401(k) Borrowing Isn’t Free

Have your employees been dipping into their 401(k)s to support their financial needs? Then take a look at this article by David Sherman from Employee Benefit Adviser on why employees shouldn't dip into their 401(k)s and what employers can do to help employees support themselves financially without having to use the money saved in their 401(k)s.

When dire financial need strikes, employees often tap their retirement accounts. While there are cases in which a 401(k) withdrawal makes sense, these loans should be viewed as an absolute last resort.

There are significant downsides related to 401(k) loans such as including penalties, administration and maintenance fees as well as “leakage” from retirement accounts. This occurs when an employee takes a loan on their 401(k), cashes out entirely or leaves their job and rolls over their account to their new employer.

Borrowing from retirement plans presents hazards to the employer, as well. More employers are minimizing the ability of employees to dip into their 401(k) savings by limiting the number of loans from 66% in 2012 to 45% in 2016, according to SHRM. Despite this, the bottom line is that employees need access to low cost credit.

More than 1-in-4 participants use their 401(k) savings for non-retirement needs, according to financial education provider HelloWallet. That amounts to a startling $70 billion of retirement savings that employees are siphoning away from their future.

There are hidden costs to 401(k) loans. One of the perceived benefits of a 401(k) loan is that the borrower isn’t charged any interest. That’s a fallacy: 401(k) loans typically include interest rates that are 1 to 2 points higher than the current Prime Rate plus administrative fees. While the borrower pays this money to him or herself rather than to a bank, these “repayments” don’t take into account penalty of taking money out of a 401(k) for months or years when it might have enjoyed market gains.

The downside of the interest rate is that it makes paying back the loan more difficult and this will likely lead to 401(k) leakage. In some cases, loopholes that allow employees to raid their 401(k)s before retirement reduce the aggregate wealth in those accounts by 25%. Simply put, this translates into having the most senior and highest paid employees stay on the job because they do not have enough funds in their account to retire. From an HR administrator’s standpoint, that can increase overall costs, since employees who cannot afford to retire are drawing higher-than-average salaries. And thanks to their advanced age, they also run-up costs on the employer’s medical plan.

The financial wellness alternative

Employers should offer socially responsible alternatives to borrowing from their 401k. Not only to ensure that older workers can afford to retire and make room for younger, less-expensive hires, but to ease the financial burden for employees when emergencies do happen. This should be offered as a voluntary benefit with no risk to employers. In a recent Wall Street Journal article, “The Rising Retirement Perils of 401(k) ‘Leakage’” Redner’s Markets made that leap offering a low-cost Kashable loan to its employees. It stopped leakage and offered employees of the online grocer much needed relief from financial stress.

Adding a financial wellness solution to the employee voluntary benefits package that provides access to responsible credit is a first step in untangling employees’ financials. For employees struggling with college loans and credit card debt, this financial-wellness benefit allows them to borrow when needed at a low rate. For the 35% of employees surveyed by PWC in 2016 that said they had trouble meeting their monthly household expenses and the 29% that said they had trouble meeting their minimum credit card charges each month, this voluntary program provides multiple benefits. For the employee, it is an opportunity to build or improve their credit score, and provide relief from financial stress. To the employer, it’s a risk-free solution to stop the leakage from retirement accounts.

See the original article Here.

Source:

Sherman D. (2017 June 5). 401(k) borrowing isn't free [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/401-k-borrowing-isnt-free?feed=00000152-1377-d1cc-a5fa-7fff0c920000


Rising Health Care Costs Threatening Employees’ Financial Goals

Did you know that the rising costs of healthcare could be having a negative effect on your employees' financial goals? Check out this great read by Marlene Y. Satter from Benefits Pro on how your employees' finances are being impacted by the costs of healthcare.

Employees are under financial stress — big time. In fact, 56 percent of them are stressed about their financial situation, and more than half of them say it’s taking a toll on both their ability to focus and their productivity on the job.

That’s according to the latest Bank of America Merrill Lynch Workplace Benefits Report, which finds that not only are 53 percent of stressed employees having trouble concentrating on their work, the cost of health care is a big shadow cast over workers’ financial situations. And that’s already an issue, with 43 percent of employees owning up to spending 3 or more hours a week while at the office dealing with personal financial matters.

As more employees find themselves shelling out more from their own pockets to pay health care bills — 69 percent of workers said so in 2015, but 79 percent said so in 2016 — it’s no surprise to hear that health care costs are up 10 percent since 2015. No wonder they’re stressed; salaries certainly haven’t risen to match.

Those rising health care costs are taking a bite out of most employees’ other financial goals — among workers who have experienced increasing health care costs, 56 percent are having to save less toward other objectives.

Women in particular are abandoning more discretionary spending and debt management to cover health care costs than men, with 72 percent chucking spending on recreation or entertainment, compared with 59 percent of men; 63 percent saving less for retirement, compared with 62 percent of men; and 50 percent paying down less debt, compared with 46 percent of men.

And the more expensive health care becomes, the more employees appear to appreciate employer-provided health coverage — with workers ranking health benefits as their top employer benefit (40 percent), followed by their 401(k) plan (31 percent).

Even among employees who class themselves as optimists about their financial futures, worries about health care and its cost are weighing them down. And as might be expected, money woes weigh more on women than men, even — or perhaps especially — when it comes to health care. While 52 percent of men say that becoming seriously ill and unable to work is a major concern (even larger for men than having to work longer than they planned), 58 percent of women fear illness and subsequent absence from the workplace.

And more than half of employees say that financial stress is negatively affecting their physical health. Different generations feel the effects more, with 51 percent of boomers, 56 percent of Gen Xers and 68 percent of millennials saying money worries are literally making them sick. Employers need to be aware of this and take steps to deal with it, particularly since it translates into a toll not just on workers but on the employer’s bottom line — via higher absenteeism rates and higher health care costs.

See the original article Here.

Source:

Satter M. (2017 June 1). Rising health care costs threatening employees' financial goals [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/06/01/rising-health-care-costs-threatening-employees-fin


Retirement Calculator Seen as Critical Tool

Did you know that the most impactful tool for employee financial wellness is a retirement calculator? Find out more in this article by Bruce Shutan from Employee Benefit News on why you should have a retirement calculator included in your employee benefits program.

In analyzing the financial behaviors of 67,089 U.S. employee financial wellness assessments, Financial Finesse concluded that the most impactful action was for employers to offer a retirement calculator. The 2016 Year in Review Report also suggested that they promote it to the hilt with the help of their brokers and advisers.

“Running that projection is driving other behavior,” such as changes in cash flow or higher retirement plan contributions over time, explains Cynthia Meyer, a financial planner with Financial Finesse and author of the report.

She says advisers can help spotlight the use of a retirement calculator in an educational workshop or enrollment meeting where they can detail examples or case studies involving the potential effect of this handy tool.

The report uncovered a few bright spots. More employees ran a retirement projection, which jumped to 49% in 2016 from 35% in 2015. In addition, about 60% of these employees discovered they were on track to retire comfortably while about 40% discovered they were underfunded and needed to make changes.

Another positive development was that repeat usage of workplace financial wellness programs appears to be gaining momentum. The number of employees who have done annual workplace assessments of their finances multiple times has climbed steadily since 2013 when it was just 6% to 15% in 2014, 16% in 2015 and 29% in 2016.

However, problems persist. Virtually all demographic groups were still found to have insufficient savings for a comfortable retirement. For example, while 92% of the employees studied participate in an employer-sponsored retirement plan, just 77% contribute enough to earn the full employer match.

Still, Meyer notes that packaging financial wellness content with a good retirement plan is becoming a standard practice as the movement toward a more holistic view of employee finances gains traction.

Aon Hewitt’s 2017 Hot Topics in Retirement and Financial Wellbeing survey found that 59% of employers are very likely and another 33% are moderately likely to focus on the financial wellbeing of workers in ways that extend beyond retirement decisions. Moreover, 86% of employers are very or moderately likely to communicate to their workforces the link between health and wealth.

Rob Austin, director of retirement research at Aon Hewitt, says this is an indication of “just how much I think employers still care about their employees.” It certainly bodes well for brokers and advisers who can expect to be busy in the coming years helping their clients create a strategy and build out a plan that appeals to each workforce, he believes.

Aon Hewitt’s survey, whose 238 respondents represent nearly 9 million employees, noted several other key trends. They include employers enhancing both the accumulation and decumulation phases for their defined contribution plan participants, and defined benefit plan sponsors revisiting ways they’re removing risk from their plan.

See the original article Here.

Source:

Shutan Bruce (2017 May 29). Retirement calculator seen as critical tool [Web blog post]. Retrieved from address https://www.benefitnews.com/news/retirement-calculator-seen-as-critical-tool?brief=00000152-14a7-d1cc-a5fa-7cffccf00000


HSAs on the Rise, but Employees Need to Know More About Them

Are your employees aware of the many benefits and features associated with HSAs? Check out this great article by Marlene Y. Satter from Benefits Pro on why it is important employees are knowledgeable about HSAs, so they can prepare for their health care expenses while planning for retirement.

According to Fidelity Investments, health savings accounts — and the assets within them — are rising quickly, as both employers and employees try to find ways to pay for health care. Still, a number of the features of HSAs are still underutilized.

While Fidelity says that assets in its HSAs rose 50 percent in the past year, now topping $2 billion, and the number of individual account holders rose 46 percent during the same period to 657,000, it points out more work still needs to be done on showing employees the advantages of such accounts.

Since it’s estimated that couples retiring today could need $260,000 — perhaps even more — to cover their health care costs during retirement, the need for a way to save just for health care expenses, aside from other retirement expenses, is becoming more urgent.

HSAs offer a tax-advantaged way to set aside more money than a retirement account alone provides — and people who have both tend to save more overall, with 2016 statistics indicating that people who had both defined contribution and HSA accounts saved on average 10.7 percent of their annual income in the retirement account. Those with just a DC account saved on average 8.2 percent in it.

People are mostly satisfied with HSAs — 80 percent say they are, while 76 percent are satisfied with the ease of using it HSA for medical expenses, 77 percent with the quality of their health care coverage and 77 percent with how the plan helps them manage their health care costs.

But that doesn’t mean they’ve got all the ins and outs figured out yet; 39 percent mistakenly believe that they’ll lose unspent HSA contributions at the end of the year. Yet unlike contributions to health flexible spending accounts (FSA), unspent contributions to HSAs roll over from year to year.

Still, employees are learning that HSAs can provide them a means of saving that’s not restricted to cash. While it’s still not common, more people are putting HSA money into investments that can then grow toward covering longer-term health expenses, but employers, says Fidelity, can do more to educate workers on such an option. Nationally, only 15 percent of all HSA assets are invested outside of cash.

See the original article Here.

Source:

Satter M. (2017 May 26). HSAs on the rise, but employees need to know more about them [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/05/26/hsas-on-the-rise-but-employees-need-to-know-more-a?ref=hp-news


Employees Look to Employers for Financial Stability

Do your employees depend on their pay and benefits for their financial security? Find out in this great article by Nick Otto from Employee Benefit News on what employees depend on from their employers to support their financial well-being.

As the American dream of financial security continues to slip out of reach for many U.S. workers, employers — seen as trusted partners by employees — will need to step up to restore faith in retirement readiness.

Only 22% of individuals described themselves as feeling financially secure, Prudential says in its new research paper, and there is growing acceptance among employers that there is significant value in improving employees’ financial wellness.

Aspirations are modest, says Clint Key, a research officer in financial security and mobility at The Pew Charitable Trusts. Between economic mobility or financial stability, an overwhelming 92% of workers say they want stability.

“Four in 10 don’t have the resources to pay for a $2,000 expense,” he said Tuesday, at a joint financial wellness roundtable sponsored by Prudential Financial and the Aspen Institute in Washington, D.C. More alarmingly, employees don’t have the income to last a month if they were to lose their job.

Still, Key adds, it isn’t so much the number of dollars in the bank, but the peace of minds that savings buy them.

And employers are feeling the repercussions of the growing stressors in the workplace.

“People who are stressed about finances are five times more likely to take time off from work to deal with personal finances,” added Diane Winland, a manager with PricewaterhouseCoopers. “Three to four hours every week go to handling personal finances, and these employees are more likely to call out sick from work.”

The security levers once in place, such as home equity, are going away and it’s becoming much more difficult for workers to handle a financial emergency, she added.

The good news, however, is employers get it, she said. “They understand employee financial wellness is tied to the bottom line and it behooves them to invest in their employees,” said Winland. “The conundrum is how to deploy and what to deploy in their programs. Is it counseling? Coaching? Is it a new snazzy app that comes out. The key is there is no silver bullet.”

So, what is there to do?

Each employer has a unique business model and employee base, and, therefore, faces different challenges when implementing a financial wellness approach, Prudential’s paper notes. “Employers should design financial wellness programs that are informed by insights into the unique financial needs of their employees, successfully educate and engage employees, and help employees take concrete actions to improve their financial health. We encourage employers to discuss financial wellness with their benefit consultants or advisers.”

And, added Robert Levy, managing director at the Center for Financial Services Innovation, just talk to your employees. “They’re open to discussing their financial challenges,” he said, and employers can engage these conversations through numerous ways: surveys, one-on-one talks, focus groups.

Prudential stepping up

To try to change the current unease in financial security, Prudential Tuesday also announced its expansion of worksite tools for employers to enable them to analyze the financial needs of their workforce and offer the employees a personalized interactive experience that includes videos, tools, webinars and articles that empower them to manage their financial challenges.

In addition, Prudential has launched a $5 million, three-year program in partnership with the Aspen Institute — a Washington, D.C.-based, non-partisan educational and policy studies organization — to promote employees’ financial security.

“The investment highlights the need to increase the national discourse about greater economic access for employees as they bear increasing risk and responsibility for their short-term and long-term financial security,” said Prudential.

See the original article Here.

Source:

Otto N. (2017 May 18). employees look to employers for financial stability [Web blog post]. Retrieved from address https://www.benefitnews.com/news/employees-look-to-employers-for-financial-stability


CenterStage...The Experts Weigh In

5 Main Benefits of Self-Funding

Simply put, a Partially Self-Funded health plan is just an alternative, and often times more effective way of financing your employer sponsored health plan. Outside of “How does it work?” the questions that are most frequently asked are regarding the risks involved with this strategy and limiting the employer’s exposure. It was once thought that partially self-funding your health plan was reserved for only large employers. Employee Benefit Research Institute (EBRI.org) reported that in 2015 there was a 36.8% increase in private sector employers moving to partially self-funding. We don’t see the use of this strategy slowing down any time soon. It’s all about building the self-funded plan the right way in order to reduce the risk, while at the same time creating opportunity for savings.

A well designed self-funded plan built by a knowledgeable advisor will result in healthier employees and money saved over time. The opportunity for nearly all size employers is substantial. Whether your company is large enough to be completely self-funded, or are mid-size and need stop loss, or are smaller and can take advantage of a level-funding type plan, there are self-funding opportunities for all size employers.

In this article, Scott Smeaton shares his insights on what makes self-funded plans beneficial and what Hierl can do to help.

Scott Smeaton, Executive Vice President

“My advice to anyone who is considering moving to a self funded plan from a traditionally funded plan is that it’s not a one year strategy,” said Scott Smeaton, Executive Vice President of Hierl. “Take the time to find a knowledgeable advisor who will help you understand the risks and opportunities with self-funding, and commit to it for at least three years."

1. Financial Control

The most significant benefit of self-funding is the resulting increased financial control. Self-funded plans often times improve cash flow as funds that would otherwise be held by the insurance carrier for unreported or pending claims are free for use. With a self-funded plan, employers have access to detailed reports and documentation of how every health plan dollar is spent. “We’ve all heard the phrase, we can’t manage what we can’t measure”. Self-funded plans provide access to information that we otherwise would not have.

2. Lower Costs

While traditional fully insured plans allow for a guaranteed monthly cost, meaning the premium stays the same month to month, self-funded plans provide greater flexibility where you only pay for what you use. The disadvantage of a traditional plan is that in a year that the claims and administrative expenses are less than the premium an employer paid – none of that money will be refunded back.

With a partially self-funded plan, you will have administrative and stop loss insurance expenses that will be about 20% of your total budget. The other 80% is purely claims. If at the end of the year your claims were lower than expected, the employer realizes the savings. In a year when claims exceed what is expected, we have stop loss insurance to protect the employer and its employees.

“Wellness efforts and self-funded benefit plans can often work hand in hand in reducing your annual health plan costs,” explained Scott. “I often tell employers who are currently fully insured and have experienced low claims cost that if you believe you can have a positive impact on the health and wellbeing of your employees, then a self-funded plan will be perfect for you because you will be rewarded for wellness efforts and initiatives.”

3. Increased Flexibility

Self-funded plans provide employers the flexibility to design a health benefit plan that addresses specific employee needs as well as company objectives. When compared to traditional plans, self-funded plans allow you to choose your own partners and plan designs. Whether it’s the provider network, the prescription benefit manager, utilization management or centers of excellence manager, vendors can be hand selected from national provider networks to incorporate in the program.

A fully insured plan is required to meet state mandates, state premiums taxes, and ACA taxes among other expenses. Self-funded plans are not subject to the state mandates and either avoids or minimizes many of the taxes.

4. Control Over Plan Design

A downside of traditional plans is being required to select an off-the-shelf plan that your insurance carrier offers.

“One of the things we are doing with our self-funded plans is designing our plans in a way that drives employees to seek out the highest quality but lowest cost providers within their provider network. Provider discounts are great, but there’s even more savings to be gained by creating incentives to seek care from these highest quality, lowest cost providers within that network. Employees are beginning to understand the importance of being better healthcare consumers and it’s paying off. When this happens, it’s only in a self-funded environment that you see the maximum savings from these efforts,” said Scott.

5. Information Management

Self-funded plans provide convenient, secure access to all the necessary information needed to effectively manage plan structure. With a self-funded plan, you can:

  • Track and report data regularly: tracking data allows monthly or quarterly patterns to be detected and acted upon accordingly. Proactive data tracking helps employers stay on top of what is coming next.
  • Utilize predictive plan modeling: past and current claim data can be used to analyze risks and forecast costs allowing for spending waste to be eliminated.

How can Hierl help?

If an employer is moving to a self-funded plan for the first time, Hierl walks clients through a simple process beginning with a risk tolerance analysis to be sure that the plan design keeps the client within their comfort level. From there, Hierl assists with finding a product and design that meets a client’s specific needs. Whether this is a level-funded plan, a captive self-funded plan that limits exposure, or a stop-loss plan that will refund any excess premium at the end of the year, an expert will help determine the best plan for the employer and their employees.

Hierl’s Self-Funded Renewal 101

Here’s an example of the process Hierl guides fully insured clients through as they transition to selffunding. For more information or assistance reach out to an expert at Hierl today.

  • 9-6 months before renewal - Hierl walks clients through all the components of how self-funding works (Self-Funding 101).
  • 6-7 months before the renewal - Hierl facilitates interviews with TPA (Third Party Administrators) in order to select the TPA that best meets the client’s goals and objectives.
  • 5-6 months before renewal - Hierl provides benefit modeling to illustrate self-funding plan design and financial projections in order to compare it to the current fully insured plan.
  • 2-4 months before renewal – Implementation and enrollment is completed.

To download the full article click Here.


Millennials are Saving for 'Financial Freedom,' not Retirement

Did you know that more millennials are skipping saving money for their retirement? Take a look at this interesting article by Marlene Y. Satter from Benefits Pro on how millennials are focusing on saving for their lifestyles instead of retirement.

Well, at least millennials are saving.

According to the Spring Merrill Edge Report from Bank of America Merrill Edge, 63 percent of millennials are socking it away in the name of financial freedom: the amount of savings or income they need to live the lifestyle they want.

GenXers and boomers, on the other hand, are saving up to get out of the workplace—with 55 percent of them working toward that goal.

Younger people are apparently being driven by FOMO—or fear of missing out, with their top goals a dream job ((42 percent, compared with 23 percent of older workers) and traveling the world (37 percent, compared with 21 percent of older workers).

Millennials have also relegated marriage and parenting lower down on the priority list, with just 43 percent looking forward to wedding bells, compared with 51 percent.

Those aren’t the only things they’re focusing on. That FOMO mindset is also driving millennials to spend now on traveling (81 percent), dining out (65 percent) and exercising (55 percent). Interestingly, however, they’re still managing to save more than older generations, with 36 percent stashing more than 20 percent of their annual salary.

Of course, that doesn’t mean that everyone is doing a bang-up job of saving money; overall, 42 percent of respondents are saving less than 10 percent of their salary, and 7 percent don’t save at all.

And many lack confidence in being able to cope with “what-if” scenarios: 71 percent are not very confident they could hit financial goals in the event of a divorce (although just 5 percent are planning for the possibility), 64 percent don’t think raising a family goes hand in hand with financial success, and just 23 percent are saving for a family; and 48 percent are not very confident about achieving their goals if they outlived their significant other.

They’re apparently not all that sanguine about financial wisdom, either with 48 percent believing that financial education should be a requirement. Not a bad idea—particularly since 29 percent of respondents believe that, in the future, 401(k)s will not be the “gold standard” in retirement investing.

See the original article Here.

Source:

Satter M. (2017 May 19). Millennials are saving for " financial freedom" not retirement [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/05/19/millennials-are-saving-for-financial-freedom-not-r?ref=hp-top-stories


Advisers Seek a Tech Solution to Financial Wellness

Have you been looking for a new solution to increase your client's investment into their financial well-being? Check out this great article by Cort Olsen from Employee Benefits Advisors on how advisers are using technology to help their clients invest in their financial wellness.

With many employers taking advantage of wearable wellness devices such as Fitbits and Apple Watches, advisers and consultants say they would like to see a similar platform that will efficiently monitor a person’s financial wellbeing.

“For physical wellness there are health assessments like biometric screenings to gather information and then there is the wearable data that tells people where they need to be to stay on track with their health goals,” says Craig Schmidt, senior wellness consultant for EPIC Insurance Brokers & Consultants. “The difference with the financial piece is that there isn’t a way to track users’ spending habits or monitoring their retirement funding to make their financial status more budget friendly.”

While Schmidt says he has not been able to find a platform that monitors financial status at such a personal level, John Tabb, chief product officer of Questis, has put together a platform that manages to gather data and make suggestions on what employees should be focusing their investments on such as paying off student loan debt or investing in their Roth IRA.

Tabb estimates that there are roughly 30 companies that call themselves financial wellness firms but adds that none of them are “holisitic.” “Not to say that they are not good, but there are only a handful of companies that can allow advisers at financial institutions to utilize their platform as a tool,” he says.

Saving for retirement vs. paying off student debt
Shane Bartling, retirement consultant for Willis Towers Watson, says they have developed a program with their clients that addresses gaps in the market and increases the value of the overall lineup of financial well-being services offered by employers generally around retirement readiness.

“As a result of requests from clients and the needs we have identified with our consulting work, we have built out a technology solution to compliment the line-up of other resources that clients have available,” Bartling says. “We wanted to find the indicators of poor financial wellbeing in the workforce, how to measure it and then how do we engage the parts of our workforce that are going to see the highest value from the resources we are providing.”

The WTW program offers clients an initial assessment from an adviser to determine where employees are struggling the most with their finances. “There is a way to look at behaviors employees are signaling when they are in a poor financial situation,” Bartling says. “They begin to do things like using loans, taking hardship withdrawals and then ultimately you see issues like wage garnishment tend to pop up on the radar and are opting out of the 401(k).”

SoFi has expanded its business focus from student loan refinancing firms into the workspace by helping employers offer a student loan repayment benefit.

“Looking at the employee benefits space today, student loans are generally a pretty big hole in most employers benefit offerings,” says Catesby Perrin, vice president of business development at SoFi. “The main stays of employee benefit offerings are healthcare and 401(k), which we all know are essential, but in many respects don’t address the most pressing financial concerns of the largest demographic in the workforce, which are millennials.”

Perrin adds that 401(k) and other forms retirement saving is imperative for everyone in the workforce, however retirement is not a top priority for millennials due to other financial stressors that are taking place in their day-to-day lives.

“As great as a 401(k) is and how important it is intrinsically, if you have $500 or $800 a month due in student loan payments, which is totally plausible for somebody coming out of undergrad today, the 401(k) is a total luxury,” Perrin says. “Most employers are not doing much about student loan problem, so we are offering two primary benefits today for employers… a student loan refinancing benefit and a benefit set for employers to help pay down the principle balance of their employee’s loan.”

Alternative tech gaining traction
One option is the increasing popularity of mobile push notifications. Ayana Collins, wellness consultant out of EPIC’s Atlanta office, says she is seeing a greater response from users who utilize these alerts on their smartphones to view wellness tips and strategies that they may not read if they are delivered in the form of an e-mail.

“Employees receive thousands upon thousands of e-mails and one more e-mail coming from HR or from a wellness company may not be opened,” Collins says. “If they receive a push notification from their mobile phone they are more likely to check out what financial wellness tips we are sending to them.”

Privacy invasion?
Meanwhile, new legislation determining how wellness plans are regulated has sparked a renewed interest in finding a streamlined financial wellbeing platform.

Shan Fowler, senior director of employer portfolio and product strategy at Benefitfocus, says legislation such as the Employer Participation in Repayment Act and the Preserving Employee Wellness Programs Act, will help fuel the creation of a financial wellbeing platform.

“Financial regulation is very similar to healthcare regulation,” Fowler says, “due to so many branches that are contingent with legislative support. Seeing bipartisan support for this national epidemic [has me feeling] very optimistic.”

However, employees may not be as enthusiastic. Many workers are concerned about the level of data employers could have access to, seeing it as an invasion of privacy, Fowler adds.

“I think you need to put yourself into the shoes of the employee and ask if I want my company to have access to my personal information,” he says. “That speaks to that very fine line employers have to walk of having their employees’ best interests in mind, but not going too far into a ‘big brother’ mentality.”

Tabb says that while the Questis platform does offer individual advice on financial direction based off an initial assessment, the data collected is stored in an aggregate form that protects employees’ personal information from being viewed by their superiors or colleagues.

“If the employer wants some data, they are going to pay for it to help them make decisions, but it is all on an aggregate level,” Tabb says. “There is certainly a perception that needs to be addressed to ensure employees that their data is safe and that nothing is being shared with their employer that does not need to be shared.”

Both Bartling and Perrin also say their platforms offer data to employers only in an aggregate form to give them an idea of how many employees are utilizing the benefit and also the projected success rates, but when it comes to the personal finances of each individual employee, security is in place to ensure private financial information is protected.

EPIC’s Collins says no matter what branch of wellness an employer invests in, whether it be financial, physical or mental, there needs to be a reason behind the technology that they are using. If there is no payout for the employee, there will be no demand to carry the program.

“There has to be a ‘so what’ behind it,” Collins says. “If the employer is just doing a simple challenge with nothing behind it, people are not going to gravitate toward it, because it doesn’t create a moment where the users discover an improvement to themselves. That is the whole point behind wellness.”

See the original article Here.

Source:

Olsen C. (2017 May 11). Advisers seek a tech solution to financial wellness [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/advisers-seek-a-tech-solution-to-financial-wellness


3 HSA Facts Employers Need to Know

With the passing of the AHCA, HSAs are on the verge of changing as we know it. Take a look at this informative article from Benefits Pro about what changes to HSAs means for employers by Whitney Richard Johnson.

Health Savings Accounts offer employers a way to help employees with health care costs without being as involved as they might be with, say, a Flexible Saving Account. But what are some other advantages?

And what are employers' responsibilities? Although employers will want to research more indepth about HSAs, here is a quick look at some basic HSA questions and answers:

#1: What are the advantages to an employer of offering an HDHP and HSA combination?

The benefits of offering employees an HDHP and HSA vary dramatically depending upon the circumstances. A major strength of offering an HSA program is flexibility.

Employers can be very generous and fully fund an HSA and also pay for the HDHP coverage. Alternatively, employers can also use the flexibility of the HSA to allow for the employer to reduce its involvement in benefits and put more responsibility onto the employee.

Generally, employers switch to HDHPs and HSAs to save money on the health insurance premiums (or to reduce the rate of increase) and to embrace the concept of consumer driven healthcare. The list below elaborates on strengths of HDHPs and HSAs.

Lower Premiums. HDHPs, with their high deductibles, are usually less expensive than traditional insurance.

Consumer-driven health care. Many employers believe in the concept of consumer-driven healthcare. If an employer makes employees responsible for the relatively high deductible, the employees may be more careful and inquisitive into their health care purchases. Combining this with an HSA where employees can keep unused money increases employees’ desire to use health care dollars as if they were their own money – because it is their own money.

Lower administration burden. Given the individual account nature of HSAs, much of the administrative burden for HSAs is switched from the employer (or paid third-party administrator) to the employee and the HSA custodian as compared to health FSAs and HRAs. This increased burden on the employee comes with significant perks: more control over how and when the money is spent, increased privacy, and better ability to add money to the HSA outside of the employer.

Tax deductibility at employee level. The ability of employees to make their own HSA contributions directly and still get a tax deduction is advantageous. Although it is better for employees to contribute through an employer, an employee can make contributions directly. An employer may not offer pretax payroll deferral or it may be too late for an employee to defer. For example, an employee that decides to maximize his prior year HSA contribution in April as he is filing his taxes can still do so by making an HSA contribution directly with the HSA custodian.

HSA eligibility. Becoming eligible for an HSA is a benefit that also stands on its own. Although not all employees will embrace HSAs, savvy employees that understand the benefits of HSAs will value a program that enables them to have an HSA.

#2: What are the employer responsibilities regarding employee HSAs?

If an employer offers pretax employer contributions, then the employer has the following responsibilities:

Make comparable contributions. If the employer is making a pretax employer contribution (nonpayroll deferral), it must do so on a comparable basis.

Maintain Section 125 plan for payroll deferral. If the employer allows pretax payroll deferral, then the employer must adopt and maintain a Section 125 plan that provides for HSA deferrals. This includes collecting employee deferral elections, sending the deferred amount directly to the HSA custodian, and accounting for the money for tax-reporting purposes.

HSA eligibility and contribution limits. Employers should work with employees to determine eligibility for an HSA and the employee’s HSA contribution limit. Although it is legally the employee’s responsibility to determine his or her eligibility and contribution limit, a mistake in these areas generally involves work by both the employer and the employee to correct. Mistakes are best avoided by upfront communication. Also, the employer does have some responsibility not to exceed the known federal limits. An employer may not know if a particular employee is ineligible for an HSA due to other health coverage but an employer is expected to know the current HSA limits for the year and not exceed those limits.

Tax reporting. The employer needs to properly complete employees’ W-2 forms and its own tax-filing regarding HSAs (HSA employer contributions are generally deductible as a benefit under IRC Section 106).

Business owner rules. Business owners generally are not treated as employees and employers need to review HSA contributions for business owners for proper tax reporting.

Detailed rules. There are various detailed rules that fall within the responsibility of the employer that are too numerous to list here but include items such as: (1) holding employer contributions for an employee that fails to open an HSA, (2) not being able to “recoup” money mistakenly made to an employee’s HSA, (3) actually making employer HSA contributions into employees HSAs on a timely basis, and (4) other detailed rules.

#3: How do employers switching from traditional insurance to HDHPs explain the change to employees?

Although there is no certain answer to this question, a straight-forward and honest approach to the change will likely work best.

Changing from traditional insurance to a high deductible plan with an HSA can be significant because employees likely face a higher deductible (although traditional health plan deductibles have been increasing to the point they are close to HDHPs).

Often the largest obstacle to the change is that employees feel something is being taken away from them. An employer that can show that the actual dollars contributed by the employer are level, or increased, versus the previous year helps a lot – especially if the employer makes a substantial HSA contribution for employees.

If the employer is making the change to reduce its health care expenses, then the employer will have to explain and justify that change to employees to get employees’ support for the change (e.g., the business is in a tough spot due to a difficult economy, etc.).

Depending on the facts, the change will likely be an improvement for some employees and HSA eligibility provides benefits to all employees. Some specific benefits include the following:

Saving money. The HDHP is generally significantly less expensive. Depending upon the circumstances, this fact often saves not only the employer money but also the employee. Highlighting the savings will help convince employees the change is positive. Although an actual reduction of the employee’s portion of the premium expense may be unlikely given increasing health insurance premiums, explaining that without the change the employee’s portion of the premium would have increased by more will help reduce tension.

Tax savings. The HSA enables tax savings. For some employees these tax savings are significant.

Control. HSAs give individuals control over their money and accordingly their doctor and treatment choices.

Flexibility. An HSA is very flexible and allows for some employees to put aside a large amount and get a large tax benefit. For those that prefer not to do so, the HSA allows that as well. Plus, even better, the HSA allows employees to change their mind mid-year. If an employee believes they are not going to need any medical services, the employee needs to contribute only a minimum deposit to an HSA. If it turns out that the employee does incur some medical treatment, the employee can contribute at that time and still get the tax benefits. Employees are often frustrated by HSA rules because of some confusion, but when explained that the rules are very flexible they appreciate HSAs more.

Distribution reasons. HSAs allow for more distribution reasons than FSAs: namely to pay for health insurance premiums if unemployed and receiving COBRA, to pay for some health insurance premiums after age sixty-five, to use for any purpose penalty-free after age sixty-five, to carry forward a large balance, and more.

See the original article Here.

Source:

Johnson W. (2017 May 11). 3 HSA facts employers need to know [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/05/11/3-hsa-facts-employers-need-to-know?kw=3+HSA+facts+employers+need+to+know&et=editorial&bu=BenefitsPRO&cn=20170514&src=EMC-Email_editorial&pt=Benefits+Weekend+PRO&page_all=1


Why Technology is Key to Financial Wellness Success

Are you trying to help your employees become successful and financial stable? Here is a great article from Employee Benefits News on how employers are figuring out that technology is key to helping their employees achieve success in their financial well-being by Kathryn Mayer.

Financial literacy is an increasingly desirable benefit for employees. But many employers don’t offer budgeting assistance, and a majority of workers are reluctant to let their company get involved in their financial business.

Dean Harris realized that in order to make financial wellness appealing to both employers and employees, he had to design technology that delivered flexible, multi-layered and comprehensive financial education in a way that’s enjoyable for the user — and ensures privacy. The chief technology officer of iGrad — a technology-driven financial wellness education company — created and maintains the iGrad and Enrich platforms, which deliver choices to make financial wellness the backbone of any benefit program. The product aims to offer financial wellness benefits with minimal cost and time to the employer.

“Financial literacy empowers workers to take control of something they feel is out of their control,” says Harris, a 2017 recipient of an EBN Benefits Technology Innovator Award. “By offering more information and knowledge, they are better equipped to make the right financial choices that promise to have far-reaching positive effects.”

By applying data analysis on the behavior of the user both within the platform and with regard to his approach to money, the platforms offer responsive content and recommendations. As the user’s skills and knowledge increase, the algorithm adjusts accordingly to provide newer and more relevant content leading to increased engagement and learning possibilities.

Technology is vital in achieving financial goals, Harris says, in part because it provides employees the privacy they desire.

“Financial literacy is a delicate subject. Most people are not comfortable discussing their finances —especially not with their employer,” Harris explains. “The online financial literacy platform offers the personalized and self-guided learning that will help them without exposing their personal financial information to their employer.”

Furthermore, topics addressed through the platform provide “interest, engagement and learning” for employees, Harris says. And employers “gain the benefit of a newly focused and re-energized workforce without having to drill down into areas that are too personal.”

“Ultimately, technology has made it possible for everyone to gain access to the help they need while maintaining privacy and discretion,” Harris says.

See the original article Here.

Source:

Mayer K. (2017 May 9). Why technology is key to financial wellness success [Web blog post]. Retrieved from address https://www.benefitnews.com/news/why-technology-is-key-to-financial-wellness-success