Benefits October 6, 2015

Employees Not Putting Time into Health Benefit Decisions

A study suggests a strong connection between the time spent reviewing benefits and the decision to make a change.
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More than half (53%) of employees surveyed by LIMRA said they spend less than one hour reviewing benefits information during their company’s open enrollment period (see also “Employees Do Not Want to Research Health Benefit Options”).

When they make a decision, it is usually to keep everything the same as last year. Only 36% of employees made changes to any of their benefit selections in the past year.

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Employees make benefit changes for a variety of reasons, the surveyed showed. A new offering from their employer was the most cited reason (22%) followed by “determining that another plan was better” (19%). An increase in the cost of benefits was a reason to change for 18% of employees.

The study suggests a strong connection between the time spent reviewing benefits and the decision to make a change. Among employees who made at least one change, 49% spent two hours or more reviewing their benefit information.

COMING UP: Preference to enroll online

It is difficult to determine, however, which behavior is causing the other, LIMRA noted. Employees who know they want to make a change may be more likely to look at benefits materials, but reviewing benefits information may motivate employees to take action and make a change. 

Once they have decided on their benefits coverage, employees showed a strong preference to enroll online, with 68% favoring this method over paper enrollment or other alternatives. Half of employees who currently enroll on paper prefer a different method, and most would choose online. 

Among those who enrolled online, nearly all used a laptop computer or personal computer (PC) rather than a mobile device. Only 4% of employees enrolled on a smartphone, and 5% on a tablet. Younger employees were somewhat more likely to use a mobile device, but still only 15% of Gen Y employees enrolled on a tablet or smartphone. 

LIMRA surveyed 3,000 full-time employees on their experiences with benefits communication and enrollment.
Ask the Experts October 6, 2015

(b)lines Ask the Experts – Allowing In-Service MRDs

“We are a private university that sponsors two plans, a 401(a) defined contribution plan for employer contributions and a 403(b) plan for employee contributions, We permit in-service withdrawals from the 403(b), but not the 401(a).
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“However, several of our long-service professors have contacted us inquiring about the possibility of amending our 401(a) plan to permit minimum required distributions (MRDs) from the 401(a) plan while still employed, These professors are older than age 70 ½ and have large retirement plan accumulations; their rationale is that, if they commence their MRDs now, rather than waiting until retirement, the annual MRD will be smaller, since it is based on life expectancy.  

“Can we amend our 401(a) plan to permit in-service MRDs at age 70 ½?” 

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Michael A. Webb, vice president, Cammack Retirement Group, answers:        

Indeed you can amend the plan in this fashion. As you are aware, MRDs must commence no later than the LATER of a) April 1st of the year following the calendar year in which the participant attains age 70 ½, or b) April 1st following the calendar year of retirement. And indeed, the vast majority of retirement plans contain MRD provisions with this precise language, meaning that individuals who are in-service and have attained age 70 ½ may NOT take an MRD (although they could take an amount equivalent to the MRD if the plan permitted in-service distributions for such individuals).

However, there is nothing in the MRD regulations that would prohibit a plan from containing language that would permit in-service MRDs. Thus, your plan could be amended to permit such distributions. Note that this is the case regardless of whether the 401(a) defined contribution plan is a money purchase plan or a profit sharing plan.

Thank you for your question!

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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