Pandemic sharpens focus on employee financial wellness

Leslie Olds, FSA, EA, FCA, MAAA Thought Leadership

COVID-19 has made financial wellness a hot topic in 2020. Even if your employees have not been negatively impacted by furloughs or pay cuts, it is likely that someone in their circle has experienced a financial setback due to the pandemic. As a result, employees want to become more financially resilient.

But what exactly does financial wellness mean to your employees and your organization? How can you help your employees become better consumers of company-sponsored financial benefits? Should you consider additional education and support tools to help employees achieve their short-term and long-term financial wellness goals?

Employees Have Different Needs

In today’s uncertain environment, many employees share a focus on saving money and reducing debt, but their specific financial objectives will vary depending on their age and stage of life. Younger employees may be more interested in paying off student loans or accumulating a down payment for their first house, while older employees may be more focused on saving for their kids’ college expenses or for retirement. All employees regardless of age and life stage can benefit from education and resources to help them create and live within a budget, reduce non-mortgage debt, increase savings and protect their assets. Employers can survey their employees to gain a better understanding of their financial wellness interests, objectives and needs.

Start with the Basics

At a minimum, plan sponsors need to ensure employees understand how to be smart consumers of company-sponsored programs that can help them achieve their financial wellness goals. To gauge how well employees are utilizing their benefits, plan sponsors can ask their administrators to answer questions such as the following.

  • 401(k) Savings Plan
    Are employees contributing enough to get the full employer match and taking advantage of catch-up contributions when eligible? Are they utilizing the investment options that are offered and diversifying their 401(k) balances?
  • Health Benefit Plans
    Are employees being smart consumers of health care benefits, for example, by utilizing in-network providers and covered services? Are they using available cost modelers to inform selection of the plans that best meet their individual healthcare needs, family size and income?
  • Health Savings Accounts (HSAs)
    Are employees enrolled in a high deductible health plan taking advantage of the opportunity to contribute to an HSA? Are they saving and rolling forward HSA dollars to future years or only contributing enough to use for the current year? Are they investing and growing HSA balances for future health care needs?
  • Flexible Spending Accounts (FSAs)
    Are employees taking advantage of FSA accounts to pay for medical and dependent care expenses on a tax-free basis?
  • Employee Stock Purchase Plan (ESSP)
    Are employees utilizing the ESSP and taking advantage of the opportunity to purchase company stock at a discounted price? Is the ESSP program marketed as a tool that employees can use to achieve their personal financial objectives, such as saving for a down payment on a house or a home remodeling project?
  • Voluntary Life Insurance
    Are employees purchasing additional voluntary life insurance? Are the additional amounts they are buying sufficient relative to their annual incomes?
  • Other Employee Benefits
    Are employees utilizing other programs offered by the company to help them achieve their financial goals, such as legal services to help them prepare a will? Are they taking advantage of opportunities to purchase employee-discounted identity theft protection, auto insurance and homeowners’ insurance?

If the data shows employees aren’t taking full advantage of the financial features of their benefits, additional employee education and communication may be in order. Companies can purposefully create a culture of financial wellness, similar to how many organizations promote health wellness. This can be done through targeted messages, tips, news articles and links to tools on the company’s intranet and benefits site. Other options include offering informal “lunch and learn” sessions on financial topics, hosting virtual financial wellness fairs for employees to learn more about company benefit programs and sponsoring financial wellness contests and incentives.

Broaden Your Horizons

In addition to promoting the financial features of company-sponsored benefits, plan sponsors may offer standalone financial wellness education and support tools, such as debt counseling, investment advice and budgeting software. If these types of resources will be offered, it is important to choose vendors that are independent and not trying to sell products to your employees. They should also have demonstrated expertise in the financial wellness areas that are most important to your employees. An experienced advisor can help you prioritize financial wellness objectives for your organization and develop performance criteria for evaluating vendors.

Seize the Opportunity

There’s no better time to launch a benefits initiative than when employee interest and engagement are high. Financial wellness programs were gaining ground even before the coronavirus pandemic, but now the need for benefits that can help employees reduce financial stress and prepare for economic uncertainty is greater than ever. For plan sponsors that have been contemplating a more holistic approach to financial wellness programs for their employees, now may be the opportune time to turn those plans into reality.