By Diane Russell, SVP Marketing, Lincoln Financial
Your company’s benefit package sends a message to your employees about what you feel is important and if you’re listening to their concerns and priorities. Get it right, and your benefits dollars will be well spent and will pay off in terms of employee satisfaction and retention. Your employees will know you’re listening — and responding — to what they are saying they want and need the most.
What employees are concerned about
The first step is to be in touch with the issues today’s employees are facing, and how those issues affect their benefit choices and work performance. We live in a time when financial stress is increasing, and health care is a significant contributor to that stress. In fact, 46 percent fear unforeseen health expenses more than any other concern.1 And that financial stress can impact employees’ health care decisions; In a 2016 study, nearly 80 percent of emergency room physicians reported treating patients who have health insurance but nevertheless chose to delay or even forgo medical care due to costs.2 When employees do decide to seek the medical care they need, many may have to make difficult decisions about where that money will come from.
One notable trend shows many Americans are funding everyday expenses by dipping into their retirement savings. In fact, 44 percent of workers surveyed said they’d most likely use money from their retirement accounts for expenses other than retirement, with 30 percent having already made one such withdrawal. 3 The top reason workers withdraw money from their retirement accounts is out-of-pocket medical expenses, with 28 percent of those surveyed withdrawing money for that reason. 4
Not surprisingly, 42 percent of American workers are concerned about running out of money in retirement.5
What employees value
There’s a clearly defined hierarchy when it comes to what employees value and seek when they choose an employer. A recent Glassdoor Economic Research study ranked 54 benefits by how much correlation they had with overall satisfaction with benefit packages — and the core benefits of health insurance, paid leave and retirement (including pensions and 401K plans) were all in the top five. These benefits, along with disability coverage, are the benefits that can really make a difference to employees’ financial security and future.
That’s because health benefits can be a prime protection against financial pitfalls such as high deductibles and coinsurance, as well as the loss of income that often comes with a prolonged recovery. Employees agree this kind of protection can strongly contribute to a feeling of financial control and well-being, and view health insurance (97 percent) and disability insurance (93 percent) as important sources of protection and security for their families. They not only value this coverage, they also expect employers to offer it, with two out of three employees expecting employers to provide disability insurance.6
Benefits make a difference7
These three key benefit areas — health insurance, retirement, and disability — are interconnected. They serve as the legs of a three-legged stool when it comes to financial wellness. If one leg is taken away, or is inadequate, the whole stool may collapse.
As we’ve noted, many workers will turn to their retirement accounts to pay for out-of-pocket medical expenses. Another reason for withdrawals is when they are out of work for a prolonged period due to a serious illness or injury. An employee’s most important financial resource, after all, is their ability to earn an income. If employees’ health insurance or disability coverages are inadequate, and an employee needs to take out a 401K loan to pay medical expenses, the impact won’t just be on today’s finances, but also their long-term financial outlook.
How can employers help?
Employers need to reach out to their employees — and truly listen to and incorporate their responses when choosing the tactics and tools that will become part of their financial wellness offerings. They need to recognize the importance employees place on the three-legged stool of health insurance, retirement and disability, and educate employees thoroughly on their options.
Optimally, this could include providing concrete examples of how everyday health occurrences can affect the current and future financial picture, and how the benefits being offered can help. When companies are trying to attract and retain talent employees, this triumvirate of key benefit solutions are an essential element when it comes to formulating successful strategies.
1 Lincoln Financial Group, “2017 Financial Focus Study.”
2 Brooke Murphy, “96% of Patients Don’t Understand Their Emergency Insurance Coverage: 6 findings from the ACEP,” Becker’s Hospital Review, https://www.beckershospitalreview.com/payer-issues/96-of-patients-don-t-understand-their-emergency-insurance-coverage-6- findings-from-the-acep.html, May 9, 2016.
3 PwC, “Employee Financial Wellness Survey,” https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html, October 2018.
4 Transamerica Center for Retirement Studies. 2015 16th Annual Transamerica Retirement Survey.
5 See footnote 3.
6 Lincoln Financial Group “2017 Employee Benefits Study.”
7 See footnote 6.