New research finds an increase in the desire and delivery of financialÂ well-being benefits.
By Tom Kelly
In this pandemic economy, corporate budgets are beingÂ squeezed. But the need to provide both competitiveÂ benefit programs and cost-effective solutions is moreÂ important than ever. In response to COVID-19, manyÂ employers are looking to add benefits that can supportÂ emerging employee needs or fill gaps in current offerings.
Findings from Buckâs third annual Financial Wellbeing andÂ Voluntary Benefits Survey makes it clear that employersÂ understand workplace wellness programs need to goÂ beyond physical health, encompassing emotional andÂ social health as well. And in recent years, these programsÂ have further expanded to include financial well-beingâand not just retirement savings, but programs that tackleÂ student loan debt, emergency savings, budgeting, andÂ more. As employers look ahead and begin to plan for aÂ return to business stability, holistic employee well-beingÂ will be a key concern. There are numerous research studiesÂ showing the link between reducing employee financialÂ stress and improvements in engagement and productivity,Â including a recent report by The Consumer FinancialÂ Protection.
Of course, this year, employers face financial struggles too:Â sales slowdowns, supply chain interruptions, and in someÂ cases, broken business models. Even though HR knows theÂ importance of employee well-being, they also know theyÂ canât afford to pile anything more onto the bottom line.
Thatâs why employers agree that new and evolvingÂ voluntary benefitsâpaid for by employees but at lowerÂ group ratesâcan help provide the flexibility and choiceÂ needed to overcome personal finance challenges.Â Voluntary benefits have now become the mainstream,Â with organizations on average offering more thanÂ 10 programs. Along with supplemental life insuranceÂ (80 percent), AD&D insurance (75 percent), and visionÂ insurance (63 percent), the Financial Wellbeing andÂ Voluntary Benefits Survey found the most commonlyÂ offered voluntary plans are:
- legal services (69 percent);
- critical illness (68 percent);
- health accident (64 percent);
- discounts (57 percent); and
- identity theft protection (55 percent).
At least 63 percent of respondents plan to expand theirÂ offerings in the near future. When asked why, one out ofÂ two employers cited financial well-being as the reason.Â Companies say they are most likely to add student loanÂ guidance/refinancing (20 percent); student loan repaymentÂ (18 percent); hospital indemnity (13 percent); identity theftÂ protection (12 percent); and long-term care (11 percent) toÂ their list of offerings.
Participants also showed a growing interest in newÂ products like college coaching, medical financing,Â addiction recovery, and DNA/genetic testing.
Improving the Bottom Line
As employers continue to further integrate and promoteÂ voluntary benefits, they are seeing increased economicÂ returns.
Eighty percent say they see direct savings from voluntaryÂ benefits through attraction/retention (62 percent);Â behavior change (45 percent); increased participation inÂ cost-favorable plans (30 percent); reduced premiums onÂ employer-paid benefits (20 percent); and reduced healthÂ and welfare consulting (15 percent), administration (12Â percent), or communications costs (10 percent).
The survey was conducted before the onset of theÂ COVID-19 crisis. But even before the pandemic hit,Â employers were deeply aware of the financial stress manyÂ Americans struggle with every day. Survey respondentsÂ cited this as a top motivator for investing in financialÂ well-being programs, backed up by research that showsÂ that financial well-being is critical to promoting jobÂ satisfaction, loyalty, productivity, and engagement.
Now, as organizations navigate the impact of COVID-19 onÂ the U.S. economy, financial well-being will become evenÂ more critical. Certain industries have been more affectedÂ than others and workers who have had wages reduced,Â been furloughed, or been re-hired after a period ofÂ unemployment may need extra support.
There is growing awareness that poor short-term financialÂ decisions can have a lasting impact on employee financialÂ health, including retirement readiness. The 2020 surveyÂ shows that 98 percent of employers want to offer theirÂ employees a unified and holistic financial well-beingÂ program. Itâs also clear from responses that prioritiesÂ have changed: budgeting, saving, credit card debt, andÂ unexpected medical expenses top the list of programÂ objectives. Only 38 percent of respondents listed âretireÂ when readyâ as their top financial well-being priority.Â Moving employees from financial instability to stabilityÂ and, ultimately, to enhanced financial well-being requiresÂ removing short-term barriers such as student loan debtÂ and paycheck-to-paycheck living.
Half of survey participants agree that hourly employeesÂ are most in need of financial support. According to theÂ U.S. Department of Labor, more than 78 million AmericansÂ are paid on an hourly basis. Thatâs 59 percent of theÂ workforce and more than 71 percent of these workers areÂ under age 30. Data shows that hourly workers struggleÂ unnecessarily to move up and make more. By creatingÂ holistic financial well-being programs, employers expectÂ to set their hourly employees up for continued financialÂ success.
Forty percent of respondents said that millennials will alsoÂ be top targets for financial support. Millennials are nowÂ the largest generation in the workforce. Many are saddledÂ with student loans, consumer debt, and a lack of savingsâboth for emergencies and for retirement. Millennials needÂ all the resources they can get to help them plan for theÂ future, and companies believe that by offering them theseÂ resources, they will have the upper hand when it comes toÂ recruiting young talent.
Voluntary Benefits Play a Key Role
Ninety-one percent of survey respondents agree thatÂ voluntary benefits help support financial well-being.Â In their newly evolved form, benefits can help addressÂ unexpected expenses, debt, and paycheck-to-paycheckÂ issues:
- Fifteen percent of those surveyed said they would beÂ interested in a âno credit checkâ financing option forÂ unexpected expenses.
- Twelve percent of employers said they would be open toÂ bill negotiation services.
- Ten percent would consider offering early, on-demandÂ access to earned wages to help solve cash flow problems.
Through these benefits, employers hope to offer betterÂ alternatives to high-interest credit cards, 401(k) loans,Â overdraft fees, late fees, payday loans, or missed billÂ payments that compound financial stress. OrganizationsÂ are also providing services like financial coachingÂ programs, budgeting tools, bill pay services, guidance forÂ establishing emergency funds, and professional creditÂ counselling.
Supplemental Medical Playing a Bigger Role
The National Center for Health Statistics reported inÂ February that one in seven people in the U.S. haveÂ problems paying their medical bills. That often meansÂ putting off treatment: Thereâs been a 30 percent decreaseÂ in cancer screenings and a 37 percent decrease inÂ wellness visits as COVID-19 has forced delays in necessaryÂ healthcare. Ultimately, this will increase future claims byÂ workers under company healthcare plans.
Supplemental medical plans can play a key role in âderiskingâÂ these higher healthcare costs, and continue toÂ be viewed as highly effective in managing those costs.Â Hospital indemnity plans can offset out-of-pocket costsÂ for increased hospitalizations. Plans like critical illnessÂ and health accident play a key role in helping employeesÂ prepare for unexpected medical expenses.
Seeing and Communicating Savings
The 2020 survey findings once again found that employersÂ are changing the way they deliver and communicateÂ voluntary benefits.
Fifty-eight percent of employers said integrating voluntaryÂ benefits with core enrollment was âextremely importantâÂ or âvery important.â Fifty-three percent plan to integrateÂ voluntary benefits with overall well-being strategy, whileÂ 54 percent plan to change the way they communicateÂ voluntary benefits to increase visibility.
The survey found that 40 percent of employers saidÂ âaddressing financial stressâ was a top reason behindÂ increasing voluntary benefits communications; thisÂ compares with only 16 percent of companies in 2017.Â In addition, 72 percent of employers view targetedÂ communications as âextremely importantâ or âveryÂ importantâ to program success.
Instead of sharing generic product information, employersÂ are using voluntary benefits communications to helpÂ employees gain the knowledge and confidence they needÂ to use the benefits to improve their personal financialÂ situation.
For the millions of employees living paycheck to paycheck,Â voluntary benefits options can help employees protectÂ against unexpected expenses, provide access to neededÂ cash, leverage financial coaching, or establish emergencyÂ funds. Through responsibly placed voluntary benefits,Â employers have an avenue to widen the scope of benefitÂ offerings while also significantly decreasing the costs ofÂ delivering and administering benefit plans.
Tom Kelly is a principal in the health practice and the voluntaryÂ benefits practice leader of Buck.