Article

• Gradifi

Creating a Financially Healthy Environment for Your Employees

By Teri Cettina | 3-min read

Recent workplace surveys have made two things clear: American workers worry a lot about their finances and employers are looking for new ways to help their stressed-out workers.

For example, the PricewaterhouseCooper (PwC) 2017 Employee Financial Wellness Survey found that personal money issues are a distraction at work for more than one in three full-time employees, using an average of three or more hours of work time each week to deal with financial issues.

Companies who value having more productive, less stressed employees are responding to these statistics. According to the National Business Group on Health, 84% of 141 large- and mid-sized U.S. companies surveyed now have financial wellness programs in place for employees. In addition, financially related benefits offered through these programs are quickly expanding.

Is it time for your company to expand its employee financial benefits? If so, here are some solutions to consider:

1. Health Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)

These two very different types of accounts can easily be added to your employee benefits package. The goal of both accounts is to encourage workers to set aside money for health care costs—and to give them incentives in the form of tax benefits.

Health FSA

Employees can contribute money on a pre-tax basis to this account. They can then withdraw these funds on a tax-free basis to pay for out-of-pocket, qualified health care costs.

You can make these accounts even more attractive by matching part or all of your workers’ contributions. For 2018, employers can consider contributing a match of up to $2,650 per year to an employee’s FSA. This can give each worker up to $5,300 in combined (employer + employee) contributions to use toward qualified health care costs.

A caveat to this is that your employees have to use FSA money the tax year it’s contributed or risk forfeiting leftover funds.

HSA

This type of tax-advantaged account is only available to employees who have a high-deductible health plan (HDHP). However, because the number of Americans with HDHPs is rising quickly, HSAs stand to be a very attractive option for workers. As with an FSA, you can “sweeten the pot” by adding contributions to your workers’ HSAs.

A big advantage of HSAs is that the funds roll over from year to year. For this reason, HSAs can also do double-duty and help boost your employees’ retirement savings. Once employees are age 65 or older, they can use HSA money tax-free for health care costs (which may be higher when they’re older) or withdraw their money for any reason and pay ordinary tax rates.

2. Financial education

Some companies now offer employees basic financial literacy programs. The concept: The more knowledgeable workers are about financial issues, the more likely they may be to participate in workplace retirement programs and avoid financial mistakes that distract them at work.

For example, the U.S. Army requires all first-time soldiers to attend an eight-hour personal finance class. Office-supply chain Staples has gone a step farther and “gamified” their financial education efforts in past years. Fun-to-play video games, including “Bite Club,” Refund Rush” and “Farm Blitz,” have helped teach employees basic financial skills. The games have also encouraged workers to participate in the company’s matching retirement program and save part of their tax refunds. 

3. Student loan repayment

More than three out of five young employees who have student loan debt have difficulty taking care of other financial goals, according to the PwC survey.

Employers can help here by offering student loan repayment as a benefit to employees who stay with your company over time. Loan repayments can be spread out over several years, to encourage greater employee retention. An easy way to manage this benefit is to use a student-loan repayment benefit provider like Gradifi.

4. College savings for employees’ children

Almost three-quarters of workers who have kids under age 18 say affording college costs for their kids is their number-one financial worry, according to a recent Gallup poll.

You may be able to help relieve some of this pressure. The solution: make contributions to 529 college savings plans your employees establish for their kids. The Society for Human Resources Management (SHRM) says it’s relatively easy and inexpensive to integrate 529 plans into employee benefits programs. You can work with professional providers to offer this benefit, such as Gradifi’s College SaveUp program.

5. Financial counseling

Employees will sometimes face complicated financial issues they can’t resolve on their own. In those cases, you may be able to reduce worker stress and lost work time by offering employees free access to financial professionals. These advisors can help employees on a one-on-one basis with issues related to debt payoff, student loan repayment options and more.

For example, as part of their overall employee wellness program, Cox Communications offers employees individualized phone consultations with money coaches.

If recent changes in tax laws are prompting your company to look into new employee benefits or bonuses, consider including financial-wellness perks. The payoff could be significant—from more focused workers to employees who are better prepared to face current and future financial challenges.