The cost of health care was already a growing concern among Americans. Now with the coronavirus impacting many workplaces, that concern is evolving into anxiety and outright fear. Employers have a real opportunity to help by offering strong leadership and tools to alleviate their employees’ financial concerns.
A new poll by the Financial Times and Peter G. Peterson Foundation found that 34 percent of U.S. voters consider healthcare costs the biggest threat to the economy, up from 26 percent only five months ago. Another poll released Feb. 27 by NBC News and the Commonwealth Fund revealed that nearly one third of Americans fear they won’t be able to afford health insurance over the next year.
Even for employees with employer-sponsored insurance, premiums are growing faster than incomes. Between 2010 and 2016, national average family premiums for employer-sponsored insurance rose by 27.7 percent, from $13,871 to $17,710, according to an April 2019 analysis by the University of Pennsylvania Leonard Davis Institute of Health Economics.
In the NBC News/Commonwealth Fund poll, one in five respondents said they had problems paying medical bills over the last two years:
- 46 percent said they had dipped into savings or retirement funds
- 46 percent said they had borrowed money from family or friends
- 34 percent said they had taken on credit card debt
- 26 percent said they had sold jewelry or furniture
- 7 percent said they had raised money through crowdsourcing
The 2019 Bank of America Workplace Benefits Report shows that one of the top three sources of employee financial stress is the inability to manage healthcare costs. While financial wellness (or lack thereof) isn’t the cause of high healthcare costs, the majority of us don’t understand the healthcare and insurance industries at the level necessary to better control our own costs.
When employees sacrifice health care because of cost concerns, the implications are far reaching.
Public health officials are worried about containing the coronavirus because employees fear the expense of getting tested or can’t afford to miss work while sick.
Over half of employees have skipped or postponed doctor’s appointments, procedures and tests, medications and hospital stays because of cost, the Bank of America report found. Without regular medical care, employees are less likely to keep up with health maintenance such as yearly blood work, cancer screenings and blood pressure checks. This can actually lead to higher health care costs in the end.
The effects of the rising cost of health care are not limited to employee health. Often workers have to make a choice between paying for health care and saving for retirement, purchasing a home or even having a child.
A financial wellness program can help
Offering a financial wellness program that adapts to each employee’s primary financial concerns and goals is essential to helping employees gain financial control.
Employees value financial wellness programs that provide these benefits:
- Professional advice
- Financial information not connected to 401(k) contributions
- Availability of products and services needed by employees
- Personal review of an employee’s financial situation
- Online tools and calculators
When evaluating a financial wellness program, be sure to look for one that offers what your employees want, and also addresses health care costs and potential cost-savings options, such as the health savings account (HSA). The Bank of America report found that most employees have a substantial health care knowledge gap that prevents them from keeping costs lower.
In particular, a financial wellness program should do the following:
- Increase the understanding of HSAs and how to use them as a tool to pay for health care costs during retirement.
- Help employees understand the benefits of HSAs, especially understanding that they can carry over their savings from year to year and that these funds are tax-exempt.
- Increase financial education in all areas to help employees better manage increased health care costs
Kris Alban is executive vice president of iGrad, a San Diego-based financial technology company that provides artificial intelligence-powered financial wellness solutions to employers, financial institutions, colleges and universities. Its Enrich Financial Wellness platform is used by more than 20,000 employers and more than 300 financial institutions to provide behavior-changing financial literacy education to employees, customers and members.