Many workers in the United States struggle with medical debt. According to a recent survey of American workers by consumer financial health organization, Financial Health Network, 37% of employees have medical debt, and 32% struggled to pay their medical bills last year.
As healthcare costs continue to increase in the United States, so does the percentage of medical bills or debt that’s sent to collection. Health insurance may help Americans cover a portion of their medical costs, but many are still in debt because of high deductibles, out-of-network charges and patient copays and coinsurance. In fact, a medical emergency, chronic illness, or prolonged hospital stay can create a financial crisis for many U.S. workers.
Workers’ struggles with medical debt can spill over into the workplace, leading to issues such as increased absenteeism and lower productivity. However, employers are uniquely positioned to help employees improve their financial health and reduce their medical debt. In today’s competitive labor market, prioritizing employee financial wellness can increase attraction and retention efforts.
This article explores the impact of medical debt on U.S. workers and what employers can do to help.
An annual study by the financial wellness platform, Salary Finance, reported that 1 in 5 Americans have outstanding medical debt. For nearly 60% of these individuals, their medical debt is the result of a single illness or medical procedure and not recurring care. Rising healthcare costs are one of the main reasons so many workers are currently struggling with medical debt. According to research from the Kaiser Family Foundation, the average deductible has more than doubled in the last decade. More than half of U.S. workers were enrolled in high-deductible health plans as of 2020, up from 35% in 2015.
Additionally, health premiums are increasing for many Americans.
Record high inflation is also straining many workers’ financial reserves. Less than half of Americans have sufficient financial savings to cover an unexpected $1,000 expense. As a result, many Americans are only one health issue from medical debt. While many workers have employer-sponsored health insurance, these plans don’t necessarily provide employees with adequate financial protections. In fact, nearly 26% of adults with employer-sponsored health plans are considered underinsured and vulnerable to expensive medical bills, according to the Financial Health Network. Underinsured workers are less likely to visit the doctor when they have a medical issue or forgo filling needed prescriptions. This can often lead to more costly care down the road, increasing employers’ medical costs.
Despite this impact on employers, many organizations still do not help. Even though employees are looking to employers for help improving their financial well-being and addressing medical debt, according to a recent study by health technology service provider, TELUS Health, more than half say they haven’t received financial advice regarding investing for retirement from their employers.
Rising healthcare costs are causing many U.S. workers with health insurance to put off receiving care to avoid slipping into medical debt. In fact, one-third of employees are skipping routine check-ups, follow-up care and scheduled procedures, according to a survey by Salary Finance. When workers skip necessary care, their physical and mental health are negatively impacted. In addition, this can lead to more emergency room visits and higher healthcare costs for both employers and employees.
Medical debt can also negatively affect workers’ performance. Medical debt often leads to financial stress, which can cause distractions at work and lead to depression or anxiety. For example, employees with medical debt are often forced to put money towards their debt that they would otherwise use for essentials, such as food, housing, and education. Workers who experience financial stress are usually less productive, struggle to complete daily tasks and have worse relationships with co-workers. These drops in productivity can be very costly for employers.
Employers are uniquely positioned to help employees reduce and, in some cases, prevent medical debt. Ensuring that workers have access to health benefits and financial support is extremely important to this endeavor.
The following strategies can help employers address and prevent medical debt among their workforce:
When employers address their employees’ financial health, productivity, job satisfaction, and retention tend to increase.
Employers can play a critical role in preventing or reducing medical debt by offering benefits tailored to meet employee needs. Offering financial well-being benefits that complement and enhance health insurance can help keep their workforce healthy and productive and ensure they’re getting the treatment they need without incurring debt.
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This article is not intended to be exhaustive, nor should any discussion or opinions be construed as professional advice. © 2023 Zywave, Inc. All rights reserved.