Open Enrollment: Supporting Your Employee's Financial Well-being
Open Enrollment: Supporting Your Employee's Financial Well-being
The economy has ebbed and flowed in the last few years, which may have impacted your employees and their finances. In 2023, 57% of employees stated that their top stressor in life was their finances. Many struggle with debt, insufficient savings and worries about their financial future. More than half of employees fear these financial woes will only worsen as inflation fluctuates and the cost-of-living increases.
Not only do employers want their employees to feel confident and engaged in their work, but these stressors can also harm their sleep, relationships and productivity. As open enrollment approaches, employers have a valuable opportunity to address their employees’ financial concerns and support their journey toward financial well-being. As the world continues to navigate financial uncertainty, you can provide your workforce with the tools, resources and benefits to help them address these concerns.
Financial Education and Planning
Providing employees access to financial education programs and resources goes beyond simply offering benefits. It equips employees with the knowledge and skills to make informed financial decisions, such as budgeting, saving, investing and managing debt. By promoting financial literacy, employers can empower their workforce to take control of their future by gaining financial stability.
Employers can offer benefits that directly address these concerns by recognizing the financial burdens associated with family responsibilities. This may include parental leave policies that provide paid time off for new parents, childcare assistance programs that help alleviate the cost of childcare and flexible work arrangements that enable employees to balance work and family obligations effectively. These benefits support employees in achieving a healthy work-life balance and reducing financial stress related to family expenses.
There are often resources available through your current life, health and disability carriers that you can leverage. They typically include educational materials, budgeting and forecasting tools, decision-making support, partnership discounts and services. Some carriers may offer online or in-person financial education seminars tailored to different employer sizes and locations.
Reaching Savings Goals
Over half of U.S. adults are concerned by their amount of emergency savings, and 22% of American adults have no emergency savings. This makes reaching savings goals a fundamental objective for employees to prioritize and employers to support.
Including health savings accounts (HSA) and flexible spending accounts (FSA) in benefits packages allow employees to effectively manage and prepare for expenses. FSAs allow employees to set aside pre-tax dollars for eligible healthcare expenses, such as medical procedures, prescription medications, vision and dental care. HSAs, on the other hand, are available to employees enrolled in high-deductible health plans and offer a triple-tax advantage: contributions are tax-free, earnings grow tax-free and withdrawals for qualified medical expenses are tax-free. These accounts provide employees with financial flexibility and help them save for future medical costs.
Additionally, comprehensive employee assistance programs (EAP) could include financial wellness components that provide employees with resources and counseling to help manage financial stress, debt and other related challenges. These programs offer confidential support from financial counselors that can help guide employees with budgeting, debt management, credit counseling and financial planning. EAPs with a financial focus can help employees navigate financial difficulties and improve their financial well-being, reducing overall stress and increasing productivity.
Debt Reduction Offerings
77% of American households hold some debt. Offering access to debt management programs can give your employees the tools and guidance they need to tackle their debt effectively. These programs may include debt consolidation strategies, negotiation with creditors and personalized financial counseling to develop repayment plans. By assisting employees in reducing debt, employers contribute to their overall financial well-being and support their journey toward financial freedom.
Student loan debt is a significant financial burden for many employees. The amount owed by students has reached its highest peak this year, with over $1.5 trillion owed by 45 million Americans. Assistance programs, such as refinancing options, employer contributions toward loan repayments, or partnerships with financial institutions, can alleviate financial stress and accelerate repayment. Tuition reimbursement can encourage employees to continue their higher education or pursue certifications. These benefits promote professional development while easing the strain of educational pursuits.
Protections from Financial Loss
In addition to HSAs, consider offering protection against unforeseen financial loss. Benefits like life, disability, critical illness, accident and hospital indemnity insurance can help mitigate financial losses. Supplemental health benefits are particularly effective when paired with high-deductible health plans, helping minimize out-of-pocket exposures. By addressing this financial need, employers can support employees in the unplanned circumstances and expenses life brings.
As an employer, you can play a crucial role in helping your employees prepare for retirement. One of the most effective ways is offering a 401(k) or 403(b) retirement plan. These employer-sponsored plans allow employees to contribute a portion of their salary pre-tax, helping them save for retirement while enjoying potential tax advantages. Consider offering a matching contribution to further incentivize employee participation and increase retirement savings.
In addition to offering retirement plans, educating your employees about retirement planning is essential. Provide comprehensive education and resources that help employees understand the importance of retirement planning and make informed decisions. Offer seminars, workshops or online resources that cover topics like investment basics, retirement savings strategies and the power of compounding interest. Encourage employees to use retirement planning tools and calculators to help them set realistic retirement goals.
By incorporating these offerings into open enrollment packages, employers can demonstrate their commitment to employees’ financial well-being and create a supportive and inclusive work environment. Prioritizing financial wellness not only benefits employees’ personal lives but also contributes to a more engaged and productive workforce.
Have questions? Brown & Brown’s Employee Benefits teams are here to help you navigate open enrollment, offering more insight into how you can help your employees reach their financial goals amidst uncertain economic times.