A recent data brief from the Centers for Disease Control and Prevention illustrates the growth in popularity of high-deductible health plans (HDHPs) over the past decade. Between 2007 through 2017, the CDC data show, the percentage of adults 18–64 with employer-provided health insurance who were enrolled in an HDHP with a health savings account increased from 4.2 percent to 18.9 percent, while the percentage enrolled in an HDHP without an HSA rose from 10.6 percent to 24.5 percent. In 2017, enrollment in HDHPs was highest among adults aged 30–44 than among other age demographic.
The greater an individual’s family income level and educational attainment, the more likely they were to be enrolled in an HDHP with an HSA, the CDC found, while the likelihood of enrollment in both traditional health plans and non-HSA high-deductible plans decreased as income and education rose. This may reflect a greater understanding of the investment value of HSAs among higher-earning and more educated employees.
Other recent data tells a similar story: Last year, Bank of America Merrill Lynch’s Plan Wellness Scorecard found that more employers were offering HSAs, more employees were using them, and their account balances were growing. That report also found that employees were using about 70 percent of their HSA contributions to cover health expenditures during the year and saving the other 30 percent for future expenses.
However, while the adoption of HDHPs has certainly grown over the past decade, our benefits research at Gartner shows that their popularity has been leveling off over the past three years, when deductibles for individual plans have actually been trending downward. (Gartner Total Rewards Leadership Council clients can view our full report on medical plan trends and observations for 2018 here.)
Financial wellbeing programs that help employees better manage their finances, pay down debt, and plan for retirement have become commonplace among private US employers. Employees want this kind of help and employers are increasingly eager to offer it. Bank of America Merrill Lynch’s 2018 Workplace Benefits Report, however, finds that only one third of employees are actually participating in these programs, even though many more are struggling with financial fitness, Nick Otto reports at Employee Benefit News. One potential explanation for this low level of engagement is that the financial wellness benefits employers are offering are misaligned with employees’ own priorities:
Employers tend to focus on actions to manage immediate financial needs, such as budgeting and handling expenses, according to the study. Meanwhile, employees mostly prioritize long-term financial goals, such as tactics that help them save and invest for the future. The report finds workers are looking to their employers to help manage their financial lives, shining a light on what employees seek in an employer-sponsored financial wellness program.
Employees feel the best approach to improve financial wellness is getting a personal financial assessment, supported by specific actions to take. Additionally, employees would also like help measuring their progress, through tracking and measuring of accomplishments.
Another notable finding from the report is that few employees recognize the role of health care costs in their financial planning: 7 percent identified health care as a key component of financial wellness, even though more than half said they had skipped or postponed a medical need to save money. The connection between health care costs and financial wellbeing is particularly salient in the US; for instance, many experts have promoted the use of health savings accounts as long-term savings and investment vehicles, comparable to 401(k) plans for retirement.
Prudential’s 10th annual Benefits and Beyond: Employer Perspectives on Financial Wellness survey finds that the number of US employers offering financial wellbeing benefits has grown exponentially in the past two years. This year’s study, data for which was collected in September-October 2017, finds that 83 percent of employers are offering these programs, compared to just 20 percent in the last study, conducted in June-July 2015.
In fact, Prudential’s data show that more employers offer this benefit today than the combined total of those who said they already offered it, planned to offer it, and would like to offer it in 2015. An additional 14 percent say they plan to offer financial wellbeing benefits in the next one to two years, indicating that these programs will soon be nearly universal among US employers.
Employers are also offering a wider variety of financial wellbeing programs, Prudential found: seven, on average. The most common of these include digital portals, tools and calculators to help employees measure their financial health, retirement planning assistance, and access to financial advice or advisors—though recent data from the Bureau of Labor Statistics show that only about 20 percent of US employees have access to financial advising services through their employer. Employers told Prudential that they were measuring the success of these initiatives along several metrics, including employee satisfaction, retirement plan participation, productivity gains, and ROI.
The KFC Foundation, the charitable arm of the fast food chain, is providing a new benefit for employees of both corporate-owned and franchised KFC restaurants in the US: personal finance coaching. According to a press release from the foundation, the MyChange program, offered in partnership with the mobile financial planning service company Sum180, “fosters personalized financial wellness and teaches foundational personal finance skills” to employees, combining a confidential financial wellness app with a personal adviser who can help them budget, plan, and learn more about how to manage their personal finances.
The MyChange program comes in addition to several other educational benefits KFC offers its US employees through the foundation:
MyChange joins several other KFC Foundation offerings, including Rise with GEDworks (personalized high school credential assistance), the KFC Family Fund (hardship and crisis assistance), and the REACH Educational Grant Program (college tuition assistance at $2,000, $2,500 and $3,000 award levels), rounding out the employee assistance organization to support the whole wellbeing of KFC’s restaurant employees.
Krista Snider, managing director of the KFC Foundation, tells Amanda Eisenberg at Employee Benefit News more about how the program came to life:
Just under 20 percent of American workers had access to financial planning benefits through their employer last year, the Bureau of Labor Statistics recently highlighted at its news publication, the Economics Daily. According to BLS data from last March, these benefits were more commonly enjoyed by high-earning employees, employees of larger organizations, and those in certain skilled professions:
Employees in larger establishments (100 workers or more) were three times as likely to have access to financial planning benefits as employees in smaller establishments (1–99 workers). Workers in higher wage groups were also more likely to have access to financial planning benefits as workers in lower wage groups.
Nearly half of workers in the information and finance and insurance industries had access to financial planning benefits. Fewer than one in ten workers in construction and leisure and hospitality had access to financial planning benefits.
The BLS data belies the growing interest in financial wellbeing offerings among employers in the US and globally: Surveys have found that a large and growing majority of American employers are offering some form of financial wellbeing benefit. The employer-provided or subsidized financial planning services tallied in the bureau’s Employee Benefits Survey are just one of many ways organizations can help their employees better manage their finances.
2017 was a good year for the stock market in the US, with the S&P 500 index rising 22 percent and the Dow Jones industrial average up 25 percent. This bull market has led to a spike in the value of Americans’ retirement savings accounts, which sounds like good news for the retirement readiness of the US workforce. However, Todd C. Frankel and Thomas Heath point out at the Washington Post, these huge gains are inspiring many working Americans to dip into their 401(k)s and IRAs at a hefty penalty to fund big-ticket purchases:
“I’ve seen more money requests for extraneous items in the last six weeks than I have in the last five years,” said Jamie Cox of Richmond-based Harris Financial Group, which manages $500 million in savings for about 800 middle-class families. … Cox said he is seeing more people take larger withdrawals, $20,000 to $40,000, to fund dream vacations or home improvement. …
The average annual return for 401(k)s hit 15.7 percent by the third quarter of 2017, according to Fidelity. And for most Americans, it’s these retirement accounts — 401(k), 403(b), SEP and IRA — that provide the closest evidence of a revving stock market. Retirement assets — including annuity reserves, pensions, and defined contribution plans such as 401(k)s and IRAs — exploded in the United States from $11.6 trillion in 2000 to $27.2 trillion as of Sept. 30, 2017, according to the Investment Company Institute, which represents the mutual fund industry.
In some cases, the early withdrawals financial planners are seeing reflect an irrational belief that the good times will roll on long enough for their retirement accounts to make back the money they are taking out. For others, however—especially workers approaching retirement age—the impulse to cash out comes from a fear that the stock market is overvalued and a crash is on the horizon that will wipe out their savings if they don’t get out in time.
A recent survey conducted by LinkedIn and Harris Poll examined what success means to the typical US employee today. The results underlined several trends we’ve been seeing in recent years in what employees care about the most. Corner offices and fancy titles are no longer seen as status symbols the way they once were, while employees are more interested in learning new skills, not missing out on career opportunities, and helping others succeed as well as themselves.
LinkedIn also found, however, that Americans are heavily preoccupied with paying their bills and getting or staying out of debt:
Two out of five professionals don’t list being passionate about their job as a measure of success – instead they’re in it to pay the bills (69%). And living problem-free is a top priority, as nearly three-quarters (74%) are in it not to worry about money. This motivation is helping to usher in the age of the side hustle. Whether it’s moonlighting in an art gallery or building websites on the weekends, more than one-third of professionals today (36%) find success in pursuing a passion project or side job.
Fast Company’s Rich Bellis remarks on the dark side of these findings, noting that 68 percent of men and 76 percent of women said they considered “not living paycheck-to-paycheck” a measure of success, compared to just 17 percent of women and 23 percent of men who defined success as “having material wealth.” These gender differences, Bellis suspects, are illustrative of the gender pay gap and the relatively greater financial insecurity women experience as a result. Yet it’s “a little troubling,” he writes, that most Americans would consider themselves successful just for keeping their heads above water.