Rising health-care costs are putting pressure on some 401(k) plan executives to reduce certain other benefits, including those related to retirement accounts and employee education, a survey by Bank of America Merrill Lynch said Thursday.
“Our survey found evidence that rising health-care costs were sapping resources from other benefits,” said a report based on a survey of 1,020 employers with 401(k) plans.
The report said higher health-care costs were cited by 17% of respondents as having a “major” impact on all other benefits, while 34% cited a “moderate” impact.
The definition of “major” and “moderate” was left to the discretion of respondents, Kim Kasin, managing director and financial guidance executive at Bank of America Merrill Lynch, said in an interview.
The survey found that 63% of employers said their health-care costs have risen 6% or more over the past two years. During that period, the average health-care cost increase for this group was 11%, the report said.
Among plan executives who cited an impact of rising health-care costs on other benefits, 55% said it resulted in less spending on the other benefits. The biggest casualty in the 401(k) plans was a reduced corporate match, Ms. Kasin said. Another benefit taking a financial hit was employee education.
Ms. Kasin said the survey showed that 24% of plans have a financial wellness strategy in place, up from 20% from a similar survey published in 2013.
Among the largest plans — those with 401(k) assets of $100 million or more — 48% have financial wellness strategies, up from 35% in the 2013 survey. Executives of another 19% of large plans said they expect to have a financial wellness strategy in the next two years.
The survey, which wasn't restricted to company clients, was conducted from mid-October to early December.