Part One
Employee financial stress is expected to increase. Benefits help.
In this volatile economic environment, it’s no surprise that employee financial stress is on the rise.
As inflation and increasing prices are still a major factor in the United States, HR leaders expect health insurance costs to rise in the next year. But within this landscape, benefits, especially Health Savings Accounts and Health Reimbursement Arrangements, are critical tools to help employees and their employers save money and combat stress.
Health insurance costs and employee financial stress are rising.
Health and wellness benefits are a critical offering to help combat financial stress.
of benefits leaders say offering competitive financial benefits is more important than a year ago.
These benefits are especially important for employee retention. This response remains consistent over the past three years.
of benefits leaders expect that HSAs and paid time off will be the most important benefits for their team in the next year.
expect health insurance costs to increase between 10 and 35% in the next year.
38% expect costs to increase between 10 and 20%, but a full quarter expect these costs to increase between 21 and 35%. No one expects costs to decrease.
say they expect enrollment in high deductible health plans to increase over the next year.
These health plans often have the lowest premiums and can help both companies and their employees save on healthcare.
say that employee financial stress is on the rise.
Benefits leaders feel financial stress is increasing more than stress around healthcare costs, which 33% say are on the rise.
Maintaining a productive workforce, rewarding employees, easing employee stress, and supporting company goals are top reasons for offering benefits.
55% of companies offer benefits to maintain a healthy, productive workforce and/or to reward employees for hard work.
50% offer benefits to ease employee stress and/or to support company culture goals, including diversity, equity, and inclusion.
Base pay and benefits, both tax-advantaged and post-tax, help combat stress and fuel employee recruitment and retention.
50% of benefits leaders say that health insurance is the most important benefit for employee recruitment and retention, followed by bonuses, 401(k) matches, and paid time off at 30%.
47% of employees are asking for increased base pay and 44% are asking for bonuses due to rising prices, while about 40% of employees also want better healthcare, HSAs or FSAs, and 401(k) matching.
Flexible employee benefits, both pre- and post-tax help drive employee retention, while helping employees save money and combat financial stress. HSAs are the most popular of all these benefits.
78% offer Health Savings Accounts (HSAs).
64% offer Health Reimbursements Arrangements (HRAs).
54% offer Flexible Spending Accounts (FSAs).
44% offer Lifestyle Spending Accounts (LSAs).
24% offer commuter benefits.
Analysis and action items
Benefits that offer employees clear financial support and add money to their pockets will go a long way in easing financial stress and helping them navigate higher prices. In addition to tax-advantaged benefits like HSAs, HRAs, and FSAs, post-tax Lifestyle Spending Accounts can help employees with everyday expenses they are already paying for, without adding to their paycheck and be a great way to support workplace culture and values. Finally, offering employees benefits that also help employees save for the future, such as Health Savings Accounts and 401(k) matching can also help employees feel more supported and secure.
Action items for benefits leaders
- Review your health plan offerings and consider adding a high deductible health plan and HSA option if you don’t already offer one.
- Offer or increase your 401(k), HSA, or FSA match to help ease employee financial stress and incentivize your team to use their benefits.
- Consider adding a Lifestyle Spending Account focused on financial wellness, including support for financial planning, tax preparation, budgeting support, and retirement planning.
- Work with your broker or benefits provider to educate employees on how to maximize their benefits to save money.
Action items for brokers and consultants
- Discuss the advantage of the high deductible health plan and HSA option as a way to drive tax-savings and save on healthcare costs for both your clients’ companies and their employees.
- Work with providers that includes employee education as part of their product offering to help drive benefits adoption and enable employees to get the most out of their benefits.
- Discuss Lifestyle Spending Accounts with your clients. These flexible, post-tax accounts can meet real employee needs, such as fitness, financial wellness, remote work expenses, and pet care expenses without adding money to their paycheck.