Let’s face it. Helping employees understand your benefits package is tough.
This is especially true when it comes to explaining the intricacies of pre-tax accounts like 401(k)s, Dependent Care Flexible Spending Accounts (DCFSAs), and Health Savings Accounts (HSAs). (If it were easy, more than half of American employers wouldn’t be struggling to effectively educate employees about their benefits.)
And not just helping employees understand them, but showing them how to optimize their contribution levels based on their unique financial, family, and life circumstances so that everyone unveils thousands of dollars of hidden savings.
Yes, we said everyone saves on taxes and premiums through strategic use of these accounts.
But aside from real cash savings, did you know there are more reasons to help employees take full advantage of their benefits?
(Think: talent acquisition, employee retention, major time savings, compliance, and more. Oh my!)
We dive into this and much more in our comprehensive blog about increasing return on investment (ROI) on pre-tax benefits.
The importance of showing the personalized value of pre-tax employee benefits
In a world where 63% of employees would leave their company if offered better benefits elsewhere and 66% are waiting to review their company’s new benefits offering before making a decision about staying or leaving, offering hyper-personalization of benefits will give you a leg up over the competition.
The game is no longer only about structuring, managing, and promoting large benefits and compensation packages.
It’s time to take things a bit deeper.
How do you show employees the additional value you’re giving them by making certain benefits (e.g. pre-tax accounts) available within your benefits package? How do you help them choose between competing options they don’t understand? And how do you help them make smarter decisions based on their unique circumstances?
No matter the answer, one thing is for certain: helping employees optimize their pre-tax accounts will improve the overall employee experience.
5 reasons why helping employees get personalized value out of pre-tax benefits increases ROI
Helping employees tailor their contribution levels through financial, tax, and benefits guidance has positive ROI for both them and your business.
1. Retain employees longer
Over half of employees are ready to jump at a new job opportunity—strictly due to benefits.
Are you mentally prepared at the possibility of losing the majority of your workforce at any given moment?
Helping employees get personalized value out of their benefits package is one of the best ways to help them appreciate, utilize, and maximize their benefits for overall success.
And by measuring your benefits’ success (more on this later!) and showing proven results, you’ll retain your hard-working employees throughout the ups and downs of the ever-changing job market.
2. Attract new talent easier
It’s not news that healthcare and other benefits are one of the main factors U.S. job seekers consider when accepting a position.
Put yourself ahead of the competition by showing high-potential candidates that you don’t only offer competitive compensation and benefits packages. You grant them the opportunity to personalize their benefits because you care.
It’s an employee financial wellness perk employees are demanding.
3. Deliver salary increase without increase in payroll budget
The average benefit costs are just over 30% of total compensation. (That’s quite a chunk of your budget to invest in something that employees aren’t necessarily using.)
By helping your employees make smarter benefit decisions with their pre-tax accounts based on their unique financial circumstances, you’ll help them save.
In other words, your employees increase their take-home pay without the additional payroll expense on your end—simply by optimizing the way they contribute to their accounts that you have already invested in.
It’s a win-win for all.
(And if you ask us, this couldn’t come at a better time as finances were the top cause of employee stress last year.)
4. Increase benefits adoption and engagement
By taking the time to educate employees about their workplace benefits, you’ll increase comprehension, utilization, and overall experience with your benefits package for all employees.
Highly compensated employees have access to costly financial advisors. Help all employees fully understand their benefits in the context of their personal financial situations and reap the benefits.
As the employer, you’ll be able to provide both highly and non-highly compensated employees with support, putting them both on the same playing field.
This will increase benefits adoption and engagement across the board, allowing your organization to more easily meet non-discrimination requirements.
5. Save the company time and money
When helping your employees understand the personalized value of their benefits, benefits adoption and engagement increases across the board.
The end result?
You reduce your payroll taxes.
You reduce your healthcare premiums.
You save countless hours answering individual personal financial questions.
You have better chances of passing your non-discrimination tests, which means you won’t have to adjust contributions, and neither you nor your employees will be surprised by a hefty tax bill.
The best part about it? You’ll have the savings and data to back up further people, Human Resources, benefits, or tech investments.
How to help employees get personalized value out of pre-tax benefits
Here are a couple ways you can grant your employees the knowledge they need to optimize their pre-tax accounts based on their unique circumstances:
Organize personalized ongoing trainings for your team
To facilitate benefit education, you can host virtual or in-person benefits training that will help your team understand your organization’s benefits better.
While this option may sound good on paper, there are a couple flaws.
For starters, these trainings are often yearly, around the time of open enrollment. Being honest with yourself, does a webinar once a year cut it? And does it cover every individual’s personal situation?
And if the training offers self-study materials post-completion, that’s also not the most effective way to foster continued education. Who actually reads those PDFs anyways?
Yes, year-round training helps employees absorb complex financial and health concepts they try to cram in during open enrollment. But how do you make the sessions personalized enough so each employee feels special?
Hire an outside vendor
A personalized financial wellness and benefits navigation partner can help you maximize ROI on your current pre-tax benefits packages.
Your employees get personalized support. The value of your benefits is clear, and you can outsource individual benefit questions. Once you are onboarded, the software and coaches handle the rest.
For example, with an employee financial wellness vendor like Pasito, you can showcase the personalized value of your benefits in the context of your employee’s personal goals and lives.
Pasito shows your employees how to maximize their contributions to your company’s pre-tax benefits via tailored financial and tax guidance. Any complicated finance or tax questions are directed to the app and its team of financial experts instead of burdening the human resources team.
Increasing ROI on your benefits starts with awareness
Realizing your company is not getting the most out of your current pre-tax benefits offerings boils down to connecting the dots.
Is your HR team spending a lot of time on benefits education to encourage usage and adoption? Do they constantly receive complex, tax- and finance-related questions from employees? Are they looped into customer support issues with your benefits providers and vendors?
If your current employee benefits package doesn’t streamline the overall employee experience, it may be time to rethink your options.
And rethinking your benefits starts with assessing the success of your current ones.
Download our ultimate guide to measuring employee benefits success to get on the right track to increasing ROI on employee benefits.