4 ways employers can lessen the severity of the financial burdens ahead
Everyone has been enveloped by the health and economic crises caused by the global COVID-19 pandemic — and employees caught in the crosshairs need help. Many people are still struggling to stay afloat while maintaining productivity, caring for their families and holding onto some semblance of well-being.
As employees experience financial hardship, they naturally look to immediate changes that can increase take-home pay. Unfortunately, this leads to reductions in contributions to benefit plans like 401(k)s and HSAs, which can have significant consequences. Failing to save enough can create financial exposure that employees may be unprepared to handle, which is critical as healthcare expenses are predicted to rise.
The trend in reduced savings is not limited to 2020 coverage; this mindset is already impacting employee decisions for 2021 enrollment. In fact, a major national employer that recently completed open enrollment noted the impact on spending account elections was significant. Total healthcare FSA contributions have dropped by over 25% with only 70% of participants continuing coverage into next year, and total dependent care FSA contributions dropped by over 55% with only 43% of participants continuing their coverage into next year.
This mirrors what we’re seeing with mid-year changes, and the worry is that the trend will continue as more benefit elections are made. Through our research and work with clients, we’re finding that employers are considering new programs, but they’re even more likely to expand or remarket current offerings like spending accounts.
Here are four ways employers can optimize the benefits experience for their people: