Student Loan Help Emerges as Top Benefit Option
Student loan programs are the No. 1 new benefit that companies are planning to start providing to their employees during their open enrollment period this year, according to Employee Benefit Adviser’s Open Enrollment Readiness Benchmark.
The benchmark, now a quarterly feature, surveys employers on critical elements of open enrollment (plan design, prep, management and analysis), with the ultimate goal of enabling benefit advisers to help employer clients better manage the benefits process during open enrollment and beyond.
With U.S. student loan debt reaching $1.52 trillion as of June 2018, according to Forbes, it’s not surprising that student loan assistance ranked highest in the list of benefits that employers plan to start providing.
“College tuition is a growing issue of stress for many employees and their dependents,” one employer says. “We are looking for realistic ways to assist those of our employees with student loans and to help our recruiting and retention efforts.”
Advisers have taken note of this change. “Student loan programs are trending right now, but they still rank the lowest among the benefits companies currently provide, because they are a newer benefit,” says Allison Wendelberger, national sales director at Voluntary Benefit Advisors. “Advisers should be going to their clients and saying, ‘Hey, a lot of companies are starting to offer student loan assistance, and I think it would be a wise thing for you to look at this.’ It’ll be interesting to see where it ranks five years from now.”
Health, fitness and wellness incentive programs rank second to student loan assistance as the most popular new benefit. The popularity of these programs can be seen by the fact that 65% of employers already provide them, with one quarter planning to update their offering this year.
“There are so many things going on in the wellness space right now,it’s pretty amazing, and it keeps evolving,” Wendelberger says.
Companies are keen to help their employees manage the cost of their benefits. The biggest challenge to employers finalizing health, voluntary, pharmacy and wellness plans during the first quarter is cost containment.
Flexible spending accounts are the most popular among the various benefit cost management strategies offered by survey respondents. About 75% have already implemented flexible spending accounts, with an additional 2% planning to implement them for the first time this year. Offering telemedicine benefits and high deductible health plans are a joint second (69%).
A growing interest in telemedicine benefits is noticeable. Indeed, 8% of respondents plan to introduce them for the first time this year, which will bring them on a par with flexible spending accounts.
Benefit advisers can help employers by educating them to make sure that employees fully understand the benefits of the new offerings. This can increase usage and, in the case of a benefit like telemedicine, potentially decrease employer costs over time.
Software plays an important part in the open enrollment process and advisers should note that its use is set to increase across the board. HR administration software is most commonly used, with 64% of respondents already taking advantage of its ability to facilitate core HR systems of record and employee self-service, and 7% are planning to use it for the upcoming open enrollment period for the first time. Employee benefits admin software at 58% and integrating software solutions at 56% are also well utilized. An additional 7% and 6% of employers respectively plan to use them for the first time this year. Advisers can help overworked HR departments by researching best-of-breed software solutions that can meet the company’s needs, keeping in mind that those needs may change as companies grow.
By the numbers
In terms of overall open enrollment readiness scores (as of Q1 2019), employers with a Q1 benefit start date are in good shape with a composite score of 44. In particular, for the benefit plan design phase, the composite score of 65 indicates an expected level of readiness for this phase for this time of the year.
Individually, high scores were noted for selecting retirement plans (76) and selecting benefit brokers/advisers (74 ).
One area of concern, however, is in selecting voluntary plans, with a score of 59. Employers are falling behind for a number of reasons. One employer notes, “We’re still evaluating new options we haven’t considered before.” Another says, “We’re determining interest and the difference between what people say they want and what they are willing to pay for.”
While the numbers for preparation (35), management (26) and program analysis (48) appear some way from completion, Wendelberger sees no cause for alarm.
“Like anything in life, you have a bell curve,” she says. “A fair share of employers are really way ahead of the curve, while at the other extreme some are going to be rushed at the last minute.”