How Employers Can Raise Financial Wellness and Health Literacy

October 01, 2019 - Twice as many employers are offering workplace financial wellness programs in 2019 than in 2018, yet financial and health literacy still leave something to be desired, revealed a Bank of America study.

“When employees live their best financial lives, it shows in the workplace,” said Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America. “While we should celebrate the increasing prevalence of financial wellness programs, more can be done to drive discussion and engagement about benefits that support employees’ complex financial journeys, including caregiving duties, rising health care costs, and funding longer lives.”

Four years ago, only 24 percent of employers offered financial wellness programs, according to Bank of America’s research. Today, that statistic has more than doubled, with 53 percent of employers provide access to financial wellness resources.

Despite this progress, employees have not necessarily experienced the benefits of these programs.

In fact, employees feel less positive about their financial wellness now than in 2018. Fifty-five percent say their financial wellness is “good” or “excellent,” which is over half of the workforce but is also 6 percentage points lower than last year.

READ MORE: Large Employers Focused on Quality and Variety for Open Enrollment

Healthcare represents a major financial challenge for most employees, yet most employees have low health literacy, the Bank of America study showed. Employees spend on average $7,685 each year in healthcare dollars.

These expenditures do not end when an employee leaves the workplace. Rather, healthcare costs rise in retirement. A study published in January 2019 revealed that 45 percent of employees who are about to enter retirement are unsure whether they will be able to cover their healthcare costs.

Despite anxieties about healthcare spending, employees did not know how to keep costs low. Fifty-three percent delayed or cancelled appointments or procedures, believing that it would result in overall savings, the Bank of America data showed.

Apart from primary care, employees also struggle to understand the financial structure of the healthcare system, including ways that it can work to their advantage.

The study found that employees did not realize the impact of managed care on overall financial wellness, placing it last among fundamental contributors to strong financial wellness.

READ MORE: Uninsurance Rate Rises as More Attain Employer-Sponsored Coverage

Even on some healthcare financing subjects that employees claimed to understand, they showed a lack of knowledge.

For example, healthcare savings accounts (HSAs) are triple tax-advantaged and designed to help individuals accrue healthcare savings for later in life when high bills are more likely to occur. Sixty-five percent of the survey participants said that they had a “solid understanding” of HSAs. However, when asked to identify four components of an HSA, only seven percent succeeded.

The rate of financial wellness and healthcare spending literacy was not the same across all employee populations. Instead, employees’ overall financial wellness was strongly stratified based on certain demographics.

Men and women tended to experience financial wellness differently, the survey showed. Among women, 43 percent felt financially well, as opposed to 65 percent of men. Furthermore, men tended to put away over three times what women did in retirement savings.

Caregivers also face unique financial wellness challenges, particularly tied to healthcare.

READ MORE: Employers Focus on High-Cost Claims, Drug Spending into 2020

Caregivers make up forty-five percent of the workforce, but employers are unaware the caregiver population is so high. Employees sense the lack of awareness. Sixty-two percent of employees think that their employers do not know that they are caregivers.

Payers and employers alike are starting to recognize the health and financial challenges caregivers face. In the last couple of months, major payers have taken steps to ensuring caregivers have the personal support they need.

For example, in June 2019, Aetna partnered with CareLinx to enable Medicare members to access qualified caregivers, seeking to answer caregivers’ greatest need: personal and informative assistance.

Cigna supports caregivers through its partnership with Memorial Sloan Kettering, which they announced in August 2019. As part of its collaborative care model, the payer provides caregivers with oncological education and assistance for end of life and palliative care.

While Aetna, Cigna, other payers attend to the interpersonal needs, employers are doing their part by increasing caregiving benefits. Today, as Bank of America’s study discovered, most employers provide caregiving benefits and 34 percent of employees utilize them.

While this is an improvement, 71 percent of employees still do not know about employer-sponsored caregiving services.

To tackle these issues, Bank of America offered three suggestions for employers.

First, the financial institution urged employers to increase awareness about the rise in healthcare spending and resources for employees to obtain assistance, such as through an HSA.

Second, Bank of America told employers to cultivate a “culture of caring” that allows caregivers to be vulnerable when they need help and to connect them with proper assistance.

Lastly, Bank of America encouraged employers to continue building their diversity and inclusion programs and communicate the benefits to employees and managers.

“By educating employees on rising health care costs, bringing caregiving conversations into the open, and demonstrating commitment to diversity and inclusion programs, employers can play a more proactive role in helping them improve their financial lives,” said Lisa Margeson, head of retirement client experience and communications at Bank of America.