Health Care Employers Find Plan Participant Success with Matches

August 2, 2004 ( - Health care organizations are making progress in prompting employees to save in their retirement plans using employer matching contributions, a new survey found.

Retirement Plan Trends in Today’s Healthcare Market – 2004 found that plans with a “dollar-for-dollar” match have average participation rates among non-highly compensated employees of nearly 73%. Plan sponsors offering matches of less than a dollar typically see participation rates drop significantly. When the match decreases to $0.75 per dollar, the participation rate drops to 60.5%; at a $0.50 per dollar match, participation drops further to 58%, the study said. The study was conducted by the American Hospital Association (AHA) and Diversified Investment Advisors.

“This year’s survey draws a distinct relationship between employer contributions and plan participation. Hospital administrators are successfully using matching contributions to boost plan participation, as well as to recruit and retain valuable employees,” said Chris Cumming, senior vice president and defined contribution plans business leader of Diversified.

The survey also indicated that despite the increase in provider outsourcing capabilities, health care plan sponsors still perform most day-to-day functions in house. The survey results revealed that 40% of hospital and health care organizations work with multiple plan providers, rather than a single full-service provider. Additionally, many plan sponsors choose not to outsource many related functions, even when they have consolidated to a single provider.

“These findings reveal an opportunity for plan sponsors; consolidate plan providers and identify the services which can be outsourced effectively,” Amy Goble, vice president of Financial Services, AHA Financial Solutions, Inc. said in a news release. “This often leads to both increased administrative efficiencies and reduced costs.”

Other findings included:

  • Since 2003, there has been a 10% decrease in the number of plan sponsors offering more than 20 investment options and a substantial increase in the number of sponsors offering 11 to 15 funds.
  • 401(k) participation rates and average contribution rates have declined; however, the average participant deferral rate has remained steady at 5% since last year.
  • For the second consecutive year, the vast majority of plan sponsors said employee education would be their top priority in the coming year. In addition, 34% of plan sponsors anticipate offering financial planning; 23% of plan sponsors intend to add investment options.

Nearly 300 hospital administrators responded to the survey. To request a copy of the survey report, go to or call 800-242-4677.