74.1
67.8
61.9
56.9
53.2
50.3
78.5
71.7
65.6
60.4
56.6
53.6
82.5
75.2
73.1
77.2
71.9
Private pension only
All participants
$15,000
$2 0 , 0 0 0
$25,000
$30,000
$35,000
$40,000
...........................
...........................
..........................
...........................
...........................
...........................
1 1 .1
1 0 .0
9.7
9.7
9.7
9.8
16.4
14.8
14.4
14.4
14.5
14.6
2 1 .6
15.9
15.1
15.2
15.7
16.2
16.6
2 1 .0
19.5
18.9
18.9
19.1
19.2
Professional and
administrative
$15,000
$2 0 , 0 0 0
$25,000
$30,000
$35,000
$40,000
...........................
...........................
...........................
...........................
...........................
...........................
1 0 .8
10.3
10.3
1 0 .6
10.9
1 1 .2
19.8
19.9
20.5
2 1 .2
21.7
Technical and
clerical
$15,000
$2 0 , 0 0 0
$25,000
$30,000
$35,000
$40,000
...........................
...........................
...........................
...........................
...........................
...........................
1 1 .1
15.6
15.0
15.2
15.8
16.3
16.7
11.5
9.8
9.0
17.1
14.5
13.4
8 .6
1 2 .8
8.3
12.4
8 .2
1 2 .2
1 0 .6
1 0 .1
1 0 .2
10.5
1 0 .8
2 0 .6
19.8
2 0 .1
20.9
2 1 .6
2 2 .1
Production
$15,000 ...........................
$2 0 , 0 0 0 ...........................
$25,000 ...
$30,000...........................
$35,000 ...........................
$40,000...........................
2 2 .6
19.2
17.6
16.9
16.4
16.0
2 1 .8
20.7
2 0 .1
19.6
Combined private pension and primary4 Social Security benefit
All participants
$15,000 ...........................
$2 0 , 0 0 0 ...........................
$25,000 ...........................
$30,000 ...........................
$35,000 ...........................
$40,000...........................
53.6
49.3
44.0
39.2
35.5
32.6
58.9
54.1
48.7
43.9
40.3
37.4
64.2
58.8
53.2
48.4
44.8
42.0
69.3
63.5
57.7
52.8
49.2
46.4
53.4
49.5
44.7
40.1
36.7
34.0
58.5
54.4
49.5
45.2
42.0
39.4
63.5
59.1
54.2
50.0
46.9
44.5
68.5
63.8
58.9
54.7
51.7
49.4
53.1
49.4
44.6
40.0
36.6
33.9
58.1
54.3
49.6
45.2
42.1
39.5
63.2
59.1
54.5
50.4
47.3
44.9
64.0
59.4
55.4
52.5
50.1
6 8 .8
63.5
59.5
56.4
Professional and
administrative
$15,000 ...........................
$2 0 , 0 0 0 ...........................
$25,000 ...........................
$30,000 ..........................
$35,000 ...........................
$40,000...........................
63.2
59.0
56.0
53.8
62.6
59.5
57.2
80.9
75.2
69.9
65.5
62.3
59.9
72.7
68.3
63.8
60.0
57.0
54.7
76.9
72.3
67.7
63.7
60.8
58.4
80.7
75.7
71.0
67.0
64.0
61.6
6 8 .2
6 6 .8
Technical and
clerical
$15,000
$2 0 , 0 0 0
$25,000
$30,000
$35,000
$40,000
...........................
...........................
...........................
...........................
...........................
...........................
See footnotes at end of table.
67
6 8 .2
Table 61. Defined benefit pension plans:' Average replacement rates for specified final earnings and years of service,2
medium and large firms, 1986—Continued
Years of service3
Final annual earnings
15
10
25
20
30
35
40
80.1
71.2
63.6
57.3
52.5
48.7
84.5
74.9
Combined private pension and primary4 Social Security benefit
P roduction
$15,000
$2 0 , 0 0 0
$25,000
$30,000
$35,000
$40,000
...........................
...........................
...........................
...........................
...........................
...........................
54.1
49 1
43.4
38.1
34.1
31.0
59.7
53.8
47.7
42.3
38.2
35.0
70.4
63.0
56.1
50.2
45.8
42.4
65.1
58.4
52.0
46.3
42.1
38.8
Excludes supplemental pension plans.
Retirement annuity as a percent of earnings in the final year of work.
The maximum private pension available to an employee, not reduced for
early retirement or joint-and-survivor annuity, was calculated under each
pension plan using the earnings 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.
75.4
67.3
60.1
54.0
49.4
45.8
6 6 .8
60.2
55.3
51.3
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.
3 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.
4 Excludes benefits for spouses and other dependents.
1
2
Table 62. Defined benefit pension plans:1 Percent of full-time participants by minimum age and associated service
requirements for normal retirement,2 medium and large firms, 1986
Age and service requirement3
T o ta l.....................................
No age requirement.....................
30 years’ service....................
More than 30 years’ service ...
Age 53 ..........................................
30 years’ service ....................
Age 55 ..........................................
2 0 years' service ....................
25 years’ service ....................
30 years’ service....................
More than 30 years’ service ...
All par
ticipants
100
100
13
13
. .
................
More than 30 years’ service ...
Age 61 ..........................................
5 years’ service ......................
2 0 years’ service ....................
26 years’ service ....................
20
10
19
O
_
3
2
0
5
4
(4
)
1
(4
)
1
14
4
3
3
(4
)
(4
)
3
0
1
(4
)
1
2
1
5
3
1
10
3
1
1
1
(4
)
0
0
1
1
0
4
4
(4
)
1
(4
)
(4
)
0
0
1
1
2
(4
)
7
(4
)
(4
)
7
(4
)
3
2
25 years' service ....................
30 years’ service ....................
(4
)
1
(4
)
18
4
(4
)
(4)
-
6
8
(4
)
4
2
1
3
2
1
1
1
1
1
1
1
1
Age 63-64 ......................................
No service requirement ..........
1 0 years’ service ....................
2 0 years’ service ....................
2
O
2
4
2
(4
)
2
2
-
O
3
(4
)
1
1
Age 65 ..........................................
No service requirement ..........
1-4 years’ service...................
5 years’ service ......................
1 0 years’ service ....................
36
32
(4
)
33
31
_
36
34
_
2
1
1
2
1
1
Sum of age plus service5 .............
Equals less than 80 ...............
Equals 8 0 .................................
Equals 8 5 .................................
Equals 9 0 .................................
Fquals more than 90 ..............
11
14
13
2
2
(4
)
4
38
32
(4
)
3
3
1
7
(4
)
(4)
4
1
1
5
3
7
2
6
2
1
1
1
1
0
(4
)
(4
)
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.
1
2
1
5
3
1
0
1
20
1
1
15
5
3
3
6
19
4
(4)
2
(4)
(4
)
(4
)
(4
)
20
19
4
(4
)
2
1
1
(4
)
Age 62 ..........................................
No service requirement ..........
1-4 years’ service...................
5 years’ service ......................
8 years’ service ......................
1 0 years’ service ....................
14 years’ service ....................
15 years’ service ....................
0
(4
)
(4
)
All par
ticipants
3
1
1
(4
)
(4
)
(4
)
(4
)
(4
)
(4
)
0
(4
)
1
years’ service
25 years' service
20
10
Age and service requirement3
Profes
sional Technical
Produc
and ad and cleri
tion par
ministra cal par
ticipants
tive par ticipants
ticipants
100
O
(4)
(4
)
Age 60 ..........................................
No service requirement..........
1-5 years’ service..............
1 0 years’ service....................
100
5
5
0
1
15 or 2 0 years’ service..........
30 years’ service ....................
More than 30 years’ service ...
Profes
sional Technical
Produc
and ad and cleri
tion par
ministra cal par
ticipants
tive par ticipants
ticipants
Less than 0.5 percent.
In most plans, participants must also satisfy a minimum age or serv
ice requirement.
4
5
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
68
Table 63. Defined benefit pension plans:1 Percent of full-time participants by minimum age and associated service
requirements for early retirement,2 medium and large firms, 1986
Age and service requirement3
T o ta l.....................................
Participants in plans permitting
early retirement..........................
All par
ticipants
100
Age 55 ......................................
No service requirement .....
5 years’ service ................
1 0 years’ service..............
1 1 years’ service..............
15 years’ service..............
2 0 years’ service ..............
100
100
Age and service requirement3
Profes
sional Technical
Produc
and ad and cleri
tion par
ministra cal par
ticipants
tive par ticipants
ticipants
100
98
98
99
5
9
4
3
1
1
1
1
1
1
1
1
2
3
98
1
O
5
10
O
ft
4
ft
4
7
(4
)
O
4
15
O
ft
7
3
2
0
3
1
O
9
2
6
67
9
5
40
O
66
70
10
12
3
41
O
7
5
41
8
8
4
4
4
1
2
7
1
O
(4
)
0
0
0
12
0
0
ft
0
7
3
0
0
0
1
0
0
0
1
ft
1
4
2
1
1
9
Age 62 ......................................
1 0 years’ service..............
1
O
3
Sum of age plus service5 .........
Equals 70 or le s s .............
Equals 71-74.....................
Equals 75 ..........................
Equals 76-79 .................
Equals 80 ..........................
Equals 85 ..........................
2
1
0
ft
Age 60 ......................................
No service requirement....
5 years’ service ................
1 0 years’ service..............
15 years’ service..............
2 0 years’ service..............
3
62
9
2
42
7
3
Participants in plans without early
retirement ..................................
1 Excludes supplemental pension plans.
2 Early retirement is defined as the point at which a worker could re
tire and immediately receive accrued benefits based on service and
earnings but reduced for each year prior to normal retirement 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.
All par
ticipants
Age 56-59..................................
30 years’ service..............
No age requirement.................
Less than 30 years’
service .............. .............
30 years’ service..............
Less than age 5 5 .....................
No service requirement....
5 years' service ................
1 0 years’ service..............
15 years’ service..............
2 0 years’ service..............
25 years’ service..............
Profes
sional Technical
Produc
and ad and cleri
tion par
ministra cal par
ticipants
tive par ticipants
ticipants
9
3
9
2
(4
)
ft
9
10
1
2
ft
1
1
1
1
1
2
1
2
2
1
4
2
2
8
2
2
1
2
0
1
4 Less than 0.5 percent.
5 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.
69
Table 64. Defined benefit pension plans:1 Percent of
full-time participants in plans permitting early retirement by
reduction factor for immediate start of payments, medium
and large firms, 1986
Reduction for each year prior to
normal retirement age
T ota l..........................................
Uniform percentage2 .........................
Less than 3 .0 ...............................
3 .0 ................................................
3.1-3.9..........................................
4.0 ................................................
4.1-4.9..........................................
5.0 ................................................
5.1-5.9..........................................
6 . 0 ................................................
6.7 ................................................
More than 6 .7 ..............................
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
100
46
2
10
100
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
Characteristic
Percent of participants in plans
with disability retirement
benefits...................................
100
42
4
45
2
10
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
89
89
88
100
100
100
90
Minimum requirements for
disability retirement
1
10
9
3
5
2
5
2
9
(3
)
13
Table 65. Defined benefit pension plans:1 Percent of
full-time participants by provisions for disability retirement,
medium and large firms, 1986
2
T o ta l..........................................
1
6
4
3
2
2
10
11
-
-
49
No age or service .............................
Age o n ly ............................................
Service o n ly .......................................
Age and service................................
Receipt of long-term disability
benefits...........................................
8
2
1
1
(3
)
17
4
1
1
(3
)
1
51
52
53
11
11
41
42
34
15
11
-
(2)
-
50
39
9
40
12
11
62
14
25
38
33
13
16
38
14
(2)
50
13
13
100
7
12
Benefit provisions
Percentage varies by a g e ................
Reduction differs for each year
of early retirement4 ..................
Reduction differs by age
bracket5 .....................................
Percentage varies by service...........
Other basis6 .......................................
T o ta l..........................................
2
O
5
1
1
(3
)
Immediate disability retirement3 .......
Unreduced normal formula4 ........
Reduced normal formula5 ...........
Other than normal formula6 ........
55
41
6
8
Deferred disability retirement............
With benefits based on:
Service when disabled ...............
Service plus credit to early
retirement date or la te r............
Service with some credit............
Not based on service....................
100
36
24
100
100
5
39
26
3
75
60
7
7
10
8
45
64
61
25
7
9
9
5
37
53
51
18
1
2
1
1
(3
)
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.
4 Reduction schedule is related to actuarial assumptions of the life
expectancy at age that pension payments begin.
5 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 e a c h ye a r b e tw een
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.
6 Reduced benefit was not derived from normal retirement formula.
1
2
(2)
(2)
(2)
1
-
’ Excludes supplemental pension plans.
2 Less than 0.5 percent.
3 Immediate disability pensions may be supplemented by additional al
lowances until an employee reaches a specified age or becomes eligible
for Social Security.
4 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.
6
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.
6
The disabled worker’s benefit is not computed by the plan’s normal
benefit formula. The methods used include flat amount benefits, dollar
amount formulas, percent of unreduced normal benefits less Social Secu
rity, and percent of earnings formulas both with and without Social Secu
rity offsets.
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
100
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
70
Table 66. Defined benefit pension plans:1 Percent of
full-time participants by provision for credit for service after
age 65, medium and large firms, 1986
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Type of credit
T ota l..........................................
No credit for service.........................
Pension deferred with no change
in am ount..................................
Pension deferred, but increased
actuarially..................................
Pension deferred, but increased
by percent per additional year
of service2 .................................
Pension begins at age 6 5 ...........
Credit for service, with no actuarial
increase for later retirement age4 ..
All service credited.....................
Service credited to specified
maximum a g e ...........................
Service credited to specified
maximum years of service.......
100
100
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
100
59
59
66
55
51
52
55
49
5
5
6
5
2
2
3
1
1
(3
)
1
1
40
39
23
34
44
22
21
21
18
16
12
23
(3
)
-
Credit for service, with actuarial
increase for later retirement age5 ..
All service credited.....................
Service credited to specified
maximum years of service.......
(3
)
Provision not determinable..............
0
(3
)
-
1
1
1
1
1
1
1
1
-
-
(3
)
(3
)
(3
)
ft
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.
3 Less than 0.5 percent.
4 Additional service is included in the benefit formula, but the pension is
not increased for later retirement date.
5 Additional service is included in the benefit formula and the pension is
increased for later retirement date.
1
2
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
71
T a b le 67. D e fin e d b e n e fit p e n s io n p la n s :1 P e rc e n t o f fu ll-tim e p a rtic ip a n ts in p la n s g ra n tin g ad h o c p o s tre tir e
m e n t a n n u ity in c re a s e s / m e d iu m a n d la rg e firm s , 1986
Characteristic
All participants
Professional and
administrative
participants
Technical and
clerical participants
Production partici
pants
Percent of participants in plans with at least one
postretirement increase in the 1981-85 period ....
35
32
29
39
100
100
100
55
25
59
21
35
25
N um ber o f in creases g ra n te d in
past 5 y ears
T o ta l.................................................................
O n e ............................................................................
T w o ............................................................................
Three.........................................................................
F o u r...........................................................................
Five or m ore..............................................................
100
46
24
9
8
8
22
10
9
12
ft
1
1
32
-
Provision fo r m inim um in crease in m ost rec e n t
a dju stm ent
T o ta l.................................................................
No minimum..............................................................
With minimum ...........................................................
Monthly dollar am ount........................................
Less than $ 5 .................................................
$ 1 0 .................................................................
$11-$14..........................................................
$15 .................................................................
$ 2 0 ................................................................
$25 ................................................................
More than $ 2 5 ..............................................
Percent of present b e n efit.................................
Greater of a monthly dollar amount or a
percent of present benefit...............................
Not determinable......................................................
100
100
100
100
82
18
17
84
15
14
88
14
13
1
1
1
2
6
9
1
1
ft
4
ft
ft
7
ft
4
ft
ft
1
1
1
86
3
ft
ft
1
ft
ft
12
11
4
2
1
ft
1
1
ft
1
1
ft
1
1
100
100
ft
Provision fo r m axim um in crease in m ost
rec e n t a dju stm ent
T o ta l.................................................................
No maximum.............................................................
With maximum ..........................................................
Monthly dollar am ount........................................
$ 1 0 0 or le s s ..................................................
$101-$150 .....................................................
More than $200 ............................................
Percent of present benefit .................................
Less than 1 0 .................................................
10-14.............................................................
15-19..............................................................
25-29 ..............................................................
30 or more ....................................................
Greater of a monthly dollar amount or a
percent of present benefit...............................
Not determinable......................................................
100
80
19
5
2
74
25
5
3
3
2
1
4
1
ft
19
ft
19
7
9
14
3
2
6
76
23
4
3
85
15
10
1
6
1
1
2
3
6
1
ft
ft
1
1
1
1
4
5
3
3
ft
1
1
1
See footnotes at end of table.
100
72
ft
1
ft
T a b le 67. D e fin e d b e n e fit p e n s io n p la n s :1 P e rc e n t o f fu ll-tim e p a rtic ip a n ts in p la n s g ra n tin g a d h o c p o s tre tire
m e n t a n n u ity in c re a s e s ,2 m e d iu m a n d la rg e firm s , 1986— C o n tin u e d
Characteristic
All participants
Professional and
administrative
participants
Technical and
clerical participants
Production partici
pants
100
100
100
100
Benefit formula fo r most recent
increase
T o ta l.................................................................
Flat increase .............................................................
Monthly dollar am ount.......................................
Less than $10.00 .........................................
$ 1 0 . 0 0 ...........................................................
$10.01-$15.00...............................................
$15.01-$20.00 ...............................................
More than $20.00.........................................
Varies by date of retirement........................
Percent of present b e n efit.................................
Less than 5 .0 ................................................
5.0 .................................................................
5.1-7.4...........................................................
7.5-9.9...........................................................
1 0 . 0 ...............................................................
10.1-14.9........................................................
15.0 ...............................................................
More than 1 5 .0 .............................................
Varies by date of retirement........................
Type of flat increase not determinable.............
40
44
2
38
5
1
ft
ft
ft
-
2
1
(3
)
ft
1
ft
ft
-
35
8
4
2
ft
1
1
1
1
1
32
4
38
43
5
25
3
3
ft
ft
ft
4
6
2
1
1
1
2
2
1
1
3
ft
3
2
ft
1
1
1
1
ft
20
22
-
1
1
1
1
0
ft
14
31
-
Increase per year of retirement...............................
Monthly dollar am ount.......................................
Percent of present b e n efit.................................
Less than 2 .0 ................................................
2 . 0 .................................................................
3.0 .................................................................
4.0 .................................................................
4.1-4.9...........................................................
5.0 .................................................................
6 . 0 .................................................................
Varies by date of retirement........................
32
1
1
1
4
5
4
Increase per year of service...................................
Monthly dollar am ount.......................................
Less than $.5 0 ..............................................
$.50 ...............................................................
$ 1 . 0 0 .............................................................
$1.01-$1.99 ...................................................
$2 . 0 0 .............................................................
More than $2.00...........................................
Varies by date of retirement........................
Percent of present benefit ................................
28
27
17
16
-
14
13
-
39
38
2
2
11
8
3
26
-
Combination of two or more benefit formulas........
Type of formula not determinable...........................
1
1
30
39
3
36
38
6
6
10
23
5
3
4
3
2
6
2
2
5
5
3
2
2
6
6
8
4
4
3
2
1
3
18
ft
ft
ft
24
5
4
ft
4
2
1
1
1
1
1
1
1
3
1
2
5
1
1
1
1
2
4
2
2
1
1
ft
Excludes supplemental pension plans.
Unscheduled increases in pension payments for employees
retiring prior to 1986. Excludes one-time lump-sum payments.
3 Less than 0.5 percent
1
ft
NOTE: Because of rounding, sums of individual items may
not equal totals. Dash indicates no employees in this category,
1
2
39
1
73
Table 69. Defined benefit pension plans:1 Percent of
full-time participants by provision for postretirement
survivor annuity, medium and large firms, 1986
T a b le 68. D e fin e d b e n e fit p e n s io n p la n s :1 P e rc e n t o f
fu ll-tim e p a rtic ip a n ts b y ty p e o f v e s tin g s c h e d u le , m e d iu m
a n d la rg e firm s , 1986
Type of vesting schedule
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
Type of annuity for surviving spouse
ticipants
trative
partici ticipants
partici
pants
pants
Techni
cal and Produc
clerical tion par
partici ticipants
pants
T o ta l...........................................
Total2 ........................................
100
100
100
Immediate full vesting.......................
(3)
(3)
(3)
(3)
100
100
100
100
100
Cliff vesting,4 with full vesting after:
1 0 years of service at any age ...
1 0 years of service after
age 18 ......................................
1 0 years of service after age 19
or later5 ......................................
Other6 ...........................................
Graduated vesting,7 with full vesting
after:
Less than 10 years of service....
1 0 years of service.....................
1 1 years of service.....................
12-14 years of service................
15 years of service8 ....................
Other9 ...........................................
Vesting provision not determinable ..
69
67
66
9
9
9
8
12
2
1
1
1
0
6
(3)
Spouse’s share of joint-and-survivor
annuity2 only ...................................
50 percent of retiree’s pension ...
51-99 percent of retiree’s
pension.............................. .....
1 0 0 percent of retiree’s pension .
Alternative percentages at
retiree’s option .........................
72
10
93
14
94
17
90
6
4
(3
)
3
(3
)
10
1
66
75
73
56
(3
)
(3
)
3
6
6
7
22
1
7
Spouse’s share of joint-and-survivo.
annuity plus portion of retiree’s
pension............................................
(3)
6
7
8
4
1
1
1
1
1
(3)
3
2
3
4
4
3
7
1
(3)
3
2
Portion of retiree’s accrued pension
only .................................................
2
(3)
(3)
(3)
1
Excludes supplemental pension plans.
2 An annuity that provides income during the lifetime of both the retiree
2
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.
3 Less than 0.5 percent.
(3)
' Excludes supplemental pension plans.
Because plans may adopt alternative vesting schedules, sums of par
ticipants covered by individual vesting schedules may exceed 1 0 0 percent.
3 Less than 0.5 percent
4 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.
6 Includes participants in plans containing service requirements for vest
ing more liberal than ERISA standards.
7 Graduated vesting schedules give an employee rights to a gradually
increasing share of pension benefits determined by years of service, even
tually reaching 1 0 0 percent vesting status.
8 Participants in this group were in plans that adopted ERISA’s longest
time span for graduated vesting, which calls for 25 percent vesting with 5
years of service, with the vested percentage increasing 5 percentage
points each year for 5 succeeding years, then 10 percentage points for
each of the next 5 years. Thus, 15 years is the maximum requirement for
this form of vesting.
9 Participants in this group were in plans which call for 50 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 5
years.
2
92
18
NOTE: Because of rounding, sums of individual items may not equal to
tals.
74
T a b le 70. D e fin e d b e n e fit p e n s io n p la n s :1 P e rc e n t o f fu ll-tim e p a rtic ip a n ts b y p ro v is io n f o r p re re tire m e n t s u rv iv o r
a n n u ity , m e d iu m and la rg e firm s , 1986
All participants
Professional and
administrative partici
pants
Technical and clerical
participants
Production participants
Total ..............................................
100
100
100
100
Preretirement survivor annuity provided
99
100
99
99
Equivalent of joint and survivor
annuity1 .........................................
2
65
64
63
68
60
58
56
63
Type of annuity for surviving spouse
Based on early retirement3 ........
Less than 50 percent of
employee pension............
At extra employee cost5
50 percent of employee
pension ..............................
At extra employee cost5
51-99 percent of employee
pension ..............................
At extra employee cost5
1 0 0 percent of employee
pension..............................
At extra employee cost5
Alternative percentages of
pension at employee's
o p tio n ................................
At extra employee cost5
Based on normal retirement6 ....
At extra employee cost5 ......
Portion of accrued employee
benefit...........................................
Reduced for early
retirement ...............................
Unreduced for early retirement..
Based on service projected to
normal retirement date ..........
No preretirement survivor annuity
provided8 .............................................
O
O
43
13
45
4
3
(4
)
3
(4
)
4
(4
)
O
0
3
0
7
5
0
0
10
52
16
5
O
3
3
0
5
(4)
3
1
6
-
-
5
(4
)
31
33
35
28
18
21
23
11
10
10
14
13
2
2
2
1
2
2
2
3
6
6
0
O
(4
)
(4
)
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.
3 Survivor annuity is based upon the benefit the employee would
have received if early retirement had occurred on the date of death.
4 Less than 0.5 percent.
5 Plan reduces the accrued employee pension benefit for each
year survivor protection is in force.
6 Survivor annuity is based on the benefit the employee would
have received if eligible for normal retirement on the date of death.
(4
)
(4
)
1
1
7 Includes annuity based on a dollar amount formula or percent
of earnings.
8 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 noncollectively 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.
1
2
O
(4
)
48
13
Other annuity7 ..................................
Type of annuity not determinable ...
O
(4
)
0
0
NOTE: Because of rounding, sums of individual items may not
equal totals. Dash indicates no employees in this category.
75
T a b le 71. D e fin e d b e n e fit p e n s io n p la n s :1 P e rc e n t o f
fu ll-tim e p a rtic ip a n ts b y age a n d le n g th -o f-s e rv ic e
re q u ire m e n ts fo r p a rtic ip a tio n ,2 m e d iu m a n d la rg e firm s , 1986
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
Age and service requirement
provision3
M inim um req uirem en t
T ota l..........................................
With minimum age and/or service
requirement....................................
Service requirement o n ly ............
3 months or le s s ...................
4-5 months.............................
6 m onths................................
1 year ....................................
3 years ...................................
Over 3 years..........................
Age 20 or le ss.............................
1 - 1 1 months of service.........
1 year ....................................
Age 21 .........................................
No service requirement.........
1 - 6 months of service ...........
1 year .....................................
Over 1 ye a r............................
100
100
100
59
58
66
57
21
21
22
19
1
C)
1
-
1
-
2
2
14
(4
)
3
16
100
1
(4
)
2
2
3
14
(4
)
5
1
1
1
1
1
1
1
1
(4)
(4
)
(4
)
20
22
22
2
2
2
1
0
0
13
(4
)
3
18
(4
)
18
O
20
20
(4
)
17
O
(4)
0
17
14
21
1
1
1
1
1
1
1
1
12
0
0
Age 22 or greater5 ......................
No service requirement.........
1 - 1 1 months of service.........
1 year .....................................
Over 1 year............................
15
(4
)
-
18
-
16
(4
)
Without minimum age and/or
service requirement.......................
40
41
34
43
Age and service requirement not
determinable...................................
O
1
(4
)
(4
)
18
M axim um age req u irem en t
T ota l..........................................
100
100
100
100
With maximum age limitation6 ..........
58
64
67
50
Without maximum age limitation......
42
36
33
50
Excludes supplemental pension plans.
Excludes maximum 6 -month administrative time lags allowed by
ERISA. Most plans with time lags adopt the beginning of designated 6 month periods as participation dates.
3 If a plan had alternate participation requirements, one of which was
service only, the service only requirement was tabulated.
4 Less than 0.5 percent.
5 The Retirement Equity Act of 1984 requires that nearly all plans must
allow participation to full-time employees who have reached the age of 2 1
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.
6 ERISA legislation permitted plan administrators to impose a maximum
age for participation. Maximum age must have been within 5 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.
1
2
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
76
Chapter 7. Defined
Contribution Plans
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. Profitsharing plans often substitute for pensions, while savings and
thrift plans commonly are supplements.
Sixty percent of the employees within the scope of the 1986
survey (seven-tenths of the white-collar workers and onehalf 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.33 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.34 Another 3 percent of the em
ployees were currently purchasing company stock, through
Cash or deferred arrangem ents (table 75)
One-third of the employees within the scope of the survey
were in plans with a cash or deferred arrangement.3 These
5
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.
34 A m oney purchase pension plan provides for a pension annuity or other
form o f retirem ent incom e that is determ ined by fixed contribution rates
plus earnings credited to the em p lo y e e ’s account. A stock bonus plan is
a plan whereby the em ployer or the em ployee and the em ployer jointly con
tribute to a trust fund w hich invests in various securities. Proceeds from
the investm ents are usually paid to the em p loyees in the form o f com pany
stock. Savings and thrift, em ployee stock ownership, and profit-sharing plans
are described later in this chapter.
35 T he survey determ ined the number o f em p loyees actually contribut
ing to freestanding 401(k) plans. It also determ ined the number participat
ing in em ployer-financed plans allow ing em ployee contributions with pretax
dollars, but not the number o f em ployees actually making such contributions.
33 BLS used these definitions for analytic purposes, but it should be noted
that m ost defined contribution plans can be used to provide retirem ent in
com e or accum ulate financial assets. Capital accum ulation plans m ay pro
vide retirement incom e, because withdrawals o f the em ployer’s contributions
are voluntary, not m andatory. Sim ilarly, defined contribution retirement
plans can be used to accum ulate a ssets, because these plans nearly alw ays
perm it preretirem ent w ithdraw als o f the em p lo y er’s contributions (for e x
am ple, at age 5 9 Vi, upon term ination o f em ploym ent prior to retirem ent,
or upon disability). M any o f these plans also perm it em p lo y ees to receive
a lump sum , rather than an annuity, upon retirem ent).
77
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.
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 1986.36 Forty-two percent of the whitecollar 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:
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.
Percent o f
pa rticip a n ts
Savings and th r ift..................................................
D eferred profit s h a r in g ......................................
M oney purchase p e n s io n ...................................
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.
75
28
34
Savings and thrift plans
Twenty-eight 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 M ost participants in cash or deferred arrangem ents w ere in plans that
qualified under section 4 0 1 (k ) o f the Internal R evenue C ode. A sm all num
ber o f plans under section 4 03(b) w ere observed in not-for-profit organi
zations.
78
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
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 P A Y S O P 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 P A Y SO P 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 P A Y SO P tax credit, employers who terminate their
plans may distribute accumulated benefits immediately.
Final distribution of p a y s o p 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.
(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.
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
formula, 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.
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 (E S O P ), up
from 24 percent in 1985.3 These plans, usually funded en
7
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 E S O P ’s were in payroll-based plans (P A Y S O P ’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 p a y s o p
Participation and vesting (tables 84 and 85)
37 This proportion is lim ited to plans w here stock w as credited to em
p lo y ee accounts during 1986.
79
Minimum age and/or service participation requirements
are more common in defined contribution plans than in de
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 E R ISA vesting
rules 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
and 29 percent of deferred profit-sharing participants had
immediate full vesting, a feature rarely found in defined
benefit plans, p a y s o p ’ 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.
80
Table 74. Retirement and capital accumulation plans:
Percent of full-time participants by combinations of plans,
medium and large firms, 1986
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
Type of plan
Profes
sional
and
All em
adminis
ployees
trative
employ
ees
Techni
cal and Produc
clerical tion em
employ ployees
ees
Type of plan
T ota l..........................................
T ota l..........................................
Covered by retirement or capital
accumulation p la n ..........................
Retirement1 o n ly ..........................
Capital accumulation2 o n ly..........
Retirement and capital
accumulation.............................
100
100
100
93
62
93
64
1
1
1
1
22
30
28
14
7
7
Defined benefit or money purchase
pension...........................................
With:
No other p lan.........................
Profit sharing1 ..........................
Savings and th rift....................
Stock2 ......................................
Profit sharing1 and
savings.................................
Profit sharing1 and
stock2 ...................................
Savings and stock2 .................
Two or more stock2
p la n s ..................................
Other combinations ................
88
12
9
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
100
100
100
85
86
85
85
35
5
15
26
26
6
8
46
3
21
19
11
10
12
1
1
7
5
15
100
91
67
Not covered by retirement or capital
accumulation p la n ..........................
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
72
Includes defined benefit pension plans and defined contribution plans
such as money purchase pension, profit sharing, savings and thrift, stock
bonus, and employee stock ownership plans in which employer contribu
tions must remain in the participant's account until retirement age, death,
disability, separation from service, age 59 1/2, or hardship.
2 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.
1
11
(3
)
l3
)
O
8
11
0
5
14
9
7
(3
)
0
1
1
0
10
10
0
NOTE: Because of rounding, sums of individual items may not equal to
tals.
Profit sharing1 ....................................
With:
No other plan.........................
Savings and th rift....................
Stock2 ......................................
Savings and stock2 .................
Two or more stock2
p la n s...................................
Table 73. Defined contribution and stock plans: Percent of
full-time employees participating by type of plan, medium
and large firms, 1986
Savings and th rift..............................
With:
No other p lan.........................
Stock2 ......................................
3
3
3
2
2
3
1
1
1
1
(3
)
Stock2 p la n ........................................
With:
No other plan.........................
1
1
2
1
1
1
2
1
Type of plan
Profes
sional
and
All em
adminis
ployees
trative
employ
ees
Techni
cal and Produc
clerical tion em
employ ployees
ees
11
11
8
7
8
1
1
1
9
1
1
1
1
1
0
0
0
(*)
(3
)
(3
)
(3
)
0
2
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.
3 Less than 0.5 percent.
1
2
Savings and thrift1 .............................
28
39
36
17
Profit sharing2 ....................................
Immediate cash only ..................
Deferred benefits o n ly ................
Combination.................................
22
22
22
22
1
1
1
1
18
3
18
3
18
4
17
4
Employee stock ownership2 .............
Payroll based employee stock
ownership..................................
O ther............................................
30
32
32
27
28
30
3
31
26
2
2
2
Money purchase pension.................
2
2
1
2
Stock bonus......................................
(3
)
1
Stock option......................................
0
Stock purchase..................................
4
0
(3
)
0
3
(*)
NOTE: Because of rounding, sums of individual items may not equal to
tals.
(3
)
3
2
1 Includes 0.2 percent of employees in plans with both matching and
nonmatching employer contributions. Not all participants in such plans
may elect or be required to contribute.
2 The total may be less than the sum of the individual items because
some employees participate in more than one type of profit sharing or em
ployee stock ownership plan.
3 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal to
tals.
81
Table 75. Cash or deferred arrangements:1 Percent of
full-time employees participating in plans permitting
employee contributions with pretax dollars, medium and
large firms, 1986
Item
Profes
sional
and
All em
adminis
ployees
trative
employ
ees
Table 76. Savings and thrift plans: Percent of full-time
participants by maximum allowable employee contribution,1
medium and large firms, 1986
Techni
cal and Produc
clerical tion em
employ ployees
ees
Maximum allowable contribution2
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Techni
cal and Produc
clerical tion par
partici ticipants
pants
T o ta l.................................................
Percent of all employees in plans
with cash or deferred arrangement
Salary reduction plans................
Deferral of profit sharing
allocation...................................
33
48
39
31
46
37
19
2
1
2
1
Salary reduction plans
T ota l..........................................
Savings and thrift plans....................
Profit sharing pla n s...........................
Money purchase pension p la n s .......
Freestanding plans2 ..........................
Other ..................................................
100
100
67
19
70
15
2
2
11
1
13
0
100
69
19
1
100
60
25
3
10
10
(3
)
2
1 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.
2 Employer contributions are not made to the plan. Includes employee
contributions permitted under either section 401 (k) or 403(b) of the Internal
Revenue Code.
3 Less than 0.5 percent.
100
100
98
1
99
1
-
99
1
0
(3)
4
5
1
13
94
1
3
4
1
12
(3)
5
4
1
14
1
(3)
1
(3)
1
0
13
1
(3)
13
0
12
(3)
15
(3)
11
(3)
4
2
(3)
4
2
11
27
6
0
(3)
3
3
3
2
(3)
2
2
2
1
(3)
3
1
1
5
34
1
7
1
1
1
1
3
4
O
0
9
29
0
4
7
5
1
11
28
3
5
1
2
2
2
2
1
(3)
Specified dollar a m o u n t........................
2
(*>
1
5
Other4 .........................................................
NOTE: Because of rounding, sums of individual items may not equal to
tals.
100
Percent of employee e a rn in g s ..........
Less than 5 percent .............. .......
5 p e rc e n t...........................................
6 p e rc e n t............................................
8 p e rc e n t...........................................
9 p e rc e n t............................................
10 p e rc e n t.........................................
10.01-10.99 p e rc e n t.......................
11 p e rc e n t.........................................
11.01-11.99 p e rc e n t.......................
12 p e r c e n t.........................................
12.01-12.99 p e rc e n t.......................
13 p e rc e n t.........................................
14 p e rc e n t.........................................
14.01-14.99 p e rc e n t.......................
15 p e rc e n t.........................................
16 p e rc e n t.........................................
16.01-16.99 p e rc e n t.......................
17 p e rc e n t.........................................
17.01-17.99 p e rc e n t............... ........
18 p e rc e n t.........................................
20 p e rc e n t.........................................
21.01-24 99 p e rc e n t........................
25 p e rc e n t.........................................
Greater than 25 p e rc e n t...............
20
100
1
1
1
1
0
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.
3 Less than 0.5 percent.
4 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.
1
2
NOTE: Because of rounding, sums of individual items may not equal to
tals. Dash indicates no employees in this category.
82
Table 77. Savings and thrift plans: Percent of full-time participants by provisions for pretax employee contributions,1
medium and large firms, 1986
Item1
2
T ota l..........................................
Pretax contribution allowed..............
All contributions must be pretax .
Maximum contribution is:
4 or 5 percent of
earnings.............................
6 percent of earnings..........
8 percent of earnings..........
9 percent of earnings..........
1 0 percent of earnings..........
1 1 percent of earnings..........
11.01-11.99 percent of
earnings...............................
1 2 percent of earnings.........
12.01-14.99 percent of
earnings...............................
15 percent of earnings.........
16 percent of earnings..........
Greater than 16 percent of
earnings..............................
Initial contributions must
be pretax3 ................................
Maximum pretax
contribution is:
3 percent of earnings .........
4 percent of earnings..........
5 percent of earnings..........
6 percent of earnings.........
7 percent of earnings..........
8 percent of earnings..........
9 percent of earnings..........
1 0 percent of earnings..........
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
partici
pants
pants
100
100
100
Item2
82
72
18
21
18
Initial contributions must
be pretax3
—Continued
1 1 percent of earnings..........
1 2 percent of earnings..........
13-14 percent of earnings....
15 percent of earnings..........
16 percent of earnings.........
Greater than 16 percent of
earnings...............................
69
14
n
0
0
2
2
3
5
2
3
1
1
1
3
2
0
0
0
1
1
2
3
3
3
2
1
18
0
0
0
0
20
0
1
1
1
0
3
3
4
(4
)
3
1
0
3
2
0
4
6
2
4
0
10
-
1
1
1
1
1
1
1
1
1
2
(4
)
1
1
39
39
33
45
0
0
(4
)
(4
)
4
3
-
0
(4
)
1
1
1
1
7
5
10
2
2
1
4
(4
)
5
7
5
3
(4
)
8
8
3
(4
)
7
2
2
2
2
1
0
3
3
7
(4
)
0
(4
)
0
(4
)
3
7
1
3
5
8
3
3
3
11
(4
)
1
3
1
Pretax contribution not allowed........
25
18
28
31
(4
)
3
1 Pretax contributions are allowed under sections 401 (k) and 403(b)
the Internal Revenue Code.
2 If maximum contributions varied by participant’s length-of-service,
age, or both, the highest possible percentage was tabulated.
3 Contributions above the maximum pretax level must be on a post
tax basis.
4 Less than 0.5 percent.
5 In most of these plans, all contributions may be either pretax or
-
(4
)
4
0
n
0
(4
)
3
0
1
0
Contributions may be pretax at
the employee’s option5 ............
Maximum pretax
contribution is:
Less than 5 percent of
earnings................................
5 percent of earnings...........
6 percent of earnings...........
7 percent of earnings...........
8 percent of earnings...........
9 percent of earnings...........
1 0 percent of earnings.........
1 1 - 1 2 percent of earnings....
13-14 percent of earnings....
15 Percent of earnings.........
16 percent of earnings.........
18 percent of earnings.........
2 0 percent of earnings..........
2
3
3
1
23
2
-
<)
4
4
0
(4
)
0
3
3
1
3
0
0
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
75
0
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
posttax at the em ployee'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 78. Savings and thrift plans: Percent of full-time participants by provision for employer matching contributions,
medium and large firms, 1986
Matching percentage1
2
Employee earnings to be matched1
Total
25 percent
50 percent
75 percent
100
percent
Other fixed
percentages
Varies3
All participants
T ota l..........................................
Up to first:
2 percent ......................................
3 percent .....................................
4 percent .....................................
5 percent .....................................
6 percent .....................................
7 p ercent.....................................
8 p ercent.....................................
1 0 percent.....................................
1 2 percent or greater...................
Specified dollar amount....................
4
100
1
7
4
16
54
3
4
3
43
0
0
5
-
12
0
3
1
1
1
2
2
1
2
27
1
0
1
-
2
1
0
1
1
1
1
7
0
5
(4
)
32
8
1
24
-
1
1
5
5
2
4
2
(4
)
-
12
-
1
1
-
-
1
1
1
5
15
-
(4
)
(4
)
1
(4
)
Professional and administrative
T ota l..........................................
Up to first:
2 percent .....................................
3 percent .....................................
4 perce n t.....................................
5 percent .....................................
6 percent ......................................
7 percent ......................................
8 percent ......................................
1 0 percent.....................................
1 2 percent or greater...................
Specified dollar amount....................
4
100
O
7
3
19
53
4
7
4
1
2
(4
)
0
1
1
1
1
17
25
(4
)
4
-
14
-
-
1
1
1
24
3
4
1
2
1
-
1
2
0
2
3
0
(4)
1
-
0
(4
)
-
1
(4
)
7
6
8
-
15
-
1
1
-
-
1
2
1
1
0
0
0
Technical and clerical
T ota l..........................................
Up to first:
2 percent .....................................
3 percent ......................................
4 percent .....................................
5 percent .....................................
6 percent ......................................
7 percent ......................................
8 percent ......................................
1 0 percent......................................
1 2 percent or greater...................
Specified dollar amount....................
4
40
(4
)
(4
)
(4
)
100
O
7
4
17
56
1
2
0
4
-
15
(4
)
4
1
(4
)
1
28
1
(4
)
1
1
3
1
1
2
0
1
1
(4
)
5
(4
)
-
60
3
5
1
2
2
2
7
1
1
-
9
-
28
1
0
4
3
(4)
1
7
18
1
0
1
(4
)
(4
)
(4
)
4
8
20
Production
T otal..........................................
Up to first:
2 percent .....................................
3 percent .....................................
4 percent .....................................
5 percent .....................................
6 percent .....................................
7 percent .....................................
8 percent .....................................
1 0 percent.....................................
1 2 percent or greater...................
Specified dollar amount....................
5
100
1
7
5
9
53
4
2
2
2
14
(4
)
(4)
1
3
3
3
32
3
O
1
0
4
(4
)
(4
)
2
1
11
1 Employee may contribute a percent of salary up to a specified maxi
mum; ceilings on contributions to be matched by employers generally are
lower. If the maximum varied by participant’s length-of-service, age, or
both, the highest possible percentage was tabulated.
2 The percentage of matchable employee contributions added by em
ployers. Some plans specified a maximum annual employer contribution.
0
(4
)
1
(4
)
(4
)
1
1
(4
)
(4
)
-
-
2
1
1
12
1
1
-
3
4
-
(4
)
2
1
1
1
(4
)
3 Includes percentages which vary by length of service, level of em
ployee contribution, and company profits.
4 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
84
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
tive participants
All participants
Technical and clerical
participants
Production participants
Characteristic
Employer
contributions
Employee
contributions
Employer
contributions
Employee
contributions
Employer
contributions
Employee
contributions
Employer
contributions
Employee
contributions
49
89
54
90
45
87
45
90
T otal..........................................
100
100
100
100
100
100
100
100
Company stock..................................
Common stock fu n d .........................
Corporate b o n d s ...............................
Diversified mix of stocks and bonds
Government securities......................
Guaranteed investment contracts....
Money market funds.........................
Other2 .................................................
58
63
67
79
32
55
20
21
41
71
31
7
29
64
35
9
Total in plans permitting investment
choices by employees1 ..................
Investment choice
65
74
31
17
33
73
26
7
86
32
18
35
71
32
10
86
29
19
43
72
35
9
86
36
67
73
32
19
26
71
25
7
52
84
32
14
27
79
24
59
67
27
11
8
100
100
11
29
77
20
Number o f choices
T ota l..........................................
100
100
24
36
25
15
T w o ....................................................
T h re e .................................................
Four....................................................
Five or m o re .....................................
100
28
35
24
100
18
35
31
16
12
19
34
33
14
1 Excludes plans that limit investment options to participants age 55 or
greater.
2 Includes purchases of life insurance or annuities, real estate,
mortgages, and deposits in credit union or savings accounts.
Least restrictive provision
25
36
23
16
100
30
36
34
37
16
14
22
12
40
37
13
10
NOTE: Because of rounding, sums of individual items may not equal
totals.
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
and
All par
adminis
ticipants
trative
partici
pants
100
Table 81. Savings and thrift plans: Percent of full-time
participants by method of distribution of account at
retirement, medium and large firms, 1986
Techni
cal and Produc
clerical tion par
partici ticipants
pants
Method of distribution available
T ota l..........................................
T ota l..........................................
100
100
100
82
83
79
84
For hardship reasons1 ................
Full withdrawal, no penalty ....
Full withdrawal, with penalty .
Partial withdrawal, no penalty
Partial withdrawal, with
penalty.................................
26
19
5
28
25
18
5
2
Techni
cal and Produc
clerical tion par
partici ticipants
pants
100
100
100
100
100
Withdrawals permitted......................
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
6
24
16
5
2
2
2
(2
)
(*)
<)
2
54
31
55
15
35
59
18
37
1
1
1
1
3
ft
3
(*>
0
-
No withdrawals permitted ................
18
17
21
16
Provision not determinable..............
(2
)
0
(2
)
-
For any reason............................
Full withdrawal, no penalty ....
Full withdrawal, with penalty .
Partial withdrawal, no penalty
Partial withdrawal, with
penalty.................................
Not determinable ..................
21
20
4
98
99
99
25
52
98
26
55
98
29
53
98
47
99
1
1
1
1
1
1
Not determinable...............................
(3
)
21
(3
)
1 The total is less than the sum of the individual items because many
participants are offered optional forms of cash distribution.
2 Employer and employee contributions are invested solely in company
stock, which is automatically distributed upon retirement or termination of
employment. Stock may also be distributed under plans providing for cash
distributions.
3 Less than 0.5 percent.
2
NOTE: Because of rounding, sums of individual items may not equal to
tals.
1 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.
2 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.
99
Stock distribution2 .............................
-
56
18
34
Cash distribution1 ..............................
Lifetime annuity (including
joint-and-survivor form s)...........
Installments..................................
Lump s u m ....................................
85
Table 83. Deferred profit-sharing plans: Percent of full-time
participants by selected provisions, medium and large firms,
1986
Table 82. Payroll-based employee stock ownership plans:1
Percent of full-time participants by selected provisions,
medium and large firms, 1986
Provision
Profes
sional
and
All par
adminis
ticipants
trative
partici
pants
Techni
cal and Produc
clerical tion par
partici ticipants
pants
Item
Profes
sional Techni
and
cal and Produc
All par
adminis clerical tion par
ticipants
trative
partici ticipants
pants
partici
pants
Method o f determining employer
contributions
Formula fo r allocation o f stock
T o ta l..........................................
100
100
100
100
Equally to all participants.................
Based on participant’s earnings.......
22
20
78
24
76
80
23
77
T o ta l..........................................
100
100
100
100
Seven years after allocation2 ............
Upon termination, death, or disability
o n ly .................................................
15
17
15
14
T o ta l...........................................
85
83
85
86
Equally to all participants.................
Based on participant’s earnings.......
Based on participant’s earnings and
service ............................................
Other2 ............................................ ....
T o ta l...........................................
100
Based on stated formula..................
No predetermined form ula................
59
41
55
45
55
45
64
36
100
100
100
100
100
100
100
Earliest distribution of stock
Allocation of p rofits to individual
employees
1
T ota l..........................................
100
100
100
Stock o n ly .........................................
Cash or stock3 ...................................
58
42
55
45
56
44
62
38
10
11
10
8
8
100
100
25
75
28
72
14
3
84
9
5
Loans from employees’ accounts
1 In a payroll-based stock ownership plan (PAYSOP), the employer cre
ates individual company stock accounts for employees. The employer
earns a tax credit equal to the value of the contribution. A 1986 amend
ment to the Internal Revenue Code has repealed PAYSOP tax credits for
compensation paid or accrued after December 31, 1986.
2 Active employees may receive the value of their 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.
3 Includes plans which distributed cash unless stock was demanded,
and vice versa.
100
24
76
100
24
76
' Less than 0.5 percent.
Allocation of profits was based on either participant contributions as a
percent of total contributions, participant earnings and performance of
staff, or some other formula combining elements of the above.
2
NOTE: Because of rounding, sums of individual items may not equal to
tals
NOTE: Because of rounding, sums of individual items may not equal to
tals.
76
Permitted............................................
Not permitted.....................................
100
0
80
T o ta l...........................................
Form of distribution
0
81
86
Table 84. Selected defined contribution plans: Percent of full-time participants by age and length-of-service require
ments for participation, medium and large firms, 1986
All participants
Age and service requirement
provision1
T o ta l.....................................
With minimum age and/or service
requirement................................
Service requirement o n ly........
3 months or le s s ..............
6 m onths...........................
7-11 months......................
1 ye a r.................................
2 years...............................
3 years...............................
Over 3 ye a rs.....................
Age 20 or le s s ........................
No service requirement....
1 - 1 1 months of service.....
1 year .................................
Professional and adminis
trative participants
Technical and clerical
participants
Production participants
Em
Savings Deferred ployee
and
profitstock
thrift
sharing owner
plans
plans
ship
plans
Em
Savings Deferred ployee
profitand
stock
thrift
sharing owner
plans
plans
ship
plans
Em
Savings Deferred ployee
and
profitstock
thrift
sharing owner
plans
plans
ship
plans
Em
Savings Deferred ployee
and
profitstock
thrift
sharing owner
plans
plans
ship
plans
100
100
100
100
100
90
86
74
88
83
73
7
69
4
7
49
68
72
7
64
3
4
44
8
ft
50
5
10
7
13
-
-
6
36
2
2
ft
4
5
3
ft
8
ft
50
4
3
ft
1
4
1
(2
)
2
2
10
12
1
ft
3
7
4
ft
3
ft
Age 21 ....................................
No service requirement....
1 - 6 months of service.......
1 ye a r.................................
Over 1 y e a r.......................
O
Age 22 or older3 .....................
1 - 1 1 months of service.....
1 ye a r.................................
Over 1 y e a r.......................
ft
(2
)
-
Without minimum age and/or
service requirement...................
10
Age and service requirement not
determinable...............................
“
1
8
1
3
ft
4
100
100
72
91
86
84
92
88
69
66
72
7
65
4
79
3
4
45
77
74
5
9
56
62
5
5
_
27
13
2
5
41
5
2
ft
ft
1
7
11
ft
1
6
8
ft
49
41
8
1
1
2
4
ft
3
ft
1
-
ft
-
-
ft
14
26
12
17
(2
)
ft
“
ft
ft
1
1
ft
1
13
14
ft
4
9
1
2
10
1
8
10
53
5
7
5
ft
-
2
5
3
ft
3
ft
5
5
ft
-
ft
14
ft
ft
1
1
1
1
3
1
8
4
7
1
ft
6
16
*
12
-
2
ft
-
9
2
-
-
1
ft
-
2
2
1
ft
ft
ft
28
1
-
3
(2
)
-
1
17
-
1
-
2
10
12
6
ft
ft
2
-
1
2
ft
2
' If a plan had alternate participation requirements, one of which
was service only, the service only requirement was tabulated.
3 Less than 0.5 percent.
3
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
j
100
-
2
1
100
-
16
ft
4
1
100
11
2
9
100
12
6
1
0
1
100
ft
3
5
ft
1
ft
-
1
3
ft
1
ft
-
8
-
1
1
_
-
-
12
31
-
ft
1
the compliance date for most plan sponsors is June 3 0 ,1 9 8 6 . However,
collectively bargained plans need not comply until the earlier of: 1)
the expiration date of the collective bargaining agreement, or 2)
January 1, 1987.
NOTE: Because of rounding, sums of individual items ,may not equal
totals. Dash indicates no employees in this category.
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
Professional and administra
tive participants
All participants
Type of vesting schedule
Technical and clerical
participants
Production participants
Savings and
thrift plans
Deferred
profit-sharing
plans
Savings and
thrift plans
Deferred
profit-sharing
plans
Savings and
thrift plans
Deferred
profit-sharing
plans
Savings and
thrift plans
Deferred
profit-sharing
plans
T o t a l '..........................................
100
100
100
100
100
100
100
100
Immediate full v e s tin g .....................
26
29
23
35
27
34
29
23
Cliff vesting13with full vesting
2
a fte r :..................................................
1-2 y e a rs .......................................
3-4 y e a rs .......................................
5 y e a r s ..........................................
More than 5 y e a rs .....................
20
5
7
7
1
2
1
22
6
7
8
1
2
21
6
8
6
1
2
14
4
5
5
2
1
Graduated vesting4 with full
vesting after: ..................................
4 or fewer y e a r s ........................
5 y e a r s ..........................................
6 y e a r s ..........................................
7 y e a r s ..........................................
8 y e a r s ..........................................
9 y e a r s ..........................................
10 y e a rs ........................................
11 y e a rs ........................................
12-14 y e a r s .................................
15 y e a rs ........................................
Other5 ............................................
25
2
15
2
1
1
0
4
0
0
0
-
Class vesting* with each class
fully vested a fte r :...........................
1 y e a r ............................................
2 y e a r s ..........................................
3 y e a r s ..........................................
4 y e a r s ..........................................
5 y e a r s ..........................................
ft
Vesting provision not determina b le ....................................................
0
29
1
16
8
3
0
1
66
3
5
7
1
1
24
5
14
6
ft
4
2
1
1
ft
1
1
24
2
15
2
57
3
5
6
2
1
24
4
6
5
1
ft
ft
ft
3
ft
ft
ft
-
7
30
1
14
12
3
1
3
1
2
*
ft
1 Because plans may adopt alternative vesting schedules, sums of
participants covered by individual vesting schedules may exceed 1 0 0
percent.
2 Under a cliff vesting schedule, an employee is not entitled to any
benefits accrued under the plan until satisfying the requirements for 1 0 0
percent vesting.
3 Less than 0.5 percent.
4 Graduated vesting schedules give an employee rights to a gradually
increasing share of accrued benefits, determined by years of service,
eventually reaching 1 0 0 percent vesting status.
5 Participants in this group were in plans which call for 50 percent
26
3
14
3
ft
1
ft
4
ft
ft
ft
-
ft
ft
1
60
5
4
7
1
1
24
6
4
6
26
ft
16
7
2
1
ft
1
ft
25
1
17
1
1
1
74
-
ft
3
2
23
5
25
6
ft
1
-
ft
5
2
1
2
-
1
5
8
-
ft
32
2
19
5
6
2
-
ft
ft
1
1
-
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 satisfy 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.
88
Chapter 8. Plan Administration
looked for the first time at two arrangements for offering
such benefits—flexible benefits plans and reimbursement ac
counts.
Five percent o f employees in medium and large firms were
offered flexible benefits plans, reimbursement accounts, or
both. These plans were more com m on among white-collar
workers (8 percent) than among blue-collar workers (2
percent).
Flexible benefits plans, also known as cafeteria plans, al
low em ployees to choose between two or more types o f
b enefits.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
o f receiving cash instead o f benefits. Less com m on 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 o f a flexible benefits program.
A reimbursement account, also called a flexible spending
account, provides employer funds, em ployee 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 o f a flexible benefits plan or they stand
alone.
A large majority o f em ployees participating in flexible
benefits plans or reimbursement accounts were required to
contribute toward the cost o f their benefits, or were allowed
to contribute to obtain additional benefits. M ost o f these
contributions were in the form o f a salary reduction
arrangement.39
Individual benefit plans offered through a flexible benefits
plan were analyzed and included in the tabulations for specific
benefit areas in this bulletin.
In addition to the data on individual benefit plans, the sur
vey looked at how various benefits are administered. The
great majority o f the insurance and retirement plans were
sponsored by individual em ployers, and benefits typically
were offered independently, rather than as part o f a flexible
benefits program.
Plan sponsor (table 86)
Single employers were the predominant sponsors o f 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-em ployer plans. Eighty-seven
percent o f sickness and accident insurance participants were
in single-employer plans; m ost o f 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 em ployees m oving
from one em ployer to another within the industry to receive
the same or similar benefits. D efined benefit pension and
health insurance plans were the most common benefits spon
sored by multiemployer groups, and production em ployees
were the m ost likely recipients o f such benefits. The scope
o f 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 o f
multiemployer plans.
Flexible benefits plans and reimbursement
accounts (table 87)
Traditionally, employers have offered their workers benefit
plans in a number o f 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 exam ple, be
tween a com m ercial 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 a tte n tio n flexible benefits. In 1986, the Em ployee Benefits Survey
3g For this survey, a plan had to allow ch oices am ong tw o or m ore types
o f benefits to be classified as a flex ib le benefits plan. T hus, plans that per
m itted a selection in on ly on e benefit (for exam ple, a ch oice am ong several
health insurance options or plans) w ere not classified as flexib le benefits
plans.
39 R egulations covering section 125 o f the Internal R evenue C ode allow
em p loyees to designate a portion o f their salary for full or partial paym ent
o f certain benefit costs. A m ounts so designated are know n as salary reduc
tion arrangem ents and are exem pt from Federal incom e tax.
89
Table 86. Plan administration: Percent of full-time participants in selected benefits by type of plan sponsor, medium and
large firms, 1986
Plan sponsor
Health insurance
Life insurance
Sickness and accident
insurance
Long-term disability
insurance
Defined benefit pension
100
100
100
100
100
87
100
All participants
T ota l.....................
Single employer...........
Multiemployer1 .............
Mandated benefits1 .....
2
Employer association3 .
96
4
(4
)
97
3
0
100
100
100
100
100
100
99
O
-
82
100
100
-
(4
)
(4)
-
100
100
2
11
-
(4
)
96
4
-
Professional and
administrative
T ota l.....................
Single employer...........
Multiemployer1 .............
Mandated benefits2 .....
Employer association3 .
O
O
0
100
100
97
98
2
1
-
18
-
Technical and
clerical
T ota l.....................
Single employer...........
Multiemployer1 .............
Mandated benefits2 .....
Employer association3 .
-
100
81
(4)
19
-
1
0
99
1
99
1
-
Production
T otal.....................
Single employer...........
Multiemployer1 .............
Mandated benefits2 .....
Employer association3 .
100
93
7
-
(4
)
100
100
94
90
3
7
-
6
(4
)
1 Individual employers in the same or in a related industry contributing a
negotiated amount to trust fund providing benefits for employees covered
under a collective bargaining agreement.
2 The majority of the participants with mandated sickness and accident
insurance benefits were covered by State temporary disability plans. The
remaining employees (1 percent) were covered by the Railroad Unemployment
Insurance Act.
100
100
100
92
-
8
-
-
-
-
3 Band of small employers in a common trade or business, for example,
savings and loan associations. The plan sponsored by the association is
not negotiated with the employees.
4 Less than 0.5 percent.
NOTE: Because of rounding, sums of individual items may not equal
totals. Dash indicates no employees in this category.
90
Table 87. Flexible benefits plans and reimbursement
accounts:1 Percent of full-time employees eligible, medium
and large firms, 1986
Profes
sional
and
All em
adminis
ployees
trative
employ
ees
Coverage
T o ta l..........................................
Provided flexible benefits and/or
reimbursement accounts...............
Flexible benefits..........................
With reimbursement accounts
100
100
Techni
cal and Produc
clerical tion em
employ ployees
ees
100
100
2
5
9
8
2
2
4
3
2
2
1
0
Reimbursement accounts...........
Freestanding reimbursement
accounts..............................
5
9
7
1
3
5
5
1
Not provided flexible benefits or
reimbursement accounts...............
95
91
92
98
1 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.
2 Less than 0.5 percent.
91
Appendix A: Technical Note
Scope of survey
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.
This survey of the incidence and characteristics of em
ployee benefit plans covers private sector establishments1in
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-l).
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-l 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.
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.
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
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 (P A T C ). The list
of establishments from which the sample was selected (called
the sampling frame) was the same as that used for the 1986
P A T C survey, except that small establishments (below the
Employee Benefits Survey’s employment cutoffs noted in
table A-l) were not included. This sampling frame was
developed by refining data from the most recently available
State Unemployment Insurance ( U l) reports for the 48 States
covered by the survey and the District of Columbia. The
reference date of the available U l 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.)
1 For this survey, an establishment is an econom ic unit that produced goods
or serv ices, a central adm inistrative o ffic e , or an auxiliary unit providing
support services to a com pany. In m anufacturing industries, the establish
m ent is usually a sin gle physical location. In nonm anufacturing industries,
all locations o f an individual com pany within a M etropolitan Statistical Area
(MSA) or w ithin a nonm etropolitan county are usually considered an e s
tablishm ent.
92
and plans covering the four insured benefit areas within the
scope o f the survey. These were analyzed by BLS staff in
W ashington to obtain the required data on plan provisions.
Data on paid leave generally were obtained directly from the
employer at the time o f the visit.
Data were collected during the months o f January through
June, reflecting an average reference period o f April 1986.
Respondents were asked for information as o f the time o f
the data collection visit.
Sampling design
To reduce the costs and resources required for data co l
lection, the sample for this survey was a subsample o f the
1986 PATC sample. The sample o f 1,503 establishments2 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 o f the eight major industry divisions, as defined
by the Office o f Management and Budget, which are covered
by the survey and shown in table A -l.
The establishment size groups are defined as follows:
Employment size
group
Data tabulation
The tables presented in this bulletin show the percent o f
em ployees 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 o f workers covered by
noncontributory benefit plans included those who had not
met possible minimum length-of-service requirements at the
time o f the survey. Workers were counted as participants
in em ployee benefit plans that require the em ployee to pay
part o f the cost only if they elected the plan and paid their
share. Plans for which the em ployee paid the full premium
were outside the scope o f the survey, even if the employer
paid administrative costs. When tabulating the effect o f retire
ment on life insurance and health insurance coverage,
how ever, cases where the retiree must pay the full cost o f
the insurance were counted since the guarantee o f insurabil
ity at group rates is considered a benefit.
Most o f the tables in this bulletin show the percent o f 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 7 2 -7 3 , shows the num
ber o f covered workers as a percent o f all workers within
the scope o f the survey; table 87 shows the number o f eligi
ble workers as a percent o f all workers. It is designed to show
the incidence o f the individual em ployee benefit.
A second approach is follow ed in tables 7, 9, 21, 2 3 -2 9 ,
31, 4 3 -4 4 , 4 6 -4 8 , 5 2 -5 4 , 5 9 -6 0 , 6 2 -6 3 , 66, 6 8 -7 1 , 74,
7 6 -7 9 , and 8 1 -8 6 . These tables show the number o f work
ers covered by specific features in a benefit area as a per
cent o f all em ployees 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 exam ple, the percent o f all
em ployees with health insurance receiving dental coverage.
The third approach provides a close look at an important
aspect o f a benefit (tables 22, 30, 3 2 -4 2 , 45, 4 9 -5 1 , 5 5 -5 8 ,
and 64); for example, the percent o f 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 o f data
the percent o f persons in the benefit area who have a partic
ular coverage, while the remainder o f the table is based on
all em ployees with that coverage. Table 20 uses a similar
approach.
Establishment
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 o f sample establishments allocated to each
stratum (defined by industry and size) was approximately
proportional to the total employment o f all sampling frame
establishments in the stratum. Thus, a stratum that contained
1 percent o f the total employment within the scope o f the
survey received approximately 1 percent o f the total sample
establishments.
A sample was then selected within each stratum using a
probability technique to m axim ize the probability o f retain
ing the establishments selected in the 1985 survey.3 This
method o f selection reduced collection costs by decreasing
the number o f 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 exam ple, consider two
strata: A and B, with respective average establishment em
ployment o f 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 o f 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.
93
Table A-1. Estimated number of establishments and workers within scope of survey and number studied, medium and large
firms, United States,1 1986
Minimum
employment in
Number of
establishments
establishments
within scope of
survey
Industry division1
2
Number of workers in establishments
Professional
and
administrative
Total3
Technical and
clerical
Production
Within scope of survey4
*
5
All in dustries.....................................................................
-
M anufacturing............................................................................... 5 100-250
-
Nonmanufacturing.......................................................................
M in in g ..........................................................................................
250
C on struction..............................................................................
250
Transportation, communications, electric, gas, and
sanitary s e rv ic e s ............................................................... 6 100-250
W holesale tr a d e .......................................................................
100
Retail t r a d e ................................................................................
250
Finance, insurance, and real e s ta te ..................................
100
Selected services7 *.................................................................. 8 50-100
.
45,525
24,110,418
5,906,430
5,369,631
10,026,761
18,810
11,390,401
2,744,932
1,647,309
6,798,243
26,714
560
573
12,720,017
364,144
244,841
3,161,498
104,777
59,814
3,722,322
67,344
34,890
3,228,518
183,275
122,634
4,126
5,094
5,910
7,574
2,878
2,887,408
1,095,915
4,496,307
2,729,827
901,575
723,689
315,001
567,860
938,933
451,424
737,576
261,084
909,086
1,432,516
279,827
1,117,508
449,235
1,207,833
86,620
61,413
Studied9
All in dustries.....................................................................
-
1,308
4,346,361
1,222,928
958,054
1,784,137
M anufacturing............................................................................... 5 100-250
578
2,395,432
727,229
374,163
1,266,553
Nonmanufacturing.......................................................................
M in in g ..........................................................................................
250
Construction ..............................................................................
250
Transportation, communications, electric, gas, and
sanitary s e rv ic e s ............................................................... 6 100-250
Wholesale tr a d e .......................................................................
100
Retail tr a d e ................................................................................
250
Finance, insurance, and real e s ta te ..................................
100
Selected services7 ................................................................... 8 50-100
730
21
20
1,950,929
33,544
29,491
495,699
15,050
7,086
583,891
9,311
4,293
517,584
8,912
14,249
153
112
135
207
82
1,052,775
38,698
370,350
341,699
84,372
248,431
13,687
43,931
122,918
44,596
262,961
10,402
79,235
192,108
25,581
390,489
11,594
78,291
5,169
8,880
1 Excludes Alaska and Hawaii.
2 As defined in the 1972 edition of the
U.S. Office of Managem ent and Budget. Industry data are shown
for informational purposes only and are subject to larger than sample error.
See section on reliability of estimates.
3 This figure includes out-of-scope workers. These workers— executive
management, part time, temporary, seasonal, and operating personnel in
constant travel status (e.g., airline pilots)— are excluded from the counts
of employment by occupational group.
4 Number of establishments and workers shown within the scope of
the survey are estimates. These estimates differ from those developed in
the 1986 PATC Survey, since each is based on the findings of its
respective survey.
5 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
manufacturing industries.
6 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; managem ent and public
relations services; engineering and architectural services; noncommercial
research organizations; and accounting, auditing, and bookkeeping
services.
8 Minimum employment size was 50 for accounting, auditing, and
bookkeeping services; and 100 in all other selected services.
9 These figures refer to all respondents to the survey, whether or not
they provided data for all items studied.
S ee the section on survey
response.
This multilevel approach has the advantage o f clearly point
ing out typical benefit plan characteristics after the preva
lence o f the benefit has been established. Any o f the second
or third types o f tables, if desired, can be converted to the
first type by multiplying each data cell by the appropriate
factors. For exam ple, to calculate the percent o f all em
ployees with orthodontic coverage, multiply the percent o f
those with dental plans that cover orthodontia (table 37) by
the percent o f health insurance participants with dental cover
age (table 28), and multiply that product by the percent o f
all em ployees who have health insurance coverage (table 1).
Tables 5, 1 7 -1 9 , and 61 differ from other tables because
they display average benefit values rather than percentages
o f workers. These tables present the averages for all covered
employees; calculations exclude workers without the benefit.
-
Mn a
a u l,
S n a In u tria C s ific tio
ta d rd d s l la s a n
Survey response
Each combination o f 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 o f partially completed establishment reports in the
survey. Therefore, the actual number o f responses for the
survey varies for each combination.
94
T h e b a sic fo rm o f th e e s tim a to r, a fte r m o d ific a tio n to a c
T h e fo llo w in g su m m a ry is a c o m p o site p ic tu re o f th e e s
ta b lish m e n t re sp o n se s to th e su rv e y :
c o u n t fo r th e w e ig h t a d ju stm e n t fa c to r, fj, d e v e lo p e d d u rin g
th e a d ju stm e n t fo r n o n re sp o n se , w as:
Number of establishments:
In sample.....................................................
Out of business and out of scope...............
Refusing to respond....................................
Nonresponse other than refusal...................
Responding fully or partially.......................
1,503
54
129
12
1,308
n'
Y =
i= 1
There are three procedures used to adjust for missing data
from partial schedules and total refusals. First, imputations
for the number o f plan participants are made for cases where
this number was not reported (about 4 percent o f participants
in insurance and retirement plans and less than 1 percent in
paid leave plans in 1986). Each o f 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 o f participants for the plan which
is missing a participation value but is otherwise usable.
Second, in the case o f 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 o f m issing 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 o f the nonrespondents is equal to the mean value
o f the respondents at som e detailed “ c e ll” level. These cells
are defined in a manner that groups establishments together
that are hom ogeneous with respect to the characteristics o f
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 o f data from partially completed estab
lishment reports to be incorporated into survey estimates.
For example, data on the number o f an occupational group’s
em ployees in an establishment or participants in a plan, or
information on the existence o f a plan, could be used even
if the plan provisions could not be obtained.
fsYj
------P.
i
where n' = number o f responding units
fi = weight adjustment factor for the ft1 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 o f approximately 1,500 establishments, rather than
tabulations based on all 4 5 ,5 0 0 medium and large establish
ments within the scope o f 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 o f 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 o f survey results involves the formation
o f confidence intervals that can be interpreted in the follow
ing manner: A ssum e that repeated random samples o f the
same size are drawn from a given population and an esti
mate o f som e 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 o f 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 o f this bulletin containing percent
age estimates. For exam ple, table 1 shows that 70 percent
o f all em ployees participated in sick leave plans in 1986.
Chart A shows a standard error o f 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 -5. For exam ple, the first
entry on table 17 shows an average o f 11.7 days o f annual
sick leave at 6 months o f 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 available.
Survey estimation methods
The survey design uses an unbiased estimator, the HorvitzThompson, which assigns the inverse o f each sample unit’s
probability o f 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 o f the estimator for a population total is:
where n = sample size
Yj = value for the characteristics o f the ith unit
p ; = the probability o f including the Ith unit in
the sample
1
95
Chart A. Employee benefits survey generalized standard errors
Standard error
3.2
~M l— Hfl W
2 .8
2.4
2 .0
1 .6
1 .2
0 .8
0.4
0 .0
Percent estimate
tation, a curve was fitted to the standard error estim ates, by
regression techniques.
Nonsam pling 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 o f questions; in
ability or unwillingness o f respondents to provide correct in
formation; mistakes in recording or coding the data; and other
errors o f collection, response, processing, coverage, and es
timation for m issing data. Through the use o f computer edits
o f the data and professional review o f 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 o f nonrespond
ents are not the same as those o f respondents, nonsampling
errors are introduced in the developm ent o f estimates. Be
cause the impact o f these limitations on the Em ployee
Benefits Survey estimates is unknown, reliability measure
ments are incom plete.
For those readers interested in further mathematical de
tails, the next section describes how chart A was derived from
1982 survey data.
The curve’s equation is:
s _ e [a + b {1 n (P )} 2 + c {ln(lO O -P )}2 + d In (P) In (100-P )]
where:
S =
P =
e =
exponential function
In =
natural logarithm function
For the 1982 Em ployee Benefits Survey,
a = -0 .6 4 6 8 3 , b = -0 .0 2 6 0 3 , c = -0 .0 1 7 4 5 8 , and d = 0 .1 2 3 7 2 6 .
These are regression coefficients. The curve fits the data with
R2 = 0 .8 5 and no pattern in the residuals. M oreover, differ
ences between curves using 1982 and 1983 data are
negligible.
The equation o f the curve was obtained empirically, by start
ing with the equation:
Mathematical details on estimates and generalized standard
errors chart
S = a Pb (100 - P)c
Each estimator used in the production o f the tables in this
bulletin is approximately normally distributed.
Standard errors for the percentage estimates were com
puted from the 1982 survey data. To sim plify their presen
standard error
percentage estim ate from the bulletin
More information describing survey response and relia
bility may be obtained from the O ffice o f W ages and Indus
trial Relations, Bureau o f Labor Statistics, U .S . Department
o f Labor, W ashington, DC 20212.
96
Table A-2. Standard error* for table 5—Paid holidays and vacations: Average
number of days for full-time participants, medium and large firms, 1986______
Profes
Technical
sional and
Production
and
adminis
clerical
participants
trative
participants
participants
Item
All par
ticipants
Paid holidays ....................................................................
0.1
0.1
0.1
0.1
Paid vacation by length of service:
At 6 m o n th s ..................................................................
At 1 y e a r ................................................ .......................
At 3 years ......................................................................
At 5 years ......................................................................
At 10 y e a r s ....................................................................
At 15 y e a r s ....................................................................
At 20 y e a r s ...................................................................
At 25 y e a r s ...................................................................
At 30 y e a r s ....................................................................
.1
.1
.1
.1
.1
.1
.2
.2
.2
.1
.1
.1
.1
.1
.1
.1
.1
.2
.1
.1
.1
.1
.2
.1
.2
.2
.2
.1
.1
.1
.1
.1
2
.2
.3
.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
All par
ticipants
Item
Profes
Technical
sional and
Production
and
adminis
participants
clerical
trative
participants
participants
Paid annual sick leave by length of service:
At 6 m o n th s ...................................................................
At 1 y e a r ........................................................................
At 3 y e a r s ......................................................................
At 5 years ......................................................................
At 10 y e a r s ....................................................................
At 15 y e a r s ....................................................................
At 20 y e a r s ....................................................................
At 25 y e a r s ....................................................................
At 30 y e a r s ...................................................................
0.9
.7
.7
.9
1.4
1.8
2.3
2.4
2.4
1.2
1.1
1.1
1.5
1.9
2.5
3.2
3.2
3.2
0.4
.4
.6
1.3
2.2
2.7
3.4
3.4
3.4
2.8
2.0
1.9
1.9
2.0
1.9
2.0
2.2
2.2
Paid per disability sick leave by length of service:
At 6 m o n th s ..................................................................
At 1 y e a r ........................................................................
At 3 years ......................................................................
At 5 y e a r s ......................................................................
At 10 y e a r s ....................................................................
At 15 y e a r s ....................................................................
At 20 y e a r s ....................................................................
At 25 y e a r s ....................................................................
At 30 y e a r s ....................................................................
4.5
4.6
3.2
2.7
2.3
2.5
3.3
4.4
4.3
5.4
5.3
3.9
3.2
2.7
2.7
3.2
3.6
3.6
3.5
4.6
3.3
3.0
3.4
3.4
4.1
5.5
5.5
7.9
6.6
5.4
5.0
4.9
6.6
8.9
5.6
5.6
97
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
sional
and
All par
admini
ticipants
strative
partici
pants
Item
At 1 year of service:
Cumulative p l a n ...................................
With sickness and accident
in s u ra n c e .....................................
Without sickness and accident
in s u ra n c e ......................................
Noncumulative p la n .............................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e ......................................
At 5 years of service:
Cumulative p l a n ....................................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e ......................................
Noncumulative p la n .............................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e ......................................
At 10 years of service:
Cumulative plan ....................................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e ......................................
Techni
Produc
cal and
tion
clerical
partici
partici
pants
pants
0.5
0.7
0.4
0.7
.4
.5
.4
.4
.7
1.3
.8
2.3
.5
.7
.8
3.1
.7
1.4
.8
.8
1.9
2.8
.9
4.9
.7
1.0
.9
1.2
.9
1.0
3.1
1.1
3.2
1.3
3.0
1.3
2.9
1.5
.8
2.9
3.4
4.8
At 20 years of service:
Cumulative plan ....................................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e .......... ...........................
Noncumulative p la n .............................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e ......................................
.6
1.0
1.9
4.9
1.4
20
1.9
2.1
1.6
.9
2.2
2.3
2.4
At 25 years of service:
Cumulative plan ....................................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
in s u ra n c e ..............................
Noncumulative p la n .............................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
insurance ......................................
1.0
1.3
Item
At 10 years of service— Continued
Noncumulative p la n .............................
With sickness and accident
in s u ra n c e ......................................
Without sickness and accident
insurance ......................................
.7
.8
Profes
sional
and
All par
admini
ticipants
strative
partici
pants
2.5
2.4
3.3
4.3
3.1
2.0
3.5
3.1
1.3
3.6
3.6
5.6
5.5
1.6
2.3
2.2
1.1
1.9
3.2
2.3
1.5
2.3
3.7
2.4
5.0
2.5
5.8
2 5
3.1
2.4
4.2
3.4
2.0
5.5
5.8
8.2
5.7
1.7
2.5
2.3
1.1
2.2
3.9
2.6
1.8
2.4
3.8
2.5
5.1
2.6
5.8
2.5
3.3
2.5
4.2
3.5
2.2
5.6
5.9
8.3
5.7
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
All par
ticipants
Item
Profes
Technical
sional and
and
Production
adminis
clerical
participants
trative
participants
participants
At 1 year of service:
With sickness and accident in surance..................
Without sickness and accident in s u ra n c e ...........
0.4
1.1
0.7
1.3
0.4
.5
0.4
4.2
At 5 years of service:
With sickness and accident in surance..................
Without sickness and accident in s u ra n c e ...........
.9
1.5
1.6
1.9
1.0
1.8
.5
4.0
At 10 years of service:
With sickness and accident in surance..................
Without sickness and accident in s u ra n c e ...........
1.5
2.2
2.5
2.2
2.0
2.8
.7
4.3
At 20 years of service:
With sickness and accident in surance..................
Without sickness and accident in s u ra n c e ...........
2.1
3.6
3.3
3.9
2.5
4.7
1.2
4.4
At 25 years of service:
With sickness and accident insurance..................
Without sickness and accident in s u ra n c e ...........
2.3
3.6
3.5
3.9
2.6
4.7
1.5
4.5
98
Techni
Produc
cal and
tion
clerical
partici
partici
pants
pants
A p p e n d ix
th e
B:
A v a ila b ility
S u r v e y ’s D a t a
of
B ase
ple weights and size codes; geographic, industrial, and em
ployee group classification codes; and the number o f wor
kers in the em ployee group. The control file also lists all
benefit plans offered in each establishment, with the num
ber o f plan participants in each em ployee 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 em ployee group, it w ill not be possible to link together
plans offered to different em ployee 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 o f coding manuals and instructions for com
pleting them are supplied to tape purchasers for interpreta
tion o f data on the file. Paid time o ff and flexible benefits
provisions are reported on collection forms which are also
provided to tape purchasers.
The analysis o f insurance, retirement, and capital accumu
lation plans is extremely detailed. The following list o f health
insurance plan provisions included in the data base gives an
indication o f the breadth and depth o f the information avail
able on the magnetic tapes. Other insurance and pension anal
ysis is similarly detailed.
The tables published in this bulletin present the major find
ings o f the Em ployee Benefits Survey; results o f additional
research appear in the Monthly Labor Review. How ever,
these tables cover only a portion o f the em ployee benefits
information collected. Persons interested in all provisions
o f a particular benefit studied during the annual survey can
purchase a set o f magnetic tapes containing the survey’s data
base through the O ffice o f W ages and Industrial Relations,
Bureau o f Labor Statistics, W ashington, DC 20212. The
charge for furnishing the data is limited to the cost o f produc
ing the tapes and preparing supporting documentation.
For major benefit item s, the bls survey obtained plan
provisions and em ployee participation data for each o f
three em p loyee groups (professional-adm inistrative,
technical-clerical, and production workers). Information on
employer costs was not collected. The magnetic tapes, which
consist o f a control file and plan data files for each benefit
area, may be used to derive national estim ates, similar to
those published in this bulletin, for other items in the data
base. For som e 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 o f employees with
the provision was very small. M oreover, the tapes cannot
yield reliable estimates for individual industries, geograph
ic regions, or establishment size classes. Full documenta
tion accompanies the tapes, including examples o f estimating
formulas. Although Bureau staff w ill respond to questions
concerning the content o f 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 o f 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 o ff 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. How ever,
plan identification numbers on the tape are scrambled (and
other identifying information is removed) to protect the con
fidentiality o f 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
Health insurance data base
Plan participation requirements
When plan participation begins
Waiting period by type o f benefit
Maximum age for participation
Employee contribution for employee and family benefits—
monthly contribution
Pretax status o f contributions
Section A
Funding media for major categories o f health care
Hospital benefits
Surgical benefits
M edical benefits
Major medical benefits
Dental benefits
99
Coverage of dependent children
Prophylaxis and routine exams
Fillings
Surgery—dental
Inlays
Crowns
Periodontal care
X-rays
Orthodontia
Incentive schedule
Deductible
Maximum coverage
Copayment
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
Vision care benefits
Vision care coverage
Eyeglasses
Schedule for eyeglasses
Eye exams
Contact lenses
Orthoptics
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
Other medical benefits
Second surgical opinion
Alcoholism treatment
Drug abuse treatment
Hearing care
Hospice care
Physical examinations
Maternity care benefit
Who is covered
Cost containment features
Diagnostic X-ray and laboratory testing
(DXL) benefit
dxl coverage
Limitations on DXL coverage
dxl schedule
Selected dxl procedure maximums
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
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
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
O
US. GOVERNMENT PRINTING OFFICE: 1 9 8 7 -1 8 1
-5
1 9 ' 6 4 2 7 0
Region I
John F. Kennedy Federal Buiiding
Suite 1603
Boston, Mass. 02203
Phone: (617) 565-2327
Region II
Suite 3400
1515 Broadway
New York. N Y 10036
Phone: (212) 944-3121
Region lli
3535 Market Street
P O Box 13309
Philadelphia. Pa. 19101
Phone: (215) 596-1154
Region IV
1371 Peachtree Street. N
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
Regions VII and VIII
911 Walnut 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
U.S. Department of Labor
Bureau of Labor Statistics
Washington, D.C. 20212
Official Business
Penalty for Private Use, $300
SMSU LIBRARIES
3 2356 00213100 9
Postage and Fees Paid
U.S. Department of Labor
Third Class Mail
Lab-441
U .S .M A IL
@FedFRASER