Benefits May 11, 2006

Web Eases Pension Plan Administration

May 11, 2006 (PLANSPONSOR.com) - Web-based pension plan administration systems have reduced the number of pension calls human resources departments get by three-fourths, according to a new report.
Reported by

According to consultant Watson Wyatt Worldwide, the rising number of defined benefit plan freezes and the large aging population nearing retirement could create an administrative overload for plan administrators.

“As the baby boomers begin to retire, companies are increasingly swamped with requests for pension payout estimates. Such demands will only increase in the coming decades,” said Tony DeNucci, national leader of pension administration systems for Watson Wyatt, in a press release.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

DeNucci noted that more and more companies are turning to Web systems as a way to give employees easy access to plan information and prevent administrative costs from becoming too high. He also warned in the news release that pension obligations do not evaporate when plans are frozen.

Benefits May 10, 2006

Health Care Costs More in Rural States

May 10, 2006 (PLANSPONSOR.com) - A new study supported by The Commonwealth Fund (CWF) found that employees in states with large urban populations, like California, Massachusetts, New York, and Pennsylvania, are getting better benefits and more value in their health plans than those in rural states.
Reported by

According to a publication summary on CWF’s Web site, when study authors adjusted premium costs for the quality of benefits, Maine, West Virginia, Wisconsin, and Wyoming – states with substantial percentages of rural residents – got the least value for their money. As an example, CWF said the study found the average adjusted premium for Wyoming employees with average benefits is $4,001, compared with $3,203 on average across all states, and $2,833 in California.

Get more!  Sign up for PLANSPONSOR newsletters.

Type of health plan was found to be the key determinant of both actuarial value and adjusted cost. The overall actuarial value in health maintenance organization (HMO) plans was 90%, 84% in point of service (POS) plans, 81% in preferred provider organizations (PPOs), and 74% in indemnity plans, according to the study. Additionally, adjusted premiums are 25% higher for indemnity plans and 18% higher for PPO plans than HMOs.

It is because of the strong effect of plan type that adjusted premiums tend to be higher in rural states (where indemnity plans have large market presence) than in urban states with strong HMO market shares, the study authors concluded.

In addition, the study found that, on average, employees in America’s smallest firms (one to nine workers) pay 18% more in health insurance premiums for the same benefits than do those in the nation’s largest (1,000 or more workers) firms. Firms with 10 to 24 workers pay 10% more. The study attributes this to the higher administrative costs from marketing, medical underwriting, greater risk, and other factors associated with small size.

The study report, “Generosity And Adjusted Premiums In Job-Based Insurance: Hawaii Is Up, Wyoming Is Down,” is here .

«