Financial Benefits of Convertible PTO

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PTO Exchange is the first benefits platform that allows employers to convert the value of excess paid time off (PTO), reducing that liability from the balance sheet at a discount. By increasing the internal Rate of Return on your PTO, you can generate revenue that can be put back into your HR budget, increase productivity, reduce employee turnover, and lower the corresponding replacement costs.

Using our robust policy engine, organizations can set the parameters to dictate how much PTO is available to exchange. This helps to limit financial exposure and ensures employees are using the majority of their PTO for its intended use – to refresh, recharge, and create a healthy work-life balance. But studies show that the average US worker leaves between one and a half to two weeks of PTO unused every year and excess PTO creates a significant liability that grows each year.

And that's the challenge that PTO Exchange is solving for. In the U.S. alone, PTO makes up approximately 24% of the total benefits spend or about $780 billion every year. But because of the inefficiency of how it's used, organizations are not getting the full value of their investment – instead it becomes a bloated line item on the balance sheet.

Best Practices: Policy Creation

Minimum Balance for Eligibility: require employees to maintain protected hours in order to be eligible to exchange. This eliminates the concern of employees burning their balance down to zero with exchanges and ensures our clients meet mandatory sick-leave requirements.

◦ Most Common Policy Setting: 40 protected hours

Maximum Annual Limit: limit the hours that can be exchanged each year. Maximums can vary by tenure or job function.

◦ Most Common Policy Setting: 80-120 hours per year

Prior Use of PTO: require employees to use a certain amount of PTO before they are eligible to exchange. This alleviates the concern that a convertible PTO plan will send the wrong message to employees about work-life balance.

How PTO Exchange Can Help

Revenue Generation & Enhanced Benefits

◦ Leverage the IRS-required Service Charge as a revenue generator to offset premium increases or put dollars back into the HR budget

◦ Increase the Internal Rate of Return on your PTO

Reduce Liability & Capitalize on the Time Value of Money

◦ Finance Departments can pay down 100% of the PTO liability at a fraction of the cost

◦ Lower liability before year-over-year salary increases kick in

Maximize Current HR Budget & Increase Productivity

◦ PTO is an already accounted-for benefit – you can simply repurpose it in a more efficient way

◦ Boost productivity with your current workforce to reduce overtime pay and/or eliminate contract staffing

◦ Reduce employee turnover and replacement costs

Turnover Rates: PTOx Users vs. Non-Users

• Healthcare: Non-Users 14% | PTOx Users 6%

• Financial Services: Non-Users 20% | PTOx Users 11%

• Professional Services: Non-Users 31% | PTOx Users 14%

• Nonprofit: Non-Users 18% | PTOx Users 10%

Ready to Modernize Your PTO Program?

Unused vacation doesn’t have to go to waste. With PTO Exchange, you can turn unused PTO into a strategic benefit—helping employees support their families, reduce debt, save for retirement, or simply gain peace of mind.

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