Author Archive for JLarocque

Open Enrollment: How Will You Communicate Medical Care Cost Increases?

Published by JLarocque on June 17, 2010 in Benefits, Financial Education, Financial Wellness, GuideSpark and for Employers. 0 Comments Tags: , .

While this likely won’t come as a shock to many reading this post, it appears

Benefits Communications

Benefits Communications for Delicate News

that medical care costs will once again rise at near double-digit rates in 2011.  According to PriceWaterhouseCoopers’ Health Research Institute, medical care costs are expected to increase by 9% in 2011, a slight deceleration from the 9.5% rise posted in 2010.

Cost sharing has become a critical tool to help keep medical care costs affordable for both employer and employee.  2011 will be no different.  Here are the key findings of the PwC report:

  • 42% of employers intend to increase employee contributions for health insurance coverage
  • 41% plan to increase medical cost-sharing, including higher-deductibles and co-pays
  • 26% expect to increase prescription drug cost-sharing
  • 67% of employers will most likely expand or improve wellness programs

In addition, many employers will add high-deductible health plans in the coming year to help ease the cost burden.

Those employers with a Fall Open Enrollment are heading into a critical time.  Important decisions will be made that will have a significant impact on the cost of benefits for employees and their families.  Careful thought, consideration and resources will go into making plan decisions and yet too little thought and preparation will go into communicating the changes.

With so much at stake, what is your plan for communicating this delicate information?  How will you deliver the news that your employees are once again being asked to shoulder a larger share of the cost burden?  How will you drive enrollment in that new and very complex high deductible health plan?

Rethink the lengthy and ineffective emails, brochures and web pages. You know that employees and family decision makers aren’t reading them – no matter how pretty they are.  And employees who operate in the absence of information are likely to come to the wrong conclusions about plan changes.  They are likely to avoid newer health plans in favor of the ones that feel familiar.

This Open Enrollment period, don’t let your communications strategy go by the wayside.  Demonstrating transparency and carefully communicating the difficult changes that are being made to benefits are nearly as important as the changes themselves.  Remember that introducing a high deductible health plan only saves the company money if you can convince an employee to adopt it (assuming they have alternatives).

For tips on communicating effectively, please see our March post:   Benefits Communications for Today’s Employee.

Financial Wellness Eases Presenteeism – Digging Into the Numbers

Published by JLarocque on June 9, 2010 in Financial Education, Financial Tools, Financial Wellness, GuideSpark and Solutions. 0 Comments Tags: , , .

Historically, presenteeism has been a word used to describe sick employees

Financial Wellness ROI

Financial Wellness ROI

who “tough it out” and come to work but operate far below normal productivity. But, there are many types of presenteeism.  There could be any number of reasons why an employee checks out and productivity suffers.  And, while presenteeism is a relatively new term, you likely have some established policies in place for helping employees stay focused at work.  For instance, over half of US companies have blocked access to Facebook, Twitter and MySpace.  Presenteeism, in its entirety, is a huge productivity issue that far exceeds that of absenteeism.

To say that presenteeism is an ambiguous problem is certainly an understatement.  It’s impossible to measure, difficult to address and simply acknowledging that presenteeism is an issue at your organization tends to imply that the company is not well run.

But, you may find that you can take steps to address the core drivers associated with presenteeism.  And by taking steps to proactively address those core employee issues, you can solve a large portion of the problem.  Similar to the issue of employee stress, recent studies show that employee money issues are a major root cause driver of presenteeism.

Think about it for a moment.  If you were in debt trouble, on the verge of losing your home or had your retirement cut in half due to the recession, wouldn’t you spend time at work dealing with these issues? Even the model corporate citizen would have trouble answering “no” to this question.

But just how big is the problem?  Well, the Personal Finance Employee Education Foundation recently did some studies on personal financial distractions in the workplace.  You can estimate the annual cost of financial distractions at your organization with this calculation:

  1. Employees in your organization: ______________
  2. Divide by 4 (1 in 4 employees is in financial distress on average)
  3. Multiple by 16 hours (distressed employees spend 12-20 hours per week at work on money issues)
  4. Multiply by 12 months in a year
  5. Multiply by average hourly wage of your employees:__________

For example, an organization of 1,000 employees has approximately 250 financially distressed employees.  The company loses 16 hours of productivity per month for each of these employees which results in 48,000 hours of total lost productivity per year.  Assuming an average annual salary of $50,000/year, this company incurs $1,200,000 per year in lost productivity from financial distractions.

This is just one of several important issues that drive the need for financial wellness in the workplace.  If you take the time to sit down with the numbers, you will likely find that introducing these types of programs may be one of the higher ROI initiatives you have available to you.

Gallup Study Highlights Financial Wellness as a Key Determinant of Overall Wellbeing

Published by JLarocque on June 1, 2010 in Benefits, Financial Education, Financial Wellness, GuideSpark and for Employers. 0 Comments Tags: , , , .

For many employers, the term “Wellness” is used to encapsulate a philosophy or an approach to employee benefits.  In other words, the goal of a benefits program is to improve the overall wellbeing of employees and their families.

Achieving Wellbeing

But what does that term wellness really mean?  What are the determinants?  How do you measure employee wellbeing and what sort of programs can you put in place to improve it?

These are not easy questions to answer but certainly relevant if the goal of your benefits program is ultimately employee wellness.

A recent study by Gallup, in partnership with leading economists, psychologists and other acclaimed scientists uncovered the common elements of wellbeing that transcend countries and cultures.  In Gallup’s initial research, they asked people what “the best possible future” for them would look like. They found that when evaluating their lives, people often give disproportionate weight to income and health: across the groups Gallup surveyed, “good health” and “wealth” were two of the most common responses.

After completing a broader study, Gallup’s research revealed the universal elements of wellbeing that differentiate a thriving life from one spent suffering. They represent five broad categories that are essential to most people:

  1. Career Wellbeing: how you occupy your time — or simply liking what you do every day
  2. Social Wellbeing: having strong relationships and love in your life
  3. Financial Wellbeing: effectively managing your economic life
  4. Physical Wellbeing: having good health and enough energy to get things done on a daily basis
  5. Community Wellbeing: the sense of engagement you have with the area where you live

The study goes on to point out that if we’re struggling in any one of these domains, as most of us are, it damages our wellbeing and wears on our daily life.  Unfortunately, only about 7% of people surveyed are thriving in all 5 areas.

As an employer, you probably offer programs in a number of these areas.  For instance, you likely have a talent management system that helps employees manage their career growth and job satisfaction.  As a part of your benefits offering, you may provide wellness programs dedicated to improving employee physical and mental health.  You may even have initiatives that promote community involvement.

But what are you doing to address employee financial wellbeing?  What programs do you have in place that help employees truly solve their financial issues and improve their financial health?  Given the economic volatility that has plagued the last few years, shouldn’t this be an area of focus?  Interestingly, the financial wellbeing component, while arguably one of the more important aspects, has been largely underserved by employers.

Financial Wellness is the logical next phase when it comes to ensuring the wellbeing of employees.  In fact, research and evidence suggests that it is employer investments here that will ultimately be the most productive.

Snoopy Weighs in on Financial Wellness

Published by JLarocque on April 14, 2010 in Benefits, Financial Education, Financial Wellness and for Employers. 0 Comments Tags: , , .

MetLife released its 8th installment of its Annual Study of Benefits Trends on Monday.  In comparison to prior

Financial Wellness

Employee financial issues a central theme in this year's survey

years, the themes of employee financial security and benefits communications played a more prominent role than ever before.  This was a natural emphasis given the backdrop of economic volatility and a renewed employer focus on benefits cost control.

We wanted to highlight and provide my perspective on three key points that came out of this year’s study:

There is a Health-Wealth Connection.  MetLife’s survey work, which is consistent with other studies we’ve seen, revealed a connection between an employee’s physical and financial health.  Put simply, those employees who assessed their medical health as “fair to poor,” were much more likely to report financial concerns.  MetLife therefore concluded that an employee’s health status impacts an employee’s financial situation.  Our conclusion would be a different one.  Given our experience with employee financial stress and the studies that have been done in this area, we believe strongly that it is an employee’s money issues that leads to poor health and NOT the other way around.  Stress has long been referred to as America’s #1 health problem and virtually every study you read points to money issues as the leading cause of stress (and it’s not close).

Benefits Communications Effectiveness on the Decline.  Each year, MetLife surveys employers and employees on their perception of benefits communication effectiveness.  This is one of those areas of true disconnect.  Over the past three years, employers believe they have made slight improvements to their benefits communications.  Employees, on the other hand, rate benefits communications as less effective than the year before.  In fact, this year only a third of employees rated their benefits communications as effective vs. 40% in 2007.  Just in the last three years, there have been such dramatic changes in the way that employees access information and learn.  And yet, too many employers have stuck to dated and ineffective forms of communications that have been in place for decades.

Personal Financial Distractions Drain Productivity.  In the past 12 months, 12% of employees surveyed took unexpected time off to deal with a financial issue and 17% reported that they spend more time at work on personal financial issues than they think they should.  Personal financial distractions are and have been an expensive problem for some time now.  What is encouraging, is that almost two-thirds of employers have now recognized personal financial issues as a drain on productivity and 45% acknowledge financial education as an effective solution.

Key takeaways:

  • The financial health of employees may be one of the largest determinants of their medical health.  Your health wellness strategy should include a financial wellness component.
  • You can improve employee understanding of benefits but you need a modern approach to the way that you communicate them.  This does not need to be an expensive undertaking – improving benefits communications will cost you a tiny fraction of the benefits themselves.
  • Employee money issues cost your company each day.  Providing your employees with programs that help them help themselves will increase productivity and employee loyalty.

A $16 Million Benefits Communications Problem: CDHPs

Published by JLarocque on April 5, 2010 in Financial Wellness. 0 Comments Tags: , , .

One of the largest issue that our clients face is providing comprehensive and affordable health care for employees and

Benefits Communications

Focused Benefits Education Can Help You Drive CDHP Enrollment

their families.  In light of recent studies, employer interest in Consumer Driven Health Plans or CDHPs has grown tremendously.  In fact, a recent study by NBGH/Towers Watson finds that 54% of companies offer a CDHP and that number is expected to grow to 61% in 2011.

One of the more widely quoted surveys that illustrate cost savings is from health insurer Aetna.  In late 2009, Aetna published the results from a six-year study of its 2.6 million members and 410,000 members of the Aetna HealthFund consumer directed plan.  One key finding from this study showed that employers who offer the Aetna HealthFund as an option experienced savings of $7 million per 10,000 members over a  five year period.

But there is an opportunity for employers to save much more than that.  Aetna also offered this nugget:

“Employers that offered CDH plans as an option but who engaged employees for adoption using strategies identified as best-in-class saved $23 million per 10,000 members over five years.”

Imagine that.  An effective employee engagement plan is worth $16 million in cost savings (per 10,000 members over five years).  For many employers, employee engagement is an after-thought despite the importance to the overall success of the CDHP initiative.  In my discussions with employers, many have a sense that they are not maximizing the cost savings opportunity provided by their CDHP, but too many have no idea how much money they are leaving on the table.

Employee engagement is more of an art than a science.  To capture the kind of savings described above, most experts agree that it requires focused and ongoing employee education.  Sure, you can offer incentives to encourage adoption and promote certain behaviors but at the end of the day, an employee will not choose a plan unless he or she understands how it works.  The typical consumer driven plan is complex and an employee doesn’t need to look at the plan very long to see that it involves taking on more financial responsibility.  After all, that’s the point of a CDHP.

And so, given the absence of time and impression of risk, most employees would just assume stick with what they know and choose the PPO/HMO option.  And that’s the state we find ourselves in with many employers unable to push employee enrollment figures past the single-digit mark.

Financial Wellness. Why Employees Turn to their Employers.

Published by JLarocque on March 29, 2010 in Benefits, Financial Education, Financial Tools, Financial Wellness and for Employers. 0 Comments Tags: .

In 2007, for the first time since MetLife began running their Annual MetLife Study of Employee Benefits Trends, more than half of employees surveyed indicated that they receive a majority of their financial products from their employer.

For most HR professionals this may seem somewhat intuitive.  Prior to 2008, many employers had built out their benefits, retirement and equity programs to compete in what was considered an all out war for talent.  So, it may not be surprising that the large investments that employers have made to offer a compelling total compensation package have made employers the number one source of financial products for their employees.

But there are some important implications of this shift.  Virtually all critical aspects of an employee’s financial plan are now available through their employer.  This includes core products that protect wealth – including disability, life insurance and many other types of insurance.  And it includes products that build wealth including retirement, college savings plans, equity compensation and many others.  The fact is, employees consider their workplace plans to be the foundation of their financial security.

When it comes to personal finance, it may be surprising to learn that many employees don’t turn to one of those name brand financial services firms when they need something, they turn to their employers.  Over the past two years, it’s amazing how many HR professionals we’ve met with have told us that their benefits call center was being inundated with financial planning questions that they were not permitted to answer (e.g. “Should I refinance my mortgage?”).  Employers have become the face of so many financial products and yet a majority of these employers are not equipped to help employees understand them, use them and benefit from them.

Two things here are certain:

  1. Over half of your employees receive a majority of their financial products from you, their employer
  2. As the face of so many important financial products, employees are likely turning to you for answers and assistance in securing their (and their family’s) financial futures

The question is…will you answer the call?  You’ve offered your employees a compelling set of benefits and compensation programs…will you make the investments that help employees use them and solve their financial issues?

April is Financial Literacy Month

Published by JLarocque on March 22, 2010 in Financial Education, Financial Tools, Financial Wellness and for Employers. 0 Comments Tags: , , .

Back in 2000, April was declared “Financial Literacy for Youth Month.”  Now, it’s just “Financial Literacy Month.”  Over the course of the last decade, it seems that us grown ups have shown that we really don’t know much more about money than our kids do – and therefore the Senate decided to drop the “youth” bit and include us adults in their call for better financial education.

And so what exactly are the folks in Washington trying to accomplish by dedicating an entire month to financial literacy?  Well, it’s quite simple actually.  See, the government recognizes that a key to restoring confidence in our financial system and maintaining America’s competitive advantage in the world is to provide financial education in our schools and workplaces.  And, while what we do in our schools is critical over the long-term, the best way to impact America’s reality today involves getting employers, or more specifically HR, to rally around the issue and help employees with their money.

Financial Literacy Month

Make the Most of Financial Literacy Month

In fact, those in Washington view the workplace as so critical to solving the financial literacy problem that recommendations have been made to extend tax incentives to employers that provide financial education (we’ll keep you updated on progress there).

You knew your job was tough, but seriously?  In addition to implementing that new talent management system, you have to restore confidence in America’s financial system?  Sounds like a lot of work.  Well, let’s take this one step at a time.  Here are some ideas for dipping your toe in the water and trying some things out come April:

  • Hold a “Creative Savers” contest.  Have employees submit creative ways they personally employ toconsistently live within their means and save for the future. It will be great for those who are struggling in this area to learn practical, everyday financial ideas that are making a positive difference in their co-workers lives.  And likely, while these ideas and practices can be quite creative, they will also tend to be relatively minor spending and/or saving tweaks that can be replicated in most budgets.  Have the 401(k) committee select the top three ideas, award some cool prizes to the winners and let the rest of the workforce benefit from their money magic.
  • Do a survey.  Financial Literacy month is a good time to take the money pulse of employees in your organization.  A well designed survey can help employees assess their financial situation and allow you to get a glimpse of the financial stress in your organization.  If you’re looking for a credible survey, I highly recommend the Personal Financial Wellness Scale which was built based on the research of Dr. E. ThomasGarman.  Uniquely, this scale allows employees (and HR) to compare results against national norms.
  • Do some seminars. Financial literacy month offers a great reason to reach out to your vendors.  You may want to start by calling your 401(k) administrator for retirement and investing related topics.  But don’t stop there.  There are a number of organizations that provide onsite financial workshops.  Some of these organizations are fee only, while others have programs where fees may be waived altogether.  If you are considering a no cost seminar provider, be sure that you understand the goals and objectives of the vendor.
  • Hold a fair.  Nothing like a little free food and drink to get the attention of your workforce.  These days, so many of your employees get the majority of their financial and health products from you.   Invite your vendors and have them come with thoughtful ideas about how to help employees improve their financial health – this may include topics such as saving for retirement, how to cut health care expenses or keys to a rock solid income protection plan.  In addition, make members of your benefits and compensation staff available for one-on-one discussions.

If you implement one or more of these ideas, you may be surprised at what you learn about your employees.  Employee financial distress is pervasive and you may decide that this April cause deserves a year round effort.

Benefits Communications for Today’s Employee

Published by JLarocque on March 15, 2010 in Benefits. 0 Comments Tags: , .
Benefits Communications

Traditional Benefits Communications Not Reaching Today's Employee

We used to make this distinction about certain people being “web savvy” but these days it seems we’re all pretty web savvy – perhaps there is just different degrees.  One of my colleagues always uses the example of his 85 year old grandfather forwarding him YouTube clips to illustrate this point.

At GuideSpark we spend much of our time talking to employers about taking a modern approach to benefits communications.  When we meet with an HR professional for the first time to discuss their specific issues, many of them seem to have this sense that the world of communications has somehow passed them by.

Naturally, we start by helping HR professionals think through their current approach.  I’m not sure it has ever taken us more than a couple of minutes to convince someone that thick handbooks, brochures and text heavy Web pages are not getting the job done.  The fact is, if this HR professional didn’t believe this to be true, they wouldn’t have met with us in the first place.

And then, we walk through how to really create a Benefits Communications strategy that aligns with how employees are learning today.  Here are 3 guiding principles that we offer:

  • Utilize web-based multimedia.  According to comScore, U.S. Internet users watched an average of 187 videos per viewer in December 2009.  Employees are conditioned to expect rich media formats when accessing information and they want it available on demand.
  • Leverage communities and shared learning.  Blogs have become a legitimate corporate training ground and in February 2009, social media usage exceeded that of email for the first time.  While not all subjects are appropriate for a shared learning environment, when making decisions, employees often just want to know what others are doing.  Build a community around your benefits and allow them to share information through polls and message boards.
  • Accommodate short attention spans.  Competing for just a few minutes of a busy employee’s time has never been more challenging.  Attention spans are shrinking each day.  A great example of this phenomenon is Twitter.  Twitter limits communications to just 145 characters.  To be effective in communicating to this crowd, you must work to make your benefits communications modular, concise and meaty.

Start with these and we promise you that your Benefits Communications will begin to have the impact that you desire.

Contrasting your FSA Employee Benefit and the Child and Dependent Care Tax Credit

Published by JLarocque on January 12, 2010 in Benefits, Financial Education and Financial Wellness. 0 Comments Tags: , , , .

A mainstay of employer Benefits Communications is to preach the virtues of Flexible Spending Accounts.  But is there perhaps a better tax opportunity out there for your dependent care related expenses?

Tax is an important area of focus when it comes to attaining a productive benefits education.  Before digging into the details of this particular tax opportunity, it’s important that you understand the difference between a tax deduction and a tax credit.  Tax deductions are taken “off the top” and ultimately reduce your taxable income, and, of course your taxable income is what ultimately drives the amount of taxes owed.  A tax credit on the other hand, is a dollar-for-dollar reduction subtracted from your tax liability.  If you had a $50 tax credit, it’s sort of like the government saying that they are giving you credit for having already paid them $50 in tax.

You may or may not be aware of the Child and Dependent Care Tax Credit available for work-related dependent care expenses.  This tax credit is calculated by applying a percentage to your total work-related dependent care expenses.  This percentage can be as high as 35% or as low as 20% depending on your adjusted gross income.  Now, there are a couple of rules to be aware of:

  • The work related dependent care expenses that are applied may not exceed $3,000 for one qualifying dependent and $6,000 for two or more
  • AND importantly, you can’t claim expenses for the purposes of the Child and Dependent Care Tax Credit that you’ve directed into your dependent care FSA

This raises an important question to ask yourself.   Should you apply eligible expenses towards the Dependent Care FSA or Dependent Care Tax Credit?  Well, this of course, will depend on your personal situation.

A good first step is to review the worksheet that the IRS has put together on the Child and Dependent Care Tax Credit.  You’ll want to understand eligibility requirements and the amount of the credit, based on your adjusted gross income.  Now, apply that percentage to your projected work-related dependent care expenses for the year (keeping in mind the IRS limits) to come up with your potential tax credit.  You’ll likely want to work with a tax advisor to compare this Tax Credit with what the tax benefits of the Dependent Care FSA Tax Deduction.

It may be the case that you have work related dependent care expenses that exceed the IRS limits for both the Child and Dependent Care Tax Credit and Dependent Care FSA.  In this case, it may be possible to leverage both of these opportunities.  Because tax laws are complex and evolving, it’s important that you consult your tax advisor to understand how these two opportunities apply to your particular situation.

GuideSpark Financial Wellness Webinar

Published by JLarocque on December 10, 2009 in Financial Wellness, GuideSpark and for Employers. 0 Comments Tags: , .

On December 8, GuideSpark presented a webinar called “The Need for Financial Wellness”.  In this webinar we discussed how poor financial health is affecting companies and their employees.  The webinar was well attended and definitely shows that financial wellness is becoming an important  issue at corporations across America.  In fact, the following poll shows that most attendees believed that 26-50% of employees are being negatively affected by financial issues.

Financial Wellness Poll Results

These results are not surprising based on our experience.  Financial issues are a productivity drain for corporations and is something we believe companies will begin to address in the coming years.  If you missed the webinar, please let us know and we’ll let you know when we have our next one.