10 Signs that Benefits Cliffs May Be Causing Turnover

Benefits Cliffs  occur when an increase in wages, or a change to employer benefits available to them, causes an employee to lose net income. This happens if a person loses eligibility for a public assistance benefit, like Medicaid or Child Care Tuition Assistance, but their increase in wages does not cover the resulting increased expenses. This makes a raise function more like a pay cut.

HR professionals often ask us:

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“How would I know if someone is facing a Benefits Cliff? We don’t have access to that kind of information about them, and it’s inappropriate to ask if they are using public assistance.”

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We also hear from some HR leaders that though they don't think that Benefits Cliffs are the reason employees are quitting, they acknowledge that they wouldn’t know if it was, since it’s not the kind of question that comes up in an exit interview, if one is offered.

So we started asking our users why they don't share with their employer that they are struggling with the loss or reduction of Public Benefits. Here's what we've heard: They could be embarrassed, think they will get in trouble, or be seen as lazy and preferring not to work, or simply just not know how to talk about what's happening to them. Most people who experience a Benefits Cliff don't know that there's a name for it.

So we’ve put together a list of signs that are pretty good indicators that your workforce may be experiencing Benefits Cliffs. If this describes any of the people in your workforce, Benefits Cliffs may be posing barriers to improving recruitment, retention, and employee-engagement outcomes for talent at the intersection of Private and Public Benefits:

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1. Less than $75K per year in combined family income, especially with young children
2. Single parent making less than $40k per year
3. Reluctant to go from Part-time to Full-time
4. Turns down overtime
5. Requests inconsistent hours
6. Turns down promotions, despite clear aptitude and drive
7. Has inconsistent child care coverage
8. Misses open-enrollment for healthcare
9. Make early withdrawals from retirement plans
10. Does not utilize FSAs, HSAs, retirement, or other tax-advantaged or matched benefits to avoid deductions from take-home pay

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So you think you have employees who may be facing Benefits Cliffs, now what?

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With the right insights into employer benefits and public assistance rules, you can:

1. Optimize "Big B" Benefits and "little b" benefits to increase immediate financial security for entry-level workers.
2. Create talent management strategies that provide viable career pathways.
3. Provide effective employee onboarding, benefit education and decision support that empowers employees to make the best choices for their household.

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Schedule a conversation

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