_________________________________________________________________
E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 5, No. 14: July 29, 2004
_________________________________________________________________
Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2004. All rights reserved.
Leading Social Science Research Delivered To Your Desktop
http://www.SSRN.Com/
___________________________________________________________
Topic of This Issue:
Health and Employment
___________________________________________________________
SEARCHING THE SSRN ELECTRONIC LIBRARY
To search the entire SSRN Electronic Library by author, title,
JEL code, or full text of the abstracts in our database, please
visit http://papers.ssrn.com/
To browse all abstracts published in this journal, please visit
http://www.ssrn.com/link/benefits-compensation-pension-law.html
REDISTRIBUTION
Individual and professional subscriptions to the journal are for
single users. It is a violation of copyright to redistribute
this document electronically or otherwise without the explicit
permission of Social Science Electronic Publishing, Inc.
Site licenses for organizations are available by contacting
Mailto:Site@SSRN.Com
SIGN OFF
SUBSCRIPTION MANAGEMENT
You can change your journal subscriptions by going to the SSRN
User HeadQuarters at the following link: http://hq.ssrn.com
Please enter the email address where you received this email in
the "Your Email Address" field and click "Submit". Click on your
name on the next screen, and your User ID and Password will be
emailed to you. Once you have received your login information and
successfully logged in, you will be able to change your journal
selections. If you have questions or problems with this process,
please email UserSupport@SSRN.com or call 877-SSRNHelp (toll free
877.777.6435).
ALIGNMENT
If this document is misaligned, please set type face to a
non-proportional font such as Courier 10.
PAPER DOWNLOADS
If you need assistance downloading papers from our web site,
please contact Mailto:Support@SSRN.Com
T A B L E of C O N T E N T S
_________________________________________________________________
NEW and FORTHCOMING ARTICLES
"Medicare Program Takes On More Income-Related Features"
EBRI Notes, Vol. 25, No. 5, May 2004
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
JIM JAFFE
Employee Benefit Research Institute (EBRI)
DALLAS L. SALISBURY
Employee Benefit Research Institute (EBRI)
"Health Savings Account: A New Defined Contribution Health Plan"
Tax Strategies, Vol. 72, p. 196, April 2004
BARRY SALKIN
Winston & Strawn LLP
"The Impact on Employment-Based Health Benefits of the Shift from
a Manufacturing Economy to a Service Economy"
EBRI Notes, Vol. 25, No. 6, June 2004
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
"Health Care Expenses in Retirement and the Use of Health Savings
Accounts"
EBRI Issue Brief, No. 271, July 2004
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
DALLAS L. SALISBURY
Employee Benefit Research Institute (EBRI)
WORKING PAPERS
"International Comparisons of Work Disability"
JAMES BANKS
Institute for Fiscal Studies & University College
ARIE KAPTEYN
RAND
Institute for the Study of Labor (IZA)
JAMES P. SMITH
RAND
Institute for the Study of Labor (IZA)
ARTHUR H.O. VAN SOEST
The RAND Corporation
Santa Monica CA Offices
Institute for the Study of Labor (IZA)
"Crime and Early Retirement Among Older Americans"
OLIVIA S. MITCHELL
Wharton School
National Bureau of Economic Research (NBER)
S S R N I N F O R M A T I O N
_________________________________________________________________
* Partners in Publishing
* Administrative Information
- Missing issues & change of address
- Solicitation of abstracts
* Directors
* Subscription to SSRN Journals
_________________________________________________________________
ACQUIRING PAPERS
Download papers directly from the included web address or contact
the author or other contact person directly. Provide an address
to which the author or other contact person can send a paper
copy and mention that you saw the abstract in SSRN. Some of
SSRN's Partners in Publishing require a subscription or charge a
fee for electronic downloads.
EDITORIAL POLICIES
To provide the broadest coverage of research in Employee
Benefits, Compensation & Pension Law we do not referee working
papers. We accept abstracts of working papers in Employee
Benefits, Compensation & Pension Law whose topics suit the
coverage of the journal and which are part of the worldwide
scholarly discourse.
N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Medicare Program Takes On More Income-Related Features"
EBRI Notes, Vol. 25, No. 5, May 2004
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
JIM JAFFE
Employee Benefit Research Institute (EBRI)
DALLAS L. SALISBURY
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=550982
Contact: PAUL FRONSTIN
Email: Mailto:FRONSTIN@EBRI.ORG
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6352
Fax: 202-775-6312
Co-Auth: JIM JAFFE
Email: Mailto:jaffe@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Co-Auth: DALLAS L. SALISBURY
Email: Mailto:SALISBURY@EBRI.ORG
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
ABSTRACT:
When Medicare was enacted in 1965 it was financed in a manner
similar to Social Security. Workers and employers were required
to pay the same tax rate for Medicare Part A (Hospital
Insurance), up to the Social Security wage base, and
beneficiaries paid the same premium for Medicare Part B
(Supplemental Medical Insurance), when opted. All beneficiaries
received the same benefits. Legislation in 1988 eliminated the
first of these commonalities: The Qualified Medicare Beneficiary
(QMB) program covers Medicare cost sharing and Part B premiums
for anyone with income below the poverty level. In 1990,
legislation created a separate, higher, cap on the amount of
income to be taxed for financing Part A. The cap was eliminated
entirely in 1994. Legislation enacted in 2003 (the Medicare
Prescription Drug, Improvement and Modernization Act), which
added a prescription drug benefit, also moved away from the
principal of commonality as it eliminated the flat Part B
premium for all beneficiaries. Today, the highest-paid workers
pay higher payroll taxes and starting in 2007 the highest-income
beneficiaries will pay a higher Part B premium. Otherwise, all
Medicare beneficiaries will have access to the same benefits,
regardless of income. This latest change has received very
little attention since it only affects the highly paid, but it
may be indicative of changes that will become necessary in the
future to keep Medicare solvent. The issue of Medicare changes
that require higher payments by higher income workers and
retirees is a potentially thorny one that cuts in ways that
often seem counterintuitive. Regardless of the politics of
particular retiree health issues, the combination of the erosion
of retiree health benefits and limited benefits from Medicare
means that beneficiaries at all income levels should expect to
pay a significant amount of money for health insurance and
health care services.
The PDF for the above title, published in the May 2004 issue
of EBRI Notes, also contains the fulltext of another May 2004
EBRI Notes article abstracted on SSRN: "Retirement Accounts and
Wealth, 2001."
JEL Classification: I1, I18, J14
______________________________
"Health Savings Account: A New Defined Contribution Health Plan"
Tax Strategies, Vol. 72, p. 196, April 2004
BY: BARRY SALKIN
Winston & Strawn LLP
Contact: BARRY SALKIN
Email: Mailto:Bsalkin@winston.com
Postal: Winston & Strawn LLP
200 Park Avenue
New York, NY 10166-4700 UNITED STATES
Note: This is a description of the paper and not the actual
abstract.
ABSTRACT:
There has been a recent shift in the delivery of health care
benefits to employees from defined benefit health plans to
defined contribution health plans. The Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (MPDIMA)
introduced a new form of plan, a health savings account, or HSA.
HSAs are based upon medical savings accounts, or Archer MSAs,
but improve upon them in several respects. HSAs are tax favored
accounts resembling IRAs that eligible individuals who are
covered by a high deductible health plan (HDHP) can use to pay
for qualified medical expenses. HDHPs are health plans,
including employer sponsored self-insured medical reimbursement
plans, that have a deductible that is at least $1,000 for self
only coverage or $2,000 for family coverage, with limits on out
of pocket expenses not to exceed $5,000 in the case of self only
coverage and $10,000 in the case of family coverage. A plan does
not fail to be a HDHP simply because it does not have a
deductible or imposes a lesser deductible for preventive care,
although preventive care is not defined in either the MPDIMA or
recent IRS guidance. In general, eligible individuals for HSAs
are individuals who are covered by a HDHP and no other health
plan that is not a HDHP, although there are exceptions for
permitted insurance and permitted coverage. Contributions to a
HSA must be made in cash, and the maximum annual aggregate
contribution that can be made to a HSA is the lesser of the
annual deductible under the HDHP, or the maximum deductible
permitted under an Archer MSA high deductible health plan, both
as adjusted for inflation. In a rule analogous to the catch-up
contribution rule for 401(k) plans and IRAs, individuals who
have attained age 55 may contribute an additional $500 beginning
in 2004, phasing up in annual $100 increments to $1,000 in 2009.
However, contributions to a HSA are not permitted once an
individual is eligible for Medicare. Special rules apply for
married couples. Contributions to a HSA can be from one of three
sources - employee contributions, employer contributions, or
rollovers from another HSA or Archer MSA. The employer
contributions to a HSA, which include salary reduction
contributions made through a cafeteria plan, are generally
excludable from gross income and wages for employment tax
purposes. If an employer makes contributions to employees' HSAs,
the employer must make available comparable contributions on
behalf of all employees with comparable coverage during a
comparable period, although the legislative history of MPDIMA
indicates that the comparability rule does not apply to employer
contributions made through cafeteria plans. Employer
contributions that fail to satisfy the comparability
requirements are subject to a 35% excise tax. Individuals may
receive distributions from a HSA at any time, the tax
consequences of which differ depending upon whether the
distribution is used for qualified medical expenses. If it is
not used for qualified medical expenses it is includible in
gross income, and also subject to a 10% excise tax, unless
certain conditions are satisfied. The article also compares HSAs
to health reimbursement accounts, and considers the advantages
and disadvantages of an employer establishing a HSA.
______________________________
"The Impact on Employment-Based Health Benefits of the Shift from
a Manufacturing Economy to a Service Economy"
EBRI Notes, Vol. 25, No. 6, June 2004
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=558268
Contact: PAUL FRONSTIN
Email: Mailto:FRONSTIN@EBRI.ORG
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6352
Fax: 202-775-6312
ABSTRACT:
This paper examines one structural change in the work force that
has contributed to the decline in employment-based health
benefits: the movement of workers from the manufacturing sector
to the service sector. Between 1987 and 2002 not only did the
percentage of workers in the manufacturing sector decline, but
the probability that a worker in this sector had
employment-based health benefits dropped as well, from 79
percent to 70 percent.
The PDF for the above title, published in the June 2004 issue
of EBRI Notes, also contains the fulltext of another June 2004
EBRI Notes article abstracted on SSRN: "The Inflation Rate and
the Actuarial Balance of the OASDI Trust Funds."
JEL Classification: E24, I1, J32
______________________________
"Health Care Expenses in Retirement and the Use of Health Savings
Accounts"
EBRI Issue Brief, No. 271, July 2004
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
DALLAS L. SALISBURY
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=569245
Contact: PAUL FRONSTIN
Email: Mailto:FRONSTIN@EBRI.ORG
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6352
Fax: 202-775-6312
Co-Auth: DALLAS L. SALISBURY
Email: Mailto:SALISBURY@EBRI.ORG
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
ABSTRACT:
The new Medicare drug law that was enacted in late 2003 makes
two changes that supporters of the law say should make it easier
for today's workers to prepare to pay the medical bills they
will confront in retirement: prescription drug benefits (the new
Medicare Part D) and health savings accounts (HSAs). This paper
examines the impact of Medicare Part D on savings needed for
insurance premiums to supplement Medicare, Medicare Part B and D
premiums, and out-of-pocket expenses in retirement, and examines
the viability of using HSAs to save for these expenses. It
presents a wide range of estimates based on various ages at the
time of death, because longevity risk is a major threat to
retirement income security. This range of estimates also varies
with various assumptions regarding health insurance premium
inflation rates and out-of-pocket expenses. Projecting the
amount needed for medical expenses in retirement is tentative
and complex because it requires conclusions about the range by
which medical inflation will exceed consumer prices generally,
as well as assumptions about whether medical practices will
change in a way that makes Medicare coverage for a given ailment
more or less likely.
JEL Classification: H51, I1, I18, J1, J14
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"International Comparisons of Work Disability"
BY: JAMES BANKS
Institute for Fiscal Studies & University College
ARIE KAPTEYN
RAND
Institute for the Study of Labor (IZA)
JAMES P. SMITH
RAND
Institute for the Study of Labor (IZA)
ARTHUR H.O. VAN SOEST
The RAND Corporation
Santa Monica CA Offices
Institute for the Study of Labor (IZA)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=533807
Paper ID: IZA Discussion Paper No. 1118
Date: April 2004
Contact: ARTHUR H.O. VAN SOEST
Email: Mailto:A.H.O.vanSoest@uvt.nl
Postal: The RAND Corporation
Santa Monica CA Offices
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
Co-Auth: JAMES BANKS
Email: Mailto:J.W.BANKS@UCL.AC.UK
Postal: Institute for Fiscal Studies & University College
7 Ridgmount Street
London WC1E 7AE, UNITED KINGDOM
Co-Auth: ARIE KAPTEYN
Email: Mailto:kapteyn@rand.org
Postal: RAND
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
Co-Auth: JAMES P. SMITH
Email: Mailto:james_smith@rand.org
Postal: RAND
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
ABSTRACT:
Self-reported work disability is analyzed in the US, the UK and
the Netherlands. Different wordings of the questions lead to
different work disability rates. But even if identical questions
are asked, cross-country differences remain substantial.
Respondent evaluations of work limitations of hypothetical
persons described in vignettes are used to identify the extent
to which differences in self-reports between countries or
socio-economic groups are due to systematic variation in the
response scales. Results suggest that more than half of the
difference between the rates of self-reported work disability in
the US and the Netherlands can be explained by response scale
differences. A similar methodology is used to analyze the
reporting bias that arises if respondents justify being on
disability benefits by overstating their work limiting
disabilities.
JEL Classification: J28, I12, C81
______________________________
"Crime and Early Retirement Among Older Americans"
BY: OLIVIA S. MITCHELL
Wharton School
National Bureau of Economic Research (NBER)
Paper ID: Boettner Working Paper No. 2004-1
Date: November 2003
Contact: OLIVIA S. MITCHELL
Email: Mailto:mitchelo@wharton.upenn.edu
Postal: Wharton School
Philadelphia, PA 19104-6365 UNITED STATES
Phone: 215-898-7620
Fax: 215-898-0310
ABSTRACT:
This paper investigates the relationship between local crime
rates and the retirement decisions of older Americans. We do so
by linking data from the Health and Retirement Study with
measures of local crime patterns taken from the Federal Bureau
of Investigation's Unified Crime Reports. If we condition on
crime rates alone, there is either a weakly positive or no
relationship between local crime patterns and older men's
propensity to retire early. But unobservable factors associated
with early retirement may be correlated with residence in
higher-crime rate cities, so next we condition on both the
expectation for the crime rate and deviations from average crime
levels. We find a positive and statistically significant
association between early retirement and expectations for murder
rates, and a positive but, on average, imprecisely estimated
positive association between early retirement and unexpected
increases in crime.
The effect of unanticipated increases in crime is greatest,
and significant for those in poor health. In this latter group,
men are 14 percent more likely to retire early given a standard
deviation increase in unexpected murder rates. These findings
are consistent with a pattern of more early retirement among
those who live in higher crime areas, and earlier retirement
among those in poor health when crime levels rise above
anticipated levels.