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…
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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.
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.
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- 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.
