Are Your Employees’ Financial Well-Being And Wellness Initiatives Being Undermined By Your Health Plan?

Employers can improve the financial and general health of their staff by implementing some emerging best practices.

 

The cost of an employer’s healthcare plan is often its biggest human capital expense after wages. Employers frequently consider and use a variety of alternative plan designs and cost-shifting options, such as High Deductible Health Plans, as healthcare costs continue to climb (HDHPs). Employers have simultaneously pushed to establish comprehensive wellness programs that aim to involve employees in programming and solutions across a number of wellbeing areas, including financial health, in part in response to the rising expense of healthcare.

Understanding how the many health pillars of a business interact with one another is one of the major problems of these programs. In other words, what effect does changing an employer’s healthcare plan have on the other aspects of wellbeing?

 

We looked at various facets of this same subject in a recent report from the Financial Health Network on the effects of medical debt. While the majority of firms look for reasonably priced health insurance choices for their workers, insurance does not always offer workers sufficient protection against mounting medical debt and its debilitating repercussions. The explanations behind this are quite simple:

• Medical debt is widespread and unforeseen: Medical debt is the most prevalent type of debt in the country, affecting more than 1 in 5 persons, and it is the main reason for bankruptcy in the country. Unlike many other types of debt, medical costs can come as a surprise.
• Costs of health insurance exceed pay growth: Employee premiums and deductibles are increasing more quickly than wages. In 2010, 6% of people with employer-sponsored health insurance reported that their deductibles consumed 5% or more of their total income. Ten years later, in 2020, that percentage had more than quadrupled, with 14% of people with employer-sponsored insurance now having to pay deductibles that represent a sizable chunk of their income (5 percent or more).
• Over 1 in 4 people with employer-provided insurance are underinsured: Due to growing deductibles and other out-of-pocket medical expenses, 26% of persons with employer-sponsored insurance are now regarded as being underinsured. Being underinsured has effects that go beyond merely financial; it encourages people to delay seeking care, which leads to more expensive care in the long run. A quarter of underinsured adults skip suggested testing or treatments, don’t fill necessary medications, and don’t go to the doctor when they have a medical problem. Due to these factors, almost 40% of US adults are concerned about their ability to pay for necessary medical treatment in the upcoming year.

 

 

Financial stability and affordable healthcare

Making healthcare accessible while limiting costs for their business is, according to 93% of employers, their top goal. Although these objectives may appear to be at odds with one another, there are certain emerging best practices that can assist businesses in achieving this objective while also improving the financial situation and general well-being of their workers.

 

First, employers have access to a variety of information that can be used in straightforward ways to determine how affordable health insurance is for all employees. The healthcare social equality audit is one illustration. Employers conduct this analysis by taking the employee-selected plan, adding the in-network deductible and out-of-pocket maximum, and dividing the total by the employee’s yearly income. Employers can further stratify this research by taking into account factors like the number of dependents, Zip Code, income levels, job category, or any other pertinent data points to pinpoint the areas where health plan discrepancies are most severe.

 

Second, new regulations requiring pricing transparency in health plans will be put into effect by the federal government as of July 2022. Employers have a fantastic chance to inform workers about the fundamentals of health insurance and how to choose the best course of treatment based on their needs in terms of cost and health. In order to encourage employees to pursue the kinds of preventive care that can serve as a buffer against rising costs for both employees and employers, employers should take this opportunity to emphasize the availability of new price transparency information and how employees can lower their out-of-pocket expenses.

 

Third, companies have a variety of levers at their disposal to lessen the financial burden of healthcare costs, particularly for lower-paid employees who frequently face the brunt of the burden under employer-sponsored plans. For instance, establishing employer payments to health savings or health reimbursement accounts might assist defray the initial costs for workers covered by an HDHP and encourage workers to seek out urgent medical attention on their own. Additionally, adjusting premium contributions based on annual income levels and increasing subsidies for individuals making less money might help lessen the negative effects of workplace health insurance on one’s financial health. This exact strategy has been used by Bank of America. Since 2012, the business has not increased medical insurance premiums for workers making under $50,000 annually.

PayPal has also adopted a similar strategy. After conducting an employee survey in 2018, the business discovered that many of its hourly and entry-level employees were experiencing financial hardships while receiving wages that were competitive with the market. Costs associated with healthcare were a major factor in that battle. PayPal reduced the cost of healthcare coverage in the US for employees with significant cost burdens by roughly 60% amid a variety of adjustments aimed at enhancing the financial health of its staff. Since implementing these (and other) improvements, PayPal has noticed a number of beneficial effects, including a rise in the number of people signing up for healthcare benefits and an improvement in the quality of healthcare plans.

 

Finally, there is a huge opportunity for companies to provide and create insurance plans that complement the financial and medical requirements of their workforce. The fact that HDHPs have a modest upfront price may appeal to employees and make them think that they won’t suddenly disappear. As we have shown, however, simply providing an HDHP without also making a financial contribution to something else, like an HSA, could be financially disastrous for employees, particularly those making lower wages. This is yet another justification for businesses to alter premium employer contributions in accordance with income level. The advantage of this strategy is that it is cost-neutral for the firm. Lower wage workers pay less than higher wage workers through a tiered, eventually more financially fair, structure. This exact strategy has been used by JPMorgan Chase.

 

Medical debt is expensive, harmful, and detrimental to both the wellbeing of the employee and employer. An employer can maximize its investment in employee wellbeing by understanding the intersections and interactions between various wellness pillars, particularly the health and financial wellness programs, and can also build a more sustainable program that leads to significant and long-lasting positive outcomes.

 

 

 

 

Source: https://www.benefitspro.com/2022/06/28/is-your-health-plan-damaging-your-workers-financial-health-undermining-your-wellness-efforts/