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In the past year we have seen many businesses facing widespread labor shortages. This, combined with historic low unemployment, means that employers need to take action now to attract and retain employees.
One area to consider changes is in benefit offerings. While the labor shifts across the United States currently being dubbed "The Great Resignation" is driven by a diverse range of factors, according to a recent survey by Pew Research Center, roughly half surveyed cited benefits as either a "major" or "minor" reason why they quit a job during 2021.
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A well-designed health benefits plan can aid businesses in meeting their objectives by improving a company's bottom line as well as attracting and retaining the best talent. We have seen that when an employer improves employee engagement with their benefits, it ultimately improves the financial wellness of not only an employee but also of the business itself. This focus on driving outcomes for employees is an encouraging trend. The right plan design with the right benefits accounts and employee communications plan increases employees' retirement readiness and job satisfaction along with employers' tax savings.
To be best positioned in an aggressive labor market, employers should consider three key elements when evaluating their benefits offerings:
1. Reposition Health Savings Accounts as a retirement savings tool
One way to rethink benefits offerings is to reposition the Health Savings Account (HSA) as a retirement savings tool. According to Devenir's 2021 Year-End HSA Research Report, roughly one in five (21%) HSA accounts were unfunded in 2021. Encouraging employees to save using their HSA promotes employee health and financial wellbeing, and helps employers achieve near- and long-term cost savings. Employers should consider bringing the investment opportunity with HSAs to the forefront of the conversation through proactive employee education to spotlight its potential to shape and secure both employer and employee health and financial wellness.
2. Maximize Health Savings Accounts through incentives or matching
Another way that employers can encourage enrollment in a High Deductible Health Plan (HDHP) with an HSA is through changes to their plan design, such as offering incentives or matching contributions. An HSA incentive structure, such as matching or seed contribution, encourages an "active" employee role similar to 401(k) matching programs. This type of structure can significantly increase HSA account balances, save employees and employers money, and improve the perceived value of benefits and retirement readiness. Offering HSAs with automatic or earned money is a further incentive for employees to enroll in HDHPs and contribute their own money to their HSAs.
3. Prioritize parenting & work-life balance through dependent care FSAs
The pandemic has been especially difficult for working parents with Pew Research Center citing that almost 50% of those who quit in 2021 did so at least in part due to childcare issues. One possible solution is to offer employees the opportunity to opt into a Dependent Care Flexible Spending Account (DC-FSA). A DC-FSA covers qualified daycare expenses for children younger than age 13 and adult dependents who are incapable of caring for themselves making it a great tool for budgeting daycare expenses. With the tight labor market, DC-FSAs are an excellent attraction and retention tool for employers to explore. Augmenting employee benefits packages with a DC-FSA option sends a strong message to employees that their employer cares about their work-life balance.
With today's labor market showing no signs of slowing down, employers should take the opportunity to reconsider the types of benefits that they offer their employees, thinking through an HSA contribution match or incentive program to increase employee engagement, and redefining how the benefits they offer can impact an employees' savings for retirement.
With some simple shifts and proactive communication with employees, employers can take advantage of this period of heightened consumer interest and engagement in benefits to reenergize their employees and attract new talent.
Kevin Robertson is Chief Revenue Officer at HSA Bank.
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