Bank of America annual 2019 Workplace Benefits Report, reveals more than twice as many companies are offering workplace financial wellness programs to employees today compared to four years ago (53 percent today versus 24 percent in 2015). However, awareness and understanding of critical health care savings and caregiving support benefits are lacking.
Now in its ninth edition, this report tracks the importance of benefit programs and uncovers an expanded set of opportunities for employers to improve their employees’ financial wellness. Based on a nationwide survey of 996 employers and 804 employees, key findings include:
- Majority of employees feel financially well: 55 percent of employees today rate their own financial wellness as good or excellent, down from 61 percent a year ago. Employees who rate their financial wellness positively are more likely to feel that they can effectively manage their day-to-day finances, pay bills while saving for future goals, and that their retirement savings are on track.
- Women lag men in retirement savings: Women have saved far less for retirement, reporting median retirement savings of $30,000, compared to $100,000 for men. This may be contributing to the fact that only 43 percent of women report feeling financially well, compared to 65 percent of men.
- Impact of caregiving on the workplace: 45 percent of employees perform caregiving duties for a family member, a number significantly underestimated by employers. In fact, 62 percent of caregiver employees don’t believe their employer knows they’re a caregiver. Caregivers report missing an average of 12 hours of work per month due to caregiving responsibilities.
- Caregiving benefit disconnect: While 88 percent of employers offer some type of caregiving resources, 71 percent of employees are unaware of these offerings, and just 34 percent of caregiver employees have taken advantage of employer resources.
- Personal advice continues to be a top priority: Employees rank advice from a professional as their top priority for a financial wellness program, followed by information on financial topics beyond 401(k) education, and the availability of financial solutions and services to help with their entire financial lives.
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.”
The health care knowledge gap
The report cites that health care costs are a significant financial burden for employees, costing each an average of $7,685 annually1. These costs only increase in retirement. A 65-year-old couple, on average, will need $296,000 to cover out-of-pocket health care expenses throughout their retirement2; yet, when employees were asked about the core building blocks of financial wellness, managing health care costs ranked last. Also surprising, 53 percent of employees have skipped or postponed at least one important medical activity to save money, including appointments (32 percent), tests/procedures (21 percent) and medication purchases (14 percent).
Amid growing concerns about health care costs, triple tax-advantaged3 health savings accounts (HSAs) have emerged as a critical tool in saving for health care costs today and later in life. Despite their importance, a true understanding of HSA benefits among both employees and employers is lacking. While 57 percent of employees say they have a good understanding of HSAs, only 11 percent correctly identified four basic attributes. Similarly, while 65 percent of employers claim they have a solid understanding of HSAs, a mere 7 percent accurately identified features of an HSA.
Engagement in diversity and inclusion programs is lacking
Diversity and inclusion (D&I) programs have a wide range of benefits. Employers report that D&I programs contribute to a strong company culture, improve brand image, help retain top talent, and are necessary to keep up within their industry4. Still, 49 percent of employers do not offer D&I programs today, and among them, only 27 percent are considering offering these programs in the future.
For organizations that do offer D&I programs (51 percent), many say lack of employee engagement is impeding their impact. While employers agree the success of their D&I program depends on strong executive support and widespread employee engagement, only 49 percent of employees who are aware of the D&I programs at their workplace participate.
At Bank of America, we’re committed to partnering with employers on financial wellness solutions through a holistic and integrated approach to workplace benefits that’s personal and actionable for each and every employee,” said Lisa Margeson, head of Retirement Client Experience and Communications at Bank of America. “By educating employees on rising health care costs, bringing caregiving conversations into the open, and demonstrating commitment to D&I programs, employers can play a more proactive role in helping them improve their financial lives.”
Bank of America’s Retirement & Benefit Plan Services organization serves more than 30,000 companies of all sizes and nearly 6 million employees. Bank of America offers institutional client employees a range of financial benefit programs and solutions to help them pursue their financial future, including retirement and health savings vehicles, and financial education through financial wellness programs.
For more findings from the Bank of America Workplace Benefits Report, including tips for employers, click here.
Workplace Benefits Report Methodology
1 2018 Employer Health Benefits Survey, KFF, October 2018.
2 EBRI Issue Brief 460, October 2018.
3 About triple tax advantages: Participants can receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses they incur after they establish the HSA. If they receive distributions for other reasons, the amount withdrawn will be subject to income tax and may be subject to an additional 20 percent tax. Any interest or earnings on the assets in the account are tax-free. Participants may be able to claim a tax deduction for contributions made to the HSA. We recommend that applicants and employers contact qualified tax or legal counsel before establishing an HSA.
4 McKinsey, “Delivering Through Diversity,” January 2018 and Deloitte Review, Issue 22. “The diversity and inclusion revolution: 8 powerful truths,” January 2018.
Escalent conducted an online survey with employees and employers, who responded between February 1 and February 26, 2019. To qualify for the survey, employees had to be current participants in the 401(k) plan and employers had to currently offer a 401(k) plan; the plans did not have to be provided by Bank of America. Bank of America was not identified as the sponsor of the study.