Annual Enrollment: An opportunity to build a more resilient workforce

One thing a majority of U.S. employers and employees agree on: employee benefits are key to attracting and retaining good hires, and they are high on the list of priorities for good hires to accept and remain in a job.

After that, the picture gets a little more complicated. Salary is important, but benefits packages that can be tailored to meet the financial, physical, and emotional needs of employees are the next most important factor in making people want to join and stay, with an employer.

The 2024 WTW Global Benefits Attitudes Survey (GBAS) saw an increase of 14% (over the 2017 survey) in the importance of the total benefits package as a reason for choosing to work for an employer. More than they have in the past, employees appreciate that employer benefits are a significant part of their total compensation.

During annual enrollment, employees engage with their benefits choices as they review and decide if they need to make changes. Employers can use this opportunity both to remind the workforce of the value of their benefits and to help them make choices that will meet their unique needs.

Today’s employees, reflecting longer term generational trends, seek benefits that provide broad choice, flexibility, and value for their investment. They also want help to achieve financial security, a more elusive goal for many in this time of high inflation rates. According to the 2024 GBAS, employees say their financial situation is their number one challenge - but it’s the area where employer support is least effective. 

Nearly 70 percent of GBAS employee respondents say they face issues with some aspect of wellbeing, and this links to lower engagement, retention, and productivity. Over the past few years, employer have often prioritized emotional wellbeing, whereas employees say they need the most help with financial security.

Common sense says that financial security is foundational to emotional wellbeing; it provides stability and security against the difficulties of life to which everyone is vulnerable. Wellbeing programs that don’t acknowledge (and address) the destabilizing effects of financial insecurity are less likely to engage employees, especially those who are at risk due to poor physical or mental health.

Supporting Financial Wellbeing

Employees are looking for help in a number of ways. They want support to improve their ability to save, get more value from their benefits, and handle emergency financial issues. Other financial concerns include retirement adequacy and the dispiriting reality that retirement age continues to rise. Employees also want help with how best to manage their money when they do finally retire.

Employers are concerned with building a financially resilient workforce [EBTS 2023], but rising plan costs are a restrictive issue influencing benefit strategies. In other words, employers seek to achieve the right balance of flexibility and support for employees while keeping benefits costs in line.

Spending accounts of various kinds are one notable option that meets all of these criteria. With FSAs and HSAs, employees can save money against expected obligations while reducing their tax burden. They can also save money towards medical expenses in retirement with an HSA.

Employers too receive some cost savings, avoiding the payroll tax on their portion of Social Security and Medicare taxes for contributions to these accounts by each employee.

Employers can choose from a wide variety of spending account options, each designed to support different aspects of employee wellbeing. These include:

Flexible Spending Accounts (FSAs): Health Care FSAs offer a tax-free way to set aside money for medical, dental, vision, and prescription expenses not covered by employee health plans. Dependent Care FSAs provide the same advantages for child and dependent care expenses.

Health Savings Accounts (HSAs): HSAs pair with high deductible health plans, and offer significant tax and retirement savings opportunities. Money is deposited into an HSA “pre-tax,” reducing the employee’s overall tax burden. HSA funds are earmarked for medical expenses, but withdrawals are tax free, the funds don’t need to be used within a limited time frame, and they belong to the employee even after he or she leaves the employer’s organization.

Health Reimbursement Arrangements (HRAs): HRAs provide a way for employees or retirees to be reimbursed tax-free for covered healthcare expenses. Employers and plan sponsors own and fund the accounts within an HRA, and can determine amounts offered, healthcare expenses covered, rollover rules, which groups are eligible, and more. Individual Coverage HRAs (ICHRAs), introduced in 2020, allow employers to set a defined contribution for employees to purchase health plans on the individual market, including the ACA.

Other types of spending accounts are funded by employers and support different aspects of employee wellbeing. These include:

• Lifestyle spending accounts (LSAs): LSAs reimburse employees for activities that promote physical, financial, and emotional wellbeing.

• Adoption assistance

• Commuter accounts

• Tuition reimbursement

In 2024, contribution limits were increased for healthcare FSAs (up to $3,200) and HSAs ($4,150 for self-only coverage and $8,300 for family coverage), with a further increase anticipated for HSAs in 2025, making these tax-advantaged vehicles even more valuable as a tool to support employee financial, physical and emotional wellbeing.

Offering Choice and Flexibility

Over time, employers have invested in broadening the choice and flexibility of the benefits they offer. In 2024, 66 percent of employer respondents to the GBAS are classified as offering a high choice benefits program, up 12 percent in 2019. High choice is defined as a benefits program that allows employees to choose from a broader, more flexible range of core benefits, along with a growing number of voluntary benefits such as dental, vision, financial counseling, life insurance, identity protection, pet insurance (to name just a few). High choice programs are linked to employee satisfaction with benefits; 76% of employees in high choice programs say their benefits meet their needs. The various types of spending accounts provide the choice and flexibility employees are looking for.

Taking Action

The 2024 GBAS responses show that employer communication to employees about the steps required to address their wellbeing challenges is often less than effective. How can employers remedy this situation?

The survey offers some useful direction. Employees indicate they are inspired to take effective action on wellness challenges if their work environment offers:

• A culture of wellbeing

• Effective programs

• Effective manager support and

• Enhanced communication


Annual enrollment periods, when employees are engaged in decisions about their benefits for the next year, provide one of the best opportunities for employers to communicate with the workforce. Organizations can use this time to ensure employees have the information and support they need to understand how their benefits can help them address their wellbeing challenges. Actively supporting employees to think carefully about their needs, evaluate their choices, and choose the right options from a range of plans, spending accounts, and voluntary benefits can lead to a more productive workforce and ultimately a more successful organization.