Ben­e­fit trends to watch in 2018

Stu­dent loan as­sis­tance and hand­hold­ing guid­ance among some of the newer of­fer­ings em­ploy­ers are look­ing at next year. .

Employee Benefit News - - CONTENTS - BY BRUCE SHUTAN

Stu­dent loan as­sis­tance and hand­hold­ing guid­ance are among some of the newer of­fer­ings more em­ploy­ers are con­sid­er­ing for next year.

Abevy of mean­ing­ful em­ployee ben­e­fits that largely fall un­der the fi­nan­cial well-be­ing cat­e­gory are in store for 2018, ac­cord­ing to sev­eral in­dus­try lead­ers and ex­perts. The need for a more holis­tic view of fi­nan­cial se­cu­rity in the work­place is so crit­i­cal, in fact, that the in­dus­try’s premier ben­e­fits re­searcher, Em­ployee Ben­e­fits Re­search In­sti­tute, hopes to fi­nally es­tab­lish a beach­head for this hot topic. While the chief tar­get ap­pears to be younger em­ploy­ees who are faced with enor­mous debt from stu­dent loans — a re­lated key trend — the ben­e­fit is said to have wide ap­peal. It also dove­tails into yet an­other ma­jor de­vel­op­ment: the long-sim­mer­ing con­ver­gence of health­care and re­tire­ment ben­e­fits.

Af­ter speak­ing with a hand­ful of ex­perts, em­ploy­ers and in­sid­ers, EBN has rounded up nine ben­e­fit trends to watch in the com­ing year.

1 FI­NAN­CIAL WELL­NESS

Evren Esen, re­search di­rec­tor at the So­ci­ety for Hu­man Re­source Man­age­ment, no­tices that more or­ga­ni­za­tions are of­fer­ing pro­grams that help em­ploy­ees with their fi­nances. Roughly half of the SHRM mem­bers polled in the lat­est an­nual em­ployee ben­e­fits sur­vey say they of­fer in­vest­ment plan­ning, 48% of­fer in­di­vid­ual re­tire­ment plan­ning and 44% of­fer re­tire­ment-prepa­ra­tion ad­vice. One note­wor­thy de­vel­op­ment is that fi­nan­cial ad­vice of any type in­creased to 49% from 37% five years ago, Esen says.

The is­sue res­onates so much that EBRI hopes to open a fi­nan­cial well­be­ing re­search cen­ter in re­sponse to this trend, with back­ing from a crit­i­cal mass of or­ga­ni­za­tions. More rig­or­ous data col­lec­tion and sur­veys on fi­nan­cial well­be­ing pri­or­i­ties will not only deepen em­ployer un­der­stand­ing of crit­i­cal is­sues in the space, ac­cord­ing to Harry Con­away, EBRI’s pres­i­dent and CEO, but also help them at­tract and re­tain top tal­ent. One chal­lenge is that there’s no agree­ment or con­sen­sus about how to even mea­sure this area, he cau­tions.

“I think fi­nan­cial well­ness is huge,” says Sylvia Fran­cis, to­tal re­wards man­ager for the Den­ver-based Re­gional Trans­porta­tion Dis­trict who’s also a mem­ber of SHRM’s Spe­cial Ex­per­tise Panel. To cap­i­tal­ize on that ben­e­fit trend, RTD this year be­gan of­fer­ing money man­age­ment ex­pert Dave Ram­sey’s SmartDol­lar pro­gram, which has helped some par­tic­i­pants pay off more than $60,000 in debt. It costs RTD about $125 per em­ployee per year, which Fran­cis deems well worth the in­vest­ment “be­cause fi­nan­cial up­set causes a lot of prob­lems in the work­place.”

While these pro­grams of­ten ap­peal to older em­ploy­ees, Fran­cis be­lieves mil­len­ni­als also crave this knowl­edge be­cause many of them would like to re­tire in their 60s and may be more fi­nan­cially savvy than their el­ders think.

Af­ter the Great Recession of 2008, she says many of them saw their par­ents strug­gle and would like to learn how to hold onto their money. There’s also a grow­ing sense of prag­ma­tism whereby she be­lieves many

of them are elect­ing to at­tend less ex­pen­sive com­mu­nity col­leges to load up on pre­req­ui­sites be­fore trans­fer­ring to a four-year col­lege.

Stu­dent loan as­sis­tance

“More em­ploy­ers are look­ing at how they can help em­ploy­ees deal with stu­dent loan debt,” re­ports Jim Klein, pres­i­dent and CEO of the Amer­i­can Ben­e­fits Coun­cil. He be­lieves the is­sue has crossed into the pub­lic pol­icy realm be­cause it’s im­pos­ing on the abil­ity of younger em­ploy­ees to par­tic­i­pate in a 401(k) plan or deepen that com­mit­ment.

It shows just how many com­po­nents to fi­nan­cial se­cu­rity there are be­yond hav­ing ad­e­quate funds in a re­tire­ment plan, ac­cord­ing to Klein, who also points to the im­por­tance of dis­abil­ity in­sur­ance and longterm care. To­gether, he says they’re part of a much larger ta­pes­try re­quir­ing a more holis­tic view of ben­e­fits from a re­cruit­ment and re­ten­tion stand­point.

One idea Klein says is be­ing con­sid­ered on Capi­tol Hill is for em­ploy­ers to con­trib­ute into a re­tire­ment sav­ings plan an amount that would match what em­ploy­ees pay each month in terms of their stu­dent loans.

“It’s in­dica­tive of think­ing in cre­ative ways about how to not only help peo­ple with their stu­dent loan debt, but also see the value of re­tire­ment sav­ings,” he says.

While Fran­cis sees stu­dent loan re­im­burse­ment pro­grams gain­ing trac­tion even among smaller com­pa­nies, she of­fers up a caveat. “We’re find­ing that mil­len­ni­als, and to a lesser ex­tent, Gen­er­a­tion X, don’t stay with jobs as long as boomers do,” she says. There­fore, em­ploy­ers will need to as­sess whether the loom­ing threat of turnover is worth the cost of pro­vid­ing this ben­e­fit.

Only 4% of SHRM ben­e­fits sur­vey re­spon­dents pro­vide stu­dent loan re­pay­ment pro­grams, but that num­ber is ex­pected to grow, many in­dus­try in­sid­ers sug­gest. So far, though, SHRM’s Esen says, the ben­e­fit ap­pears to be con­fined to the fi­nance and tech sec­tors, as well as larger em­ploy­ers.

Cadil­lac-style health cover­age

By post­pon­ing the pro­posed 40% ex­cise tax on Cadil­lac-style health plans un­der the Af­ford­able Care Act, law­mak­ers pre­served a com­pet­i­tive bal­ance in tight la­bor mar­kets, ob­serves Doug Hes­sel, a part­ner with John­son & Du­gan In­sur­ance Ser­vices, which is part of the United Ben­e­fit Ad­vi­sors net­work of com­pa­nies.

Many of his clients are based in the San Fran­cisco Bay Area where it’s dif­fi­cult to keep up with Google, Ap­ple, Face­book and other tech gi­ants. As a re­sult, he says they’re more com­fort­able about mov­ing for­ward with aug­ment­ing their plans, in­clud­ing health re­im­burse­ment ac­counts and med­i­cal ex­pense re­im­burse­ment ac­counts.

“The gold-plated or plat­inum-plated types of plans are alive and well in our mar­ket,” he says.

Con­ver­gence of health­care and re­tire­ment

An­other way em­ploy­ers are think­ing about em­ployee ben­e­fits in a more uni­fy­ing way is to use health sav­ings ac­counts to pay for health­care needs in re­tire­ment. Klein says it re­flects a need to be “more vig­i­lant about mon­i­tor­ing in­vest­ments or seek­ing in­vest­ment op­tions with lower fees in light of a lot of the in­creased scru­tiny around the fidu­ciary is­sue.” There also could be more op­por­tu­ni­ties within a re­tire­ment sav­ings plan to pro­vide for health­care needs, with Klein cit­ing the idea of re­tiree health­care ac­counts within 401(k) plans or more fa­vor­able tax treat­ment for in­vest­ments made in life­time-in­come prod­ucts.

Hand­hold­ing guid­ance

Con­away is an­tic­i­pat­ing reg­u­la­tory or leg­isla­tive clar­i­fi­ca­tion on whether cer­tain pro-re­tire­ment plan de­signs and fea­tures are ac­cept­able. Ex­am­ples in­clude a stretch match, which raises up to 12% the thresh­old for match­ing de­ferred pay, and changes to pre-re­tire­ment dis­tri­bu­tions aimed at re­duc­ing so­called leak­age.

He be­lieves “hand­hold­ing guid­ance” from the IRS, Trea­sury and La­bor De­part­ments or in any tax-re­form bill will en­cour­age em­ploy­ers to pur­sue more ag­gres­sive strate­gies to boost re­tire­ment sav­ings. Such ac­tion also would en­joy bi­par­ti­san sup­port, he notes.

Work­place well­ness

An em­pha­sis on health­ier liv­ing dates back about five to seven years in SHRM’s an­nual ben­e­fits sur­vey, ac­cord­ing to Esen. “There is an in­crease in well­ness-type of ben­e­fits,” she re­ports, not­ing a de­sire to man­age ris­ing health­care costs as the pri­mary mo­ti­va­tor.

Nearly a quar­ter of par­tic­i­pants in SHRM’s lat­est ben­e­fits sur­vey plan to in­crease their well­ness ben­e­fits, a per­cent­age higher than other cat­e­gories such as pro­fes­sional and ca­reer de­vel­op­ment, flex­i­ble work sched­ules, re­tire­ment and fam­ily-friendly poli­cies. One un­usual of­fer­ing, work­sta­tions that al­low peo­ple to stand, soared to 44% from just 13% in 2013 when the data was first tracked. While only 7% of or­ga­ni­za­tions of­fer meditation and mind­ful­ness pro­grams to help re­duce stress, Esen ex­pects the num­ber will grow.

Flex­i­ble work sched­ules

Fran­cis notes a move­ment to­ward more flex­i­bil­ity in the work­place. One key com­po­nent in­cludes a “9/80” sched­ule fea­tur­ing nine hours a day for the first week and then nine hours for four days that amounts to an ex­tra day off ev­ery other week. She be­lieves these com­pressed work­weeks largely ap­peal to mil­len­ni­als and star­tups.

“I think com­pa­nies that are sort of died in the wool, blue chip or like us, trans­porta­tion, have to change their mind­set” about flex­i­ble sched­ule to com­pete for tal­ent, RTD’s Fran­cis says. The think­ing is that em­ploy­ees can work just as hard, or harder, at home, Star­bucks or wher­ever they might be than those in an of­fice.

More em­ploy­ees are ex­pect­ing greater flex­i­bil­ity in their work sched­ules, Esen says. Telecom­mut­ing on an ad hoc ba­sis rose to 59% in 2017 from 45% in 2013, while flex­time ben­e­fits have re­mained sta­ble dur­ing that time frame at 57%. The num­ber of com­pa­nies of­fer­ing a com­pressed work­week, how­ever, fell to 29% this year from 35% in 2013.

Paid leaves of ab­sence

Fran­cis pre­dicts more paid leaves of ab­sence re­lated to ma­ter­nity and pa­ter­nity ben­e­fits as part of a more fam­ily-friendly ap­proach to re­cruit­ment and re­ten­tion. This can come in handy for em­ploy­ees who haven’t been able to ac­crue six to 12 weeks of paid time off. How­ever, she cau­tions that the ar­range­ment can cause prob­lems in other ar­eas. For ex­am­ple, what hap­pens to em­ploy­ees who are di­ag­nosed with cancer?

An­other chal­lenge for em­ploy­ers is com­ply­ing with lo­cal or state man­dates for paid leave, which Fran­cis de­scribes as “a night­mare” sce­nario for multi-state em­ploy­ers. She lauds SHRM for ad­vanc­ing the no­tion of man­dated paid leave at the fed­eral level so that it su­per­sedes the reg­u­la­tory patch­work that ties the hands of these larger em­ploy­ers.

Flat fees for bro­kers

Hes­sel be­lieves bro­ker com­mis­sions will con­tinue to be squeezed in the small-group health ben­e­fits mar­ket­place — and right­fully so. “If the pre­mium is go­ing up, why should bro­kers get in­creases for not do­ing in­creased work for their clients?” he asks. A fee-based ap­proach that in­cludes a strate­gic scope of ser­vices bet­ter de­fines the de­liv­er­ables time­line and makes for a more re­ward­ing client re­la­tion­ship, he adds.

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