Data and Research October 20, 2021

Participants Missing the Full Match Remains a Big Problem

A new survey shows there are several reasons employees decide not to contribute to their retirement plans.

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Millions of Americans are not contributing enough to their workplace retirement plan to get the full company match, as a recent study found 12% of employed adults—or as many as 17.5 million working Americans—aren’t contributing enough.

According to a MagnifyMoney survey of 1,233 employed Americans, 59% say their employer offers a retirement saving plan, 34% say their employers do not and 7% did not know if a plan was offered. Those with higher annual household incomes are more likely to work in jobs with employer-sponsored retirement savings plans—78% among those with incomes of $100,000 or more, versus 41% among those with incomes below $35,000, according to the survey.

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Among those respondents whose employers offer plans, 83% say they are currently contributing to the plan, 12% have contributed to it in the past but aren’t doing so currently and 6% have never enrolled.

The survey found there are several reasons employees decide not to contribute to their retirement plans. Thirty-five percent of respondents say they could not afford to contribute to their plan—the top reason. Meanwhile, 17% say they forget to enroll and 12% are waiting until they are older.

Men are more likely than women to work for an employer that offers a retirement saving plan (64% versus 56%), and women were less likely than men to know if their employer offers matching funds (20% of women didn’t know versus 12% of men).

The survey also examined if those who were saving were accumulating enough to last through retirement. Just 20% of respondents said their retirement plan balances have reached $100,000 or more, with significantly more men (30%) than women (11%) in this category. Older generations were more likely to have higher balances in their retirement accounts, with 48% of Baby Boomers and 31% of Generation Xers having a balance of $100,000 or more, versus 9% of Generation Zers and Millennials.

“If your employer offers to match a certain amount of your retirement contributions, that’s a part of your total compensation package,” says Ismat Mangla, MagnifyMoney senior content director. “Matching contributions from your employer will help you save and invest more for retirement. If you don’t contribute enough money to get your employer match, you are literally leaving free money on the table.”

Products October 20, 2021

Transamerica Offers Individual Coverage Health Reimbursement Accounts

The benefit offers more flexibility for employees and employers, a survey finds.

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Transamerica has announced the expansion of its workplace-focused benefit solutions with the introduction of individual coverage health reimbursement accounts (ICHRAs).

ICHRAs allow employers to contribute toward premiums and other expenses paid by employees for individual primary medical insurance.

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Transamerica says an ICHRA provides a tax-advantaged platform for employers to provide contributions without the administrative burden of providing medical insurance through their organization. For employees, advantages include choosing the medical coverage that best fits their situation and having more control over their health benefits budget. Also, if the plan allows, employees can make additional pre-tax contributions.

Eligible reimbursable expenses may be customized by the employer to include:

  • health insurance policy premiums;
  • dental services;
  • vision expenses;
  • prescription drugs;
  • over-the-counter medications; and
  • doctor visits or medical procedures.

Transamerica adds that customers can pay for expenses through a Transamerica-issued debit card or by submitting receipts for reimbursement through Transamerica’s website. The website also provides the customer’s current balance and any pending claims.

Under final regulations issued in 2019 by the U.S. departments of Health and Human Services, Labor and the Treasury, starting in January 2020, employers were able to use ICHRAs to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage that workers purchase in the individual market, subject to certain conditions. Interest in the benefit has since been growing.

Willis Towers Watson has found ICHRAs are starting to attract more interest from U.S. employers, particularly wholesale and retail employers and those in education and the public sector.

According to the “Willis Towers Watson 2020 Health Care Delivery Survey,” about one in six employers (15%) is planning to offer or considering offering ICHRAs to at least some portion of its employees in 2022 or later. The survey results showed similar levels of interest regardless of employer size, with 20% of large employers planning to offer or considering offering ICHRAs to at least some portion of their active employees.

Recently, PeopleKeep reported that its 2021 report on ICHRAs found the top reason employers want to offer an ICHRA is because it allows their employees to choose their own health insurance plans. Nearly 70% of employers surveyed said they find that an ICHRA is more flexible than other group health insurance options.

In addition, 90% of employers surveyed already plan to renew their ICHRA benefit in 2022.

To learn more about Transamerica’s ICHRA solution, employers may contact their financial adviser or Transamerica directly at 888-401-5826.

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