Enhancing Financial Wellbeing Through Voluntary...
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Conduent Human Resource Services Enhancing Financial Wellbeing Through Voluntary Benefits January 26, 2017
Transcript of Enhancing Financial Wellbeing Through Voluntary...
Conduent Human Resource Services
Enhancing Financial Wellbeing
Through Voluntary Benefits January 26, 2017
Today’s Speakers
Ruth Hunt Principal
Engagement
Tom Kelly Principal
Voluntary Benefits
January 26, 2017 2
• Employee financial landscape
• Role of voluntary benefits in financial
wellbeing
• Making voluntary benefits work
• Questions?
3
Agenda
Employee Financial Landscape
Muscle Tension/
Back Pain
51%
31%
Migraines/
Headaches
44%
15%
Insomnia/
Sleep Trouble
39%
17%
High Blood
Pressure
33%
26%
Severe
Anxiety
29%
4%
Stomach
Ulcers
27%
8%
Severe
Depression
23%
4%
Heart
Attacks
6%
3%
• Seven out of ten under
stress
• 48% under financial stress
• One in five skipped work
• 61% impact on performance
• 75% are living paycheck to
paycheck
• 69% have less than $1,000 in
savings
People with high levels of financial stress
People with low levels of financial stress
Sources: AP-AOL Health Poll: Debt Stress: The Toll Owing Money Takes on the Body.
The American Psychology Association; PricewaterhouseCoopers, LLC; American Institute of Certified Public Accountants; Society for Human Resource Management; and Gallup.
2016 Retirement Confidence Survey, Employee Benefit Research Institute
CareerBuilder 2016 Survey January 26, 2017 4
Financial Stress in the Workplace
Source: Conduent 2016 Financial Wellbeing & Voluntary Benefits Survey.
HR leaders are “extremely concerned” or “very
concerned” about impact on financial wellbeing
71%
71%
68%
67%
67%
65%
65%
64%
64%
64%
64%
57%
Retire When Ready
Unexpected Medical Expenses
Long-Term Care/ Elder Care
Absorb Financial Shock
Right Amount of Life/Disability
Access to Financial Advice
Address Legal Issues
Reduce 401(k) Loans
Day-to-Day Expenses
Save for College
Improve Credit
Payoff Student Loans
55% Of companies are either working on implementing
financial wellbeing strategies, or plan to in the next
3 years.
78% Of employers view voluntary benefits as being
“extremely effective” or “very effective” in supporting
employee financial wellbeing.
January 26, 2017 5
Source: Conduent 2016 Financial Wellbeing & Voluntary Benefits Survey.
Top Resources Offered to Support Financial Wellbeing Future Emphasis on Voluntary Benefits
43% 43%
13%
1%
They will be part of ourstrategy.
They will be one of our threehighest priorities.
We will keep track of them,but not focus on them.
They will not be a topic weplan to spend much time on.
76%
41%
39%
36%
36%
35%
32%
31%
29%
26%
25%
24%
22%
19%
15%
Voluntary Benefits
Financial Health Assessment
Employee Workshops on Financial Topics
Financial Education Material
Retirement Planning Tools/Calculators
Money Management/Budgeting Tools
Personal Financing Guidance
Financial Wellbeing Vendor(s)
Retirement Modeling Tools
Access to Personal Financial Planners
Interactive Retirement/Investment Games
Integrated Recordkeeping Tools/Services
Retirement Drawdown Strategies
EAP
Robo-Investing
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Financial Stress in the Workplace
Workforce 2017
5 Generations Working Together
Silents Baby Boomers Generation X Millennials Generation Z
Financial
Outlook
• Concerned with keeping what
they’ve accumulated through
proper distribution strategies
• Worry about having enough
money for retirement
• Worry about covering medical
expenses in retirement
• Concerned about long-term
care and estate issues
• Impacted by chronic and
catastrophic illnesses
• Parents report greater stress
• Ages 35-54 have delayed
paying bills more often than
other groups to help manage
finances
• Highest legal needs (wills, real
estate, etc.)
• Pregnancy cost a top medical
concern
• Underinsured with life and
disability
• Highest financial stress
• 74% say money is top worry
• 33% use credit to pay for
items they can’t afford
• 42% have student loans (78%
of these say it impacts their
ability to reach other financial
goals)
• Want discounts and
convenience programs
• Benefit needs include portable
benefits, forced savings,
financial education
• Younger employees are most
stressed by “budgeting”
• Spend more time at work on
personal finances
2% 29% 33% 35%
1%
Sources include the American Psychology Association; PricewaterhouseCoopers, LLC; American Institute of Certified Public Accountants; Society for Human Resource Management; and Gallup.
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Employee View: The Four Pillars of Financial Success
Spend Smarter
Save More
Invest Better
Protect Wisely
“I can manage my daily finances,
absorb a financial shock”
“I’m on track to meet
my financial goals”
“I am able to enjoy life…
Throughout my lifetime”
Concepts from the Consumer Financial Protection Bureau.
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The Role of Voluntary Benefits: Spend Smarter, Save More, Protect Wisely
A well designed voluntary benefit
offering complements and
enhances existing benefit programs
while helping to support employees’
health, wealth and security needs.
Programs are typically employee paid and payroll deducted.
Financial
Wellbeing Health
• Accident
• Critical Illness
• Hospital Indemnity
• Limited Medical
• Telemedicine
• Dental
• Vision
Wealth
• Short-Term Disability
• Long-Term Disability
• Life Insurance (Term/Permanent)
• Long-Term Care
• Financial Wellness
Security
• Legal
• Identity Theft Protection
• Auto & Home Insurance
• Pet Insurance
• Payroll Purchasing
• Student Loan Refinancing
• Discounts
• Mortgages/Personal Loans
January 26, 2017 9
It Starts with Your Priorities
Financial
Wellbeing
Business/HR Priorities
• Employee Engagement
• Attraction and Retention
• Benefit Cost Containment
• Financial Stability of Workforce
• Improve Productivity
• Decrease 401(k) & 403(b) loans
Employee Financial Wellbeing = Employer Financial Wellbeing
January 26, 2017 10
Health Strategy
Spend Smarter/Protect Wisely
Voluntary Benefits Most Likely to Offer in Next 1-2 Years*
43%
48%
54%
Hospital Indemnity
Accident Coverage
Critical Illness
Hospital Indemnity Accident Plan Critical Illness
Increased employee deductible and coinsurance cost
Out-of-pocket expense
Lower Employee Out-of-Pocket Risk
Employers “Agreed” or “Strongly Agreed” Supplemental Medical Achieved the Following Goals for HDHP Strategy:
Conduent Voluntary Benefits & Financial Well-being Survey, March 2016.
January 26, 2017 11
78% Participation in HDHP
79% Employees Satisfaction with HDHP
78% Employee Cost Savings
88% Employer Cost Savings
Health Strategy
Spend Smarter/Protect Wisely
Note: Assumes employee coverage in CDH Plan: $1,500 deductible, 20% coinsurance, $5,600 out-of-pocket maximum = $3,200.
Employee chooses:
Hospital Indemnity Insurance
Jen has baby via conventional delivery.
Employee incurred expenses for services in and out of the hospital. In addition
to what the medical plan pays, Hospital Indemnity benefits are paid directly to
the employee.
Overall hospitalization charges before deductible and copay applied: $10,000
Employee Financial Impact
Employee Medical Out of Pocket* ($3,200)
Annual Premium Payment
of Hospital Indemnity Plan ($250)
Hospital Plan Benefit Payment to Employee ($2,200 admission and $200/day for 3-day stay)
$2,800
Net Employee Out of Pocket:
With Hospital Indemnity Coverage
Without Hospital Indemnity Coverage
($650)
($3,200)
January 26, 2017 12
Health Strategy
Spend Smarter/Protect Wisely
Note: Assumes employee coverage in CDH Plan: $1,500 deductible, 20% coinsurance, $5,600 out-of-pocket maximum = $2,200.
Employee chooses: Accident Insurance
James breaks his leg and is rushed to the emergency room. (Estimated cost: $5,000)
Employee incurred expenses for services in and out of ER. In addition to what
the core plan paid, Accident benefits were paid directly to the employee.
Employee Financial Impact
Employee Medical Out of Pocket* ($2,200)
Annual Premium Payment
of Accident Plan ($135)
Accident Plan Benefit Payment to Employee $2,200
Net Employee Out of Pocket:
With Accident Coverage
Without Accident Coverage
($135)
($2,200)
Ambulance $100
ER Treatment/X-ray $250
Broken Leg $1,500
Crutches $125
Follow-up Treatment (3 visits) $150
Physician Treatment (3 visits) $75
Total Cash Benefits $2,200
January 26, 2017 13
Wealth Strategy
Protect Wisely
1. LIMRA, “Facts from LIMRA: Life Insurance Awareness Month
2. U.S. Department of Health and Human Services. longtermcare.gov.
3. National Funeral Directors Association (NFDA)
More than 50% of employees expect survivors to have trouble
covering everyday expenses if the employee were to die tomorrow1
Needs persist long after the kids have graduated college or the
mortgage has been paid off
70% of Americans 65 years old and older will need LTC assistance2
Average U.S. funeral costs between $7,000 and $10,0003
Term Life Insurance
Permanent Life Insurance
Long-Term Care Insurance
Retiree Life Insurance
January 26, 2017 14
Wealth Strategy
Protect Wisely
Group LTD plus
Supplemental DI
Group LTD
Standard LTD policies could
leave some of your high earners
with only 15% to 45% of their
pre-disability income
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Security Strategy
Spend Smarter, Protect Wisely
Solution: Voluntary Purchasing Program
Financial Education
• Financial assessments and goal-setting
• Broad financial education
• Personalized, unbiased coaching
• Ongoing measurement of participation and progress
• Free credit report
Cash/Debt Management • Manageable payments through payroll deductions
• Easy qualification – no credit check required
• No overspending, typically limited to 6% of annual salary
Employee Engagement • Incentives for engagement
• Financial education portal with budgeting/learning tools
• Custom dashboard for key engagement metrics
Example: Meet Amber
Amber needs to buy a new refrigerator. She’s low on cash, and
her credit score is below prime.
What are Amber’s options?
70M Do not qualify for prime
credit and can’t turn to
friends and family for
help.
69% Do not have at least
$1,000 in emergency
savings.
21% Of 401(k) savers have an
outstanding loan against
their account.
January 26, 2017 16
Harris Poll on behalf of Purchasing Power, Nov. 19-23, 2015
PWC Employee Financial Wellness Survey, 2015 Results
Employee Benefit Research Institute, 401(k) Plan Asset Allocation, Account Balances, and Loan Activity
Subprime
Credit Rent-to-Own Title Loans Payday
Loans Bounced
Checks
25-41% 91% 300% 400% 17,000% Average
APR
Sources: 1December 3, 2015 CFPB report on The Consumer Credit Market
2http://scholarship.kentlaw.iit.edu/cgi/viewcontent.cgi?article=3993&context=cklawreview
3http://www.responsiblelending.org/other-consumer-loans/car-title-loans/research-analysis/CRL-Car-Title-exec.pdf
4http://www.consumerfinance.gov/askcfpb/1567/what-payday-loan.html
5http://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf
6http://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-small-debit-purchases-lead-to-expensive-overdraft-charges/
7https://s3.amazonaws.com/files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft-practices.pdf
Security Strategy
Save More/Spend Smarter/Protect Wisely
Multi-Year Strategy May
Include • Student Loan Refinancing
• Mortgage Program
• Purchasing Program
• Personal Loans
• Identity Theft Protection
• Financial Planning
• Concierges Services
• Employee Discount Mall
• Auto, Home and Rental Insurance
• Pet Insurance Millennials
• Highest financial stress; 74% say money is top worry
• 33% use credit to pay for items they can’t afford
• 42% have student loans (78% of these say it impacts
their ability to reach financial goals)
• Want discounts and convenience programs
• Have challenges establishing credit and
buying homes
• Pets are the new family!
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2% 29% 33% 35%
1%
The Value of an Integrated Approach
Source: Conduent Voluntary Benefits & Financial Wellbeing Survey, March 2016.
Employer interest in further integrating voluntary benefits with core benefits/core enrollment in next 1-3 years.
70%
15%
15%
Yes
No
Not Sure
Top Reasons for Integrating Voluntary Benefits:
32%
26%
23%
23%
22%
Support attraction/retention
Address unique needs of different demographic and generational segments
Complement HDHP strategy
Provide awareness and education about the need for financial protection
Fill benefit "gaps"
January 26, 2017 18
The Value of an Integrated Approach
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Company ABC Goal Results
Consistency • Establish consistent
voluntary benefits strategy
• Successfully harmonized voluntary benefits for over 100,000 employees
• Improved rates/underwriting
• Implemented platform and communication identity and channels
Value
Proposition &
Member
Experience
• Move VBs from an after-
thought to an integrated
part of the EVP
• Support total wellbeing
• Promote engagement and
enhanced consumerism
• Integrated with the annual enrollment process
• Aligned VB communication plan with EVP and wellbeing strategy
• Paired together like benefits (voluntary and core) during enrollment
• Increased participation in supplemental medical by over 570%
• HSA contributions rose by $116; those electing VB increased $359
Administrative
Simplicity
• Enable ease of
communication and
explanation, online
navigation, enrollment and
administration
• Successfully launched two phases of voluntary benefits
• Centralized and streamlined management of partners
• Integrated data from all vendors
• Consolidated confirmation statements (elections and deductions)
• Developed and documented administrative process flows
• Developed consolidated payroll/remittance process
Action
Orientation
• Drive engagement and
participation
• Enrolled over 20,170 across all plans
• Achieved strong participation across age groups
• Shifted average salary of purchasers from lower to mid salary levels,
demonstrating increased understanding of value across pay levels
Clients Moving from
Non-Integrated Strategy
to Integrated Strategy
Participation by policy count
after transition:
3-5x higher participation
Lessons Learned in VB Communications
January 26, 2017 20
With providers: “Partner” but customize • Co-brand where possible; if ERISA concerns, emphasize choice and use disclaimers
• Leverage vendor communications but customize to your message and integrate, e.g., leverage teachable moments at open
enrollment but also promote periodically
• Make it easy with technology – and don’t forget the spouse at home
Know your audience: Push solutions, not just products • Gather data: audience demographics, benefit elections, survey and focus group research (consider pre-testing) to prioritize
product needs and design communication strategy
• Consider “what if” scenarios to help varying employees/situations visualize personal value
• Monitor data and response for future updates
For management: Build the business case • Financial wellbeing is more than retirement and 401(k) savings plans
• Long-term saving isn’t possible without short-term financial management
• Addressing financial wellbeing also enhances physical and mental/emotional wellbeing
• Voluntary benefits can move from an “afterthought” or “add-on” to a valued part of our EVP
Examples: Branding and Messaging Strategies
Protection Appeal: Get covered; worry less
To drive understanding, perceived value, security and wellbeing
Total Rewards Appeal: Get more; something for all
Wellbeing Appeal: Get a better life
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Messages: Examples to Meet Audience Needs • Expanded choice – personalize a package to support your unique
physical, financial and other security needs – whatever your life
stage
• Peace of mind – safety nets reduce your out-of-pocket risks,
reduce identity theft or legal concerns, and more
• Savings – group purchasing and discounts mean more money
left for other basics and priorities
• Convenience – easy payment through payroll deduction
• Access – minimal (or no) pre-existing condition exclusions
• Decision support – help meeting your needs
• Experiences – popular ticket discounts (millennials, families)
January 26, 2017 22
Keys to Wellbeing
“A lack of worry about money
has more than double the
impact of income on overall
wellbeing.”
- Gallup research
Tactic: Financial Wellbeing Assessment • Decision support quiz educates
while self-assessing wellbeing
needs
• Scoring can recommend
solutions and invite further
exploration
January 26, 2017 23
Scenarios Support Decision-Making
January 26, 2017 24
New supplemental medical
plans introduced
• All with no pre-existing condition limitations
• Goal to show how new plans complement the
medical plans
Enrollment results
• Consumer-driven health plan elections
doubled; HSA contributions also rose
• Supplemental plan elections
– 20% Hospital Indemnity
– 25% Accident
– 15% Critical Illness
In Closing
• Voluntary benefits play a key role in supporting total wellbeing
• Providing the right personalized mix of voluntary benefits to meet specific health, wealth and security
needs supports both employee and employer financial being
• In order to achieve desired results, create a truly integrated benefit experience for the employee and
employer including design, enrollment, communications, and administration
January 26, 2017 25
Ruth Hunt Principal
Engagement
612.805.2387
Tom Kelly Principal
Voluntary Benefits
515.330.7476
Questions?
January 26, 2017 26
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