THIS IS QUEENSBOROUGH
queenschamber.org
EXPERT ADVICE
STUDENT LOAN REPAYMENT FOR EMPLOYEES BY GLYNIS ROBERTS Increasingly, individuals comprising today’s workforce are straddled with significant levels of student loan debt. At the same time, these workers are often conflicted as to whether they should focus on paying off their debt or set aside funds to pay for retirement. As an employer, adding a student loan repayment program to your employee benefit portfolio not only helps them address this dilemma, but also represents a tremendous opportunity to help attract and retain key talent. In today’s competitive job market, it’s not enough to simply offer the traditional benefit portfolios of the past. Showing prospective talent and valued current employees that you care about their financial
future by providing student loan repayment assistance goes a long way to help you stand out among your industry peers. And by structuring the program as a part of your voluntary benefits package, you have the ability to customize the program according to your workplace demographics and budgetary capabilities. To further benefit employers, the coronavirus Aid, Relief and Economic Security (CARES) Act passed in March of 2020 added a little-known provision regarding student loans. The provision allows an employer to make up to $5,250 in student loan payments for an employee within a year. Regardless of whether the payments go directly to the employee or to the student loan servicing entity, the money is considered
tax-free to the employee and the employer is excluded from paying payroll taxes on the funds. As of this writing the provision, originally set to expire at the end of 2020, has been extended through December 2025. Employers who assist employees with student loan repayment can utilize a variety of methods, including fixed contributions, matching contributions, consolidating loans or refinancing. With these programs, the employer first decides how much, if any, they are willing to contribute into the program. Then, based on the vendor chosen, the program options include models focusing on refinancing, consolidation or payroll deductions. The employer can set a specific amount they agree to pay toward the student’s debt over the course of a year. This is an arbitrary amount set by each employer, typically, $1,000 to $2,000 per year, although larger companies sometimes offer amounts as high as $10,000. An employer can also set certain eligibility criteria, such as being actively at work for the firm for a required minimum time period or having graduated within a certain number of years. The employer can choose to match the student loan payment amount by contributing funds into a 401(k) on behalf of the employee. This relieves the employee of the burden of making the choice to either repay student loan debt or save for retirement. Refinancing the debt can lower the interest rate and corresponding monthly payments, converting it from a federal loan to a private one. Consolidating loans combines multiple loans into one with a recalculated interest rate and monthly payment. By creating a differentiated, unique benefit package that addresses a specific employee need, employers benefit by boosting employee engagement, increasing productivity levels, and improving employee retention rates.
Glynis Roberts is senior vice president of My Benefits Advisor. Reach her at (212) 706-9451. The Queens Chamber of Commerce offers its members access to My Benefit Advisor as a solution for employee benefits, including voluntary offerings. For more information about My Benefit Advisor, visit our website at qcc.mybenefitadvisor.com.
MEDICAID CONTINUED FROM PAGE 11 ishing $156,444 per year! In the event only one spouse is seeking Medicaid assistance, then the other “Community Spouse” may have assets between $74,820 to $130,380, and is permitted to keep monthly income of $3,259.50. If the Community Spouse’s monthly income is less than this amount, they may keep some or all the income of the spouse seeking Medicaid. With proper Medicaid planning, it is possible to lower your available resources below the limit while also achieving your estate planning goals. This has merely been a primer on Medicaid. The laws surrounding Medicaid are nuanced and extensive. There is no one plan that will fit everyone’s needs, which is why it is important to speak with an elder law attorney to create a plan that is specifically tailored to your needs.
