How Companies Can Help Their Employees with Financial Wellness

Lindsay Cates
Senior Manager, Communications and Strategy, U.S. Chamber of Commerce

Published

September 29, 2022

As businesses continue to grapple with a national workforce shortage, recruiting and retaining employees is more important than ever. But one thing that may be keeping workers out of the job market—or from working more hours or trying for a promotion—is a flawed government benefits framework that causes “benefits cliffs.”

A benefits cliff is the point at which government benefits, like SNAP or Medicaid, get cut off because an employee earns more or increases their savings. These support mechanisms provide necessary help to many families during difficult times, however, earning more money doesn’t always make up for the loss of government benefits and can deter Americans from joining the workforce.

For employers, taking steps to mitigate the impacts of benefits cliffs beyond educating employees about cliffs should be a part of employers’ financial well-being strategy. The strategies below are taken from a report from the U.S. Chamber of Commerce Foundation that dives deeper into benefits cliffs and policy solutions.

1. Increase pay.

Employers can increase pay to a level at which losses in public benefits are fully offset and families can meet the living expenses in their communities.

For example, PayPal took action after assessing employees’ net disposable income and realizing how difficult it was for employees to meet basic needs and have money left over to save.

While increasing pay to such levels may not be possible for all employers, other steps can be taken.

2. Offer income-based health insurance premiums.

For workers leaving Medicaid and enrolling in employer-sponsored health insurance, any premium they will pay acts as a benefit cliff. Employers can use a tiered approach based on wages, so premiums do not take such a large bite out of lower-wage employees’ pay.

3. Offer childcare assistance.

Workers and their families need help in finding quality, affordable childcare options and accessing public subsidies. Employers could also consider helping workers' pay for childcare, especially those who are on waitlists for subsidies or were denied subsidies due to a lack of adequate funding.

4. Flexible scheduling.

Offering some control over number of hours worked can help hourly employees avoid benefits cliffs. Flexible scheduling has the added benefit of helping employees balance work and caregiving responsibilities.

5. Offer Paid Family Leave.

For workers struggling with caring for young children, paid leave can help, such as when workers cannot find open slots for infant care after returning from parental leave or when childcare centers close due to COVID-19 outbreaks.

6. Raise awareness among employees of tax credits and tax filing options.

Refundable tax credits are very valuable and have gradual phaseouts, yet not all workers claim them. Helping employees understand options for free or affordable tax filing assistance can help them claim these credits.

7. Offer financial wellness benefits.

Benefits can include financial coaching, resource navigation, digital apps to help workers access and use public and private benefits, emergency savings programs,and employee assistance funds for emergencies, including when employees lose public benefits.