Rethinking how to prepare for the unexpected
5 protection options employees may not know they have
Emergency savings are at the foundation of every wise financial plan. Yet for Americans, there’s still a big gap. A connected offering with these benefits at the center could help employees become better-positioned to financially plan for the unexpected – and protect their retirement income.
With fewer than 4 in 10 Americans able to pay a surprise $1,000 bill,1 having an emergency savings is key to financially protecting employees, whether it’s funding an unexpected car or home repair to covering unforeseen medical bills.
However, having an emergency savings is not the only answer for preparing for the unexpected – so is addressing employee anxiety around finances. There are more employer-offered protections employees may not even realize they have.
Employers are in a unique position to coach their employees throughout the year and shift how they think about their workplace benefits and savings decisions. With a more holistic view, employees can better understand how these decisions are interconnected – and how they impact their financial future.
Why connect the dots between workplace benefits and savings?
Voya research found many employees are paying more than they need to for their health benefits, which is contributing to an inability to save for retirement.2
In fact, 65% of survey respondents enrolled in a traditional PPO plan compared to 35% who chose a high deductible health plan (HDHP)2 – despite $500-$2,500 additional expenses associated with the PPO plan in all scenarios.2 These additional expenses, if diverted towards retirement savings, could enable a 30%-increase in overall contribution rates to retirement.
Research has also shown that employees who do not optimize their benefits spend and are either over or under insured contribute much less toward retirement.
Employers have an opportunity to support their employees to save more by connecting them to more meaningful workplace benefits and savings solutions. This can also help maximize employee financial wellness and savings potential – so they can retire on time.
Interdependent benefits decisions support the whole employee, enabling them to achieve the healthy balance of living for today, preparing for tomorrow and feeling confident about the future.
5 workplace solutions that further protect employees
Besides encouraging employees to save for an emergency on their own, here are five additional workplace protection benefits employers can offer and promote to help employees prepare for the unexpected – and stay on track for retirement:
1. Health account solutions
Employees can plan and save for the future with health account solutions such as Health Savings Accounts. Based on how plan participants contribute to and use them, these tax-advantaged accounts may also help them avoid dipping into their retirement savings:
- Health Savings Accounts (HSAs) – Enable employees to set aside pre-tax dollars to pay for eligible medical expenses today and into retirement. The balance rolls over and can be invested once a certain threshold is reached, allowing for triple tax advantages.
- Flexible Spending Accounts (FSAs) – Health FSAs and Limited Purpose FSAs can help employees manage their current health care costs using pre-tax dollars to pay for eligible expenses throughout the year – these accounts do not roll over year after year, but depending on plan administrator rules, a carryover balance or grace period to use those funds could be available.
- Commuter Benefit Accounts – Help employees set aside pre-tax dollars each month to help manage transit and/or parking expenses. The balance can also roll over (year to year and month to month) while an employee maintains an open account.
2. Emergency savings solution
Employers may also want to consider an Emergency Savings solution that enables employees to make contributions to a dedicated emergency savings fund to help fund emergencies. They can even automate their contributions through payroll deduction or ACH transfers. And employers can make contributions through an employer match or ad hoc contributions.
3. Supplemental health insurance benefits
Supplemental insurance can offer an additional layer of protection – this type of insurance pays benefits when specifically covered events occur such as an accident, critical illness or hospitalization. The insured can use the paid benefit to help with any out-of-pocket expenses not covered by their medical plan, or even childcare, home health care costs or any of their regular household expenses like rent or groceries. Benefits are used as the insured chooses.
A Voya survey of more than 1,000 adults reveals that nearly three-quarters of employed individuals who are benefits eligible (70%) agree that they are more likely to work for an employer who offers employee-paid voluntary benefits.3
These optional coverages can help to minimize the financial impact of a covered event – and perhaps even ease some of the anxiety around increasing out-of-pocket health care costs:
- Critical Illness Insurance – Pays a lump-sum benefit if the insured is diagnosed with a covered disease or condition.
- Accident Insurance – Pays benefits for specific injuries and events resulting from a covered accident.
- Hospital Indemnity Insurance – Pays a daily benefit if the insured has a covered stay in a hospital.
It’s important to note that Critical Illness, Accident and Hospital Confinement Indemnity Insurance are limited benefit policies. This is not health insurance and does not satisfy the requirement of minimum essential coverage under the Affordable Care Act (ACA).
4. Disability income insurance
Annually, approximately 5% of American workers will experience a short-term disability (typically six months or less) due to an illness, injury or pregnancy.4 The most common causes of long-term disability are:4
- Musculoskeletal disorders
- Muscle/ligament fractures & sprains
- Mental health issues
- Circulatory (heart attack & stroke)
That’s why disability income coverage is another key to an employee’s overall financial health:
- Short Term Disability Income Insurance (STD) – Pays benefits to replace a portion of an employee’s earnings when they can’t work due to an illness or injury.
- Long Term Disability Income Insurance (LTD) – Continues to replace some of an employee’s earnings if they remain disabled after their Short Term Disability coverage, or waiting period if applicable, runs out.
5. Life insurance
Life Insurance is another tool employees can use to help financially prepare for the future – it pays a benefit to the insured’s beneficiaries if they pass away:
- Group Term Life Insurance – Coverage can be employer-paid or supplemented by the employee. Some employers may be eligible to include services like an Employee Assistance Program (EAP), funeral planning, will prep and concierge services, or travel assistance. Availability of these services will vary by state.
- Whole Life Insurance – This individual policy is designed to provide life insurance coverage over a lifetime. The insurance coverage, premium amounts and accumulated cash value are guaranteed as long as employees make the required premium payments.
There are several benefits when employers educate their employees, helping them to rethink how to prepare for the unexpected and see the interconnection of their workplace benefits and savings decisions. This can help maximize the value of a benefits program, improve retirement outcomes, reduce employee financial stress, and save time and energy for everyone with a simplified experience.
This is the third article in a three-part series where we explore how employers can create more value for employees by connecting the unconnected when it comes to benefits and savings needs in the workplace.Read the other articles in this series:
- Evolving workplace benefits and savings decisions to year-long moments that matter
- A new retirement mindset: 4 solutions to help employees rethink retirement planning
Find out how you can get your workplace benefits and savings in sync or contact your Voya representative.
- Bennet, Karen. “Survey: Less than half of Americans have savings to cover a $1,000 surprise expense.” Bankrate’s January Financial Security Index, bankrate.com, January 19, 2022.
- Based on an online survey conducted by Voya Financial, in partnership with Russell Research, between September 2-6, 2020, among 315 U.S. Consumers currently enrolled in an employer-sponsored health plan.
- Based on the results of a Voya Financial survey conducted January 4-5, 2022, on the Ipsos eNation omnibus online platform among 1,005 adults, featuring 443 working Americans and 293 eligible for benefits, aged 18+ in the U.S.
- “Disability statistics.” Council for Disability Awareness, last updated September 30, 2021.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial advisor for specific advice about your individual situation.
Health Account Solutions, including Health Savings Accounts, Flexible Spending Accounts, Commuter Benefits, Health Reimbursement Arrangements, and COBRA Administration offered by Voya Benefits Company, LLC (in New York, doing business as Voya BC, LLC). HSA custodial services provided by WEX Inc. For all other products, administration services provided in part by WEX Health, Inc.
This highlights some of the benefits of these accounts. If there is a discrepancy between this material and the plan documents, the plan documents will govern. Subject to any applicable agreements, Voya and WEX Health, Inc. reserve the right to amend or modify the services at any time.
The amount saved in taxes will vary depending on the amount set aside in the account, annual earnings, whether or not Social Security taxes are paid, the number of exemptions and deductions claimed, tax bracket and state and local tax regulations. Check with a tax advisor for information on whether your participation will affect tax savings. None of the information provided should be considered tax or legal advice.
Investments are not FDIC Insured, are not guaranteed by Voya Benefits Company, LLC (in New York, doing business as Voya BC, LLC), and may lose value. All investing involves risks of fluctuating prices and the uncertainties of return and yield inherent in investing. All security transactions involve substantial risk of loss.
Employee Assistance Program services are provided by FMLASource®, a ComPysch® company, Chicago, IL. Product provisions and availability may vary by state.
Funeral Planning, Will Prep and Concierge Services provided by Everest Funeral Package, LLC, Houston, TX. Services and availability may vary by state.
Voya Travel Assistance services are provided by Europ Assistance USA, Bethesda, MD. Services and availability may vary by state.
Insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Within the State of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya® family of companies. Voya Employee Benefits is a division of both companies. Product availability and specific provisions may vary by state.