ESAs are trending upward. About 36% of employers now offer them as part of their benefits package; another 36% are getting ready to. What makes ESAs so attractive is the ease with which they can be set up and the impact they can have on employees’ lives.

What is an ESA?

An ESA is a consumer-owned bank account that holds money specifically set aside for unplanned expenses or financial emergencies. They are portable, so owners keep them if they change employers,

They can be established through a credit union or bank and integrated with payroll deductions so that employees make deposits without thinking about it. And because an ESA is a non-ERISA plan, it affords employers with broad flexibility on structure, timing and control. It can also be added at any time of the year and made available to all employees regardless of number of hours worked or enrollment in other benefits.”

Employers can make post-tax contributions to employee ESAs, providing an incentive for their employees to engage in their account while offering the employer a possible write-off as a business expense.

Employers can kickstart the program using simple census and offer incentives like sign up, matching and/or milestone bonuses to encourage employees to start saving.

Why offer an ESA?

The inability of Americans to pay for unexpected emergencies transcends employee income ranges – all employees, regardless of wage level (A) have need, and (B) can benefit from an ESA safety-net.

Financial wellness is one of the fastest growing areas of focus when it comes to employee benefits, and for good reason, credit card debt reached a record $1.21 trillion in the fourth quarter 2024, cost of living increases have eaten away at paychecks, making saving more of a luxury, and 401(k) hardship withdrawals have hit an all-time high.

The Webster Bank Financial Empowerment Study, an in-depth, independent report that examines financial challenges and literacy of consumers, found that two thirds of consumers feel that they are not saving enough for retirement and cannot save as they should. A majority say saving for emergencies is a top financial priority, but nearly a third do not have an emergency fund and say that when it comes to saving, they do not know where to start.

ESAs give them a place to start. Employees are already familiar with paycheck deductions for 401(k)s and health savings accounts, and it takes only a few minutes to set up the post-tax payroll deduction for these FDIC-insured accounts. Employers also can offer incentives such as seeding the account at signup or adding matching or milestone bonuses to accounts.

As increasing numbers of employers add ESAs them to their benefits packages, they are sending a strong message that they care about their employees' financial wellbeing. Workers are responding, citing ESAs as the most appealing new benefit category. A solid 90% said they would participate in an ESA if offered.

Related: More than just a savings account: How the right HSA provider transforms employee benefits

What can employers expect?

Based on several recent studies, here’s what employers can expect from employees with access to emergency savings accounts:

• 10 times more likely to be focused at work
• 28% less likely to leave their job and 10% more likely to enjoy their job
• 52% less likely to have onsite safety issues
• 50% less likely to withdraw from retirement savings
• Twice as likely to increase retirement contributions

Based on our experience, we have seen well than a 60% adoption rate with participants saving an average of $400 within four months and $1,000 after one year. About 85% of funds stay in savings. Employees are also highly engaged if offered an intuitive online account and mobile app with 50% of participants logging at least once a month.

In a white paper titled, “Building Emergency Savings Through Employer-Sponsored Rainy-Day Savings Accounts,” researchers concluded that offering both ESAs and 401(k) plans can "reduce the frequency with which short-term needs crowd out long-run retirement savings."

I recently sat down with Suze Orman, the personal finance expert, to talk about ESAs – and she didn’t hold back.

“In today’s world,” Suzy said, “If you’re an employer who wants to attract and retain top talent, you’ve got to go beyond the basics. It’s not just about what you think your employers want – it’s about giving them what they truly need. And what they need is financial security. That starts with an ESA.”

She emphasized what this means. “When you give your employees this one simple tool, it can transform their lives. As they watch their ESA balance grow, many feel — for the first time — the power of saving. They begin to get more satisfaction from saving than from spending. They go from feeling powerless to powerful.”

And that shift, Suze says, doesn’t just impact their finances. “When people feel powerful in their own lives, they show up better at work. They’re more focused. More engaged. More loyal. It’s a win-win.”

Suze summarized her point with perspective for employers. “You want to empower your employees to meet their needs today. Not someday. Not next year. Today. There is no downside to offering an ESA. None. Only upside. Every single employer in America should be doing this — right now.”