Fintech comes for benefits: Best practices for employers

Claire is the CEO of The family of the futurea fintech startup that offers simple monthly financing plans for family health costs, including fertility.

Fintech is increasingly touching every aspect of our lives, from retail to banking to blockchain, and now it’s coming to employee benefits. But how can fintech innovation change employer benefits?

Employee benefits are essentially a payment or subsidy to employees – with some strings attached. They can use this payment for specific areas, such as health, student loan debt, 401(k) plans, transportation, and more.

Benefits are among the biggest drivers of why employees choose companies – and stay. Nevertheless, performance plans are in many cases opaque and difficult for employees to quantify. How much is that health insurance really worth? What about that 401(k) plan?

I think fintech will do for benefits what it has done for other sectors: increase speed, flexibility and transparency. Thanks to fintech, consumers can now sign up for a current account on the phone and shop the same day. Thanks to buy-now-pay-later (BNPL) fintech innovation, consumers can make almost any online purchase as a monthly payment plan and then pay for items as they are paid (monthly vs. upfront). And thanks to fintech, consumers can shop prices within minutes for everything from a mortgage to a personal loan to almost any other type of financial product.

In fact, fintech is already coming for benefits programs through payroll innovation that provides transparency and simplicity and includes features like the ability to unlock paychecks early (thanks to platforms like Gusto), easily refinance and pay off student loans (with programs like SoFi at Work). ) and access financial guidance and coaching and even credit building (via programs offered by Brightside, for example). This is just the beginning.

As the CEO of a healthcare fintech company, I believe the next frontier is healthcare benefits. Today, we see thriving telehealth options via employers, but still relatively narrow benefit management programs for specialty areas. The benefits available are often narrowly tied to programs around weight and diabetes, exercise, mental health and fertility, to name a few popular choices. But employees need more flexibility and choice as individual and family health needs vary dramatically. Why is expensive IVF covered, but not breast cancer or menopause treatments, and vice versa?

Fintech companies are working to solve these problems by offering financial plans that cover all health needs and receive a direct employer subsidy that is equal across employees. This kind of innovation is what companies like mine, Future Family and others are working on, and it’s designed to make health benefits fast, flexible and transparent for those who need them. This can be particularly important for small and medium-sized businesses and new technology startups that rely on attracting and retaining top talent. Such decisions often come down to which employers can offer benefits other than salary as a comprehensive benefits package.

Some things to keep in mind when looking at fintech benefits for your business.

Look for flexible plans.

I have noticed that one reason many employers do not offer more comprehensive optional benefits is that they are usually very expensive and may not be used by all employees. Consider the fintech options by introducing more budget-friendly solutions that allow employers to choose how much to contribute to an employee’s plan and also when to contribute instead of forcing them to pay up front.

Let fintech work harder.

The most innovative fintech is not just offering one service; it provides a comprehensive solution, whether through billing and payment in addition to digital health guidance or also coordinating your prescriptions. For example, patients often have to deal with several different payment channels, including the clinic, the loan provider, the pharmacy or more. To make things easier for employees, look for fintech solutions where they only need to deal with a single payment stream while having access to support systems and advisors that make the process easier.

Consider retaining talent.

A recent study found that 39% of respondents would change jobs for better healthcare. While many companies struggle to retain and attract top talent, comprehensive benefits are something employers are wise to consider. The employer benefits fintech market is growing rapidly, bringing a massive influx of new ideas and solutions, but also a bewildering array of plans for employers to offer. Employers need to look carefully at their options, identify what is important to the employees they want to retain and attract and build plans with retention in mind.

Avoid programs that encourage unsustainable debt.

The goal of an employee benefit program should be to help employees with their essential expenses and to improve their quality of life. Programs for student loans, transportation and healthcare can achieve this. However, using fintech solutions to encourage increased discretionary spending may be a poor approach. This is already a concern with some “buy-now-pay-later” programs that make it “painless” to overspend. In other words, I recommend employers avoid subsidizing loans for broad discretionary expenses and rather focus the benefits on specific areas such as transportation or healthcare.

Overall, fintech innovation in the benefits space is a win-win for employees and employers. Employees receive benefits that are flexible enough to cover what they need and that are easy to understand the value of. And fintech health innovation for employers means they can attract not only happy, healthy employees – but loyal ones too. New solutions allow employers to subsidize their employees’ benefits monthly instead of paying in advance. Both employee and employer spread the costs over time, and incentives are aligned.

The coming decade will see a re-thinking of employee benefits, and I think fintech will be a driver.

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