This article highlights three HR Programs that may just be worth consideration at this time. None of these three programs are brand new ideas but each has continued to gain popularity. All programs have pros and cons associated with them and organizations need to consider the positive and the negative impacts to both their organization and their employee population before implementing any new program.
Defined Contribution Healthcare
With the enactment of the Affordable Care Act (ACA), the launch of insurance exchanges, and the increasing cost of healthcare, it is an opportune time for employers to re-access the healthcare benefits that they offer to employees. One option to consider is Defined Contribution Healthcare (DC Plans). DC Plans give employers the option to shift some of the responsibility for healthcare to the employee. As opposed to the traditional Defined Benefit Healthcare plans where an employer offers healthcare plans with defined benefits, DC Plans give the employers a choice of setting a dollar contribution amount towards an employee’s healthcare. The employee is then responsible for researching and purchasing their own insurance policies. The Employer can work with an insurance broker to help employees choose individual health insurance policies, and work with a Defined Contribution Administrator that will help educate, train, and support employees on their new health benefits. Some advantages of DC plans are employers are alleviated of the administrative burden of choosing and managing their employees’ health plans, greater financial predictability for employers, portability for employees when changing jobs and it forces employees to become more educated consumers of healthcare. Changing benefits is challenging especially healthcare benefits and employees may resist and struggle with this drastic change. DC plans, however, may very well be the way of the future.
401(k) Automatic Enrollment
Studies show that most households’ retirement savings are dangerously low, overall participation in employer 401(k) plans are very low, and many employees cash out their 401(k) accounts when they change jobs. Changing to an automatic enrollment 401(k) plan has proven to increase participation and overall retirement savings. The majority of participants who are automatically enrolled do not opt out. However, automatic enroll plans typically set initial enrollment contributions low such as 2% of pay and for some participants this is much lower than they would have chosen on their own. Many automatic enroll plans also use automatic escalation where the contribution amount automatically increases each year. Automatic enrollment can significantly increase employer match and therefore, some employers with automatic enrollment reduce their 401(k) match or choose a low default savings rate to keep compensation costs constant. With retirement savings at a crisis level, automatic enrollment is worth consideration and a way for employers to show they care.
Payroll (Debit) Cards
Some employers choose to submit payroll payments using direct deposit to employee debit cards instead of a standard check or deposit to a checking account. Submitting pay via debit card is a cost savings for employers eliminating paper and printed checks. It can also save employees who do not have savings or checking accounts the effort and cost of cashing their checks at expensive check-cashing stores. Payroll debit cards can also be a way for employees to better manage their money as they use what they need rather than receiving the whole paycheck in cash. However, there are some drawbacks. Cards can be lost or stolen and the employer must have a system in place to recover funds quickly for the employee. There are also fees associated with the cards, ATM withdrawal fees as well as ATM maximum withdrawal limits. The popularity of these payroll debit cards is increasing among employer and employees; however, it may not work for all employees, and employers are required to give employees a choice on how to receive their paychecks.
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