More employees are expecting their workplaces to support financial wellness. How much can you be expected to help, and how?
Read time: 5 minutes
The idea of an employer actively investing in employee training and loan programs to help with personal finances is becoming more and more commonplace. What was once solely the responsibility of an individual is now a benefit offered by employers. We’ve seen an uptick in new products and services hitting the market to prevent financial instability. Let’s investigate what has moved this challenge into the arms of the employer.
Rising Health Care Costs
Benefits start with the physical and mental health of employees, and it’s no secret that medical expenses have risen throughout the years. The US spends more on health care than any other country in the world to achieve worse population health outcomes.[1],[2],[3] The expense alone influences patient behavior.
The Federal Reserve reports that 27% of adults skipped medical treatment due to costs in 2017.[4] This lowered to 24% in 2018,[5] but remains troubling. Physicians will tell you that this avoidance contributes to the development of even more costly illnesses.[6],[7]
Unfortunately, many chronic illnesses cannot be reversed once set in motion. According to the CDC, 90% of the nation’s $3.3 trillion in annual health care expenditures are for people with chronic and mental health conditions.[8] Worse still, when patients skip care for more serious disease states, it can result in death. It’s no wonder that health care and insurance are an area of focus in political debates.
This has given rise to companies such as Paytient, enabling employees to pay off out of pocket medical, dental, vision, or veterinary bills over time at 0% interest. Others, including PriceMD, focus on lowering the costs of surgery, medications, and workers’ comp.
Inability to Make Ends Meet
However, financial assistance doesn’t stop there. Self-funding is becoming an option not just for large corporations but for smaller groups as well. With a growing number of HR leaders deciding to manage the costs and health outcomes of their employees, the benefits market has expanded to include strategies for affordably increasing overall well-being in efforts to boost recruitment, retention, satisfaction, and productivity.
This has led to more all-encompassing fintech offerings, given that a high number of Americans live paycheck to paycheck. In 2017, CNBC reported that “nearly 10% of those making $100,000 or more say they can’t make ends meet.” CNBC also notes that “78% of full-time workers said they live pay check to paycheck,” up from 75% in 2016, and that 41% could not easily afford an emergency expense of $400.[9]
NFP’s VP of Innovation, Rachelle Oribio, discussed this topic with Alex Woolsey at HoneyBee a certified B corporation that offers employee benefits related to financial coaching and building emergency funds for unplanned expenses. Woolsey echoed CNBC’s statistics, stating that many people they help “are living right within their means, even ones earning above $60,000.” That’s worrisome, given that the US median household income was $60,336 in 2017, according to the American Community Survey published by the United States Census Bureau.[10]
Along the same lines, Kashable offers Socially Responsible Credit, marketing it as a “better way to tackle costly debt and unexpected expenses,” while Best Money Moves provides a mobile-first platform that measures and reduces employee financial stress through individually tailored content. According to Best Money Moves’ website, “80% of your employees are suffering from moderate or severe financial stress. That means they miss more work, are less focused, engaged and productive than non-financially stressed colleagues, and have higher rates of turnover.”
Rising Tuition Costs
Another contributing factor, also hot on the political debate circuit, is the rising cost of higher education and the consequences of student loans. It’s no secret that education costs have skyrocketed, limiting access and saddling many with debt. According to U.S.News, average tuition at a private college or university is now $35,676 per year, without considering room and board.[11]
According to the 2017 Federal Reserve Report on the Economic Well-Being of U.S. Households, “over half of young adults who went to college took on some debt … Repayment of this debt can be challenging. In 2017, one-fifth of those with education debt were behind on their payments.” Findings go on to state that “30% of all adults have incurred some debt for their education…including 22% who still owe money” with typical monthly loan repayment between $200-$300/month. That’s 4% of the median household income before accounting for taxes.[12]
Because of this trend, many employers are looking to provide their employees with benefits that both avoid and manage the negative financial consequences this large investment. NFP is addressing this need by becoming the first insurance brokerage firm to bring Edmit to employer groups via an NFP national partnership. Initially a direct-to-consumer business, Edmit provides families with the tools and financial advice to make informed higher education financing decisions, including a new student loan calculator. On the other end of the problem, Peanut Butter helps employers offer student loan assistance by providing a wide array of resources, including debt counseling from experts available 24/7.
Whatever your company position on providing loan or repayment assistance or education, thousands of people are being helped through tough (and often complex) financial scrapes by using these products. With holistic employee well-being as the cornerstone to healthy, happy organizations, this market is growing with no signs of stopping any time soon. It’s definitely a conversation worth having.
[1] Karen Feldscher. “What’s behind high U.S. health care costs,” The Harvard Gazette, 2018; https://news.harvard.edu/gazette/story/2018/03/u-s-pays-more-for-health-care-with-worse-population-health-outcomes/
[2] Susan Brink. “What Country Spends The Most (And Least) On Health Care Per Person,” NPR, 2017; https://www.npr.org/sections/goatsandsoda/2017/04/20/524774195/what-country-spends-the-most-and-least-on-health-care-per-person.
[3] Bradley Sawyer and Cynthia Fox. “How does health spending in the U.S. compare to other countries?” Peterson-Kaiser, 2018;https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-start.
[4]Report on the Economic Well-Being of U.S. Households in 2017, Board of Governors of the Federal Reserve System, 2018; https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf
[5]Report on the Economic Well-Being of U.S. Households in 2018, Board of Governors of the Federal Reserve System, 2019; https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf
[6] Dr. Tomasulo, Mark. Personal Interview. March 27, 2019.
[7] Dr. Tovar Quiroga, Diego. Personal Interview. August 16, 2019.
[8] “Health and Economic Costs of Chronic Diseases,” National Center for Chronic Disease Prevention and Health Promotion, 2019; https://www.cdc.gov/chronicdisease/about/costs/index.htm.
[9] Aimee Picchi. “Vast number of Americans live paycheck to paycheck,” CBS News, 2017; https://www.cbsnews.com/news/americans-living-paycheck-to-paycheck/.
[10]Gloria Guzman. “Household Income: 2017,” U.S. Census Bureau, 2018; https://www.census.gov/content/dam/Census/library/publications/2018/acs/acsbr17-01.pdf.
[11] Farran Powell. “See the Average Costs of Attending College in 2018-2019,” U.S.News, 2018; https://www.usnews.com/education/best-colleges/paying-for-college/articles/paying-for-college-infographic.
[12] Report on the Economic Well-Being of U.S. Households in 2017, Board of Governors of the Federal Reserve System, 2018; https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf