With the new year approaching, HR managers are shifting their focus to benefit planning for the 2019 plan year. While questions loom about what direction healthcare benefits will take, the stability of voluntary benefits continue to be top of mind for many employers . Savvy benefit planners recognize that these programs round out compensation packages and contribute to their employees’ financial wellness.
Understanding potential gaps in medical plans, HR managers are working to decrease out-of-pocket expenses for employees by offering worksite benefits that complement the core medical plan. Employers are also using voluntary benefits to enhance their benefits offerings to attract and retain competitive talent.
Here are three voluntary benefits offerings that gained traction in 2017 and we expect will continue the momentum into the coming year. When properly communicated, these benefits, can add tremendous value to your employees and drive overall engagement within your workforce.
1. Student Loan Assistance:
The trend is becoming more common for employees to look to their employers for contributions to their overall financial well-being, over and above traditional 401-k matching programs. The newest population of employees entering the workforce on average have record high student loan debt and are therefore less financially secure. According to an ORC International survey commissioned by PadillaCRT1, one in four millennials owe more than $30,000 in college debt and think it will take more than 20 years to pay off their student loans.
Employers are attracting and retaining the latest working generation by helping employees manage their student loan debt through employer-sponsored programs. Here are three solutions to consider:
Refinancing Options: Many lenders specializing in student loan debt will allow employees to refinance and consolidate existing student loan debt. Just a word of caution, if you have a federally backed student loan, ensure that there are appropriate communications advising the employee of the potential consequences of refinancing.
Employer Contribution: Employer-sponsored match programs can help employees pay back their loans faster. There are various plan designs for consideration such as fixed contribution, contributions based on tenure, etc.
Debt Management Resources: Student loan refinancing programs often provide guidance and technology tools to help employees manage their existing debt and create a realistic repayment plan.
2. Worksite Benefits:
To confront the challenges of the cost shift in core medical plans from employers to employees, voluntary benefits are designed to help employees cover the out-of-pocket costs from unexpected medical issues. The most widely provided programs tend to be critical illness insurance, accident insurance and hospital indemnity insurance. These programs generally pay a cash benefit directly to the employee regardless of existing insurance for a covered accident or hospitalization.
Additional features of these worksite benefits are that they are usually portable for the employee if they leave their current employer. They can be payroll deducted and do not generally cost the employer to provide the programs.
As a starting point to offer the right mix of worksite benefits, employers should closely examine the core medical plan for any financial gaps for employees. Employers should also consider the demographics of their workforce. For example, employees with young children would benefit from an accident plan that can help pay for costs associated with a broken bone, while an older population may be more interested in a critical illness plan that can help cover expenses related to illnesses, such as heart attack, stroke and cancer.
Worksite benefits like accident insurance, critical illness insurance and hospital indemnity insurance are traditionally only offered during Annual Enrollment. In order for these programs to be successful, HR managers should communicate these alongside the core medical programs and emphasize how they complement the core medical offering.
3. Employee Purchase Programs:
The right voluntary benefit programs can help employees save time and worry less! We’ve started to see an increasing number of employers offer employee purchase programs to help employees pay for items that they may need, such as a new washer and dryer or new computer for a child going to college. Cash-strapped employees may not have sufficient credit to buy the products they need without avoiding a high-interest loan program. Employee purchase programs generally allow employees to spread out the payments on the products they have purchased over a period of time through payroll deduction. Young employees, who are trying to establish credit and manage student loan repayments may especially benefit from an employee purchase programs. Discerning benefit managers understand the benefit of employee purchase programs because they provide an alternative to employees taking loans from their 401(k) plans for these types of purchases. Employees can then focus on 401(k) plans as a dedicated retirement vehicle which is what they are intended to be.
As healthcare benefits evolve and the workforce changes, the flexibility of voluntary benefits will continue to play a role in employers’ overall benefit packages. Voluntary benefits are the weapon that employers can use to differentiate themselves and attract and retain an engaged workforce . Financial wellness will be more achievable for employees with a well thought out voluntary benefits strategy.