Employee benefits programs can both positively – and negatively – impact your employees’ income. Employees need more than just good pay. During an employee’s tenure, they will have planned and unplanned expenses. This is why it’s important they are educated on how to best utilize their benefits to manage their out-of-pocket costs and prepare for unexpected expenses. Financial stress can lead to less than desirable outcomes for an employer when employees may use work time to handle personal business, or simply have less focus on work-related tasks due to financial stress outside of work. There needs to be careful consideration given the short-term cashflow versus longer term coverage needs which may arise. Taking a holistic view to benefits and programs that can provide a more supportive environment can help them not only feel more prepared, but also help your organization with both retention and recruitment.
Areas where your organization can support employees in protecting their income including providing spending and savings accounts. Both options offer a tax-advantaged approach to paying out-of-pocket expenses for medical, pharmacy, dental, and vision. These accounts include Flexible Spending Accounts (FSAs), Dependent Care FSAs, Limited Purpose FSAs, and Health Savings Accounts (HSAs). In addition, there are other programs that expand their coverage such as supplemental life insurance, medical supplement plans (also known as worksite or voluntary), and disability coverage among others.
Medical supplement plans give employees coverage for unexpected costs arising from injury or illness. In recent years, employers have had to increase their medical plan deductibles and out-of-pocket costs to manage plan spend. This has put a heavier financial burden on employees.
Disability coverage provides income in the event an employee becomes injured or faces significant health issues and is unable to work. When implementing disability coverage, it’s important to consider what replacement ratio will provide sufficient income to ensure employees can focus on recovery and return to work without added financial stress. However, highly compensated employees typically do not receive sufficient coverage under a group disability plan, as their income exceeds the monthly payment cap. Exploring executive disability coverage to address this gap in executive income replacement may help you provide income protection for this segment of your valued employees.
Financial literacy resources not only serve employees, but your organization as well. Providing employees with education and resources to help them accomplish their financial goals can increase employee loyalty and contribute to career longevity.
Income protection is just one of the five key employee benefit program pillars that contribute to a thriving workplace. Learn more about the pillars in our white paper, Five Pillars of Well-Being – A Strategic Approach to Employee Benefits for a Thriving Workforce, or visit us at risk-strategies.com for more employee benefits insights and resources.
With more than 10,000 clients managed in our National Employee Benefits Practice, Risk Strategies delivers the high-quality, cost-effective, and compliant benefits programs and solutions employers need and employees value.