JANUARY 25TH, 2022
We don’t yet know the full scope of the impact of COVID-19, but nearly two years into this global catastrophe, we can say with certainty that it goes far beyond physical health. People of all ages, genders, races, and religions have been affected by this mass trauma differently, but one area your HR team should monitor moving forward is its impact on your employees’ financial health.
According to a survey from Purchasing Power, nearly half of households (44%) say they are in worse financial positions than they were before the pandemic; another 38% say they have changed their spending habits as a result. And a 2021 PwC survey of American workers found that two-thirds are stressed out about their financial health.
Your company has a vested interest in turning employees’ financial angst into financial well-being. One study suggests that financial stress costs employers about $4.7 billion a week in wasted productivity. It makes logical sense: Stress — financial or otherwise — keeps employees from bringing their best selves to work, which leads to an uptick in unscheduled absences and a drop in on-the-job performance and engagement. In contrast, companies that help cultivate financial well-being in their workforce achieve heightened employee engagement, reduce absenteeism, and boost their team’s productivity.
Providing additional financial support doesn’t necessarily mean raising everyone's base salary — though you’ll probably want to conduct annual analyses to ensure you’re paying employees livable wages that match the market average. Instead, think about what financial wellness benefits your employees might need. Here are three ideas:
You don’t have to look far to find headlines about the student loan crisis in America. Nearly 50 million Americans have some sort of student loan debt, equating to a combined $1.7 trillion. Each year, 70% of college graduates enter the workforce saddled with an average of $40,000 in student loans, and the U.S. is expected to add more than a trillion dollars in new debt by 2028.
The latest on student loan forgiveness, an issue President Joe Biden campaigned on, is that it’s unlikely to happen on a large-scale level anytime soon. If you remember, the government paused interest and payments for federally held student loans at the beginning of the pandemic, but borrowers will have to restart their payments on May 1, 2022. With many employees already strapped financially, restarting loan payments could put them underwater.
Thanks to the Consolidated Appropriations Act of 2021, employers can make annual tax-free contributions of up to $5,250 to a worker’s student loan debt. The payment is excluded from the employee’s taxable income and could make a real difference in their financial well-being. You don’t need to have a bunch of cash lying around to offer this benefit, either. For many employers, it can be as simple as redirecting existing benefits money to where it can be most impactful.
Any financial wellness program worth its salt will include some kind of ongoing education around how to handle money. Did you know that nearly 50% of employees are embarrassed to ask for help with their finances — and only 1 in 5 consider themselves financially literate? Unfortunately, money has long been considered a taboo subject in our culture, which means people grow up without understanding how to track expenses and grow their wealth.
Help your employees get a firm grasp on personal finance by offering financial well-being education. Bring in experts to teach your employees about important topics like retirement planning, budgeting, debt consolidation, etc. Some employers even connect employees with money management professionals through free one-on-one phone consultations. When your employees feel more comfortable navigating the financial space, they’re more likely to take advantage of benefits like 401(k) plans or health savings accounts (HSAs).
Don’t assume your tax-advantaged benefits are automatically helping improve employee financial health — there’s a good chance they’re coming up short. For instance, enrollment in high-deductible health plans (HDHPs) has skyrocketed 43% over the past half-decade. Employers like offering HDHPs because they help reduce the company’s costs related to insurance coverage. Plus, they come with the option of contributing to an HSA, which is a tax-advantaged vehicle that HDHP enrollees can use to save for qualified medical expenses.
Sounds great in theory, right? In reality, many employees aren’t financially able to realize the long-term benefits of contributing to an HSA. Low earners are more likely to be living paycheck to paycheck, especially post-pandemic. Once these workers have covered their monthly expenses, they’re unlikely to have enough funds to contribute meaningful amounts to an HSA. And if employees can’t contribute enough money to pay for out-of-pocket medical expenses — which most cannot — their HSAs languish and cause them to miss out on the promised tax benefits.
To help your employees reap the intended rewards of an HSA, consider adding on a benefit like Paytient. Your HDHP enrollees can still add money to their HSAs every month, but instead of withdrawing HSA money to fund medical costs, they can swipe their Paytient card at the time of care. We cover the upfront cost, and members pick their own payment plans through a series of payroll deductions. And every Paytient transaction comes with 0% APR and no fees.
Considering offering Paytient to your team? Click here to learn more.
Employees haven’t always looked to their employers for financial wellness support, but most folks would welcome the help these days. In fact, PwC reports that 72% of workers are more attracted to companies that care about their financial well-being. It behooves you to consider how you can promote financial well-being through a robust financial wellness program. Use these three ideas as jumping-off points, and watch your team’s financial literacy and well-being grow tenfold.
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