Vanguard’s Kathryn Larkin wants employees to squeeze “every ounce” out of their benefits

Kathryn Larkin got her start in the world of total rewards as a lawyer, advising clients of companies like Deloitte on how to design benefits.

This involved a fair amount of problem-solving, Larkin told HR Brew. After a while, she said, “you wish that you could set things up so maybe you wouldn’t need to solve the problems,” she said. To design benefits with a solutions-oriented approach, she needed to be part of HR.

This desire for a seat at HR’s table led Larkin to take on a position as director of global benefits for Air Products, an industrial gas company, where she also served as their in-house employee benefits and executive compensation counsel.

After nearly 14 years with Air Products, the investment management company Vanguard tapped Larkin to be its head of global benefits in 2024. In this role, Larkin works with her team to educate workers so they get as much as they possibly can out of the benefits Vanguard offers.

Honing in on HSAs. Vanguard tries to promote physical, personal, and financial wellness through its offerings, and sees this mission as an extension of its business, Larkin said. The company views its 20,000 employees as its biggest asset “because they’re the ones who are actually doing the work that provides the shareholder value.”

To that end, one financial benefit that Vanguard touts to its workforce is a Health Savings Account (HSA) seed and match. The company puts $500 toward individual employee HSAs, and $1,000 for those with families, as well as matches worker contributions at a rate of 1.5%. Vanguard encourages employees to view HSAs as a long-term savings vehicle for retirement, Larkin said.

Once individuals turn 65, they can use an HSA for anything, though expenses that don’t qualify as medical are taxed. Because HSA funds roll over into the next year, “it’s kind of a pressure valve for individuals, you’re building this kind of medical nest egg,” she said.

There’s a fair amount of education that goes into positioning the HSA—which is offered to employees on high-deductible health plans—as a tool for long-term savings. Vanguard says she understands that workers may need to use the funds for medical expenses in the near-term, but encourages them to tap into other benefits first if possible so they can save at least part of their HSA funds. The company’s flexible spending accounts, for example, can be used for dental and vision costs.

“You will have medical expenses in retirement,” Larkin explained, referring to items like prescriptions or hearing aids. “So think of it as your 401(k) for your medical.”

Spending every cent. Larkin’s team has employees focused on both strategy and operations. She described the latter team members as “the engine that makes the benefits run,” with a focus on troubleshooting any questions or concerns that may arise from Vanguard employees.

Vanguard’s communications team monitors questions that come through ServiceNow and flags any “pain points” that come up in the benefits process, Larkin said. “They’ll sit with me and provide a report and say, ‘Do you realize a lot of people are asking questions about X? We think we need to get out in front of this, something doesn’t seem to be working.’”

One of the most common pain points that comes up concerns medical benefits—which isn’t surprising given how costly and complex this area of total rewards has become. When questions about medical plans arise, Vanguard can direct them to in-house advocates with Aetna, the company’s insurance provider. The idea behind hiring these contractors was to allow people with specific expertise to handle medical benefits-related questions, Larkin said.

Such efforts are ultimately in service of helping employees “get every ounce of every benefit we have,” Larkin said. Whereas employers were focused on cost-savings when she first entered total rewards, that perspective has shifted today, as businesses now view benefits as driving the “total value proposition” for their workers, she observed.

In Larkin’s view, the measure of a successful benefits program is one that’s “highly utilized and valued.” Given this philosophy, it’s not hard to see why Vanguard’s 401(k) program, for instance, has a 98% participation rate.

“If you have benefits that people aren’t using, you’re wasting money,” she added.