A recent Experian study revealed that 78% of respondents report their household income had been negatively impacted by COVID-19, and 69% were worried about their personal finances. While your employees may be anxious to get back to work, they’re more concerned than ever about their health care and finances.
That makes this year’s open enrollment season especially important. It’s a golden opportunity for you to support your employees’ health and financial wellness, and quell some of their worries.
But here’s the catch. Almost everyone goes on auto-pilot when it comes to enrollment. They see it as something to cross off their to-do list…an annoying task that they just want to get done.
But this year, things have changed. 59% of employees said they’ll be paying more attention to their benefits, and it’s up to you to take advantage of that trend. Now is the time to help your employees make better financial decisions, drive them to change their behavior, and ultimately help them save more throughout the year.
1. Reframe how you talk about open enrollment
The words you choose to talk about your benefits can have a big impact on how your employees think and feel about their options. While many people view open enrollment as drudgery, it’s actually a great time for your employees to save money. Or put another way: it’s a built-in annual financial check-up.
Most financial wellness programs focus on helping employees make better choices about their post-paycheck money. But employers who offer advice about pre-paycheck earnings—i.e. their pre-tax gross pay—have a much better chance of helping employees make immediate and quantifiable savings.
For example, when employees choose to automatically direct money into a 401(k) or an HSA, they end up saving hundreds (if not thousands) of dollars on taxes—by simply checking a box during open enrollment. It’s easy, but the impact is substantial. But how do you catch employees’ attention and help them view open enrollment as a way to improve their financial future? The key is to reposition open enrollment as an opportunity, not a requirement.
2. Help them consider multiple scenarios
Remind employees that the new benefits year holds a lot of uncertainty, and that it’s important to prepare by taking another look at their benefits. In addition to major life events like getting married or having a baby, COVID-19 can have a major impact on your employees’ finances if they don’t have the right coverage this year.
Outline the best- and worst-case cost scenarios for each plan you offer. While the CARES Act now mandates free COVID-19 testing, there have been cases of “surprise billing” after tests were performed by ‘out-of-network providers.’
The average cost of COVID-19 treatment without complications
The average cost of COVID-19 treatment with complications
Your employees may also want to switch the type of plan they have this year, but may not understand the differences between HDHPs and PPOs or HMOs. The advantages of a high deductible health plan are numerous, especially for younger, generally healthier people who don’t anticipate making many doctor visits.
And an HDHP could save a family hundreds or even more than a thousand bucks a year over a traditional PPO plan.
However, in light of all that’s happened with COVID, a big deductible upfront may scare people away. A $20 co-pay with a PPO may be more appealing to some people, even if the total plan cost is higher. So prompt employees to think about how much cash they have on hand to pay for deductibles before they make their choice.
3. Update employees on regulation changes
Along with any changes to your company’s benefits offerings, make sure to share any COVID-related legislation changes that could have an impact on this year’s choices.
Thanks to the CARES Act, not only do employees have penalty-free access to their 401(k) funds (up to $100,000), they now have more flexibility on repayment of federal student loans.
Additionally, you no longer need a prescription to be able to pay for medication with your HSA or FSA. Employees can use it to pay for many over-the-counter medications and other personal items.
Remind employees of changes like:
- Penalty-free access to 401(k) withdrawals
- Federal student loan relief
- Expanded HSA-eligible purchases to many OTC medications and personal care items
- New FSA contribution limits
4. Give timely financial advice
While it’s important to let employees know about all of their options, it’s equally important to point out the consequences if they choose to pursue them. Some employees may be tempted to take advantage of penalty-free cash access, especially if money is tighter than it used to be. But “no penalty!” comes with a catch.
By taking out that money now, they’ll miss out on building interest over time, and the’ll miss out on a huge chunk of change in the future. And with the current state of the economy, the money they take out right now is worth the least in the long run.
This is a concept called hyperbolic discounting. The idea is that people are more likely to want a smaller amount of money in their pocket now, rather than waiting to get more money later.
To combat that bias, help employees understand the tradeoff. Do the math for them, and show them: “If you remove $25,000 from your retirement funds now, you’ll miss out on $5,000 in interest in 10 years.”
It’s also important to remind employees that now is actually a really good time to put more money into retirement, rather than take money out. Thanks to a deflated market, they’re actually buying more shares right now—and when the economy recovers, that investment will pay off big-time.
If employees are really feeling strapped for cash and don’t have personal savings, encourage them to take out a low-interest loan before dipping into their 401(k). It could help them save thousands down the line, and paying off a loan ultimately pales in comparison to losing years of retirement investment.
5. Share ways to save on healthcare
In a year when employees are pinching pennies just as much as you are, they might be less likely to seek out medical care if they perceive it to be too expensive. So remind them that saving a little bit up front can save them huge medical expenses down the road.
Give them a few cost-saving tips like:
These tips can be the difference between employees staying home sick and seeking out care.
6. Communicate hard news with empathy and transparency
So many companies are looking for ways to cut costs this year, which means you might have to make some tough decisions about your benefits.
If your company has to freeze your 401(k) match, be upfront and clear about it. Show employees the data and any thought processes behind your company’s health insurance and benefits program decisions.
If you’re announcing significant changes, explain why you believe they are the right moves. Employees will appreciate your willingness to pull back the curtain, especially if the news isn’t great.
Above all, express that you know how hard this is for your employees, and show empathy for their personal situations. Don’t over promise if you’re not sure when you’ll bring back any cut benefits. Just be as human and empathetic as possible.
Don’t bury the lead
A few years ago here at Jellyvision, we decided for cash flow reasons that we would wait until the end of the year to provide 401K employer matches, instead of doing it on an ongoing basis. Here’s how our Chief Administrative Officer, Kurt Hirsch, handled sharing the news:
✓ Started with WHY
✓ Preemptively addressed other possible concerns
✓ Remained open to any other questions
In communicating the hard news, Kurt didn’t bury the lead. He jumped right into the news, and explained why the new policy strengthened Jellyvision’s financial footing, and how that would help all employees with job security. And once employees had a chance to digest his email, Kurt kept his door open to anyone who had questions.
7. Focus on mental health resources
Beyond the threat to our physical health, COVI-19 is affecting our stress levels as well. To combat this, many employers have increased their focus on mental health. So if you offer wellness resources like an EAP, now’s the time to encourage employees to take advantage of these benefits.
Employee Assistance Programs vary, but most offer some form of mental health resources, financial advice, support for child and elder care and even coronavirus-specific issues. Even better: EAPs are already set up for remote access.
If you have any employees who have used your EAP, ask them to vouch for it. Peer testimonials can motivate other employees to sign up when they otherwise may not have.
If you have yoga or meditation classes and have moved them online, make that known. There are even popular mobile apps (like Headspace and Calm) that can reduce stress and promote better sleep through relaxation and meditation. Consider offering something like this as a temporary or even long-term benefit.
Don’t forget to remind employees about telehealth options that allow for virtual visits. This can help reduce stress by providing a safer option for care, while maintaining strong physical and mental health. Finally, consider setting up emergency relief funds for employees who need it. If you already have one, make sure everyone knows about it.