The majority of Americans have money on their mind, as 83% of adults say inflation is a source of stress, and 69% are concerned with the overall economy. All the while, the fate of student loan repayments (and how and when they will impact 45 million Americans) hangs in the balance. The public health emergency (PHE) also officially ends May 11, 2023, which will wind down additional pandemic-related benefits.
These events, coupled with rising interest rates for borrowers, could mean employees will soon face more financial strains, including their ability to afford basic needs like healthcare, food, housing, and transportation.
As the provider of the paycheck, employers play a key role in helping employees adapt to these changes.
Here’s a closer look at some of the specific financial challenges your employees may be facing, and how you can help.
1. Increased healthcare costs, less access
Thanks to congressional action, Medicaid programs kept people continuously enrolled through the end of the PHE. Due to the increased Medicaid coverage, KFF estimates that the share of people who lacked health insurance coverage in 2021 returned to levels not seen since the historic low in 2016.
But on March 31, 2023, continuous enrollment ended. Now that states have resumed disenrollment, up to 14 million people could lose Medicaid coverage. For employers, this may lead to more people joining employer-sponsored healthcare plans, and more employees who are facing higher costs for household members who are ineligible for coverage.
Further, on June 9, 2023, extensions that once applied to events like special enrollment periods and COBRA will also change, which may result in employees getting caught without appropriate healthcare coverage for their families.
Helping employees gain better footing with financial wellness benefits may mean employers see healthcare utilization (and costs) increase–but only temporarily. As those putting off care get the help they need, those increases will subside. They can also mitigate longer-term care costs, and the risks of worsening conditions.
2. Student loan payments looming
Federal student loan payments, collections, and garnishments have been paused since March 2020. The exact date payments could resume depends on the Supreme Court’s decision on the student loan forgiveness plan, but The Wall Street Journal reports it will likely be by Fall 2023, or sooner.
An analysis by the Brookings Institution reveals that those who were struggling to make student loan payments before the pandemic will once again face “significant financial hardship” when the pause ends.
The Department of Education offers programs that can help borrowers afford their loans, including income-driven repayment, “Fresh Start” to help those with loans in default return to good standing and avoid collections and wage garnishments, and forgiveness programs based on a borrower’s profession. But Brookings points out that many who could qualify for these programs do not use them. Why? They don’t know about them or don’t know how to enroll.
Employers can help by providing unbiased financial health support that makes it easy for employees to understand their student loan options, based on the employee’s holistic financial picture.
3. Cash from the government is drying up
More than 42+ million Americans are enrolled in SNAP benefits–and research shows that more than half of people who receive SNAP benefits are employed. Emergency allotments that provided SNAP recipients with extra support as part of government relief measures ended in March 2023. For a family of four, that may mean receiving $328 less in monthly SNAP benefits.
To add to these lost benefits, the cost of food keeps rising. Not only did grocery prices rise 10.2% from February 2022 to February 2023, they’re forecasted to increase another 7.8% by the end of 2023.
Tax day has come and gone. Many Americans found their tax refund shrunk this year, as stimulus checks and many pandemic-era increases are a thing of the past. Plus, stricter reporting requirements for 1099s could mean employees with side hustles and other sources of taxable income faced potentially higher taxes.
Employers can help employees navigate these strains with holistic financial wellness programs that help employees make the most of every paycheck, in the moments they’re facing critical financial decisions. This includes helping them connect with resources that ensure affordable access to food and programs that can help families pay for necessities like utilities, safe housing, and even internet access. Ask your current financial wellness provider if they help connect your employees to free community resources like local food pantries, or help negotiate bills or payment terms on behalf of employees.
Here’s an example of how Brightside does that:
Jocelyn is a single mom who fell behind on critical bills after missing work due to chronic illness.
Her Brightside Financial Assistant connected her with a program that helps families catch up on late utility bills, found a benefit to reduce her future utility costs, and a program that will lower her internet bill by $30 a month.
Support employee financial challenges with Financial Care
Brightside created Financial Care, a new category in employee benefits, to help working families minimize acute damage to their short-term financial health and set them up for long-term financial security.
Now, more than ever, employees need Financial Care to navigate these painful changes. And as employers struggle with recruitment and retention (particularly among blue collar workers), having differentiated benefits with proven employee success stories can help in the war for talent.
Click here to learn more about why Brightside is the only model designed to support the financial health of the 70% of Americans living paycheck to paycheck, by offering unbiased financial solutions and personalized, human financial navigation support.
Written by Sophie Raseman, Head of Financial Solutions at Brightside
