September 28, 2012
--- A record
number of health care organizations are offering enhanced features in their
defined contribution (DC) plans. ---
More than one-third (38%) of health care plan sponsors are
taking advantage of automatic enrollment in 2012 — up 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 plan — up 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
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.