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Benefits and human resources (HR) professionals are all too familiar with experiences related to the 47 million people who, according to the U.S. Department of Labor, have quit their jobs as part of the Great Resignation. But statistics show that nearly two-thirds of these early retirees would consider returning to the workforce. For corporate and single employers struggling to fill open roles within their organization, one option is to tap into these more seasoned and experienced professionals, many of whom may have retired earlier than expected due to the pandemic and are looking to reenter the workforce.
Joblist’s Q2 2022 U.S. Job Market Report cites that more than two million people were forced to retire early due to the pandemic. While some of these professionals cited financial reasons behind their return to the workforce, many “unretirees” are looking for something to fill their time. This group likely has the flexibility in their lives to pick and choose what they want to focus on and which employer they want to dedicate their precious time to. The traditional career model might not be as attractive to this group, so a fractional or agile work style might be a better fit for their “retirement” plans.
The term post-primary career professionals is another great way to describe this group of professionals who are finished with their primary career but aren’t ready to fully step away from the workforce. A post-primary career can be the answer to finding purpose and fulfillment in retirement. As this idea becomes more commonplace, employers will benefit by thinking through what this could mean for their workforce and the type of benefits they offer. This approach may become more important as there are fewer young people turning 18 every year to replace these older workers who provide valuable skills but are looking for more flexibility and creativity when it comes to work environments and benefits.
Following are some areas for benefits professionals to consider when evaluating the attractiveness of their benefits package for retirees looking to return to the workforce.
Health and Wellness
Employer-sponsored medical and dental benefits are a necessity to many and highly desired by others. Having access to these benefits while still experiencing flexibility in employment can be a huge draw. That being said, the age of this group of employees can lead to high usage of health and dental plans, and higher costs in claims. This group may also want or need to include spouses/partners which leads to similar issues with claims. Following are some strategies employers can consider for cost-containment:
*Evaluate different contribution strategies toward plan premiums. For example, an employer can contribute more toward employee + child coverage to draw younger and healthier lives to plans. Conversely, an employer could contribute less toward employee + spouse coverage levels to even out potential higher claims costs.
*Take advantage of new trends such as spousal carve-outs and spousal surcharges that can be considered by employers as a strategy to manage this group’s potentially higher claims.
* Consider making the dental plan 100% employee paid.
* Leverage the lookback period measurement method available through the Affordable Care Act (ACA). The lookback measurement process was created to assist employers that staff high-variable hour workers in complying comply with the ACA regulations without overextending offers of coverage. Most employers choose to follow the standard 12-month lookback measurement method, but employers can review as short as three months.
Offering fractional work with the standard 12-month lookback could be difficult for employees because if they don’t meet the eligibility criteria, then their benefits eligibility can be affected for the entire following year (or the following 12-month stability period). If employers review hours at a more frequent rate, (twice annually for example) to determine employees’ full or part-time status and adjust their benefits eligibility accordingly it allows employees who want health insurance to regain eligibility faster.
On the employer side, this practice allows employers to offer fractional work, while ensuring that employees are meeting the eligibility parameters that have been established. The practice of more frequent hours monitoring can also provide the employer with a clearer picture of the hours the fractional group is working, which helps with budgeting for the benefits department and across the organizations.
Employers should be aware of administrative workload upticks if they consider shorter lookback periods and be sure they are properly complying with the rules to avoid penalties. Third-party administrators that can manage the ACA process are available for employers that cannot handle the workload in house.
Employers can consider additional creative and nontraditional strategies to meet the part-time schedules and flexibility desired by this group. When combining the following ideas with the cost-containment strategies above, employers may offer a unique and attractive benefits solution for this group.
* Evaluate eligibility strategies, such as offering health and dental benefits to employees who work 20 or 25 hours per week rather than the standard 30.
* Create policies for sabbaticals or unpaid personal leaves. Employers should predetermine benefits eligibility during these leaves and provide the details in plan documents. This will provide protection from something like a claims denial by a stop-loss provider for a claim that was made during a period of coverage while an employee wasn’t actively working.
One compliance-related note for employees who are covered by Medicare: A group health plan cannot require someone to enroll in Medicare coverage. If an employee is enrolled in both Medicare and employer-sponsored health benefits, there are often primary payer confusions, and the employer may receive notice of this from Centers for Medicare & Medicaid Services (CMS). Employers should be able to rely on their TPA to sort through these challenges. Also, employees on Medicare are not eligible to contribute to a health savings account (HSA). An employer may be able to help an employee sort through all this by tapping into their vendor relationships. For example, an EAP vendor may have Medicare workshops available for employees, the medical vendor may have Medicare advisors, or a health and wellness broker may have resources to share.
Ancillary and Posttax Benefits
Life, accident and disability insurance can be easily offered to this group, and employer-sponsored plans are inexpensive. Employers should be aware of the rules within their plan documents and consider renegotiating them with vendors if these plans will be advertised to the unretiree group. For example, many plans have age-based reductions on their benefits or maximum benefit periods (such as age 70), meaning their benefits decline after age 70, or they can’t continue earning benefits past age 70.
A lifestyle spending account (LSA) can be another easy way to offer posttax benefits to an employee group. Companies can provide a designated dollar amount to employees, offer several ways to use this money and delegate it monthly or annually. This provides employees with extra funds for lifestyle expenses, and they can choose from an array of options that best fits their needs. Examples include a meditation phone app, gym membership, dietitian services, on-demand attorney services, caregiving assistance or even state park passes. Depending on the size of the organization, these offerings can be very economical when purchased in bulk. Offering a variety of options to unretirees who are familiar with benefits packages from previous employers shows that the organization appreciates that every employee values different things in their lives. To streamline the process, an LSA vendor can handle the administration.
Retirement savings vehicles can be a valuable benefit offering for this group since they are often high earners and can benefit from contributing to pretax savings accounts. Employers should be aware that vesting schedules may not apply to this group because there could be age-specific rules in the plan causing individuals to be automatically fully vested.
Employers should talk with their broker and TPA to understand the rules, so they can be aware of financial impacts if they offer profit sharing or an employee match and so they can properly answer the questions that this group may bring. There are also IRS rules around required minimum distributions (RMDs), or the minimum amounts that a retirement plan account owner must withdraw annually. RMDs can be delayed from a 401(k) if an employee is actively working. RMDs cannot; however, be delayed from traditional individual retirement accounts (IRAs). Therefore, access to a 401(k) that allows rollovers from traditional IRAs can be extremely attractive to employees over retirement age to help further delay using their retirement funds.
Conversely, some individuals may want to gradually phase out of the workforce and prefer to start deducting from their retirement plan. A phased retirement may be attractive to this age group. Phased retirements allow employees to “retire” from certain aspects of their position and continue other job responsibilities (such as knowledge transfer to those moving into senior-level positions). A phased retirement may allow an employee to earn partial wages, while beginning to draw retirement benefits from their retirement plan and continuing their employer-sponsored health coverage. This arrangement can allow employers to offer unique mentoring opportunities while maintaining access to years of knowledge for succession planning.
Another retirement plan function to be aware of is that rollover options out of the plan during employment are not uncommon for this age group, meaning they can roll their balance into a different qualifying account. Typically, active employees cannot move their plan funds. This could simply lead to added administrative burden or added fees to a TPA for managing these transactions.
Free and Easy Solutions
Offering remote work and flexible workhours can be very attractive to unretirees. For example, in the Midwest, it’s very common for residents to spend their winter months in warmer states, such as Arizona. A work-from-home arrangement could allow for this desired temporary relocation. Some employees may want to travel internationally, and flexible work hours would allow them to work in a different time zone. With technology allowing for hybrid and virtual work, this is more of a possibility than ever before.
Educating employees about their benefits is another great way to provide employee satisfaction and create brand ambassadors. Giving this employee group tools to navigate these next stages of their life can lead them to feeling supported and valued and can often lead them to speak positively about their organization workplace to their network. Employers can leverage free resources on Medicare and planning for retirement through their EAP and retirement plan vendors. Also, employers can point employees in the direction of resources that they can seek out themselves such as interactive retirement planning workshops or retirement coaches.
Steps to Take
A good first step for employers that are interested in strategizing more to meet the needs of this unique population, is to talk with their network good first step is to talk with their network and industry peers to find out what they’re hearing in the market. Current employees are another good source of input—Surveys or discussions can reveal what they are missing or desiring from their total rewards package. Brokers on both the retirement and health side also are good partners. Lastly, employers should consult with an attorney to ensure that they remain in compliance when making changes related to group benefits plans and workplace policies.
As today’s workplace continues to evolve, many employers will face recruiting and retention challenges as they work to fill roles within their organization. What’s exciting is that there is a large pool of recently retired, qualified professionals looking to return to the workplace. With a little creativity, forward- thinking organizations can develop new approaches to benefits options that will resonate with this group. Tapping into the unretirement trend provides a solution that can benefit both the organization and the individuals returning to the workplace.
Natalie Chandler, CEBS, PHR, is the total rewards manager at Salo, LLC in Minneapolis, Minnesota. She is a Director-At Large for the Twin Cities Chapter of the International Society of Certified Employee Benefit Specialists. Chandler holds a bachelor’s degree in business and marketing from the University of Wisconsin-La Crosse.