How to motivate millennials to participate in retirement savings
Why aren't millennials participating in retirement plans? In this article, Zito explains why and how you can motivate your millennial employees to participate.
Millennials comprise one-third of the U.S. labor force, making them the single-largest generation at work today, according to Pew Research Center. But they don’t appear to be functioning as full-fledged members of the workforce just yet — at least when it comes to participating in benefit plans.
The National Institute on Retirement Security found that two-thirds of millennials work for employers that offer retirement plans, but only about half of that group participates. That means just one-third of working millennials are saving for retirement through employer-sponsored plans.
The culprit for such low participation originates primarily with eligibility requirements. Millennials are more prone to disqualifying factors like minimum hours worked or time with the company — products of being relative newcomers to the workplace and spending the early parts of the careers in a deeply challenging labor market. The passage of time will hopefully help relax these eligibility limitations.
But there are other headwinds bearing down on millennials that could be holding them back from plan participation, and which present an opportunity for plan sponsors to demonstrate value to the largest working generation. For one thing, millennials have earned the most college degrees as a share of their generation, according to the Center for Retirement Research at Boston College, all while tuition costs have continued to outpace inflation. The resulting financial burden is compounded by the fact that millennials are earning less so far in their careers, despite their education gains, than older generations were earning at their age.
It’s important for sponsors to figure out how to enroll more millennials, and not just because it will generate goodwill. Boomers will continue to roll assets out of their plan accounts as they retire. The flight of their outsized share of plan assets will leave a smaller pool to share plan costs. Increased millennial engagement can offset this drawdown.
Plan design that gives due consideration to the rise of millennials should consider how to help with their financial needs and play to their strengths.
Harness millennial tech savvy
Growing up immersed in an electronic and interconnected environment reduces the learning curve that millennials might face in using planning tools. Simple offerings like a loan payment calculator or retirement savings projection interface can make a profound difference on the path to financial preparation.
The flipside to millennials’ willingness to tinker is that they tend to over-scrutinize their investment mix. TIAA found that millennials are three times as likely as boomers to change their investment allocation amid a market downturn — typically a decision that ends in regret. The compulsion to de-risk tends to strike after the worst of the damage is done, leaving investors ill-prepared for the ensuing recovery.
Solutions like target-date funds can remove the need to think about allocations altogether, so millennials can focus on more effective factors like retirement savings or loan repayment rates and stretching for their full matching contributions.
Provide an education benefit umbrella
Compound interest — the accelerant that makes saving and investing for retirement over several decades so effective — works in a similar way against borrowers that are slow to repay their loans. This is an acute problem for millennials, but it doesn’t stop with them. Almost three-fifths of 22 to 44-year-olds have student debt, and they’re joined by more than one-fifth of those over 45-years-old.
Employer-sponsored student loan repayment assistance can take a variety of forms. It can be as simple as directing participants to enroll for dedicated loan payments, and can extend all the way to helping them refinance at a better rate or consolidate multiple loans.
The education benefit umbrella can also cover tuition reimbursement programs for employees that want to continue their education but are hesitant to spend the money. These programs can also serve employee retention goals as they’re typically offered with a payback period if workers leave shortly after being reimbursed.
Any program that lowers employee financial stress will likely help improve productivity. From a practical standpoint, workers have more disposable income — and feel wealthier — once they’ve vanquished their loans.
Being an advocate in helping employees accomplish that goal has obvious benefits for organizations that are seeking to retain members of the country’s largest working generation.
SOURCE: Zito, A (9 August 2018) "How to motivate millennials to participate in retirement savings" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/motivating-millennials-to-participate-in-retirement-savings
5 things to know about getting life insurance for your child
Have you considered getting your child a life insurance policy? Continue reading to learn more about juvenile life insurance policies.
We spend so much time talking about the reasons adults need life insurance (income protection, covering funeral costs and so on) that it’s easy to forget why it may be a good idea for you to insure your children as well.
When we think about it, we reason that our kids aren’t contributing to the household budget—in fact, anyone with kids knows that raising them takes a lot out of that budget! Getting a permanent life insurance policy for a child can offer financial advantages for them later in life (in addition to the death benefit).
Before you find yourself caught up in internet debates over how to get your baby to sleep or what kind of diapers to use (or if you’ve already been through that and are dreading the next round of parenting arguments), here are five things to know about buying life insurance for your child:
1. Life insurance policies “grow up” too. A great reason to invest in juvenile life insurance is to ensure that your children are covered from the get-go, and as they get older, may be able to take advantage of riders that allow them to expand their coverage at a guaranteed rate without any question about their respective health. People’s health changes, including children’s, and having a policy in place can ensure they’ll have the coverage they need, despite health changes.
2. It creates a sensible foundation: While there are tax-advantaged vehicles for saving for retirement and college, that’s not necessarily the case for other major expenses that young adults face such as automobile down payments, weddings and first home purchases. The cash value of a policy can be borrowed from—understanding, of course, that it reduces or eliminates the death benefit if not repaid—for these expenses.
3. Not sold on getting them their own policy? Add them to yours. Check to see whether easily affordable riders on your own life insurance policy are available to cover the kids.
4. Don’t buy the first policy that crosses your mailbox, either: The same marketing clearinghouses that make sure you get every single updates on your pregnancy week by week are also making your contact information available to firms that market life insurance. Be sure to compare prices, and it’s always helpful to talk to an insurance professional or advisor who can help you navigate through choices before committing to a policy.
5. The safety net is there. We all want to see our kids grow up happy, healthy and strong. But if the worst happens, as was the case for the Koonsman family, (you can watch their story here) then juvenile life insurance can help provide a buffer—covering funeral expenses, sure, but also allowing parents to take time off, care for their other children, and allow everyone to grieve as needed. And as the Koonsman’s story shows, they were also able to keep their daughter Hope’s memory alive by establishing a scholarship in her name.
Have a chat with a specialist at Saxon Financial today by visiting this link.
Learn about the different types of life insurance here.
SOURCE: Mosher, H. (31 July 2018) "5 things to know about getting life insurance for your child" (Web Blog Post). Retrieved from https://www.lifehappens.org/blog/5-things-to-know-about-getting-life-insurance-for-your-child/
10 everyday things that cost more than term life insurance
Many people don’t purchase life insurance because they think it’s too expensive. Read on to find out which everyday items cost more than term life insurance.
Adults and parents worry. We worry about our family’s health, safety, financial security and future, but more families need to put their money where their heart is by buying term life insurance. (This is the most affordable type when initially purchased and provides protection for a specific period of time or the “term”.) However, the issue isn’t a matter of hypocrisy, but a lack of research and financial literacy. According to a Life Happens and LIMRA study from this year, 65% of households have not purchased life insurance because they think it’s too costly.
To show that this is a common misconception, the study asked Americans to estimate the cost of a 20-year, $250,000 level term life insurance policy for a healthy 30-year-old male. Eight in 10 people overestimated the cost, saying it would be $400 a year, which is more than double its actual cost of about $160 a year or about $13 a month. Astonishingly, one in four thought it would cost more than $1,000 a year.
And just know that unless you have serious health issues, pre-existing conditions or high-risk hobbies that would likely necessitate high-risk insurance, getting affordable coverage is really straightforward.
How Much Is Life Insurance?
To put the true cost of term life insurance in perspective, here are 10 products or services that people regularly spend money on that cost more than a term life insurance premium would for a healthy 30-year-old at $13 a month.
- Food – According to the National Resource Defense Council, Americans waste about $529 per year, or $44 per month, on unwanted snacks and meals.
- Alcohol – According to the Bureau of Labor Statistics, the average American consumer spends 1% of their discretionary income on alcohol.
- Tobacco – For households with smokers, 14% of Americans’ incomes are spent on cigarettes.
- Gym Membership – The $30 per month you spend on a 24 Hour Fitness membership that goes unused could be better spent funding your life policy.
- Electronics – That new 55” LED TV that costs $800 could be used to cover about five years of term life premiums.
- Games – Video games average $50 per new release. Don’t you think your child would prefer to have financial security than a game he/she will play for a few months?
- Cars – Underspend on your next car purchase by $3,000 and over a six-year loan period with 0% APR, you will save $500 per year, or $40 a month.
- Gadget – Depending on which version you get, an iPad costs around $550 with tax, almost three and a half years of premium payments.
- Entertainment – A pair of movie tickets, popcorn, and a drink, totaling $25.
- Fashion – One pair of designer jeans costing $50 or more.
Saving money and funding your life insurance policy doesn’t have to make your life miserable. In fact, the average cost of life insurance is so small compared to your overall budget, that even small concessions such as minimizing waste and limiting frivolous purchases can open up your budget enough to buy a much-needed financial tool.
Ultimately, the peace of mind and pride of securing your family’s financial future will outweigh any temporary pleasure from a materialistic purchase.
Don’t wait to protect your livelihood. Have a chat with a specialist at Saxon Financial today by visiting this link.
Learn about the different types of life insurance here.
SOURCE: Dek, G. (15 June 2015) "10 everyday things that cost more than term life insurance" (Web Blog Post). Retrieved from https://www.lifehappens.org/blog/10-everyday-things-that-cost-more-than-term-life-insurance/
Everything benefits managers need to know about Generation Z
Generation Z is making their way into today's workforce. Yes, they have similarities to millennials, but they have plenty of differences as well. Read this blog post to learn more.
Just when you thought you had finally figured out the millennial generation, there’s another young cohort of professionals entering the workforce. Sure, they’ve got some similarities to tech-focused millennials, but they have plenty of their own attitudes and opinions about money, relationships and, of course, work and benefits. Meet Generation Z.
Generation Z was raised in a post-9/11 world, following the dot-com boom and bust and during the midst of the Great Recession. There’s no doubt that these world events have colored the way they think and the way they work. Generation Z is a large cohort of about 72.8 million people and about 25% of the population. It’s a generation that employers will need to understand to create meaningful relationships. Here’s what you need to know.
They’re true digital natives. Generation Z was born between the 1995 and 2010, which makes them the first truly digital native generation. By the time they were heading off to Kindergarten, the internet had reached mainstream popularity and Mark Zuckerberg had already launched Facebook across college campuses.
Like many of us, Generation Z is rarely without their phones. But unlike your older colleagues, Generation Z may be more connected than ever — documenting their days on Instagram Stories and Snapchat, and messaging friends by text and other messaging platforms.
However, they’re also a relatively private bunch. Rather than broadcasting their lives on Facebook (like their parents, aunts, uncles and grandparents), they favor networks that allow for privacy. Snapchat snaps disappear, as do Instagram Stories. Gen Z also gravitates toward apps like Whisper, an anonymous social network for sharing secrets.
Here’s the takeaway for HR pros: Rather than seeing this as a barrier to communication, look at it as an opportunity. Try using text message reminders for open enrollment deadlines or creating a Slack channel for benefits communication, in addition to email and paper updates.
They’re seeking financial security. Generation Z grew up during the Great Recession, during which they may have seen their parents lose their jobs or deal with serious financial hardships. Because of this, Generation Z is focused on financial stability.
Unfortunately, many Gen Zers may join your company drowning in student loan debt from college. Consider offering benefits that help them get out of debt and begin saving for the future. Student loan debt repayment benefits with platforms like SoFi or Gradifi provide appealing avenues to pay off debt faster. You can also promote tax-deferred savings programs such as a 401(k) or health savings accounts to minimize their tax liability and maximize savings opportunities. These benefits may also appeal to millennials struggling with student loan debt and the prospect of saving for retirement — all while they start families.
Financial wellness benefits are attractive to all of your employees — Gen Z included. Consider partnering with local banks or credit unions to provide other savings options and financial education. Make this education appealing to everyone by providing it in different formats — in-person for anyone to attend, as well as on-demand webinars or Skype meetings for those who appreciate a more interactive experience.
Gen Z wants to actively participate. Generation Z is the most connected generation yet; they’re used to Googling an answer before you can finish your question or chatting with their friends throughout each day.
This hyper-connectedness lends itself to more interactive workplace meetings. Keep your Gen Z employees engaged and garner feedback by incorporating polls into your meetings, or creating recordings and presenting to computers and smartphones using a platform like Zeetings, Presentain or Mentimeter.
Whereas millennials were known for their interest in collaborating with each other, Gen Z wants to own their work a little bit more and compete against colleagues. Use this to your advantage to introduce gamification into your programs. Platforms such as Kahoot cannot only help you create some fun competition, but it can improve information retention.
They have a surprising communication preference. We’ve established that Generation Z is a hyper-connected cohort. But research uncovered one surprise about this generation’s preference for feedback: they prefer to be in-person. Use this knowledge to mentor your managers who will deliver feedback, and use it to make your benefits more appealing, too. For example, a confidential advocacy program with phone, email and chat options can be a great source for Gen Zers who want more information on their benefits.
While not everyone in this age group will conform to these attitudes and feelings, it can be helpful to pull back the curtain and understand how this generation could be different from millennials, Gen Xers and baby boomers.
Improve workplace fitness by focusing on the collective "we"
Do your employees participate in workplace wellness programs? Try involving the collective "we" to increase involvement. Continue reading to learn more.
Workplace wellness programs are implicitly focused on the individual: biometric screenings, individual incentives, gym member reimbursements. This approach can leave employees feeling less than motivated to take part because, even though the programs focus is on the individual, by no means does it make the program personalized.
As workplace wellness programs rapidly improve to meet the expectations of today’s workers, it’s important to remember the value of accountability and what a culture of health can do to create a workplace committed to wellness solutions.
Since wellness programs have traditionally focused on the individual, oftentimes employees never know if their colleagues are participating in any of the programs being offered. Bring it into the light by giving your employees a program they want to talk about, while still keeping it personalized. The collective “we” are not only more likely to try a wellness program, but we are also more likely to stick with it, if we know our peers are also partaking.
The power of sharing with your peers
We all know writing down a goal gives you a much higher chance of achieving it, but research from the Association for Talent Development says someone is 65 percent more likely to achieve a goal if the goal is shared with another person. Why? Because it creates accountability.
We are in the day and age of a social media frenzy, and, it’s cross-generational. We share everything we do and spend a lot of our time concerned with what our friends, family and co-workers are doing through these social platforms. Wellness practitioners can and should be taking advantage of this, especially as you build your culture of health.
To find the right wellness solution for your company or client, look for solutions that are social and easy to use. If the company as a whole has buy-in, or even a few internal advocates, word-of-mouth can be incredibly powerful. Whether that is around the water-cooler at work, on employees’ personal social media channels, or within the work intranet, create opportunities for employees to talk about your program and encourage them to use it. We know when an employee knows a few of their coworkers are planning to attend yoga or kickboxing on a Tuesday evening, they are much more likely to sign up and actually go.
These “wellness relationships” help not only build stronger bonds at work, but they also help you create and maintain healthy habits. You want your employees to engage with your wellness solution, so encourage them to share and become part of the “solution” themselves. At the end of the day, workplace wellness solutions are there to help everyone get healthier and stay that way, but they have to use the program.
More than just an incentive
We have spent at least a decade looking at incentives and how we align them to solve problems with low participation in our wellness program, when we should have focused on building a program that empowers our employees and puts them in the driver’s seat. I’m not suggesting you stop incentivizing your employees, but I do suggest you measure what it is you are rewarding. If it can’t be measured you may as well burn the money you are investing.
Remember, your employees are the real reason your program will sink or swim. Take care of your employees and encourage them to be and find their healthiest selves. Empower them in the process and give them choice in how, when and with who they participate in your wellness program and let them become your wellness solution.
Maurer E. (18 July 2018). "Improving workplace wellness by focusing on the collective 'we'" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/07/18/improve-workplace-wellness-by-focusing-on-the-coll/.
Point-of-sale wellness: How health plans are cashing in
Many health plans are starting to offer preventative approaches to help promote health and reduce skyrocketing healthcare costs. In this article, Vielehr talks about one approach, the point-of-sale wellness method.
Health care costs continue to skyrocket, and payers are constantly looking for ways to keep their populations healthier and to reduce these costs. Payers looking for more effective strategies to improve health and wellness for members should be aware of the new preventative approaches that more health plans are offering.
One such method that health plans are deploying to engage members is point-of-sale wellness, a type of incentive program that encourages members to actively make healthier purchases and lifestyle choices. As point-of-sale wellness becomes more prevalent among health plans, human resource managers and benefits brokers should understand how these programs work to best determine if they would be a valuable option for their employees and clients.
What is point-of-sale wellness?
Point-of-sale wellness is all about helping health plan members make smart, healthy purchasing decisions when they’re in a retail store or pharmacy. According to the Henry J. Kaiser Family Foundation, the average consumer visits their doctor 3.1 times per year. This same consumer will visit his or her favorite retailers multiple times per week. This presents the perfect opportunity for actionable engagement. It is often too easy for individuals to make impulsive decisions that favor cheaper care items or junk food that provides instant gratification but lead to an unhealthy lifestyle in the long run. Empowering consumers in these moments before checking out at the register with the understanding — and more importantly, the financial incentive — to make informed, smarter choices can lead to a healthier lifestyle and reduced health care costs. In short, the goal is to help individuals prioritize health and wellness at retail point of sale.
There are numerous ways that health plans can achieve this goal. One of the most common is by providing members with prepaid cards that are loaded with funds and discounts for the purchase of over-the-counter (OTC) items such as vitamins, diabetes care items and medications for allergies or cold and flu symptoms. The key component of these specialized prepaid cards is that they can be restricted-spend cards. In other words, they cannot be used to purchase any items that the health plan members want; they can only be used to purchase items off a curated list of products.
Under this arrangement, all parties, from the individual to the health plans and retailers, benefit. With a restricted-spend prepaid card in hand, an individual is rewarded for making purchases that contribute to a healthier lifestyle, while reducing health care costs both for themselves and the health plans administering the cards. In the meantime, the retailers partnering with the health plans to make point-of-sale wellness possible enjoy the opportunity to build long-term customer relationships with the health plan members using the cards.
Point-of-sale wellness in action
Point-of-sale wellness can be customized to be as general or specific as a health plan needs. For example, a health plan that supports a high number of new parents on a regular basis may offer a prepaid card designed specifically to assist members with newborn children. The first years of an infant’s life are among the most expensive from a health care perspective. More health plans are starting to offer new parents prepaid cards that are loaded with funds and discounts for items such as OTC medications, baby food and formula, diapers, strollers, car seats or thermometers. This opens an easier path for new parents to do basic at-home diagnostics and keep their babies’ health monitored so costly trips to an emergency room or urgent care center are not needed as often.
Payers that offer health and wellness programs to assist new parents in their populations can consider engaging health plans that offer these types of prepaid cards. Having a healthier child has the added benefit of reducing stress on the parents, which means they are in a better position to continue performing in the workplace.
Financial incentives for healthier choices
Most wellness programs are focused on informing participants of the best ways to support a healthier lifestyle, but that is only half of the equation. Point-of-sale wellness goes one step further to ensure participants are empowered from a financial perspective to make smarter purchasing decisions while shopping for daily care items. Businesses and benefits brokers who want to provide their employees and clients the best opportunities to live a healthier lifestyle should consider engaging health plans that prioritize these prepaid card incentives into their offerings.
Vielehr, D. (19 July 2018). "Point-of-sale wellness: How health plans are cashing in" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/07/19/point-of-sale-wellness-how-health-plans-are-cashin/
What's the best combination of spending/saving with an HSA?
Health savings accounts (HSAs) are changing the way many people are planning for retirement. Do you know much about HSAs and what they can offer? Continue reading to learn more about them.
The old adage, “You need to spend money to make money,” is applicable to many areas of life and business, but when it comes to retirement, not so much. Particularly for people who are enrolled in retirement accounts, like the 401(k) or IRA.
After all, the more you’re able to fund these accounts on a yearly basis, the sooner you’ll be able to accrue enough money to retire to that beach condo or cabin in the backcountry. But in recent years, a newcomer has entered the retirement planning picture offering a novel new way to save money: By spending it.
The health savings account (HSA) has the potential to influence the spending/saving conundrum many young professionals face: Do I spend my HSA money on qualifying health care expenses (which can save me up to 40 percent on the dollar) or do I pay out of pocket for the same expenses and watch my HSA balance grow?
What many people don’t realize is that yearly HSA contributions are tax-deductible. So if account holders aren’t factoring in doctor co-payments, prescription drugs and the thousands of over-the-counter health products that tax-advantaged HSA funds can cover, they may be missing an opportunity to save in taxes each year.
By maximizing their contributions and paying with HSA funds as opposed to out-of-pocket, HSA users can cover products they were going to purchase anyway with tax-free funds, while using whatever is rolled over to save for retirement.
Spending more to save more. Who knew?
Here’s some food for thought that savvy employers should consider sharing with employees of all ages.
Facts about health savings accounts (HSAs)
HSAs were created in 2003, but unlike flexible spending accounts (FSAs) that work on a year-to-year basis, HSAs have no deadlines and funds roll over annually. HSAs also feature a “triple tax benefit,” in that HSA contributions reduce your taxable income, interest earned on the HSA balance accrues tax free, and withdrawals for qualifying health expenses are not taxed.
Account holders can set aside up to $3,500 (2019 individual health plan enrollment limit) annually and $7,000 if participating in the health plan as two-person or family, and these funds can cover a huge range of qualifying medical products and services.
HSAs can only be funded if the account holder is enrolled in an HSA-qualified high-deductible health plan (HDHP). If the account holder loses coverage, he/she can still use the money in the HSA to cover qualifying health care expenses, but will be unable to deposit more funds until HDHP coverage resumes. The IRS defines an HSA-qualified HDHP as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family (in 2019 – limits are adjusted each year).
Despite their relatively short lifespan, HSAs are among the fastest growing tax-advantaged accounts in the United States today. In 2017, HSAs hit 22 million accounts for the first time, but a massive growth in HSA investment assets is the real story. HSA investment assets grew to an estimated $8.3 billion at the end of December, up 53 percent year-over-year (2017 Year-End Devenir HSA Research Report).
However, while HSAs offer immediate tax benefits, they also have a key differentiator: the ability to save for retirement. HSA funds roll over from year to year, giving account holders the option to pay for expenses out of pocket while they are employed and save their HSA for retirement.
If account holders use their HSA funds for non-qualified expenses, they will face a 20% tax penalty. However, once they are Medicare-eligible at age 65, that tax penalty disappears and HSA funds can be withdrawn for any expense and will only be taxed as income. Additionally, once employees turn 55, they can contribute an extra $1,000 per year to their HSAs, a “catch-up contribution,” to bolster their HSA nest eggs before retirement. When all is said and done, diligently funding an HSA can provide a major boost to employees’ financial bottom lines in retirement.
What’s the best HSA strategy by income level?
HSAs have immediate tax-saving benefits and long-term retirement potential, but they require different savings strategies based on your income level.
Ideally, if you have the financial means to do so, putting aside the HSA maximum each year may allow you to cover health expenses as they come up and continue saving for retirement down the road. But even if you’re depositing far below the yearly contribution limit, your HSA can provide a boost to your financial wellness now and in the future.
I’ve seen this firsthand. Before we launched our e-commerce store for all HSA-eligible medical products, we extensively researched the profiles of the primary HSA user groups through partnerships with HSA plan providers.
We then created “personas” that provide insights on how to communicate with different audiences about HSA management at varying points in the account holder’s life cycle, and these same lessons can be just as vital to employers.
The following contribution strategies are based on these personas and offer insights that could help employees get their HSA nest egg off and growing. These suggestions offer a means of getting started.
As employees receive pay raises and promotions, they may be able to increase their HSA contributions over time, but this can be a way to get their health care savings off the ground and then adjust to life with an HSA.
Disclaimer: These personas are for illustrative purposes only and in all cases you may want to speak with a tax or financial advisor. Information provided should not be considered tax or legal advice.
1. Employee Type: Millennials/Gen-Z with an income between $35-75k/year
For the vast majority of young professionals starting out, health care is not at the top of their budget priorities. However, high-deductible health plans have low monthly premiums, and by contributing to an HSA, an account holder can cover these expenses until the deductible is exhausted. For this group of employees, starting off small and gradually increasing contributions as income increases is a sound financial solution.
Potential Contribution Range: $1,000-$1,500
2. Employee Type: Full-Time HDHP Users Enrolled with an income between $35-60k/year
With many companies switching to all HDHP health plan options, a large contingent of workers find themselves using HDHPs for the first time. For this group, it’s all about finding the right balance between tax savings and the ability to cover necessary health expenses. Setting aside money in an HSA will allow workers to reduce how much they pay in taxes yearly by reducing their taxable income, while being able to pay down their deductible with HSA funds at the same time.
Potential Contribution Range: $1,000-$1,500
3. Employee Type: Staff with Families with an income between $75-100k/year
Low premiums from an HDHP plan are attractive for these employees, but parents will have far more health expenses to cover and more opportunities to utilize tax-free funds to cover health and wellness products. With more opportunities to spend down their deductible with qualifying health expenses and the resulting tax savings, parents should strive to put the family maximum contribution ($7000 for 2019) into their HSAs.
Potential Contribution Range:$4,000-$6,900
4. Employee Type: Pre-Retirement Staff with an income between $100-200k/year
Employees who are in their peak earning years have the greatest opportunity to put away thousands in tax-free funds through an HSA. So whenever possible, they should be encouraged to contribute the largest possible allocation to their HSA on a yearly basis. Additionally, employees age 55 and over can contribute an extra $1,000 to their HSA annually until they reach Medicare age at 65 to fast-track their HSA earnings.
Potential Contribution Range: HSA Maximum ($3,500 individual, $7,000 families for 2019)
What else should employers know about HSAs?
Employers can help employees get the most out of HSAs. Here are some tips:
- Employers should consider contributing to their employees’ accounts on an annual basis. Employer contributions to an HSA are tax-deductible, and this has the added bonus for employees of making it easier to max out their contributions annually.
- Remember: Employer and employee contributions cannot exceed the yearly HSA contribution limits ($3,500 individual, $7,000 family for 2019), so make this information clear to employees during open enrollment.
- If employees are still on the fence about HSAs, remind them that deductible expenses can be paid for with HSA funds, and yearly HSA contributions are tax-deductible for employees as well.
SOURCE:
Miller, J (2 July 2018) "What's the best combination of spending/saving with an HSA?" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/06/08/whats-the-best-combination-of-spendingsaving-with/
3 questions to ask about paid leave programs
Paid time off policies are offered by employers for numerous reasons, employee wellness being one of them. Continue reading to learn about the 3 key questions to ask about these programs and their costs.
Employers provide paid time away from work policies for a variety of reasons: to attract and retain talent (responding to employee needs and changing demographics); to be compliant with local, state and federal laws (which are proliferating); and to support general employee well-being (recognizing that time away from work improves productivity and engagement).
While offering paid absence policies delivers value to both employees and the employers, employers recognize the need to balance the amount of available time with the organization’s ability to deliver its products and services.
To help employers balance paid time away drivers, here are three key questions to ask to get a handle on the costs and benefits of paid leave.
1. Do you have a complete picture of the costs associated with your employees’ time away from work?
A challenge for many employers is getting a handle on the cost of time away from work and the related benefits. If an employer cannot quantify the costs of absence, it may not be able to define management strategies or to engage leadership to adopt new initiatives, policies or practices related to paid and unpaid time away programs.
Ninety percent of employers participating in the 2017 Aon Absence Pulse Survey reported they hadn’t yet quantified the cost of absence, and 43 percent of participants identified defining the cost of absence as a top challenge and priority. Though intuitively managers and executives recognize there is an impact when employees are absent from work, particularly when an absence is unscheduled, they struggle to develop concrete and focused strategies to address absence utilization without the ability to measure the current cost and collectively the impact of new management initiatives.
Employers struggle to quantify the cost of absence in the context of productivity loss, including replacement worker costs. According to the Bureau of Labor Statistics in 2017, employers’ cost of productivity loss associated with absenteeism was $225.8 billion, and 9.6 percent of compensation was spent on lost time benefits and overtime.
Employers are expanding their view of absence, recognizing that use of paid and unpaid time away programs are often associated with an employee’s health. As a result, combining data across health and absence programs allows an employer to recognize drivers of absence “work-related value” and define strategies to address not just how to manage the absence benefit, but to target engagement to improve well-being and the organization’s bottom-line.
As an example, musculoskeletal conditions are frequently associated with absence, which is not surprising when 11 percent of the workforce has back pain. It is noteworthy that of those with back pain, 34 percent are obese, 26 percent are hypertensive and 14 percent have mood disorders. The Integrated Benefits Institute reported in 2017 that back pain adds 2.5 days and $688 in wages to absence associated with this condition. It is this type of information pairing that provides employers with the insight to develop strategies to address comprehensive absence.
When absence and health costs are quantified, organizations quickly recognize the impact on the business’s bottom line. As the old saying goes, “we can only manage what we can measure.”
2. What is your talent strategy to improve work-life benefits, inclusive of time off to care for family?
The race for talent is on, and every industry recognizes the huge impact the changing workforce demographics currently has, and will continue to have. The current workforce incorporates five generations, though an Ernst and Young report from 2017 estimates that by 2025 millennials will make up 75 percent of the workforce. As a result, the work-life needs of millennials—and their perspectives around benefits—is driving change, including time away from work policies.
It is worth noting that, per a 2015 Ernst and Young survey, millennial households are two times more likely to have both spouses working. The Pew Research Center reported in 2013 that, among all workers, 47 percent of adults who have a parent 65 years or older are raising a minor child or supporting a grown child. Additionally, a 2016 report from the Center for Work Life Law at the University of California Hastings claimed that 50 percent of all employees expect to provide elder care in the next five years.
In response, employers are expanding paid time off programs for care of family members. The paid family leave continuum often begins with a paid parental policy providing time to bond with a new birth or adoption placement. An elder care policy may follow, and the culmination might be a family care policy covering events like those under the job-protected Family Medical Leave Act. An Aon SpecSelect Survey reported that 94 percent of employers offer some form of paid parental leave in 2017; this is a significant change from 2016 when 62 percent offered this benefit. Two weeks of 100 percent paid parental leave was the norm per Aon’s SpecSelect 2016 Survey, but we are finding that many employers are expanding these programs, offering between 4 to 12 weeks.
Offering paid leave programs on their own may meet immediate needs for both time and financial support, but may be incomplete to help the employee address the full spectrum of issues that could affect success at work. In combination with family care needs—even those associated with a happy event such as a birth—there may be other health, social or financial issues. Employers combining their paid leave programs with a broader well-being strategy deliver greater value, improve engagement and increase productivity.
3. If you’re a multi-state employer, how are you ensuring your sick and family leave policies are compliant across all relevant jurisdictions?
Paid leave is a hot legislative topic lately. Last December saw the enactment of a paid FMLA tax credit pilot program as part of the federal Tax Reform The paid sick leave law club now totals 42 states and myriad municipalities. Both Washington state and Washington, D.C. are ramping up to implement paid family leave laws in 2020, joining the four states and one city that already have some form of paid family or parental leave law.
How are multi-state employers keeping up with this high-stakes evolving environment? The 2017 Pulse Survey saw 70 percent of employers report they are aware they have an employee who is subject to a paid sick leave law. Ten percent of respondents said they did not know if they had anyone subject to such a law. If knowledge is the first step in the process of compliance, deciding on a compliance strategy and then successfully implementing it are surely steps two and three.
With respect to paid sick leave, there are three major compliance options: comply on a jurisdiction-by-jurisdiction level, with as many as 42 different designs and no design more generous than it has to be; comply on a national level with one, most generous design, or meet somewhere in the middle, perhaps with one design for each state where a state- or local-level law is in place, or by grouping jurisdictions with similar designs together to strike a balance between being overly generous and being bogged down by dozens of administrative schemes.
Data analytics can be a key driver in designing a successful compliance strategy—compare your employee census to locations with paid sick leave laws. The ability to track and report on available leave is a requirement in all jurisdictions, and at this point, few if any third-party vendors are administering multi-state paid sick leave.
For paid family leave, the primary policy design issue is how an employer’s FMLA, maternity leave and short-term disability benefits will interact with the various paid family leave laws. So, while there may be fewer employer choices to be made with statutory paid family leave, clear employee communications will be critical to success.
Employers may tackle time away from work program issues individually to meet an immediate need, or collectively as a comprehensive strategy. Such a strategy would include data analytics across health and lost-time programs, absence policies that meet today’s needs for the employer and employee, health and wellness programs targeting modifiable health behaviors, and absence program administration that is aligned to operational goals. The expected outcome for time away from work programs isn’t about the programs themselves: it is about an engaged, productive workforce who delivers superior products/services. How do your programs stack up?
SOURCE:
VanderWerf, S and Arnedt, R (13 July 2018) "3 questions to ask about paid leave programs" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/05/3-questions-to-ask-about-paid-leave-programs/
'Pawternity' leave acknowledges pet owners' needs
Studies show that pet-friendly policies are trending. Are you considering implementing pet-friendly employer policies? In this article, Gurchiek lists questions employers should consider when creating pet-friendly policies.
When Anne Doussan adopted Celie, a Labrador retriever mixed breed in 2016, she had no idea her 8-week-old pup had three serious heart conditions and would require frequent trips to the veterinarian. Her boss at One-Sixteen, a real estate investment company in New Orleans, was understanding when Doussan needed to take paid time off (PTO) for Celie's appointments.
"They were incredibly understanding of my puppy's special needs," Doussan said, noting that she was allowed to report to work a few minutes later than scheduled or leave a few minutes early from her job as executive assistant. And with her supervisor's permission, she took extended lunch breaks to check on Celie. When Celie began having seizures, Doussan's boss let her bring Celie to work so Doussan could keep a careful eye on her. Her boss even let Celie take refuge under his own desk during rainstorms. When Celie's condition required her to stay home, Doussan was allowed to work remotely.
Doussan experienced the benefit—however informally—of "pawternity" leave. Pet-friendly employer policies are a trend, according to Steven Feldman, executive director at Human Animal Bond Research Institute (HABRI) in Washington, D.C. HABRI conducts research into the health benefits of having pets.
"Over the last five years we've seen this [trend] increase," Feldman said. "Millennials are getting pets as their 'starter kits.' A lot of Millennials, before they have children, often end up with feline or canine children as a way to start [parenting]."
In fact, Millennials are the primary pet-owning generation, slightly edging out Baby Boomers (35 percent and 32 percent, respectively), according to the American Pet Products Association.
"Those [pets] are just as much a part of their families as human kids will be later on. They're looking for … acknowledgement [from employers] of the important role of pets in their lives."
That acknowledgement can take different forms. Organizations that don't allow pets in the workplace may still offer pet-supportive benefits—pet health insurance, pet bereavement leave, time off to take a pet to the vet—that "signal you're looking at the employee's entire family," Feldman said. "These are all things that show you care."
That can translate into engagement and retention. Ninety percent of employees in pet-friendly workplaces feel highly connected to their company's mission, fully engaged in their work and willing to recommend their organization to others, according to a survey of 2,002 full-time workers in the U.S. HABRI and Nationwide, a health insurance provider headquartered in Columbus, Ohio, conducted the online survey in December.
Pets are considered part of the real estate team at AE Home Group in Baltimore, said Jeff Miller, who is a realtor for the company.
"Most of our real estate agents have dogs, and many of our clients are the direct result of time spent at the dog park," Miller said in an e-mail. "Whenever an agent gets a dog, it's like we're gaining a new team member. We'll lower that agent's client load for the month and encourage them to get involved with local dog-training groups and organizations. We find that this almost always pays off with even more clients and a larger network of homeowners and potential homeowners."
Questions to Consider
Marie Larsen, SHRM-CP, office manager and HR generalist at Searls Windows and Doors Inc. in Plainfield, Ill., said her employer does not offer pawternity or pet bereavement leave, but it would support an employee who wanted to use PTO for pet care or time to mourn.
"I've been that grieving employee and knew that I would be useless at work after putting our dog down last August. That's why we took her in on a Friday afternoon, I took the afternoon off, and my family and I had the weekend to be together and grieve. If a pet were to die suddenly, obviously the timing would be out of the employee's control," she said.
However, while Searls would allow an employee whose pet had died to take the day off unpaid if that employee had no PTO left to use, Larsen said she would struggle to recommend offering specific pet bereavement or other pet-related time off.
"Having specific days for pet care or pet grieving leaves a company wide open for problems. Having a general policy that allows employees with pets to utilize their standard PTO for furry family members might be a better overall approach," she said.
Creating a pet-friendly office takes some thought, Larsen noted. She suggested employers consider the following questions before venturing into pet-supportive benefits:
- "What constitutes a pet? A Dog? Cat? Lizard? Gerbil? Fish? Horse? Someone's pet is someone's pet, regardless of what type of critter it is. If one pet owner gets time off, ALL pet owners should get time off," Larsen said in a SHRM Connect discussion.
- "How much time would a company allow? One day per year? Two? One per pet? One day per pet might work if the employee lost one animal, but what do you do for someone who lost a tank full of fish? I had a friend who put one of her dogs down, then less than a month later had to put her other dog down. How much time off would she get? One day for each dog? More? Less?"
- "Bringing a new pet home, especially a very needy puppy or kitten, could take weeks for them to mature beyond the 'baby' stage. How much time would a policy allow for these situations? A couple of days? A couple of weeks?" she asked.
- "What do you do about employees with no pets? How do you provide similar benefits to prevent these employees from claiming discrimination?"
A specific pet policy makes sense, Larsen said, for businesses where pets are part of the culture, such as Rover.com, which provides dog-sitting services nationwide.
That's the case at Seattle-based Trupanion, which provides medical insurance for pets. The company offers its 500 employees three days of pet bereavement leave. It has had 250 dogs "and a few brave cats" in the workplace, according to Michael Nank, the company's public relations manager.
"Our pets are an important part of our culture, and they constantly remind us why we come to work—to help the pets we all love to receive the best veterinary care," Nank said in an e-mail. "When one of our employees loses a pet, we are acutely aware of the family-like bond that exists between them and their pet, and the need they may have to take the time to grieve and process the loss."
SOURCE:
Gurchiek, K (10 July 2018) "'Pawternity' Leave Acknowledges Pet Owners' Needs" [Web Blog Post]. Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/pawternity-leave-acknowledges-pet-owners-needs.aspx
Who are Benefits for, Anyway?
U.S. employees often decline benefits to them by their employers. Continue reading to find out why your employees may be declining their benefits.
With many Americans living paycheck-to-paycheck, U.S. employees have a significant need for financial protection products to secure their income and guard against unplanned medical expenses. However, employees frequently decline these benefits when they are offered at the workplace. Only two-thirds of employees purchase life insurance coverage at work when given the option, while roughly half enroll in disability coverage and less than one-third select critical illness insurance coverage. Why do so many employees choose not to enroll in benefits?
Is this right for me?
Some employees may opt out of nonmedical benefits because they do not believe these offerings are intended for people like them. In a recent report, “Don’t Look Down: Employees’ Understanding of Benefits and Risk,” LIMRA asked employees whether they thought life, disability, and critical illness products were “right for someone like me.”
While a majority of employees feels that life insurance coverage is appropriate for someone like them, they are on the fence about other coverages. Fewer than half believe they need disability insurance and only 36 percent feel they need a critical illness policy.
It is also noteworthy that a large portion of employees respond neutrally or only slightly agree or disagree with these sentiments, which suggests a lot of uncertainty. Given employees’ poor understanding of these benefits, many simply do not know if the coverage is intended for them.
Role of behavioral economics
Behavioral economics reveals that human behavior is highly influenced by social norms, particularly among groups that people perceive to be similar to themselves. In light of this, LIMRA asked employees if they think most people like them own certain insurance products. Their responses indicate that employees feel very little social pressure to enroll in these benefits.
Only 22 percent of employees think most people like them are covered by critical illness insurance, while 47 percent disagree. Similarly, 38 percent disagree that most people like them have disability coverage (versus only 34 percent who agree). Life insurance is the only product where a majority of employees (60 percent) think most others like them have the coverage.
Employees who believe others like them purchase benefits will tend to be influenced by this peer behavior. This could lead them to take a closer look at the information provided about these benefits and possibly enroll.
However, for the larger group of employees who think others like them do not have coverage, social pressure will discourage them from enrolling. These employees will perceive not having coverage to be the “norm” and assume it is safe to opt out, without giving these benefits proper consideration.
Who should purchase benefits?
If employees do not think insurance benefits are right for them, who do they believe these products are intended for?
Of employees who are offered disability insurance at work, only 38 percent recognize that anyone with a job who relies on their income should purchase this coverage. Troublingly, more than 1 in 5 think disability insurance is only for people with specific risk factors, such as having a physical or dangerous job, a family history of cancer, or a current disability.
Similarly, less than half of employees recognize that critical illness insurance is right for anyone. One in five think this coverage is only for people with a family history of cancer or other serious illness, while 15 percent believe the coverage is for people who have personally been diagnosed with a serious health condition.
Employees have a better understanding of life insurance. Eighty percent of employees recognize that life insurance is appropriate for anyone who wants to leave money to their spouse or dependents upon their death. However, some employees still express uncertainly about this or believe life insurance is only for high-risk individuals.
Confusion about who should purchase insurance benefits is contributing to low employee participation in these offerings. To counteract this trend, educating employees to understand how these products apply to their own lives is crucial. By clearly explaining what the products do and providing examples of how anyone could use them, benefit providers can help employees see the relevance of these offerings and help them make more informed financial decisions.
SOURCE:
Laundry, K (12 July 2018). "Who are benefits for, anyway?" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/12/who-are-benefits-for-anyway/