Health Care Employers Embracing 403(b) Enhancements

September 25, 2012 ( – A record number of health care organizations are offering enhanced features in their defined contribution (DC) plans.

By Rebecca Moore | September 25, 2012
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More than one-third (38%) of health care plan sponsors are taking advantage of automatic enrollment in 2012up from 24% in 2006, according to the 10th annual survey of health care plan sponsors by Diversified and the American Hospital Association (AHA).Use of automatic deferral escalation increased to 24% in 2012 from only 9% in 2006. Both of these are record levels of usage since the questions were first asked in 2006.  

As a result, 73% of health care sector employees now participate in a 403(b) defined contribution planup from the 10-year low of 58% in 2006.   

According to the survey, the median participation rate for plans with auto-enrollment is 81% versus 64% for plans without auto-enrollment. The “opt out” rate after auto-enrollment is just 7% in 2012, down from 8% in 2011.   

However, the default deferral level with automatic enrollment is still low—typically 3% or less according to 70% of the plan sponsors; 84% said they know their default contribution rate is not high enough.