It doesn’t matter if you work at the coffee shop around the corner or at a Starbucks across the street. An accounting startup in your hometown or one of the Big Four. At Gusto, we believe affordable healthcare and financial security should be accessible to every employee in America. It’s part of the vision behind our people platform—one place that makes it easy for new and growing businesses to pay, support, and engage their teams—at work, and beyond.
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Small businesses and their employees need help now
A happy, healthy, financially secure team is at the heart of every successful business. But taking care of that team can’t break the bank. In 2020, the ability to balance these priorities is more important than ever. That’s why today we are adding new, “no-cost and low-cost benefits” to our already robust lineup of benefits built for small businesses. Our goal is to help every business in the US take care of their team, regardless of size, stage, and budget (log into your account for more details).
Small businesses and their employees were running on thin margins before COVID-19 hit.
The pandemic has led to significant losses in revenue and forced many businesses to reduce wages and health coverage. These reductions can lead to increased employee debt. More than 12 million Americans have lost health insurance—Yelp data shows that 60% of the businesses that have closed as a result of COVID have done so permanently—and Gusto data shows that many small businesses had to reduce pay and benefits for their employees. Also, with more teams going remote and spreading out across state lines, it can be harder to find small group health insurance plans that will cover the team.
Small business owners and their employees need help now. Gusto’s new modern financial health benefits are available at no cost; and we’re administering new highly-effective options that increase the accessibility of affordable health coverage—even for multi-state teams—during this global pandemic.
New free financial benefits to build savings and avoid debt
Businesses using Gusto’s people platform can provide employees with access to flexible spending accounts, college savings, and 401(k)s, so they can route pre-tax earnings into accounts that help secure long-term financial health. But in a world that includes a global health pandemic, an economic crisis, and increasingly destructive natural disasters, it is becoming next to impossible to save for the emergencies that are happening now.
Today, we’re continuing our efforts to modernize the paycheck by introducing free financial benefits employees can tap into each and every payday—right from their mobile devices.
With Gusto Wallet, the new financial health app for anyone paid with Gusto, employees can manage their paycheck with Cash Accounts that earn 8X the national savings rate,1 tuck away money for a rainy day each time they get paid, and access cash before payday when emergencies happen using Cashout. It’s all completely free.
There are no hidden fees: no overdraft fees, no account minimums, or other limits.2 And every dollar in Gusto Cash Accounts earns interest. With Gusto Wallet, small businesses can provide employees with a holistic, effective solution to tackle the cause and effect of debt and help relieve the financial stress that so many American workers feel each and every day.
Employees work hard for their paychecks; it’s time to put those paychecks to work for them.
Slowing down debt with free, early access to cash between paychecks
When an emergency happens between paydays, the bill can often come at a high cost: the astronomical APR (often more than 400%) that can come with payday loans, mounting overdraft fees, or credit card interest that’s hard to escape. All of these fees make the debt from an unexpected expense even worse. And, instead of saving for the next rainy day, an employee is stuck dealing with higher volumes of debt.
We designed Gusto Cashout to enable employees to hold on to more of their hard-earned cash by providing free access to money on those occasions they can’t afford to wait around for payday. Cashouts are based on the estimated accrued net wages employees have already earned.3 And the service is completely free—there is zero cost to employees or employers. Gusto takes care of everything, which means employers can run payroll as usual without any extra work.
Cashout includes smart limits and is designed to help employees get their finances back on track as quickly as possible. The service can be used up to twice per month and caps the withdrawal amount, so employees always have money coming on payday.
Payroll is the best platform to provide financial health benefits to workers at every business.
Early access to earned wages and lending products shouldn’t be predatory. Financial products should help people avoid debt, not create more debt. Financial products should be transparent and never include hidden fees. And finally, they should be combined with tools that make it easier to build savings. Because savings is the true key to slowing down the compounding debt cycles that plague tens of millions of Americans across the country. This must become the standard—every company that provides payroll services should be offering savings and early access to earned wages for free.
Free automated savings to build strong financial health
When employees are freed up to tuck a little money away on payday, Gusto Cash Accounts make it easier for employees to build savings directly from their paychecks, automatically. We’re already seeing people paid with Gusto putting aside money for rainy day funds, paying down debt, and preparing for big life events.
From the moment their paychecks hit their Gusto Cash Accounts, employees start earning 0.34% APY (annual percentage yield)—8 times the current national average—so their paycheck is able to help them earn even more.1 And Gusto Cash Accounts have no typical fees—no overdraft fees, no minimum balance, and no ATM fees.2 Employees can easily access their Gusto Cash Accounts either through the new Gusto Wallet mobile app or new Gusto debit card.4 And savings are more important than ever during the pandemic: More than 30% of the employees on Gusto have said that they want to set aside significantly more of their paychecks.
New health reimbursement benefits through QSEHRA
In the face of COVID-19, health coverage has become an even more urgent need. Throughout the pandemic, Gusto’s team of licensed advisors continues to support small businesses in finding group health insurance plans that work best for their teams.
But we know that millions of business owners have been faced with an impossible dilemma as a result of COVID—how can they afford to provide health insurance to employees when revenue is down and the future is uncertain?
Employers looking to offer health insurance for the first time know what they can afford today, but sometimes they can’t commit to a cost that could increase year-over-year. And many employers are struggling to find plans that cover their teams as people move across state lines.
Today, Gusto is introducing new health reimbursement benefits through QSEHRA. A QSEHRA is a qualified small employer health reimbursement arrangement. Gusto is the first and only payroll provider to offer QSEHRAs integrated directly into payroll for faster, more streamlined administration. Health Reimbursement, made possible by QSEHRA, is a low-cost, flexible solution that enables employers to decide how much they can afford to contribute to employees’ monthly health insurance costs.
In Gusto’s pilot, small businesses started with affordable $100 contributions, and others opted for contribution amounts that would cover an employee’s entire premium (up to an IRS maximum). If a business’s cash flow changes, employers have the flexibility to adjust their contribution at any time. Unlike health insurance, where plans are chosen by the employer for the employee, with QSEHRAs, employees find and choose their own eligible insurance plan. This is a great fit for employees who want more coverage options to choose from, or employers with employees in multiple states, which is becoming more common with the rise of remote work.
Even better, offering a reimbursement encourages employees who aren’t already covered to get coverage, or get more comprehensive coverage. Employees can use Gusto’s partner HealthSherpa, who works directly with healthcare.gov and state marketplaces, to find a plan.
Gusto makes sure offering health reimbursement is flexible and convenient for small businesses. Employees submit their health insurance bills through Gusto, and the reimbursement amounts are automatically included in employees’ paychecks. Best of all, Gusto provides support to assist you with compliance and help you file the right paperwork.
And there’s tax savings all around—QSEHRA contributions are payroll-tax-free for the business and income-tax-free for employees.5
In a perfect world, every employer would feel empowered to offer health benefits to their employees. By introducing other low-cost options to small group health insurance, Gusto is increasing access to that reality.
Our goal is to help employers retain and build healthy and productive teams. From health insurance to healthcare reimbursement, 401(k) to automated paycheck savings, our team guides employers in building attractive benefits packages regardless of a company’s size, stage, or budget.
As we continue to develop Gusto’s people platform, we’re driven by the mission that work should be so much more than a paycheck—work should empower a better and more prosperous life. We look forward to continuing to help create workplaces where everyone thrives.
1Based on FDIC national rate available at fdic.gov/regulations/resources/rates/. Cash Account Annual Percentage Yield (APY) is 0.34%. Interest rates are variable and subject to change at our discretion, at any time without prior notice. No minimum balance required.
2 Some fees, such as out-of-network ATM and foreign transaction fees, may apply. Please review terms and conditions carefully.
3The Cashout program is issued by Sunrise Banks, N.A. Member FDIC.
4Gusto Cash Accounts and Debit Card are issued by nbkc bank, Member FDIC.
5 Contact your tax advisor before deciding. While contributions are generally tax-free, other business or personal taxes may be impacted.