Health and retirement benefits aren’t available to a large portion of small-business employees, which leaves these workers vulnerable to financial disasters. Intuit is addressing this problem with two recent products — a health debit card and a 401(k) service.
Among the many innovations showcased during Intuit’s Innovation Gallery Walk, which focuses on the needs of small business, Intuit’s Health Debit Card and 401(k) are the two products that could attract the attention of workers.
After learning of these products, an employee may be inclined to pitch them to their bosses in a mission to attain low-cost benefits that would otherwise be non-existent.
Health benefits on a debit card
According to a 2011 survey on employer-sponsored health benefits by Kaiser/HRET, nearly 40 percent of small businesses, with 3 to 199 workers, did not offer health benefits to employees in 2011 — up from 31 percent in 2010.
One big factor is cost. The average monthly premium is $452 for single coverage, according to the survey.
As a result many small-business workers may resort to purchasing their own health insurance, or take the risk of not having health insurance — meaning a visit to the emergency room would be financially catastrophic.
The Intuit Health Debit Card offers access to a health-reimbursement account that is managed and funded only by the employer. Employers determine a monthly contribution for each employee starting at $1. Employees can use the debit card for a long list of health expenses.
There are about 1,000 small businesses that have issued Intuit’s Health Debit Card, said a senior product manager at Intuit.
A cheaper 401(k) plan
According to a 2011 National Compensation Survey by the U.S. Bureau of Labor Statistics, nearly one-half of private small businesses, with 1 to 99 workers, offer access to retirement benefits. For companies with 100 or more workers, the number jumps to 81 percent.
“The reason that business don’t offer [retirement plans] is because of cost,” said Anu Sanghvi, a product manager at Intuit. Furthermore, major firms are likely to require small-business owners to have a certain amount of assets, often in the millions of dollars, to qualify for plans, said Sanghvi.
For employers, there is a one-time setup fee of $495 and a monthly fee that ranges from $75 to $150, depending on the number of employees. Employees pay a maximum monthly fee of $3 in addition to asset-management fees that range from 0.44 to 1.44 percent. According to the Investment Company Institute, the average fund management fee of funds held in 401(k) plans is 0.71 percent.
Plan participants immediately have a choice of eight diversified portfolios that are managed through Morningstar. Made up of various funds from companies including Dodge & Cox, PIMCO and Vanguard, the Morningstar portfolios vary based on risk tolerance.
Employees also have the option of picking their own funds and ETFs, Sanghvi said. Like with many 401(k) plans, employers can offer a contribution match.
Currently, Intuit manages 1,600 plans serving about 16,000 employees.
If small-business employees can get on board, it would play a part in fixing Americans’ unpreparedness for retirement.