Surya Kolluri, with Bank of America, says financial wellness should be thought of in the broadest way, with an eye toward how employees live their lives; this includes health care and caregiving efforts.
More than twice as many companies are offering workplace financial wellness programs to employees today compared to four years ago (53% vs. 24% in 2015), according to Bank of America’s ninth annual 2019 Workplace Benefits Report.
More than half (55%) of employees today rate their own financial wellness as good or excellent, down from 61% a year ago. Employees who rate their financial wellness positively are more likely to feel that they can effectively manage their day-to-day finances, pay bills while saving for future goals, and that their retirement savings are on track.
According to Bank of America, awareness and understanding of critical health care savings and caregiving support benefits are lacking.
Surya Kolluri, managing director with Bank of America’s retirement and personal wealth solutions group in Boston, says financial wellness should be thought of in the broadest way, with an eye toward how employees live their lives.
“When we think about priorities in life, health care is at the top. It is a financial burden,” Kolluri says. The Bank of America report shows the average person spends $7,700 per year in health care costs. In addition, the survey of 996 employers and 804 employees found 53% of employees have skipped or postponed an activity—going to the doctor, buying a prescription, etc.—to save money on health care.
“As we go from work life to retirement life, health care costs will only go up. If we don’t address health care costs now, it will drive down employees’ feelings of financial security,” Kolluri says. “We should all appreciate that health and wealth are two sides of same coin; If one is not healthy, he may draw on savings to pay for expenses, and if one is not financially well, being unable to get care and the stress of financial burdens can drive up health care costs.
Employers can encourage employees to take advantage of no-cost preventive care, health savings accounts (HSAs) and employer-provided physical wellness programs to get a handle on health care costs now and for the future.
Kolluri says HSAs are emerging as a critical tool to address health care costs. But, HSAs are connected to high-deductible health plans (HDHPs). Bank of America found 90% of employers that offer HDHPs also offer HSAs. More than three-quarters (76%) of employees that have an HDHP are also enrolled in an HSA.
But, the study found 65% of employers say they have a good understanding of HSAs, while only 7% correctly identified four basic attributes of HSAs. Likewise, 57% of employees say they have a good understanding of HSAs, while only 11% correctly identified the attributes.
Kolluri suggests that employers should not only offer HSAs, but provide HSA education. They should inform employees of what health care costs and how Medicare works, as well.
Caregiving is another way of life for many employees that employers may not recognize. According to the Bank of America report, 45% of employees perform caregiving duties for a family member, and 62% of caregiver employees don’t believe their employer knows they’re a caregiver.
In the most recent Wells Fargo/Gallup Investor and Retirement Optimism Index survey, roughly half of U.S. investors (53%) report they have provided financial assistance, personal assistance or both to adult children or extended family members—not including school tuition. When asked how much they spent in total in the past year financially supporting adult family members—not including college expenses for an adult child—investors estimate spending $10,000 on average.
Non-retired investors are 11 percentage-points more likely than retired investors to say that providing this monetary help has harmed their finances (31% vs. 20%). Nearly one in four say the time commitment has negatively affected their ability to save for retirement (23%) or their finances more generally (22%).
Kolluri says employers should think about offering caregiving benefits as part of a broader financial wellness program. He suggests offering flexible work hours as well as care consultation programs to give patient’s advice about care, for example. In addition, providing a subsidy for the suggested care needed can help caregivers financially.
He explains that flexible work hours could provide caregivers time for caregiving activities, including implementing legal actions that can put the person they are caring for in a better financial position.
Women’s versus men’s financial wellness
Kolluri says one trend found in the report is the difference between women and men when it comes to financial wellness. “The life journey and financial life journey for women is different from men,” he says.
Bank of America found women are less likely to say they are financially well; 43% of women versus 65% of men. In addition, the median retirement savings for women is $30,000 compared to $100,000 for men.
Kolluri attributes this in part to more women taking time off to raise children or taking time off to be a caregiver. “Overall its’ the right thing to do, but the effect on time and savings is showing up,” he says.
The most recent Wells Fargo/Gallup Investor and Retirement Optimism Index survey shows that women investors are more likely than men to spend time helping a parent or in-law (14% of women versus 8% of men). Women who provide this care are also much more likely than their male counterparts to be the sole caregiver (40% versus 13%).
Diversity and inclusion
The Bank of America reports suggests that diversity and inclusion (D&I) programs contribute to a feeling of financial wellness.
Kolluri says diversity and inclusion impacts wellness, engagement and participation in programs.
“According to studies, corporations with a D&I program perform well,” he adds. “We found only half of employers have D&I programs. Having strong executive sponsorship and strong employee networks can lead to engagement, participation and a feeling of wellness.”