Congress Still Clueless About Employer-Sponsored Benefits: Survey

January 20, 2003 ( - While benefits issues have enjoyed a refreshing prominence on the legislative agenda in recent years, Congress is still largely clueless about the topic, according to a new survey of large plan sponsors.

The vast majority (79%) of plan sponsor respondents said Congress lacks a sufficient understanding of the laws and regulations currently governing employer-sponsored benefits plans–and more than a third (34%) said they strongly agreed with that assessment, according to the survey conducted by the American Benefits Council.  

Roughly three-fourths (72%) of the employers surveyed said that Congress didn’t really understand the role of employers in providing these benefits–and less than 25% said Congress is willing to “seriously consider” employer views in developing benefits legislation.

Health care Hurting

Health care looms large for plan sponsors, with a full 62% noting that President Bush and Congress should give a "very high" priority to increasing the number of Americans with health insurance, and 28% saying that was somewhat high in importance.   As for a means to that end, 45% said a very high priority should be accorded to providing stronger tax incentives (37% said that was somewhat high, and just 13% said somewhat low).   Not surprisingly, two-thirds said that Congress should not be looking to reduce and/or restrict employers' tax deductions for health coverage, while 24% said expanding those should be a high priority, and 39% said it should be a "somewhat high" priority.

Eighty-six percent were very concerned about employers' ability to continue to offer quality health care coverage to their workers, and the future prospects looked dim as well.   Nearly half (44%) said they thought it "not very likely" that the annual percentage increase in health care costs would return to single digits - and 15% said it was "not at all likely."

Consumer Drivens

As for alternatives, roughly a quarter (23%) said legislators should make the development of consumer-driven health-care reimbursement accounts a very high priority, while 35% said the priority should be "somewhat high."   However, a full 30% said it should be a "somewhat low" priority.

That relative degree of ambivalence stands in some contrast to the 54% of employers that said they expected the enrollment in those kinds of programs to be "somewhat significant" over the next five years.   Roughly one in five thought it would be "very significant," though an identical number said it would not be very significant.

Liability Leery

On the subject of liability, 42% of employer respondents said that the President and Congress should place a very high priority on including strict liability limits in some kind of medical malpractice/tort reform, while another third (32%) felt that was a "somewhat high" priority.   Just 14% said that was somewhat low in priority, while 9% either said it was very low or were not sure.

Not surprisingly, just 3% said the Congress should put a "very high" priority on expanding the right to sue employers and health plans for incorrectly denying benefits, while only another 9% cited it as a "somewhat high" priority.   Forty percent said it was somewhat low, and another 45% said it was very low.

Still, a remarkably strong 38% said that some kind of new incentives for retiree health care was a very high priority, and 42% said it was somewhat high.   Forty percent said that clarifying or rescinding the so-called "Erie County" decision (that prohibits higher health benefits for early retirees than for post-age 65, Medicare-eligibles) should be a very high priority, while a third said it should be somewhat high.  

If Congress does pass some form of legislation that would expand prescription drug coverage for Medicare, 45% said they strongly agreed that employers should be reimbursed in the same manner as insurers and other entities that offer such coverage.   Thirty-seven percent agreed "somewhat" with that statement, while just 13% disagreed.

Survey respondents were not nearly as concerned about the issue of mental health parity.   Nearly three-quarters (74%) said it was either of low, or somewhat low, priority on their agendas for congressional action.

Seeking Security

The vast majority (94%) said that shoring up the financial soundness of Social Security should be a priority for the President and Congress (54% said it should be a "very high" priority).   Roughly 70% said that more clarity was required on issues related to cash balance plans (34% said it should be a very high priority).  

On the issue of retirement benefits, nearly half (47%) said that making the retirement policy components of EGTRRA permanent should be a high priority, while 37% said it should be "somewhat high."   Only 10% said somewhat low, and just 5% said very low, or not sure.

Meanwhile, expanding and/or making the lower-income tax credit for retirement savings permanent was ranked as a high priority item by 26% of respondents, and somewhat high by 34%.   That represented a significant increase from the 2000 version of the survey, according to the American Benefits Council.  

Advice "Consents"

Allowing financial institutions that provide retirement products to also offer participants investment advice was cited as "very important" by about one in five (22%), and "somewhat important" by another third (32%).   On the other hand, for 29% it was rated "somewhat low," and 15% said either very low or not sure.  

Plan sponsors were also interested in incentives to support offering advice to participants.   Twenty-two percent said the availability of some kind of tax incentives to offset the cost of offering the advice (such as pre-tax funding or employer tax credits) was of high importance, and nearly half (42%) said it was of somewhat high importance.   Twenty-two percent said it was somewhat lower in importance, and 12% ranked it low.

More than three-quarters (77%) of survey respondents said coming up with a permanent replacement for the 30-year Treasury bond for all pension calculations was a priority (42% very high, 35% somewhat high).  

Employers were not as concerned about company stock - just 17% saw legislation that would encourage greater diversification rights for this investment by participants as a high priority, though 39% said its importance was "somewhat high."   A full third said it was somewhat low in importance.

A whopping two-thirds (65%) said that the enactment of legislation taxing nonqualified deferred compensation programs and reducing the availability of funding would hurt those programs.   Somewhat surprisingly, a full 29% said it would make no difference, and 3% said it would actually help.  

The online survey was conducted among the 1,568 people currently on the membership database of the American Benefits Council during the period December 20 through January 9.   The questionnaire was completed by 337 individuals.