In Practice April 25, 2023

A Three-Step Plan for Employers to Encourage Financial Wellness

For April’s National Financial Capability Month, the head of retirement services at Corebridge Financial suggests understanding, engaging and taking action to help improve financial wellness.

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The last 15 months have been a challenging time for retirement savers. Many have seen their savings shrink, while their stress levels have risen.

Employers know financial stress can creep into the workplace—creating distraction, raising doubts and lowering morale and productivity.

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April is National Financial Capability Month, and employers can take this moment to help their employees become more confident in their finances and take steps toward a better and stronger financial future.

Terri Fiedler

One key to energizing more employees to get their finances on track is making financial wellness a central element in workplace retirement plans.

We see financial wellness as a feeling of confidence and strength that employees can have in their finances today and for the future. It can serve as an antidote to today’s uncertain and stressful time.

In this article, I outline three steps we are taking with plan sponsors to help improve financial wellness—understanding, engaging and taking action.

Understanding

First, we must understand the financial journey for each employee. General demographic information isn’t enough. Every employee is unique—with their own goals and aspirations, as well as their own emotions, preferences and behaviors.

We are working with many employers to help them understand what their employees want and need from financial wellness programming. The focus for a young, newly hired employee can start with plan enrollment, but student loan debt, budgeting and goal-planning could also be important topics. For a pre-retiree, engagement around retirement milestones is a natural framework, but there is opportunity to build in communications about catch-up contributions and retirement income.

Today, nearly everyone has become accustomed to, and even expects, personalized experiences. Information can play a role in providing plan sponsors with the understanding they need to create content and programs that best match the needs of their employees. Financial wellness programs are often most effective when they emphasize personalization.

Engaging

The next contributor to a successful financial wellness program is how we are engaging with employees.

Like every other industry in the digital age, we must engage our customers whenever and wherever they prefer. Multi-channel delivery is essential—mobile apps, webinars, workshops, emails, texts and on-demand content.

The resources provided by employers can span the full spectrum of the personal finance journey. For some employees, the priority might be budgeting and savings; for others it could be income planning.

Design is a key contributor as well, and financial wellness programs should be intuitive and interactive. Ideally, the experiences include digestible content and make it easy for the participant to engage. Tone can sometimes be as important as content, and we have found that our most successful programs are encouraging and upbeat.

As an example, Corebridge offers employers an online tool with which employees can take a self-assessment with simple-to-answer questions that don’t require a calculator. From there, they receive a personalized action plan that is easy to implement and focuses on the fundamentals of financial wellness: saving and spending; debt management; and meeting future needs.

Taking Action

For employees to move forward on their financial wellness journey, we believe action is everything.

What taking action means will depend, of course, on the individual employee. Some want to do everything on their own, others want help sometimes and others want someone to do as much for them as possible. So taking action could be signing up for a webinar, raising contribution dollars or connecting with a financial professional.

On that last point, connecting with a financial professional might not be the first thing an employee considers when it comes to saving for retirement, but building this kind of relationship can be very helpful. Financial professionals can help employees create a financial plan that includes near-term goals and long-term objectives, as well as a road map with actionable steps, milestones and reminders.

Building Confidence

In times of uncertainty, employees will often look to their employers for guidance and support. During National Financial Capability Month, we are working with employers to make sure their financial wellness programs emphasize understanding, engagement and action.

Even if employees take only one small step tomorrow, it can build confidence and encourage them to keep moving toward their future goals.

Terri Fiedler is president, retirement services, for Corebridge Financial.

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This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.

Corebridge Financial, Inc. and its subsidiaries provide a wide range of life insurance, retirement solutions, and other financial services.

In Practice April 25, 2023

HSA Admin: Avoiding ERISA Status While Still Providing a Strong Benefit

Experts discuss the proper health savings account administration to stay complaint at the 2023 PLANADVISER/PLANSPONSOR HSA Conference. 

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Plan sponsors offering health savings accounts must be careful to practice proper administration—by following Department of Labor and IRS guidance—or risk being subject to Employee Retirement Income and Security Act regulations.

Although employer-provided high-deductible health plans are subject to ERISA, the associated HSA offered to employees is generally not, as long as the employer limits its involvement with the HSA, explained panelists at PLANSPONSOR’s 2023 HSA Conference.

“It’s very important that these requirements be followed strictly, because if [plan sponsors] slip up and do not comply with one of them, you are stepping into ERISA territory,” said Carol Buckmann, partner at Cohen and Buckmann PC.

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Employers have turned to offering HDHPs to limit the costs of health insurance, and an HSA is often paired with the HDHP as an additional benefit for employees.

Appropriate plan sponsor use of the HSA benefit requires employers to observe several “special rules that have been promulgated by the Department of Labor” to limit involvement with the HSA so that it will not be treated as an ERISA plan, Buckmann explained.

For HSA providers and plan sponsors, it is not in the best interest of either to be regulated under ERISA, added Buckmann.Plan sponsors and vendors regulated under ERISA “are going to have difficulty finding an administrator who will take on an HSA plan that is subject to ERISA, [because] … they know that’s a lot more exposure,” Buckmann said.

HSA Administration

The DOL and IRS rules must be followed by plan sponsors to limit involvement with the HSA, preventing the greater oversight, paperwork and regulation that would be required under ERISA.   

Proper plan sponsor HSA use requires employee participation to be voluntary, although employers may use automatic enrollment; employers cannot limit the ability of employees to transfer assets to different HSA administrators; employers cannot limit the use of HSA funds or withdrawals; employers cannot influence employees’ HSA investment decisions; and employers must offer a reasonable availability of investment options, Buckmann explained.  

Under DOL guidance, the “broad range of investment alternatives” standard can be satisfied by the plan sponsor including a minimum of three investment options, said Ellen Goodwin of Groom Law Group.

“Probably 99% of the HSAs out there in the world work diligently to avoid ERISA coverage,” said Goodwin. “The Department of Labor has really provided a road map for employers, and almost all HSAs are set up to follow this roadmap.”

In-Plan Investments

Invested account dollars—HSA assets not held in cash deposits—were $33.8 billion at year-end 2022, compared to $34.4 billion a year earlier and $23.8 billion at the close of 2020, research by Devenir found recently.

HSA holders can invest savings via investment lineups to cover qualified medical expenses, but plan fiduciaries should avoid influencing the investment offerings beyond selecting the provider, Goodwin said.

“It’s clear from DOL guidance that an employer can choose one or more providers to make HSAs available to employees, and those providers can offer the providers own curated lineup of investment alternatives,” Goodwin said. “That’s fine, but an employer should always seek to avoid customizing the providers lineup by striking particular funds from the lineup or adding new ones to the lineup. That you don’t want to do, because that can be viewed as influencing participant investment decisions and could cross you into the line of ERISA territory.”

DOL guidance affirms a plan sponsor can replicate the same menu offered in the 401(k) in the HSA or a subset of the lineup and still remain not be covered by ERISA, Goodwin added.

Plan sponsors will want to check beforehand, however, if certain conduct will spill over into ERISA territory. If they are unsure, they should check with in-house or outside employee benefits counsel, Buckmann added.

“You should be very cautious about crossing over the line, because there are many consequences, including [the plan sponsor] may find fact participants suing for losses because you’ve breached your fiduciary responsibilities, [and ] there’s possible fiduciary responsibility for administrators,” she said.

Plan sponsors with an HSA benefit that does fall under ERISA requirements will have to: complete a Form 5500 with the IRS and DOL Form 5500 every year and have a summary plan description for the benefit. Plan sponsors will also face greater regulatory risks and fiduciary liability if covered by ERISA, Buckmann said.

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