This paper, using the EBRI IRA Database, specifically examines the trends in account balances, contributions, withdrawals, and asset allocation in IRAs from 2010-2014. Results from both the annual cross-sectional sample and a consistent sample of IRA owners who have been in the database in each year from 2010-2014 are presented. This allows for the investigation of the behavior in IRAs that are continuously maintained, instead of the results being affected by new and former IRA owners. Significantly higher growth in account balances was found in the consistent sample of IRA owners compared with the annual cross-sectional sample. While the cross-sectional overall average account balance increased 38.9 percent from 2010 to 2014, the increase for those IRA owners who continuously owned IRAs from 2010-2014 was 45.8 percent. There are considerable differences by IRA type whether IRA owners who have maintained their IRA for five years (consistent account owners) are likely to contribute, as well as the number of years they contribute. Among Traditional IRA owners, 87.6 percent did not contribute to the IRA in any year, while 2.1 percent contributed in all five years. In contrast, 61.5 percent of Roth IRA owners did not contribute in any year and 10.4 percent contributed in all five years. Roth IRA owners ages 25-29 were the most likely to contribute in at least one year and in all five years, at 61.3 percent and 16.0 percent, respectively. Among consistent account owners, the percentage of individuals taking a withdrawal from a Traditional or Roth IRA rose from 12.9 percent in 2010, to 15.4 percent in 2011, to 16.7 percent in 2012, to 18.5 percent in 2013, and to 19.6 percent in 2014. This pattern is the result of the increasing percentage of individuals in this sample surpassing the required minimum distribution (RMD) age each year due to the same individuals being in the sample from year to year. Moreover, the likelihood of taking a withdrawal increased with age. For the annual cross-sectional snapshot, the percentage allocated to equities decreased from 45.7 percent in 2010 to 44.4 percent in 2011 before a sharp increase in 2012 to 52.1 percent, to 54.7 percent in 2013, and to 55.7 percent in 2014. The amount allocated to balanced funds was constant from 2010 to 2011 before a slight decline in 2012 and an even smaller uptick in 2013 and in 2014, while the percentage in money increased in 2011 and fell through 2014. Consistent account owners moved toward higher equity holdings from 2010-2014. The equity allocations in 2014 were overall higher than the values in 2010 across all groups studied.
This paper, the annual, cross-sectional analysis of the EBRI IRA Database, examines the distribution of IRA owners by IRA type, average and median account balances, and contributions and rollovers to IRAs. Added to this cross-sectional study is a longitudinal component that looks at account balance changes and contribution behavior from 2010 to 2013 of a consistent sample of individuals who own IRAs. For year-end 2013, the EBRI IRA Database contained information on 25.8 million accounts owned by 20.6 million unique individuals, with total assets of $2.46 trillion. The average account balance decreased from $91,864 in 2010 to $87,668 in 2011 before increasing to $119,804 in 2013 -- an increase of 30.4 percent from 2010 to 2013, and 14.1 percent from 2012 to 2013. The percentage of individuals who contributed to their IRA was relatively consistent ranging from 12.1 percent in 2010 to 13.8 percent in 2013. The percentage of individuals owning Traditional IRAs who contributed to them rose from 5.2 percent in 2010 to 7.0 percent in 2013. In contrast, the percentage of Roth owners who contributed ranged from 24.0 percent to 26.0 percent from 2010-2013. The percentage of contributors who contributed the maximum rose from 43.5 percent in 2010 to 53.5 percent in 2012. However, with the increase in the maximum allowable contribution in 2013, the percentage contributing the maximum overall fell to 43.3 percent in 2013. The average contribution increased from $3,335 in 2010 to $4,145 in 2013. When examining the same individuals that were in the database each year from 2010 to 2013, the median percentage change in these individuals’ account balances was a 33.6 percent increase. Furthermore, at the 25th percentile and the 75th percentile, increases of 2.6 percent and 57.1 percent resulted. The growth rates for Roth IRA balances were higher both overall and by age and gender. The average and median rollover amounts to Traditional IRAs were $96,660 and $27,967, respectively, and to Roth IRAs were $22,915 and $8,291. In addition, nearly 1.6 million rollovers to Traditional IRAs occurred in 2013 compared with 0.1 million rollovers to Roths. When comparing contributions to IRAs with rollovers to IRAs, rollovers overwhelmingly outweighed new contributions in dollar terms. While almost 2.6 million accounts in the database received contributions compared with the 1.7 million accounts that received rollovers in 2013, 14.5 times the amount of dollars were moved to IRAs through rollovers than were contributed to IRAs. This is not surprising, given the annual contribution limit of $5,500 ($6,500 for those ages 50 or older) to IRAs in 2013, relative to the theoretically unlimited amount that could be added via a rollover.
This paper examines the experience of a particular large employer, and a subset of its employees, with respect to a recent increase in the number of health plans that employees could choose. In 2014, this employer offered employees a choice of four health plans -- an HSA-eligible health plan (HSA plan), an exclusive provider organization (EPO), a preferred provider organization (PPO), and a health maintenance organization (HMO) -- all with the same carrier. In 2015, it added six new health-plan choices -- HSA-eligible plans, EPOs, and PPOs -- from two additional carriers. As a result, employees saw their plan choices increase from four to 10. The case study in this paper addresses one set of questions: Which workers switch health plans when an employer introduces more choices? Does the introduction of more choices contribute to adverse selection? One-third of health plan participants enrolled in both 2014 and 2015 switched health plans between 2014 and 2015. Workers enrolled in the HSA plan in 2014 were more likely to switch plans than other workers. One-half of HSA plan enrollees switched plans, compared with 27 percent among EPO enrollees, 24 percent among PPO enrollees, and 13 percent among HMO enrollees. About 88 percent of HSA plan enrollees in 2014 who did switch plans for 2015 chose an HSA-plan with a different carrier. Sixty-three percent of EPO enrollees in 2014 who did switch plans for 2015 switched to an EPO with a different carrier, and 72 percent of PPO enrollees switched to a PPO with a different carrier. Because only one HMO was offered in 2014 and 2015, 100 percent of the HMO enrollees who switched chose a different plan type with a different carrier. EPO and PPO enrollees in 2014 who switched health plan types were more likely than HSA plan enrollees to switch carriers. Twenty-four percent of EPO enrollees and 21 percent of PPO enrollees in 2014 who switched plans for 2015 switched to a different type of health plan with a different carrier, while 13 percent of EPO enrollees and 7 percent of PPO enrollees switched to a different type of health plan with the same carrier. In attempting to explain plan switching, certain demographics and prior use of health care services appear to be predictors of plan switching, but health status is not a strong predictor. For this employer, it appears that older workers were less likely to switch health plans than younger workers; and more actual use of office visits for both primary care physicians and specialists was linked to less plan switching.
With the decline of defined benefit (DB) pension plans, there has been some renewed interest in providing other annuity income options to American workers, but demand for annuities has remained low in the United States. To develop future annuity income solutions, it is important to understand the public’s preferences for such products. This paper uses a unique experiment in the Health and Retirement Study (HRS) to assess the effect of savings on the preference for immediate annuities (which begin paying out a regular stream of income as soon as they are purchased). Regression results show that people at the bottom- and top-ends of the savings distribution (those with the least and most assets) are more likely to buy annuities than people in the middle of the savings distribution. Also, savings has a large positive effect on preference for annuities only for those in the highest savings category. Possible explanations for such behavior follow. People at the bottom of the savings distribution are very likely to run out of money in retirement and thus are inclined to select annuities. People at the top end of the savings distribution expect longer lifespans and can afford annuities even after leaving a financial legacy for their heirs. People in the middle generally face more uncertainty about their retirement adequacy and so they are more likely to hold on to their savings for precautionary purposes and perhaps also for some hope of leaving a financial legacy for their heirs. The results also show clear preference for annuitizing smaller shares of assets or partial annuitization. When compared to their current financial situation, only 16.5 percent of retirees (ages 65 and above) preferred full annuitization compared to 43.0 percent who preferred a one-quarter annuitization. A large majority (70.2 percent) of the current Social Security recipient households receive at least three-quarters of their income in annuities from Social Security, employer-provided pensions, and other annuity contracts. The fact that most retirees are already highly annuitized might help explain the lack of demand for additional annuity income.
This paper presents key findings from the 27th annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The 2017 RCS by EBRI and Greenwald & Associates finds that six out of 10 American workers feel very or somewhat confident about having enough money for a comfortable retirement, though just 18 percent feel very confident. The share of workers reporting that they feel either very or somewhat confident has declined compared with last year (60 percent from 64 percent in 2016). Worker confidence now resembles levels measured in 2015 (when 59 percent were either very or somewhat confident). In addition to lacking confidence, 3 in 10 workers report that preparing for retirement causes them to feel mentally or emotionally stressed. These stressed workers feel less financially secure and are far less confident about having enough money for a comfortable retirement than those who do not feel stressed. Another 3 in 10 workers say that they worry about their personal finances while at work (30 percent). More than half of these workers believe they would be more productive at work if they didn’t spend time worrying. Among all workers, about half say that retirement planning (53 percent), financial planning (49 percent), or health care planning (47 percent) programs would be helpful in increasing their productivity at work. Retiree confidence in having enough money for a comfortable retirement continues to exceed worker confidence levels. Seventy-nine percent of retirees report feeling either very or somewhat confident about having enough money to live comfortably throughout their retirement years, including one-third of retirees who feel very confident (32 percent). Workers who have a retirement plan, whether a defined contribution plan, defined benefit plan, or IRA, are far more likely to feel confident about having enough money for retirement. Indeed, they have saved more than those without a plan, have taken more steps to prepare for retirement, and feel less stressed about retirement preparations. Nearly 3 in 4 workers (73 percent) not currently saving for retirement say they would be at least somewhat likely to save for retirement if contributions are matched by their employer. Approximately two-thirds of non-saving workers say they would be likely to save for retirement if automatic paycheck deductions with the option of changing or stopping them, at either 3 percent or 6 percent of salary, were used by their employer.
This paper is an update of the Employee Benefit Research Institute (EBRI) and the Investment Company Institute’s (ICI) ongoing research into 401(k) plan participants’ activity through year-end 2014. The bulk of 401(k) assets were invested in stocks. On average, at year-end 2014, 66 percent of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. More 401(k) plan participants held equities at year-end 2014 than before the financial market crisis (year-end 2007), and most had the majority of their accounts invested in equities. More than 70 percent of 401(k) plans included target-date funds in their investment lineup at year-end 2014. At year-end 2014, 18 percent of the assets in the EBRI/ICI 401(k) database were invested in target-date funds and 48 percent of 401(k) participants in the database held target-date funds. A majority of new or recent hires invested their 401(k) assets in balanced funds, including target-date funds. For example, at year-end 2014, two-thirds of recently hired participants held balanced funds in their 401(k) plan accounts. 401(k) participants’ investments in company stock continued at historically low levels. Only 7 percent of 401(k) assets were invested in company stock at year-end 2014, the same share as in 2012 and 2013. This share has fallen by 63 percent since 1999 when company stock accounted for 19 percent of assets. 401(k) participants were less slightly likely to have loans outstanding at year-end 2014 than at year-end 2013. At year-end 2014, 20 percent of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) plan accounts, down from 21 percent at year-end 2013, although up from 18 percent at year-end 2008. The year-end 2014 average 401(k) plan account balance in the database was 5.4 percent higher than the year before, but may not accurately reflect the experience of typical 401(k) participants in 2014. To understand changes in 401(k) plan participants’ average account balances, it is important to analyze a sample of consistent participants. As with previous EBRI/ICI updates, analysis of a sample of consistent 401(k) plan participants is expected to be published later this year. The average 401(k) plan account balance tends to increase with participant age and tenure. For example, at year-end 2014, participants in their 30s with more than two to five years of tenure had an average 401(k) plan account balance of close to $25,000, compared with an average 401(k) plan account balance of nearly $275,000 among participants in their 60s with more than 30 years of tenure.
The bulk of 401(k) assets continued to be invested in stocks. On average, at year-end 2007, about two-thirds of 401(k) participants' assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. About one-third was in fixed-income securities such as stable value investments and bond and money market funds. Although these relative shares have changed little over the past 12 years, the underlying fund composition has changed over time. About two-thirds of 401(k) plans included lifecycle funds in their investment lineup at year-end 2007. New analysis shows that at year-end 2007, more than 7 percent of the assets in the EBRI/ICI database were invested in lifecycle funds and one-quarter of 401(k) participants held lifecycle funds. Also known as "target date" funds, they are designed to simplify investing and automate account rebalancing. New employees continued to utilize balanced funds, including lifecyclefunds. Across all age groups, more new or recent hires invested their 401(k) assets in balanced funds, including lifecycle funds. At year-end 2007, 28 percent of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 24 percent in 2006, 19 percent in 2005, and about 7 percent in 1998. At year-end 2007, almost 19 percent of the account balances of recently hired participants in their 20s were invested in lifecycle funds compared with 16 percent at year-end 2006. 401(k) participants continued to seek diversification of their investments. The share of 401(k) accounts invested in company stock continued to shrink, falling by 0.5 percentage point (to 10.6 percent) in 2007. That continued a steady decline that started in 1999. Recently hired 401(k) participants contributed to this trend: they were less likely to hold employer stock. Participants' 401(k) loan activity was stable. In 2007, 18 percent of all 401(k) participants eligible for loans had a loan outstanding against their 401(k) account, the same percentage as at year-end 2006. Most loans tended to be small, amounting to 12 percent of the remaining account balance, on average, similar to year-end 2006. At year-end 2007, the average account balance in the EBRI/ICI database was $65,454, compared with $61,346 at year-end 2006. 401(k) account balances varied with participant age, tenure, and salary. Individuals with account balances of less than $10,000 were primarily young workers or workers with short job tenures. In contrast, those with account balances in excess of $100,000 were primarily older workers or workers with longer job tenure. The year-end 2007 average account balance in the database was 6.7 percent higher than the year before, but does not accurately reflect the experience of typical 401(k) participants in 2007. To examine the experience of 401(k) participants, one must control for the impact of 401(k) plans or participants joining and leaving the database year to year. As with previous EBRI/ICI updates, analysis of a consistent sample of 401(k) participants (those that have been in the same plan since 1999) is planned; this additional analysis is expected to be published in early 2009.
This paper presents key findings from the 26th annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The 2016 RCS by EBRI/Greenwald & Associates finds that the percentage of workers very confident about having enough money for a comfortable retirement, at record lows between 2009 and 2013, increased from 13 percent in 2013 to 22 percent in 2015, and, in 2016 has leveled off at 21 percent. The percentage of workers somewhat confident increased from 36 percent in 2015 to 42 percent in 2016, while the percentage not at all confident decreased from 24 percent in 2015 to 19 percent in 2016. This move out of the not-at-all-confident group is observed primarily among those reporting they or their spouses do not have a retirement plan (defined benefit, defined contribution, or individual retirement account). Retiree confidence in having enough money for a comfortable retirement, which historically tends to exceed worker confidence levels, continued to increase in 2016 reaching 39 percent who are very confident (up from 18 percent in 2013). The percentage not at all confident was 12 percent (statistically unchanged from 14 percent in 2013). Worker confidence in the affordability of various aspects of retirement continued its increase in 2016. In particular, the percentage of workers who are very confident in their ability to pay for basic expenses increased (43 percent in 2016, up from 25 percent in 2013 and 37 percent in 2015). The percentages of workers who are very confident in their ability to pay for medical expenses (22 percent, up from 14 percent in 2013) and long-term care expenses (16 percent, up from 11 percent in 2013) are slowly inching upward. Sixty-nine percent of workers report they or their spouses have saved for retirement (statistically equivalent to 67 percent in 2015). Still, a sizable percentage of workers report they have virtually no savings and investments. Among RCS workers providing this type of information, 26 percent say they have less than $1,000, though those who indicate they and their spouse do not have a retirement plan -- a defined benefit (DB), defined contribution (DC), or individual retirement account (IRA) -- are far more likely than those who have a plan to report this low level of savings (67 percent vs. 9 percent) and far less likely to report having saved at least $100,000 (5 percent vs. 34 percent). Retirees are more likely than workers to describe their level of debt as not a problem.
This paper is the sixth annual cross-sectional analysis update of the EBRI IRA Database. It includes results on the distribution of individual retirement account (IRA) types and account balances, contributions, rollovers, withdrawals, and asset allocation in IRAs for 2014, the latest data available. The average IRA account balance in the database was slightly more than $100,000 and the average IRA individual balance was $127,583, but the balances varied significantly by the IRA type: Roth IRAs had the lowest average balance, while Traditional IRAs had the highest average balance. Just less than 12 percent of all accounts in the database received a contribution in 2014, but Roth IRAs were more likely to receive a contribution than Traditional IRAs (25.9 percent vs. 6.4 percent). Rollovers in 2014 amounted to 15 times more than the total contributions in the database, with the average and median rollover to a Traditional IRA in 2014 being $97,174 and $25,827, respectively. Almost 24 percent of individuals owning a Traditional or Roth IRA took a withdrawal in 2014, including 27.2 percent of Traditional IRA owners. The overall IRA withdrawal percentage was largely driven by activity among individuals ages 70-1/2 or older owning a Traditional IRA--the group required to make withdrawals under the required minimum distribution (RMD) rules. In contrast, among owners under age 60, fewer than 12 percent of any age group had a withdrawal. One-quarter of owners ages 71 or older was found to have withdrawn an amount from their Traditional IRA in excess of their RMD. More than half of all IRA assets were allocated to equities, although this varied with owner age, account balance, and IRA type. There were minimal differences in asset allocations trends by gender. Those older or owning a Traditional IRA had, on average, lower allocations to equities. Individuals with the largest balances had the lowest combined exposure to equities (including the equity share of balanced funds added to the pure equity funds). Overall, 27.0 percent of IRAs had less than 10 percent in equities and 27.9 percent had more than 90 percent in equities, so called “extreme allocations” in a particular asset category. Furthermore, just short of 1 in 5 IRAs (17.2 percent) had more than 90 percent of their assets in bonds and money funds.
This paper examines whether there is variation by worker income on how an HSA-eligible health plan affects health care services use and spending. Does the typically flat-dollar gap between a health plan’s deductible and the employer contribution to a health savings account (HSA) have a bigger impact on the use of health care services among lower-income workers than it does for higher-income workers? The data for this study come from a large employer that offered an HSA-eligible health plan alongside a preferred provider organization (PPO), includes between 150,000 and 200,000 individuals, and covers health care services use and spending over the six-year period from 2009-2014. The HSA-eligible health plan was associated with a decline in (non-preventive) outpatient office visits for workers at all income levels, but the decline was over twice as large for workers and their dependents with incomes less than $50,000 as compared with those with incomes of at least $100,000. The decline in specialist visits accounted for most of the decline in outpatient office visits among the group of workers with less than $50,000 in income. There was an across-the-board decline in prescription drug fills regardless of worker income. However, unlike the results for outpatient physician office visits, there was not a clear relationship with income level. The HSA-eligible health plan was associated with a reduction in various preventive services by worker income. For example, lower-income workers reduced their use of influenza vaccinations more than higher-income workers. The usage of preventive office visits exhibited the same general pattern as influenza vaccinations. In contrast to the other findings, the HSA-eligible health plan was associated with an increase in emergency department visits and inpatient hospital admissions among lower-income individuals. The usage levels of certain health care services ― inpatient hospital days, avoidable emergency department visits, pneumonia vaccinations, human papillomavirus (HPV) vaccinations, and glycated hemoglobin (HbA1c) testing for individuals with diabetes ― were unaffected by enrollment in the HSA-eligible health plan both overall and by worker income.
This paper provides an annual update of the longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k) database -- the largest participant-level database of its kind -- with about 24.9 million 401(k) participants at year-end 2014. Because the annual cross sections cover participants with a wide range of participation experience in 401(k) plans, meaningful analysis of the potential for 401(k) participants to accumulate retirement assets must examine the 401(k) plan accounts of participants who maintained accounts over all of the years being studied (“consistent participants”). The main body of the paper focuses on consistent participants for the 2010-2014 period, while the appendix addresses the 2007-2014 period. The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2014. Overall, the average account balance increased at a compound annual average growth rate of 17.3 percent from 2010 to 2014, to $138,553 at year-end 2014. The median (mid-point) 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 19.7 percent over the period, to $56,653 at year-end 2014. At year-end 2014, the average account balance among consistent participants was almost twice the average account balance among all participants in the EBRI/ICI 401(k) database. The consistent group’s median balance was more than three times the median balance across all participants at year-end 2014. Three primary factors affect account balances: contributions, withdrawal and loan activity, and investment returns. The percent change in average account balance of participants in their 20s was heavily influenced by the relative size of their contributions to their account balances and increased at a compound average growth rate of 44.1 percent per year between year-end 2010 and year-end 2014. The asset allocation of the 8.8 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation of the 24.9 million participants in the entire year-end 2014 EBRI/ICI 401(k) database. On average at year-end 2014, about two-thirds of 401(k) participants’ assets were invested in equities, either through equity funds, the equity portion of target-date funds, the equity portion of non-target-date balanced funds, or company stock. Younger 401(k) participants tend to have higher concentrations in equities than older 401(k) participants.
The authors conducted in-depth qualitative research to examine questions around provider networks in employer health plans, particularly the development of so-called “narrow networks,” which have grown in the individual market exchanges under the Patient Protection and Affordable Care Act of 2010 (ACA). These narrow networks are characterized by offering considerably fewer health providers than is typical in the group market, and they are formed primarily based on price discounting. The research includes the review of peer-reviewed journals, news sources, and public policy reports; structured interviews with a convenience sample of human resource benefit directors at 11 large employers; and field research by health-policy experts in a dozen states. This paper describes the research in more detail and analyzes the reported facts and viewpoints. Major findings include the following: Narrow provider networks are receiving renewed attention, following their increasing prominence in the ACA’s individual (nongroup) marketplace exchanges, which are highly price-competitive. So far, this renewed interest in narrow networks has not translated strongly to employers. For example, in 2016, only 7 percent of employers with health plans offered a narrow network. Also, in 2014, employers ranked narrow networks the least effective among several strategies to manage health insurance costs. Reasons employers give for their subdued interest include absence of a track record showing sustained (year-over-year) savings; concern about antagonizing workers; spotty availability of narrow networks, especially in rural areas; greater interest currently in other cost-savings strategies; and reluctance to adopt substantial changes in benefit structures until the future of the ACA’s so-called “Cadillac tax” is resolved. There are signs that employers’ interest in narrow networks may grow in the near future. More than one-third of employers with health plans that have 5,000 or more workers now offer some type of alternative network, including tiered or “high-performance” networks. Field reports indicate increasing adoption of narrow networks by both large and small employers, particularly in urban markets around the country. Where narrow networks are offered, their adoption could be increased by giving workers stronger financial incentives to consider them. Offering workers a fixed (“defined”) contribution that does not vary by choice of plan is one way to confer such incentives, and private exchanges are a way to offer workers a broader range of choice. Currently, however, neither defined contributions nor private exchanges are widely used by employers.
The Employee Benefit Research Institute (EBRI) maintains a wealth of data collected from various health savings account (HSA) providers. The EBRI HSA Database contains 2.9 million accounts with total assets of $5 billion as of Dec. 31, 2014. This Issue Brief is the second annual report drawing on cross-sectional data from the EBRI HSA Database. It examines account balances, individual and employer contributions, annual distributions, investment accounts, and account-owner demographics for 2014. Enrollment in HSA-eligible health plans is estimated to be about 17 million policyholders and their dependents, and it has also been estimated that there are 13.8 million accounts holding $24.2 billion in assets as of Dec. 31, 2014. Almost 4 in 5 HSAs have been opened since the beginning of 2011. The average HSA balance at the end of 2014 was $1,933, up from $1,408 at the beginning of the year. Average account balances increased with the age of the owner of the account. Account balances averaged $655 for owners under age 25 and $5,016 for owners ages 65 and older. About 6 percent of HSAs had an associated investment account. End-of-year 2014 balance averages were higher in accounts with investment assets. Thirty-seven percent of HSAs with investment assets ended 2014 with a balance of $10,000 or more, whereas only 4 percent of HSAs without investment assets had such a balance. Among HSAs with investment assets, accounts opened in 2014 ended the year with an average balance of $6,544; whereas those opened in 2005 had an average balance of $19,269 at the end of 2014. HSAs with either individual or employer contributions accounted for 70 percent of all accounts and 86 percent of the assets in 2014. Four percent of these accounts ended the year with a zero balance. On a yearly average, individuals who made contributions deposited $2,096 to their account. HSAs receiving employer contributions received $1,021 a year, on average. Four-fifths of HSAs with a contribution also had a distribution for a health care claim during 2014. Among HSAs with claims, the average amount distributed for health care claims was $1,951. Distributions for health care claims increased with age, with the exception of those ages 65 and older. Average annual distributions were $636 for account owners under age 25; $2,373 for account owners ages 55-64; and $2,124 for account owners ages 65 and older. Average annual distributions were higher for accounts that were older. However, the likelihood of taking a distribution for health care claims was higher among accounts opened more recently.
This paper presents findings from the 2014 EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey (CEHCS). In 2014, there was $22.1 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 10.6 million accounts, according to data from the 2014 CEHCS. In 2008, there were only 4.2 million accounts with $5.7 billion in assets. The average account balance was $2,077 in 2014, up from $1,356 in 2008. An increasing number of individuals have held their account for three or more years. One-quarter (27 percent) had held their account for three to four years, up from 19 percent in 2008. Thirteen percent had held their account five or more years, up from 4 percent in 2008. In 2014, accounts with an employer contribution had an average balance of $2,403, whereas those without an employer contribution had an average balance of $2,056. Individuals who had held an HRA or HSA for five years or more had $3,092 in their account. Those who had held an account for less than a year had less than $1,500 in their account. In general, average account balances have grown over the longer term regardless of how long the account had been open. Average rollover amounts increased from $1,165 in 2013 to $1,244 in 2014. In 2014, $8.9 billion was rolled over, down from $9.4 billion in 2013. Eleven percent of individuals had held an account for more than a year without a rollover in 2014. Rollover amounts increased with the length of time an individual had held an account. In 2014, those who had held an account one to two years rolled over an average of $982; those who had held an account three to four years rolled over an average of $1,421; and those who had held an account five or more years rolled over an average of $1,428. Accounts with an employer contribution had a higher amount rolled over than those without an employer contribution. Accounts with an employer contribution had an average rollover of $1,280, whereas those without an employer contribution had an average rollover of $1,069.
This paper examines HSA and HRA assets, account balances, and rollover amounts, using data from the 2012 EBRI/MGA Consumer Engagement in Health Care Survey (CEHCS), sponsored by the Employee Benefit Research Institute and Mathew Greenwald & Associates. It then examines differences and trends in account balances by demographics, income, contribution levels, and engagement in an individual’s own health care using a regression equation. Rollover amounts are then examined. In 2012, there was $17.8 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 11.6 million accounts, according to data from the 2012 CEHCS. This was up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2011, when 8.5 million accounts held $12.4 billion in assets. After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011 and 2012. In 2006, the average account balance was $696. It increased to $1,320 in 2007, a 90 percent increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively. In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. In 2011, average account balances increased to $1,470, a 9 percent increase from 2010. It increased to $1,534 in 2012, a 4 percent increase. After declining to $1,029 in 2010, average rollover amounts increased to $1,206 in 2011 and remained there in 2012. Total assets being rolled over increased: $9.7 billion was rolled over into HSAs and HRAs in 2012, up from $6.8 billion in 2011. The percentage of individuals without a rollover was 11 percent in 2012. Individuals who smoke have more money in their accounts than those who do not smoke. In contrast, obese individuals have less money in their accounts than the nonobese. There was very little difference in account balances by level of exercise. Very small differences were found in account balances and rollover amounts for individuals who used cost or quality information, compared with those who did not use such information. However, next to no relationship was found between either account balance or rollover amounts and various cost-conscious behaviors. Men have higher account balances than women, older individuals have higher account balances, account balances increase with household income, and education has a significant impact on account balances, independent of income and other variables. Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals in 2012. Rollover amounts increased with household income and education, and individuals with single coverage rolled over a slightly higher amount than those with family coverage in 2012.
The results show that a very small portion of older households receive transfers from their younger generations, while a much larger section of older households transfer money to their younger generations. The amounts transferred by older households are much higher than what they receive. These transfers are highly correlated with income. The average annual transfer amounts are large enough to be considered as a major spending item in a household budget.
This paper examines administrative health insurance claims, wellness-program participation, and data collected from health-risk assessments (HRAs) and biometric screenings. It reports distinct differences between individuals who participated prior to the enhancement of financial incentives and those who first participated after the new incentives were in place. Indeed, employees who delayed completion of an HRA and/or biometric screening were more likely to be male, older, higher wage earners, and in poorer health -- as evidenced by higher Charlson Comorbidity Index scores; and to have higher prevalence rates of obesity, diabetes, pre-hypertension, high blood pressure, and high cholesterol. Moreover, patients first completing an HRA and/or biometric screening post-incentive had greater use of specialist visits, and prescription drugs; and were less likely to use preventive services, such as preventive office visits, breast cancer, cervical cancer, and colorectal cancer screening. In short, the employees who had abstained from participating in the workplace wellness programs were likely the ones in need of them most. The significantly increased financial incentive appears to have been effective at encouraging their participation. While results from this study cannot shed light on the magnitude of financial incentives necessary to sufficiently bolster participation, a greater proportion of employees remained unscreened for biometrics under the financial incentive than the fraction of the population without a completed HRA. The differential may be due to the time required to complete each, for which the individual may incur opportunity costs. Support for this theory is provided by the fact that higher income earners were more likely to forgo the wellness programs. Firms offering wellness programs should expect to have to employ financial and other incentives to encourage member participation. Relatively low financial rewards may attract the young and well. Higher financial incentives -- while more costly for the employer in the short-run -- may bring in older, less healthy employees who are consuming more health services, and accounting for a large proportion of health care spending. If wellness programs are effective at improving patient health, positive longer-term, returns-on-investment (ROI) may support the use of high financial incentives. Forthcoming research will investigate the impact of these wellness programs on health-services utilization and spending, as well as worker productivity.
This paper presents key findings from the 25th annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The 2015 RCS by EBRI/Greenwald & Associates finds that the nation’s retirement confidence continues to rebound from the record lows experienced between 2009 and 2013 -- but this is based on the increasing optimism of those who indicate they and/or their spouse have a retirement plan. The percentage of workers confident about having enough money for a comfortable retirement, at record lows between 2009 and 2013, increased in 2014 and again in 2015. Twenty-two percent are now very confident (up from 13 percent in 2013 and 18 percent in 2014), while 36 percent are somewhat confident. Twenty-four percent are not at all confident (statistically unchanged from 28 percent in 2013 and 24 percent in 2014). The increased confidence since 2013 is strongly related to retirement plan participation. Among those with a plan, the percentage very confident increased from 14 percent in 2013 to 28 percent in 2015. In contrast, the percentage very confident remained statistically unchanged among those without a plan (10 percent in 2013, 9 percent in 2014, and 12 percent in 2015). Retiree confidence in having a financially secure retirement, which historically tends to exceed worker confidence levels, also increased, with 37 percent very confident (up from 18 percent in 2013 and 27 percent in 2014). The percentage not at all confident was 14 percent (statistically unchanged from 14 percent in 2013 and 17 percent in 2014). Worker confidence in the affordability of various aspects of retirement has also rebounded. In particular, the percentage of workers who are very confident in their ability to pay for basic expenses has increased (37 percent, up from 25 percent in 2013 and 29 percent in 2014). The percentages of workers who are very confident in their ability to pay for medical expenses (18 percent, up from 12 percent in 2011) and long-term care expenses (14 percent, up from 9 percent in 2011) are slowly inching upward. Cost of living and day-to-day expenses head the list of reasons why workers do not save (or save more) for retirement, with 50 percent of workers citing these factors. Nevertheless, many workers say they could save a small amount more. Seven in 10 (69 percent) state they could save $25 a week more than they are currently saving for retirement.
This paper separates the more predictable health care expenses in retirement for older Americans (ages 65 and above) from the less predictable ones. Based on utilization patterns and expenses, doctor visits, dentist visits and usage of prescription drugs are categorized as recurring health care services. Overnight hospital stays, overnight nursing-home stays, outpatient surgery, home health care and usage of special facilities are categorized as non-recurring health care services. The data show that recurring health care costs remain stable throughout retirement. The average annual expenditure for recurring health care expenses among the Medicare-eligible population was $1,885. Assuming a 2 percent rate of inflation and 3 percent rate of return, a person with a life expectancy of 90 would require $40,798 at age 65 to fund his or her recurring health care expenses. This does not include recurring expenses like insurance premiums or over-the-counter medications. Usage and expenses of non-recurring health care services go up with age. Nursing-home stays in particular can be very expensive. For people ages 85 and above, the average and the 90th percentile of nursing-home expenses were $24,185 and $66,600 during a two-year period, respectively. Nursing-home stays, home health care usage, and overnight hospital stays are much higher in the period preceding death. More than 50 percent in every age group above age 65 received in-home health care from a medically trained person before death. For those ages 85 and above, 62.3 percent had overnight nursing-home stays before death and 51.6 percent were living in a nursing home prior to death. Some recurring and non-recurring expenses were also much higher before death. Usage of recurring health care services generally goes up with income and usage of non-recurring health care services -- except outpatient surgery and special facilities -- goes down with income. The top income quartile spent significantly more on nursing-home and home health care expenses than the rest. This could be a result of Medicaid coverage for the lower-income, lower-asset groups. Women above 85 have significantly higher nursing-home usage than men. The rest of the differences between men and women are small. The data for this study come from the Health and Retirement Study (HRS), a study of a nationally representative sample of U.S. households with individuals over age 50.
EBRI previously published extensive analysis that focused on the EBRI Retirement Readiness Ratings™ -- the probability that households will not run short of money in retirement. This paper expands the earlier analysis by providing similar analysis of the EBRI Retirement Savings Shortfalls (RSS) -- the size of the deficits that households are simulated to generate in retirement. The Retirement Savings Shortfalls show that for those on the verge of retirement (Early Baby Boomers), the deficits vary from $19,304 (per individual) for married households, increasing to $33,778 for single males and $62,734 for single females. While these RSS values may appear to be relatively small considering they represent the sum of present values that may include decades of deficits, it is important to remember that less than half of the simulated lifepaths modeled are considered to be “at risk.” Looking only at those situations where shortfalls are projected shows that the values for Early Boomers vary from $71,299 (per individual) for married households, increasing to $93,576 for single males and $104,821 for single females. RSS values are much smaller for Gen Xers with significant years of future eligibility for defined contribution plan participation. The deficit values for Gen Xers assumed to have no future years of eligibility (as if they were never simulated to be employed in the future by an organization that provides access to those plans) is $78,297 per individual. That shortfall decreases substantially (to $52,113) for those with one to nine years of future eligibility, and even further to $32,937 for those with 10-19 years of future eligibility. The results also demonstrate the extreme importance of longevity risk and nursing home and home health care costs in simulating Retirement Savings Shortfalls. Ignoring nursing home and home health care costs (or assuming another entity pays these costs) decreases the RSS by an average of 74 percent whereas the RSS for those in the latest relative longevity quartile average 14.8 times those in the earliest relative longevity quartile. The impact of Social Security retirement benefits on RSS was demonstrated in two ways. A pro rata decrease of between 22 and 27 percent starting in 2033 would increase RSS by an average of 15 percent for Gen Xers. If all Social Security retirement benefits were eliminated in 2015, the average RSS (for Boomers and Gen Xers) would increase by 90 percent. The aggregate national retirement deficit number is currently estimated to be $4.13 trillion for all U.S. households where the head of the household is between 25 and 64, inclusive.
