Q&A: 6 links between physical and financial health.
What should employers be doing to calm financial fears and support employees' financial well-being? Why are HSAs and HRAs needed to help buffer employees from short-term expenses and prepare them for future financial obligations? How might businesses take a more holistic view of employee benefits?
LifeHealthPro elicited answers to these questions during a Q&A with Steven Nyce, director of research and innovation center at Willis Towers Watson, a global multinational risk management, insurance brokerage and advisory company; and Carlos Hernandez, vice president of strategic alliances of Acclaris, a provider of technology and services to support account-based healthcare plans.
A recap of the interview follows...
See also: Third of U.S. workers participate in employer-based wellness programs Employers not helping with employee retirement challenges
LHP: Why does financial health matter?
Nyce (pictured at right): A highly engaged workforce can be an organization's greatest asset, and companies have long understood that there is a strong connection between healthy employees and improved productivity. However, there are many facets of well-being.
There is no denying the mind/ body connection; stress can create significant health issues. Likewise, financial hardships can not only be an emotional burden, but can also distract employees from being at their best each day.
According to the Willis Towers Watson Global Benefit Attitudes Survey 2015/16, employees with financial issues tend to be more stressed, less healthy, and miss more days of work, negatively impacting work engagement and overall performance. Facing stagnant salaries and a millennial workforce that is carrying amounts of student loan debt never seen before with previous generations, American workers are understandably concerned about their financial situation. And they are bringing these anxieties into the workplace. In fact, the World Health Organization estimates that stress costs the American economy more than $300 billion annually.
See also: The big political debate over the Employer Health Tax Exclusion
LHP: Wouldn't this be covered within a standard wellness program?
Hernandez (pictured at right): Employers now recognize the need to balance physical, emotional and financial health. They are broadening the scope of their existing benefits programs to include financial well-being support. This includes placing a greater emphasis on available account-based health plans such as HSAs (health savings accounts) and HRAs (health reimbursement arrangements) to help employees buffer themselves from short-term expenses and prepare them for future financial obligations.
* HSAs are becoming part of overall well-being programs and carry many perks: The money moves with the employee from job to job;
* There is no use-it-or-lose-it deadline, and;
* The funds in the account can be used penalty-free for medical costs today or thirty years from now.
See also: How has PPACA affected people's health?
LHP: What should employers be doing to calm financial fears and support employees' financial well-being?
Nyce: Employers need to help their employees better understand how HSAs can serve as a reliable solution to overcome financial challenges. In the same Willis Towers Watson survey I mentioned earlier, we found that only one out of 10 employees think about their HSA as a long-term investment vehicle. Instead, it's commonly viewed as a short-term spending account.
This is a missed opportunity to build a buffer to absorb shocks associated with unexpected health care expenses and, for those more fortunate, to accumulate additional tax-efficient funds for later in life. Clearly, more education is needed on how HSAs can address both short-term and long-term financial scenarios.
Beyond the short-term advantages as a tax efficient savings tool, HSA accounts are also an investment vehicle to accumulate money for the health care expenses they need to manage in retirement. By incorporating HSAs as a financial planning tool coupled with 401K plans, for instance, employees can see their investment assets continue to grow and take comfort in their newfound financial stability.
See also: Tech exec: Decision support tools can keep benefits brokers in game
LHP: Given all of the advantages, why aren't employees using the HSA and HRA accounts already available to them?
Hernandez: Many employees are simply unsure of where to start and get stuck in analysis paralysis. They don't know how to answer core questions about how much money they will need for retirement health care costs, when/how they should use the available funds, how to manage account-based health plan contributions, etc. Instead of selecting a plan suited to their individual needs, they often avoid the opportunity all together or embrace a conservative planning approach. This is a fundamental change in the way people manage and view their health and financial planning. But it is painfully clear that employees are confused.
Our Consumer Survey found that 92 percent of industry insiders rate consumer understanding of HSAs and HRAs as "mediocre" or "poor," while 40 percent called out HSAs as the most difficult type of plan to understand. There is a tremendous opportunity for employers to provide educational tools and events to help employees overcome the initial HSA learning curve so they can better understand (and enjoy) the value that they offer.
Employees want to receive helpful information throughout the entire benefit process -- before, during and after enrollment. Ongoing communication is critical throughout the year, and especially in advance of any new program rollout. I've seen employers successfully use lunch-and-learns, webinars and other live events to help prepare employees for HSA rollouts.
In addition, smart employers often identify and designate employees to enlist as coaches for their peers; the coaches are given in-depth training and support so they can be advocates and build momentum. Management must empower employees with knowledge about their options to fuel long-term participation.
See also: 3 in 10 Americans would likely share tracker data with insurers
LHP: What can companies do to encourage participation in these programs?
Nyce: When it comes to their account-based health plans, employees now expect ongoing communication, as well as accurate and up-to-date information, easy-to-use technology that creates a consumer-grade experience, simple transactions, and quick reimbursement -- meaning days, not weeks. In exchange, employees are increasingly allowing administrators and employers to take a more active role in their health journey by sharing personal details about their health and financial status.
The good news is that once employees are engaged and have connected with their employer, they tend to stay engaged. This gives employers an opportunity to help them learn and make smarter choices, which in turn bolsters their confidence in the program and all of the available financial tools. Together, employees and employers can meet each employee's specific health and financial needs.
See also: Behavioral finance: Getting workers to do the right thing
LHP: How will these programs change in the years ahead?
Hernandez: The biggest mistake would be to assume that everything will be the same, both over the years and throughout a population of employees. Most employee bases are heterogeneous, so their needs will vary.
It will be increasingly important to communicate value points that address the needs of each employee group. Organizations need to take a more holistic view by looking at how the employee population will shift and grow over time.
Organizations should also incrementally build out their benefits program, including HSAs and HRAs. They must proactively help employees better understand the benefit landscape and guide them towards the best options for their individual needs. By placing greater emphasis on the available benefit options, employers can directly address employees' financial concerns and help them make smarter financial health decisions.
One thing that never changes is that successful organizations put their employees first. Therefore, the goal should always be to support a healthy, happy, productive workforce.
See also: How to become a smarter, savvier & scrappier broker
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|Publication:||National Underwriter Life & Health Breaking News|
|Date:||Jun 28, 2016|
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