Spotlight Value of Benefits Package During Open Enrollment
The COVID-19 pandemic has highlighted the importance of helping employees maintain physical, mental and financial health, making this year's open enrollment period a critical time for employers to think about the benefits they're providing and to communicate the value of these offerings to employees.
"This is not a typical year," said Hope Manion, senior vice president for Fidelity Investments' workplace consulting division. "We cannot simply default our benefits like we may have done in previous years."
She advises employers to encourage employees to spend more time during this year's enrollment period reviewing their benefits, learning about all of their offerings and asking questions. "Given that so many have experienced financial and health crises this year, now is the time to ensure they don't overlook benefits that could impact their future health and financial well-being," she noted.
Employees Rush Through Enrollment
Nearly three-quarters of employees—73 percent—spend less than an hour, and 41 percent invest less than 30 minutes, reviewing their benefits at enrollment time, according to a March study of 1,200 U.S. consumers on behalf of life and accident insurer Colonial Life. Because the pandemic has changed the way millions of workers live and work, simply rushing through their annual benefits enrollment won't do this year.
"If this year has taught us anything, it's the importance of our health and the value in taking every opportunity to protect it," said Richard Shaffer, senior vice president of field and market development at Colonial Life. "As we head into enrollment season this fall, workers across the country need to take time to ensure they're protecting their families, finances and futures against unexpected events."
Surprisingly, those who are the least confident in their knowledge of the benefits available to them are most likely to rush through the enrollment process. Nearly 90 percent of employees who reported not understanding their benefits "at all" said they plan to spend less than an hour on enrollment this year.
"Especially in today's environment, offering benefits isn't enough," Shaffer said. "To make the investment pay off, employers must ensure employees take the time to understand, value and participate in the benefits enrollment process."
Showcasing How Benefits Are Vital
A new Fidelity report, Uncovering the Real Value of the Benefits You Offer, shows that employees are often unaware of their benefits options and frequently don't take advantage of them. The findings are from a survey of nearly 9,500 participants in Fidelity-administered benefit plans.
For instance, only 61 percent of employees could report whether telemedicine was offered to them. "In this case, if you are offering a benefit low in awareness, you may need to go back to basics and increase promotional efforts that emphasize availability, what it is, and how to use it," the report points out.
Health saving accounts (HSAs) are a different story. While 92 percent of employees surveyed knew whether an HSA was available, many chose not to opt for a high-deductible health plan (HDHP), which is a requirement to contribute to an HSA. However, 89 percent of account-holders who used an HSA reported that it had a positive effect on their lives. "In this case, awareness about availability isn't the issue, but employees may not understand the value a benefit brings," the report stated.
Approaching Open Enrollment
Fidelity's Manion suggested that open enrollment communications encourage employees to consider the following when selecting benefits for the year ahead:
- Health insurance. Consider your finances, family health status, and preferred health care providers and hospitals when choosing health care coverage. Review deductibles and out-of-pocket maximums. To take advantage of an HSA, enroll in an HDHP.
- HSAs and flexible spending accounts (FSAs). Take the time to learn how each of these accounts can be used, reviewing eligibility guidelines and updates to coverage, including services like telemedicine and over-the-counter medications.
- Retirement savings. Consider increasing your 401(k) retirement savings plan contribution if the company reduced or suspended its match as a result of the COVID-19 pandemic.
Other benefits may not require an employee to enroll and so are often overlooked despite their value, Manion noted. Be sure to highlight information regarding:
- Telemedicine. Among Fidelity clients, 76 percent saw an increase in telemedicine use since the COVID-19 pandemic began. This benefit will continue to be important, and employees should understand how it works.
- Employee assistance programs (EAPs). As the pandemic caused many people to experience anxiety, mental health and counseling services, such as those offered through an EAP, saw a 39 percent increase in use. This is a benefit that is impactful to employees' overall well-being when offered.
- Wellness programs. Wellness programs are much appreciated when used, but 30 percent of employees surveyed did not know whether their employer offered them.
With millions of employees still working at home, effective benefits communication is more challenging than ever, Colonial Life's Schaffer said. He advised business and HR leaders to "ensure they're providing opportunities for employees to learn basic information and ask questions, even in a virtual environment."
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5 Questions to Kick-Start Open Enrollment Planning For employees dealing with physical, emotional and economic setbacks due to the pandemic, "this will be the year to reevaluate insurance and financial safety nets, so keep this in mind as you communicate about medical plans, disability insurance, flexible spending accounts and other financial wellness benefits," blogged Megan Yost, vice president and engagement strategist at communications consultancy Segal Benz in San Francisco. She advised open enrollment managers to ask themselves five questions:
"Even if you don't have all your plan design changes finalized just yet, planning ahead can help make everything go more smoothly and minimize unnecessary stress," Yost observed. "Lay your foundation now—and fill in the details when you have them." SOURCE: Miller, S. (10 August 2020) "Spotlight Value of Benefits Package During Open Enrollment" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/spotlight-benefits-value-during-open-enrollment.aspx |
Job Hoppers Seek Better Rewards, Recognition and Career Growth
Did you know: Only 33 percent of employees state that they are committed to staying at their jobs. If employees are disengaged from their work, it is easier for them to find other opportunities with promising recognition, rewards, and growth. Read this blog post to learn more about why employees might be searching for more generous benefits.
Employees have high expectations when it comes to job perks, and, if their employer doesn't offer what they want, they'll find another that will, new survey findings show.
Only one-third of employees (33 percent) say they are committed to staying at their jobs in 2020, compared to the 47 percent who had the same intention for 2019, according to the 2020 Engagement & Retention Report by employee-recognition software firm Achievers.
As the labor market stays tight, it's easy for disengaged employees to find work elsewhere. And they might try to: Just 19 percent of employees surveyed consider themselves "very engaged," while 14 percent say they are fully disengaged. Even the 32 percent with "average engagement" said they were open to new job opportunities.
The survey, conducted in October 2019, received 1,154 responses from employees across North America who were asked about their intentions for 2020.
"A substantial portion of today's workforce already has one foot out the door," said Natalie Baumgartner, Achievers' chief workforce scientist. Unless employers take steps to reverse these feelings, she said, "the risk of turnover and underperformance in 2020 is immense."
The survey found that the top three reasons employees are considering leaving their jobs are:
- Compensation (cited by 52 percent of respondents).
- Career growth (43 percent).
- Recognition (19 percent).
Employees Feel Unheard, Unrecognized
Ninety percent of workers said they are more likely to stay at a company that asks for, and acts on, employee feedback. But when asked how good their manager and company are at soliciting feedback, the most common answer was just "OK," asking for it once or twice a year. As for their employers acting on feedback, "OK" was again the most common response, at 44 percent. These employees said their manager and company only talk about feedback and make few changes based on it.
Companies should make sure that employee feedback reaches managers, Baumgartner advised, and equip managers to use this feedback to address staff needs "in a personalized and timely way." These actions, she noted, can range "from small acknowledgements to larger changes that improve the employee experience and, as a result, improve engagement and retention."
As for recognition, 82 percent of surveyed employees "strongly" or "somewhat" agreed that they wished they received more recognition at work, and another 30 percent of employees said they feel "not very" or "not at all" valued by superiors.
"When organizations recognize everyday behaviors that align with their culture and goals, they help reinforce them as well as the role each employee plays," Baumgartner said.
Frequent vs. Infrequent Job Changers
After wanting more money, feeling unappreciated is the top reason infrequent job changers could be driven to leave, another recent survey found.
Joblist, a website that compiles jobs from leading job boards, last October asked nearly 1,000 workers throughout the U.S. what would make them consider accepting an offer from another employer and then compared responses from frequent and infrequent job hoppers—those who had held two or more jobs in the past five years and those who had held just one job during the same period.
The average minimum salary increase that respondents seeking other jobs would accept to stay at their current employer was $15,491, which represents a 25 percent increase, on average, over the past five years. Perks such as unlimited paid vacation, student loan assistance and paid parental leave were cited by frequent job changers as factors that would make a potential employer more attractive.
"These perks may appeal more to younger workers who are less likely to have a 'lifer' mentality" toward their employer, according to Joblist.
While both frequent and infrequent job switchers said they would leave jobs for better pay, "people who switch jobs infrequently are more likely to leave because of feeling underappreciated or undervalued," according to Joblist. "For the most part, people who don't change jobs often have made an emotional commitment to their employers, so when they feel slighted because that investment isn't being reciprocated, they're more likely to leave." Conversely, people who leave frequently are more likely to see the employer-employee relationship as transactional, "so they're less affected by those feelings."
Is Turnover So Bad?
Turnover can be disruptive and costly, but it can also be an opportunity for employers to find and develop employees who are enthusiastic about the organization and the direction in which it's heading, according to a November 2019 report from compensation data and software firm PayScale.
"Some turnover is actually good for an organization—especially in the case of overpaid, under-performing employees," said report author Conrado Tapado, content marketing manager at PayScale. "Usually employees stay when they feel satisfied and fairly compensated for their work. But sometimes, employees stay for less positive reasons," he noted, including:
- They are overpaid. "Being overpaid leaves little incentive for workers to look for another job. They may realize how difficult it will be to find another organization that will match their salary. Thus, they are perfectly happy to stay where they are."
- They value their benefits. "Benefits are meant to help drive retention, which is generally a good thing. However, sometimes employees remain just for the benefits but would rather be working elsewhere. Eventually, those 'golden handcuffs' will begin to chafe, and your employees may start to feel resentful."
Health care, retirement savings and paid-time-off benefits should be competitive and focused on helping employees remain productive and feel financially secure, without becoming so rich that employees don't feel they can leave, the findings suggest. Pay should be calibrated to reward performance through variable compensation tied to achieving personal, team and organizational goals, with base pay increases made according to merit and not treated as an entitlement.
The Right Benefits Balance
"Creating a benefits package that incentivizes good employees to stay without deterring uninspired employees from leaving can be tricky," said Amy Stewart, PayScale's senior content marketing manager.
That can happen when employers offer benefits with a high monetary value that employees only receive if they stay put and hold tight, such as pensions or stock options that vest over time. People can also stay in an unpleasant situation for benefits that would be hard to find elsewhere, such as a paid sabbatical, a four-day workweek or paid child care, Stewart said.
A possible solution is to "experiment with rewarding some benefits in exchange for high performance, such as Fridays off or opportunities to work from home only if certain metrics are hit," she said.
Compensation is similar, Stewart explained, as employees with above-market pay are often reluctant to leave. "When you have a highly paid employee who isn't performing to a high standard, sometimes the answer isn't a change in compensation or a new job, but a new challenge. If their interest in their current work is waning, they might need new work, but it doesn't necessarily have to be at another organization," Stewart said. "Employees who have stopped learning in their current position may become revitalized in a position that offers them new opportunities to grow."
SOURCE: Miller, S. (06 February 2020) "Job Hoppers Seek Better Rewards, Recognition and Career Growth" (Web Blog Post). Retrieved from https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/job-hoppers-seek-better-rewards-recognition-career-growth.aspx
Need a Morale Booster? Therapy Dogs Can Help
Work is stressful by itself, but with added layers of stress from having to process outside emotions and hardships, it becomes difficult to give the best service that is should be offered. Allowing a therapy dog in the workplace can help employees reduce stress, and become calmer throughout the day. Read this blog post to learn more about how therapy dogs in the workplace can be beneficial to the work environment.
The Evergreen Health services facility in Buffalo, N.Y., is buzzing with anticipation several days before Stella arrives. Some staff even seek out Matthew Sydor, the director of housing and retention services at the health care agency, days ahead of time to confirm her arrival. Others have requested a calendar invite from him so they can plan their day around her visit.
The middle-aged golden retriever is a certified therapy dog, and her visits are a hit with employees.
Therapy dogs are common in what Sydor describes as the "helping" fields. Bringing therapy dogs into any workplace, he says, is an opportunity to break up the day for employees and give them something to look forward to at no cost.
"At our agency we work with many people who have gone through traumatic experiences. All work is stressful, but layers of stress are added when you are helping others to process their own emotions and hardships," he explained. "The compounding stress makes it difficult to best serve our patients at a high level. Having a therapy dog in the building helps staff to participate in a self-care activity."
Stella's owner, Krista Vince Garland, Ph.D., is an associate professor of exceptional learning at Buffalo State College. The pair specializes in animal-assisted interventions in educational settings but are receiving an increasing number of requests to visit local workplaces.
"Everyone who visits Stella has the same comments: 'I feel so much better. She's brightened my day,' " Vince Garland said. "Aetna also did a study in 2017 that shows tremendous promise on the benefits of therapy dogs in the workplace. Employee sick days were down, morale was up and interactions among co-workers increased."
Having dogs in the workplace isn't a new concept, but it's a concept that hasn't been widely embraced. Only about 11 percent of companies in the United States allow pets in the office, according to the Society for Human Resource Management Employee Benefits 2019 survey.
Paul LeBlanc is the founder and CEO of Zogics, a Massachusetts-based fitness, cleaning and body care company. S'Bu, a Rhodesian Ridgeback, was LeBlanc's first employee.
"When you look at [Inc. magazine's] list of best places to work, 47 percent of those companies allow dogs in the office," he said. "Studies have shown that petting a dog for five to 10 minutes causes a reduction of blood pressure and the dogs have calming effects on people."
But not all employers are ready to go "all-in" like Zogics. For these workplaces, therapy dogs are a viable alternative. Sydor and Vince Garland share insight into what has made their partnership successful and offer tips any business can use.
Communicate. No one likes a surprise, even if it's a friendly four-legged canine. Talk with staff first to address any questions or concerns. Arrange a quick meet-and-greet to give the dog a chance to get used to the environment before interacting with employees.
"This also gives the administrator a chance to touch the dog and make sure it is clean and well-groomed. Therapy dogs are required to have a bath within 24 hours of any visit," Vince Garland said.
Distributing a fact sheet helps with the introduction of a therapy team. Once a visit is established, send a reminder a day prior.
"I suggest telling your staff why you're bringing therapy dogs in and advertise it as much as possible to employees," Sydor said.
Verify credentials. Ask about the team's training. Certifications are not required of service dogs and emotional support dogs. However, therapy dogs must complete training. Stella is an American Kennel Club (AKC) Good Citizen and has earned certifications through Therapy Dogs International and the SPCA Erie County Paws for Love.
"There's a lot of fake information out there. If someone is shy about sharing that information, that's a clue that more discussion is needed," Vince Garland said.
Sydor added, "We found Krista and Stella through Erie County SPCA's Paws for Love, and it has been a great partnership. They hold liability insurance for any damage that may occur. All dogs are well-trained, and the handlers are consistent with how they conduct their work."
Acknowledge cultural differences. "Care must be taken to respect cultural sensitivities," Vince Garland said. "Some cultures regard dogs as unclean, others view dogs as nuisances, while others believe spirits may appear as animals."
Designate a point of contact. This person handles scheduling visits, interacting with the team, and confirming vaccinations and liability insurance. The ideal individual works well with people and is animal-friendly, according to Vince Garland.
Create a space for the team. Not everyone will embrace dogs. Designating space separate from the main workflow respects the space of those employees who choose not to interact with the dog.
"Evergreen has given us a room for visits," Vince Garland said. "By being out of the flow, we're able to meet with staff who are interested without making others feel uncomfortable."
SOURCE: Navarra, K. (13 January 2020) "Need a Morale Booster? Therapy Dogs Can Help" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/need-a-morale-booster-therapy-dogs-can-help.aspx
Starbucks Unveils Mental Health Initiatives for Employees
Did you know: One in Five United States adults experiences mental illness. According to the World Health Organization, work is good for mental health but a negative environment can lead to physical and mental health issues. Starbucks has announced that they have launched an app for its employees to improve their mental health along with their anxiety and stress. Read this blog post to learn more about how Starbucks is creating mental health benefits for their employees.
Starbucks has launched an app to help its employees improve their mental health and deal with anxiety and stress.
The global coffee company also announced it will be retooling its employee assistance program based on feedback from employees and mental health experts. It plans to offer training to its U.S. and Canada store managers on how to support workers who experience a mental health issue, substance-abuse problem or other crisis.
Every year, one in five U.S. adults experience mental illness and one in 25 experience serious mental illness, according to the National Alliance on Mental Health. And more people are killing themselves in the workplace, according to the Washington Post. The number of such suicides increased 11 percent between 2017 and 2018. Employers, the Post reported, "are struggling with how to respond."
Business Insider reported that some Starbucks employees it interviewed about the initiatives said much of their stress comes from the company cutting back on hours and relying on employees to work longer shifts with fewer people and no pay increase.
The World Health Organization points out that while work is good for mental health, a negative environment can lead to physical and mental health problems. Harassment and bullying at work, for example, can have "a substantial adverse impact on mental health," it said. There are things employers can do, though, to promote mental health in the workplace; such actions may also promote productivity.
SHRM Online has collected the following articles on this topic from its archives and other sources.
Starbucks Announcements Its Commitment to Supporting Employees' Mental Health
The company released a statement Jan. 6 about additions to its employee benefits and resources that support mental wellness.
"Our work ahead will continue to be rooted in listening, learning and taking bold actions," it said. In the past, that has included tackling topics such as loneliness, vulnerability "and the power of small acts and conversation to strengthen human connection."
(Starbucks)
Mental Illness and the Workplace
Companies are ramping up their efforts to navigate the mental health epidemic. Suicide rates nationally are climbing, workers' stress and depression levels are rising, and addiction—especially to opioids—continues to bedevil employers. Such conditions are driving up health care costs at double the rate of illnesses overall, according to Aetna Behavioral Health.
Starting workplace conversations about behavioral health is challenging because such conditions often are seen as a personal failing rather than a medical condition.
(SHRM Online)
Research: People Want Their Employers to Talk About Mental Health
Mental health is becoming the next frontier of diversity and inclusion, and employees want their companies to address it. Despite the fact that more than 200 million workdays are lost due to mental health conditions each year—$16.8 billion in employee productivity—mental health remains a taboo subject.
(Harvard Business Review)
Viewpoint: Addressing Mental Health in the Workplace
Companies are reassessing their behavioral health needs and are looking to their health care partners for creative, integrated and holistic solutions. Many are turning to employee assistance programs for help.
(Benefits Pro)
4 Things to Know About Mental Health at Work
Kelly Greenwood graduated summa cum laude from Duke University with degrees in psychology and Spanish. She holds a master's degree in business from Northwestern University's Kellogg School of Management, contributes to Forbes magazine and is editor-at-large for Mental Health at Work, a blog on Thrive Global.
She also is someone who has managed generalized anxiety disorder since she was a young girl. It twice led to debilitating depression. She shared four things she wishes she had known earlier in her life about mental health.
(SHRM Online)
Employers Urged to Find New Ways to Address Workers' Mental Health
An estimated 8 in 10 workers with a mental health condition don't get treatment because of the shame and stigma associated with it, according to the National Alliance on Mental Illness. As a result, the pressure is growing on employers to adopt better strategies for dealing with mental health.
(Kaiser Health News)
Mental Health
Depression, bipolar disorder, anxiety disorders and other mental health impairments can rise to the level of disabilities under the Americans with Disabilities Act that requires employers to make accommodations for workers with such conditions.
This resource center can help employers understand their obligations and address their workers' mental health.
(SHRM Resource Spotlight)
SOURCE: Gurchiek, k. (14 January 2020) "Starbucks Unveils Mental Health Initiatives for Employees" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/starbucks-unveils-mental-health-initiatives-for-employees.aspx
Saver's Credit Can Spur Retirement Plan Contributions
Many employees are not aware of employer-sponsored retirement accounts, or individual retirement accounts (IRA), which could be costing those more money. Tax season is the best time for employers to educate their employees on how they can earn extra tax credits through their 401(k) plans. Read this blog post to learn more about how to educate employees on what retirement account opportunities that are available to them.
Many workers don't know that they're eligible for a tax credit by saving in an employer-sponsored retirement plan or individual retirement account (IRA)—and that could be costing them money. Tax time, however, is prime time for employers to inform eligible workers about the saver's credit.
The Retirement Savings Contributions Credit, or saver's credit, is available to low- and moderate-income workers who are putting money aside for retirement. But only 29 percent of workers with annual household income below $50,000 know about the saver's credit, according to the nonprofit Transamerica Center for Retirement Studies in Los Angeles, which surveyed nearly 6,000 employees last fall.
"Tax season is an ideal time to tell eligible workers how they can earn extra tax credits by saving through their employer's 401(k) or a similar retirement plan," said Catherine Collinson, president of the Transamerica Center. "The saver's credit might just be the motivator for those not yet saving for retirement to get started."
Scott Spann, a senior financial planner with Financial Finesse, a provider of workplace financial wellness programs in Charleston, S.C., said, "Saving for retirement is a challenge for many households in America. Special tax incentives help make the process of saving easier."
What Is the Saver's Credit?
Like other tax credits, the saver's credit can increase a taxpayer's refund or reduce the tax owed. Here's how it works:
The amount of the credit is a maximum of 50 percent of an employee's retirement plan contributions up to $2,000 (or $4,000 for married couples filing jointly), depending on the filer's adjusted gross income as reported on Form 1040. Consequently, the maximum saver's credit is $1,000 (or $2,000 for married couples filing jointly).
The saver's credit "is different than a tax deduction due to the fact that a tax credit is a dollar-for-dollar reduction of your gross tax liability, which is the total amount of taxes you're responsible for paying before any credits are applied," Spann explained.
The saver's credit also differs from the separate tax benefit of contributing pretax dollars to a qualified retirement plan, such as an employer-sponsored 401(k) or an IRA. "Many eligible retirement savers may be confusing these two incentives because the notion of a double tax benefit"—pretax contributions and an additional tax credit—"seems too good to be true," Collinson said.
Who Can Claim the Saver's Credit?
The credit is available to workers age 18 or older who have contributed to a company-sponsored retirement plan or an IRA in the past year and meet the income requirements shown in the table below. The filer cannot be a full-time student nor claimed as a dependent on another person's tax return.
Income Caps for Tax Years 2019 and 2020
For eligible workers, the amount of the available tax credit diminishes as adjusted gross income (AGI) rises. To help preserve the credit's value, income thresholds are adjusted annually to keep pace with inflation. Below are the AGI caps for tax year 2019 (for tax returns filed this year) and 2020 (for returns filed next year).
| 2019 Saver's Credit | |||
| Tax Credit Rate | Single Filers and Married, Filing Separately* | Married, Filing Jointly | Heads of Household |
| 50% of contribution | AGI not more than - $19,250 | AGI not more than $38,500 | AGI not more than $28,875 |
| 20% of contribution | AGI of $19,251 - $20,750 | AGI of $38,501 - $41,500 | AGI of $28,876 - $31,125 |
| 10% of contribution | AGI of $20,751- $32,000 | AGI of $41,501 - $64,000 | AGI of $31,126 - $48,000 |
| No credit | AGI more than $32,000 | AGI more than $64,000 | AGI more than $48,000 |
| 2020 Saver's Credit | |||
| Tax Credit Rate | Single Filers and Married, Filing Separately* | Married, Filing Jointly | Heads of Household |
| 50% of contribution | AGI not more than $19,500 | AGI not more than $39,000 | AGI not more than $29,250 |
| 20% of contribution | AGI of $19,501 - $21,250 | AGI of $39,001 - $42,500 | AGI of $29,251 - $31,875 |
| 10% of contribution | AGI of $21,251 - $32,500 | AGI of $42,501 - $65,000 | AGI of $31,876 - $48,750 |
| No credit | AGI more than $32,500 | AGI more than $65,000 | AGI more than $48,750 |
Deadlines for Retirement Contributions
"You must make eligible contributions to your employer-sponsored retirement plan or IRA for the tax year for which you are claiming the income tax credit," Spann said.
While 401(k) contributions for a tax year can be made only up to Dec. 31, those who are eligible but did not save last year can still make a tax year 2019 IRA contribution until April 15, 2020.
Filing for the Saver's Credit
Employers can advise eligible workers to take the following steps to claim the saver's credit, according to the Transamerica Center:
- If using tax-preparation software, including those programs offered through the IRS Free File program, use Form 1040 or Form 1040NR for nonresident aliens. Answer questions about the saver's credit, which may be referred to as the Retirement Savings Contributions Credit or the Credit for Qualified Retirement Savings Contributions.
- If preparing tax returns manually, complete Form 8880, Credit for Qualified Retirement Savings Contributions, to determine your exact credit rate and amount. Then transfer the amount to the designated line on Form 1040 (Schedule 3) or Form 1040NR.
- If using a professional tax preparer, ask about the saver's credit.
Financial planners advise having tax refunds directly deposited into an IRA to further boost your retirement savings.
The Transamerica Center has additional information, in English and Spanish, on its Saver's Credit webpage, along with a downloadable fact sheet.
IRS Free File Program Is Available
Another potentially overlooked opportunity for workers is the IRS Free File program, which offers federal income tax preparation software at no charge to tax filers with an AGI of $69,000 or less.
Free File opened on Jan. 10, 2020, for the preparation of 2019 tax returns. Eligible taxpayers can do their taxes now, and the Free File provider will submit the return once the IRS officially opens the tax filing season on Jan. 27.
For 2020, the Free File partners are: 1040Now, Inc., ezTaxReturn.com (English and Spanish), FileYourTaxes.com, Free tax Returns.com, H&R Block, Intuit, On-Line Taxes, Inc., Tax ACT, TaxHawk, Inc. and TaxSlayer (English and Spanish).
Here's how Free File works:
- Taxpayers go to IRS.gov/FreeFile to see all Free File options.
- They browse each of the offers or use a "look up" tool to help find the right product. Each Free File partner sets its own eligibility standards generally based on income, age and state residency. But if the taxpayer's adjusted gross income was $69,000 or less, they will find at least one free product to use.
- They select a provider and follow the links to their web page to begin a tax return.
- They complete and e-File a tax return if they have all the income and deduction records they need. The fastest way to get a refund is by filing electronically and selecting direct deposit. For taxes owed, they can use direct pay or electronic options.
Many Free File online products also offer free state tax preparation, although some charge a state fee. Taxpayers should read each provider's information carefully.
"The IRS has worked to improve the program for this year, and we encourage taxpayers to visit IRS.gov, and consider using the Free File option to get a head start on tax season," said IRS Commissioner Chuck Rettig.
Nearly 57 million returns have been filed through the Free File program since it began in 2003, and 70 percent of U.S. taxpayers (about 100 million people) are eligible for Free File, according to the IRS.
SOURCE: Miller, S. (10 January 2020) "Saver's Credit Can Spur Retirement Plan Contributions" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/remind-low-wage-earners-about-savers-credit.aspx
How to prevent employees from taking advantage of unlimited PTO
Attracting and retaining is becoming more difficult. Because of this companies are now offering competitive benefits to bring that talent to their company. Companies have added unlimited paid time off, along with work from home policies to their benefits offering. Read this blog post to learn how to prevent employees from taking advantage of new benefits being put in place.
In the quest to attract and retain top talent, more companies are offering competitive benefits including unlimited paid time off and generous work from home policies. But what if you have workers who abuse the policy?
To prevent workers from taking advantage, it’s critical that companies set proper guidelines, says Jonathan Wasserstrum, CEO and founder of Squarefoot, a commercial real estate company, which offers its staff unlimited personal time off. At his company, people were utilizing the policy from “all ends of the spectrum,” which led him to reassess how they monitored and encouraged time off.
“The war for talent is so strong right now, and when an employee is looking to make a decision, you don’t want to disqualify yourself because you don’t offer this benefit,” he says. “But people don’t use the amount of vacation days intended. You get some people who underutilize and over utilize. The bad spoils the good, and that's not the intent of unlimited policy.”
Unlimited paid time off is becoming a more popular benefit, especially in the tech space. According to Indeed, 65% of companies mentioned “unlimited PTO” in their job postings, and companies like General Electric and Kronos offer the benefit to employees.
While the standard time off has typically been two to four weeks, 55% of employees do not use all of their paid time off, according to the U.S. Travel Association. To level the playing field among his employees, Wasserstrum says he established guidelines that made unlimited PTO flexible, but still within reason.
“There are top performers who work a lot, and you don't want them to burn out. On the other end of the spectrum, there are those who take advantage of policy,” he says. “We frame it as flexible and not unlimited. The intent is for everyone to use it as time away from the office — it helps you refresh — so we encourage you to take anywhere from two to four weeks.”
Paid time off has a multitude of benefits, including increased employee morale and a better sense of work-life balance. And today’s workforce is in desperate need of time away from the office. According to Deloitte, 77% of employees say they have experienced burnout, and 70% say their employer does not do enough to prevent or mitigate work stress.
“Work-life balance looks very different now than it used to,” Wasserstrum says. “If I'm on vacation 20 years ago, you really can't get in touch with me. Now, everyone is 24/7 on, so you have to set the boundaries as an employer.”
In addition to more paid time off, more people are also reaping the benefits of remote work. According to a Gallup poll, 43% of the workforce works remotely some or all of the time, but employers like IBM, Aetna and Yahoo have pulled back on those policies and required workers to be on site instead, according to the Society of Human Resource Managers.
"[Managers] may have realized how blind and invisible remote workers are and they don't know what's going on at the remote location — what work that person is doing or what distractions they may have to deal with,” Judith Olson, a distance-work expert and professor at the University of California Irvine, told SHRM.
With more employees weighing the benefits of workplace policies, time off is still the top benefit employees look for. Metlife found 72% named unlimited paid time off as their most desired benefit, ahead of wellness plans and retirement programs.
While it may put companies at an advantage, PTO and other flexible work policies are just one part of the overall picture of a company’s workplace culture, Wasserstrum says.
“If you're winning people based on benefits, they're coming to you for the wrong reasons,” he says. “But every company looks and feels different from the inside and has a company culture that shouldn’t be one size fits all. This works for us and the work-life balance experience we want people to have.”
SOURCE: Place, A. (17 Decemeber 2019) "How to prevent employees from taking advantage of unlimited PTO" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/how-to-prevent-employees-from-taking-advantage-of-unlimited-pto
Congress OKs paid family leave for federal workers
First-time landmark benefits are rising to the surface come the new year. In 2020, federal workers will receive paid family leave for the birth or placement of a child. Read this blog to learn what paid family leave for federal workers will look like come the new year.
Congress has given the green light for federal workers to receive 12 weeks of paid leave for the birth or placement of a child. This first-time landmark benefit comes as lawmakers and influential CEOs, continue to advocate for a nationwide parental leave policy.
The Senate approved and sent the 2020 National Defense Authorization Act (NDAA), which includes the leave provision, to President Donald Trump Dec. 17. The House passed the bill Dec. 11. Trump previously said he would sign the bill into law, and Ivanka Trump tweeted Tuesday afternoon that the president would sign the legislation this week.
The NDAA, sweeping defense legislation, provides 12 weeks' paid parental leave for federal employees based on language of a bill sponsored by Rep. Carolyn B. Maloney, D-N.Y. The benefit takes effect Oct. 1, 2020.
The NDAA also includes a "3.1-percent pay raise for our troops [and establishes] the United States Space Force," according to a statement by the White House press secretary. Bipartisan congressional lawmakers allowed for the creation of the Space Force as the sixth branch of the military in exchange for the new parental-leave benefits, according to The New York Times.
Calls for private-sector leave
The new benefit is reserved for federal employees and highlights the fact that the U.S. is the only industrialized country without a nationwide federal parental leave policy or law, according to Maloney.
The congresswoman noted in her opening remarks that the U.S. is one of only two countries that do not provide workers with paid family or medical leave, a statement presidential candidate Andrew Yang made during the November Democratic presidential debates. (It's worth noting that this is not strictly true, according to reporting from Inc.)
"This agreement is not perfect," she said. "The Senate refused to approve paid leave for medical reasons. This provision covers only federal employees. So, it does not cover anyone working in the private sector."
Maloney, who has advocated for such a benefit for many years, added, "We will continue fighting for these Americans in the months and years to come. But despite these drawbacks, this is an amazing accomplishment."
Some state and local governments require paid leave for private-sector employees, but that patchwork of laws serves neither employees nor employers well, according to the Business Roundtable, an association of CEOs of American companies.
Ginni Rometty, chairman, president and CEO of IBM, sent Trump and congressional leaders a letter Dec. 12 on behalf of the council, urging them to enact federal legislation creating paid family and medical leave benefits.
"Legislation should provide uniform standards that apply to all covered employees and that adhere to the federal Family and Medical Leave Act requirements," the letter said. "Doing so would benefit employees needing coverage as well as help businesses challenged by the growing patchwork of competing and inconsistent state plans."
As private companies compete with the federal government for top talent, benefits could be a deciding factor, and studies have shown that employers can boost retention by offering such perks.
SOURCE: Estrada, S. (17 December 2019) "Congress OKs paid family leave for federal workers" (Web Blog Post). Retrieved from https://www.hrdive.com/news/congress-oks-paid-family-leave-for-federal-workers/569286/
A health insurance primer for your employees during Open Enrollment
The end of open enrollment season is quickly approaching. During open enrollment, employees have the chance to choose a benefits plan or change from the plan they currently have. Read this blog post for a few things employees should consider when choosing a plan.
Now is the time to choose the best health plan for you and your family. During open enrollment season, employers and the Health Insurance Marketplace (or Exchange) let you choose a plan or change from the plan you have. Making the right choice can impact your health and your wallet.
Even if your current coverage seems satisfactory, your employer or the Exchange may offer new options that better suit your needs. It is important to compare costs and to understand differences in benefits, networks and other rules. In some states, plans available outside the official Marketplace offer attractive, low premiums but may have dollar limits on benefits, or may not provide coverage for childbirth, mental health and other services mandatory for plans that qualify under the Affordable Care Act (the “ACA” or “Obamacare”). Review and compare such plans’ terms carefully.
The time for your decision is limited. Employers generally provide a month or more to make your selection. Open enrollment for the federal Marketplace runs only from November 1, 2019, to December 15, 2019. Exceptions may be made for life changes like the birth of a child or loss of coverage under a spouse’s plan, but if you miss open enrollment season, you will probably have to wait another year to enroll. Here are some things to think about when choosing a plan.
Costs
The first cost to consider is the premium — the payment, usually monthly, to maintain coverage. If you get your plan through your job, your employer may pay all or part of the premium. If you choose a Marketplace plan, you may qualify for a premium tax credit to reduce the premium.
Other insurance costs are known as cost sharing, because you share the cost of care with your plan. They may take the form of a copay (a fixed dollar amount for each service), coinsurance (a set percentage of the cost of a service) or a deductible (the amount you must pay before your plan starts paying for services). If you select a Marketplace plan, you may qualify for cost-sharing reductions to lower those expenses.
In principle, it would be nice if all the costs were as low as possible. But usually, low-cost sharing comes with a high premium. High-deductible health plans may offer lower premiums but you will pay more out-of-pocket before your insurance pays anything.
In shopping for a health plan, consider how high a premium you are willing to pay for the level of cost sharing you would like. For example, if you or a family member have a chronic illness, you may need regular treatment and may be at risk for hospitalization. In that case, you may be willing to pay a higher premium for low-cost sharing. But if you are a healthy, young, single adult who rarely sees a doctor, you might accept a high deductible in exchange for a low premium.
Bear in mind that if you have a high-deductible health plan, you might be eligible to set up a health savings account (HSA). An HSA provides tax savings that stretch the dollars you contribute to the account to help pay for qualified medical expenses.
Choice of Doctors
If you like your current doctors and want to keep seeing them, make sure they and their facilities belong to the network of providers who have contracted with the plan you are considering. Check the plan’s online provider directory to make sure those doctors and their facilities are listed in its network. Even if you do not have a regular doctor, make sure the network includes providers close to where you live and work.
If you want to choose freely among many providers, a plan with a broad network might be for you. That may be more expensive than a plan with a narrow network, which may cost less but has a more limited choice of providers.
Out-of-Network Coverage
As good as a plan’s network might be, you may still wish to consult providers outside the network from time to time. If so, consider a Preferred Provider Organization (PPO) or Point of Service (POS) plan; each provides out-of-network benefits. With such plans, you will still spend more for out-of-network than in-network care, but at least you will have some coverage. Two other types of plans, Health Maintenance Organization (HMO) and Exclusive Provider Organization (EPO), typically will not pay for out-of-network care except for emergencies.
Who’s in Charge of Your Care?
In HMO and POS plans, you choose a primary care physician (PCP) who acts as a form of “gatekeeper” for your care. Unless it is an emergency, when you need medical treatment, you go to the PCP first. The PCP either treats you personally or refers you to specialists in your network. If you like having a PCP’s guidance, this arrangement might work for you. But if you prefer choosing specialists directly, you might opt for a PPO or EPO.
ACA-Compliant versus Association and Short-Term Plans
Whatever plan you choose, it is important to consider whether it covers all the types of healthcare you might need and whether it limits the dollar amount of your coverage. Plans that comply with the ACA are comprehensive because they have to cover 10 essential health benefits. Short-term, limited-duration (STLD) health plans, do not have to cover all those benefits. They may, for example, not cover childbirth, mental health or prescription drugs. If you end up needing care that is not covered, you will have to pay the whole cost yourself.
AHPs and STLD plans differ from ACA-compliant plans in other ways. For example, STLD plans can impose annual or lifetime dollar limits on coverage. If your care costs more than those limits, you have to pay the excess amount.
SOURCE: Gelburd, R. (5 December 2019) "A health insurance primer for your employees during Open Enrollment" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/a-health-insurance-primer-for-your-employees-during-open-enrollment
IRA spousal contributions can mitigate the high cost of women’s work breaks in retirement plans
According to a November 2018 study, women who took a year off from work in a 15-year period had 39 percent lower average annual earnings than women who worked continuously through that time. Read this blog post for more on how spousal contributions can mitigate the high cost of work breaks in retirement plans.
Women employees face special retirement savings challenges compared with their male counterparts. On average, they earn less and log fewer years of earned income compared to men. That’s because, in part, because women take multiple breaks from work, turn down work or decline promotions because of family care obligations.
The cost of a career break can be high. A November 2018 study by the Washington-based Institute for Women’s Policy Research found that women who took just one year off from work in a 15-year period had 39% lower average annual earnings than women who worked continuously through that time. The study also showed that the number of women taking at least one year off of work during a 15-year period was nearly twice the rate of men — 43% of women compared to 23% of men.
As a result, women are less likely to set aside money in a savings arrangement or to contribute to an employer-sponsored retirement plan.
Spousal advantage
Married women (and men) who take work breaks may stay on track with their retirement savings goals by making IRA (traditional or Roth) contributions based on their working spouse’s income — if they meet these requirements.
- The couple must file a joint federal income tax return
- The working spouse must have enough earned income to make any IRA contributions on behalf of the nonworking spouse, or, if both spouses are contributing, enough income to support both spouses’ contributions
- Assuming enough earned income, each spouse can contribute up to $6,000 (plus $1,000 if turning age 50) for 2019. This limit applies to traditional and Roth IRA contributions combined
- The spouse receiving a traditional IRA contribution must be under age 70 ½ for the entire year
- To be eligible for Roth IRA contributions, the couple must also satisfy income requirements.
Roth IRA income restrictions
The amount that an individual is eligible to contribute to a Roth IRA depends on the amount of the couple’s modified adjusted gross income (MAGI). If the couple’s joint MAGI for a tax year is less than the IRS phase-out range, each spouse can make the maximum Roth IRA contribution allowed for that tax year (assuming enough MAGI to support both spouse’s contributions). If it’s above the phase-out range, neither spouse is eligible to contribute to a Roth IRA. Keep in mind that they could still contribute to a traditional IRA, if under age 70 ½. If the couple’s joint MAGI falls within the phase-out range, their maximum contribution amount is reduced. The MAGI phase-out range is subject to cost-of-living adjustments each year.
Traditional IRA income tax deductions
Note that separate MAGI phase-out ranges apply to traditional IRA contribution deductions — another way for non-working married individuals to potentially benefit when saving for retirement with an IRA. The ability to take a federal income tax deduction for a traditional IRA contribution — if eligible — appeals to many savers. But deduction eligibility depends on whether either spouse is an “active participant” in an employer-sponsored retirement plan. An active participant is generally making or receiving contributions to her retirement plan accounts for the applicable year. Because active participants have access to a workplace retirement plan, the IRS uses its MAGI to determine whether each spouse can take a full deduction, a partial deduction or no deduction at all.
No minimum required
Regardless of which IRA a couple chooses to, the main thing is to contribute — even if it’s a small amount. There is no minimum amount that must be contributed to either type of IRA. Couples can contribute whatever they’re comfortable with, up to the previously described limit. For those concerned about not having enough to set aside in an IRA during a career break, contributing even just $500 or $1,000 for the year will still make a difference.
It certainly beats not saving at all.
SOURCE: Van Zomeren, B. (9 December 2019) "IRA spousal contributions can mitigate the high cost of women’s work breaks in retirement plans" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/ira-spousal-contributions-can-mitigate-cost-of-womens-work-breaks-in-retirement
Why using a 401(k) to pay for emergencies is hurting employers and employees
More and more employees are withdrawing $1,000 or less from their 401(k) retirement accounts to help pay for emergency expenses according to HR leaders. This trend is causing corporate leaders to become concerned about the financial stress that their employees are living with. Read the following blog post to learn more.
More than ever, HR leaders at Fortune 500 companies are reporting that employees are withdrawing $1,000 or less from their hard-earned 401(k) retirement accounts to pay for emergency expenses. These employees — often living at the brink of being financially unstable — are using the funds for unexpected emergency expenses like car repairs, medical bills or even to purchase books for their college-age children.
Corporate leaders are now, more than ever, concerned that many of their employees live under a high degree of financial stress that can affect their productivity, creativity and even their health, resulting in absenteeism and drops in productivity that ultimately impact the bottom line. HR managers are especially feeling the pain as they are called upon to handle the excessive paperwork needed for the 401(k) plan withdrawals, causing extra work that could be spent more productively on other projects that benefit all employees.
The fact that more Americans than ever are dipping into their 401(k) accounts for emergency funds reveals that many are living above their means or working below their needs financially. While it’s important to have an emergency fund, for many people savings is a luxury they simply can’t afford. According to a Federal Reserve survey, nearly 40 percent of Americans said they don’t have enough cash on hand to cover an unexpected $400 expense. The quick fix for many is to use credit cards or ask family or friends for a loan when an emergency arises, but when those are not options, tapping into the 401(k) accounts is becoming increasingly common.
Some companies are partnering with payday loan companies so employees will refrain from tapping into their retirement funds. This is actually a worse idea because they’re setting their employees up to fail by enabling a vicious cycle of debt employees may never be free of.
Financial education could be the key to helping employees gain control of their financial lives. Companies that promote financial literacy courses and attendance at financial seminars or conferences offer the first step toward a better path for future financial stability. Offering or subsidizing the cost of continuing education courses help inspire employees to begin a lifelong journey of education for higher salaries and career advancement. Companies that promote education and career advancement attract, engage and retain employees longer than companies that don’t.
Flexible benefits can help
Companies can help their employees refrain from using their 401(k) retirement accounts as a bank if they offer flexible benefits. Employees get to choose how to use their earned benefits, like utilizing the monetary value of their unused paid time off (PTO) for other priorities such as paying for an emergency expense, paying down student loan debt or funding a vacation, among other things. Companies that offer flexible benefits are giving workers the ability to finally be in the driver’s seat of their careers and lives. When companies empower employees in this way, job satisfaction, productivity and creativity go way up.
Flexible benefits are a no brainer to organizations that want to attract, recruit, engage and retain top talent. Salary isn’t the only factor in determining a good career move, and companies that want to win the talent war will offer some type of flexible benefits. Every employee should have the ability to choose benefits based on their individual needs, avoiding the damaging financial practice of using 401(k) accounts for emergency expenses.
SOURCE: Whalen, R. (25 November 2019) "Why using a 401(k) to pay for emergencies is hurting employers and employees" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/employees-are-using-401k-funds-for-emergencies