It’s no secret that health care in America has grown increasingly expensive — and increasingly out of reach. For many Americans, the cost of health care leaves them choosing between forgoing potentially life-saving services, or seeking care and being left to pay an exorbitant bill. Unsurprisingly, medical debt has soared in recent years, with 57 percent of Americans owing at least $1,000, most often due to diagnostic tests, hospitalizations, and emergency room visits. Collectively, that amounts to nearly $1 trillion in medical debt. Financial distress affects every area of a person’s life, including in the workplace. For employers across the US, medical debt is an undeniable problem hindering employee health and, consequently, productivity and ability to work. However, you can play a significant role in reducing the impact medical debt has on your workforce by:
Understanding the true costs of medical debt for employees
Recognizing the company-wide burdens medical debt imposes
Addressing the problem at its root
Supporting employees through their medical debt journey
Offering health insurance that values preventive care
Before you start implementing strategies to help your employees tackle medical debt,
you should first understand what it is and how it arises. Forbes defines medical debt as “any balance or amount owed after receiving medical services or goods,” including amounts that are not past due and amounts that haven’t been paid and have been sent to collections.
Any type of health care service can put a person in debt, especially unexpected treatment such as hospitalization or emergency room visits, which are often a surprise for patients. Notably, people with chronic conditions frequently experience medical debt due to routine costs that quickly add up. Health insurance doesn’t always protect from medical debt, as many plans don’t cover all medical expenses. 26 percent of Americans with employer-sponsored plans are considered underinsured and vulnerable to high medical bills. From deductibles to co-insurance to co-pays, out-of-pocket costs add up quickly — even for insured employees.
Medical debt impacts every area of a person’s life. Not only does it lead to worsening health outcomes, but it also amplifies existing health disparities through:
Adverse effects on economic stability and mobility
Stress that impacts mental health and prompts riskier health behaviors
Avoidance of use/access to medical care
Limiting access to neighborhoods with environments that foster positive health practices
Medical debt has financial implications that extend far beyond a simple bill.
While medical debt comes at a cost for your employees, your company also pays a price in productivity. When medical debt hangs over a person’s head, it prevents them from focusing on other important areas of their life, including work. Four out of five workers agree that medical debt distracts them while on the job. What’s more, 50 percent of employees who describe debt as a source of stress report spending at least an hour every week dealing with issues related to their debt during work hours. As a result, individuals’ performances and overall productivity decline, causing company success to suffer.
The impact managing or preventing medical debt has on employers extends further, influencing recruitment and retention rates. Because of the extent medical costs factor into an employee’s financial security, the importance of having a health insurance plan they can rely on cannot be overstated. Results from a 2018 survey revealed that for 56 percent of Americans with employer-sponsored health benefits, their health coverage was a decisive factor in whether they stayed at their current employer or found a new job. Thus, one way you can attract and retain top talent is by choosing an innovative, transparent, simple health insurance plan to offer your dedicated workforce.
There are various strategies employers can use to address medical debt at its root and improve employee health:
Understand the financial vulnerabilities of your employees related to health care needs and costs.
Educate employees about the insurance plan you offer to ensure they know what to expect when seeking care and how to navigate it.
Provide preventive care benefits to help employees manage their health before any serious, more costly conditions arise.
Invest in wellness programs, as part of your health insurance or as a stand alone program, to keep employees engaged in their health care.
It is also important to actively engage with your employees about their well-being in the workplace and beyond. The stigma around discussing personal finances often prevents people from openly talking about the conflict they might be facing, causing them to feel embarrassed asking for help. Each person faces unique needs and challenges, and working for an employer who advocates for financial wellness and puts programs in place that foster financial resilience can be game-changing. By creating a culture where employees feel comfortable talking about financial stress, employers build trust and loyalty, increasing the likelihood that workers will reach out for support when they need it.
Employee health is not measured just by physical well-being. It encompasses various aspects that contribute to a person’s overall happiness, including physical, mental, social, and financial health. 52 percent of employees in the US agree that finances are their biggest concern — more than any other aspect of their well-being. Thus, when an employee’s financial health is threatened by medical debt, it can cause a spiral of stress and uncertainty.
The most important step you can take when an employee faces heavy medical debt is building a reliable support system that invests in their financial wellness. Employers have a unique opportunity to be both a source of emotional and financial encouragement by offering resources and benefits that help employees work through their financial stress and ultimately improve their well-being. Ensuring your employees are equipped with the knowledge to navigate the health care system under their insurance plan, access emotional support when they need it, and have the tools to build a strong financial future builds trust and even improves employee satisfaction.
Oftentimes, people avoid accessing preventive care for a variety of reasons. Whether they worry about a surprise medical bill, fear adding to existing debt, or simply don’t know what services are available, preventive care is easily sidelined. However, preventive care has the power to dramatically improve employee health physically, emotionally, and financially. Services like routine health screenings, vaccinations, and even talking with a doctor about creating positive nutritional habits help your employees stay happy and healthy — and save a lot of money.
Under the Affordable Care Act, all preventive services are at no cost. It’s much more affordable for employees to engage in a preventive service, then the complications and costs of managing a condition down the road.
Health insurance companies that go above and beyond to center preventive care as a core pillar of their plans are key to eliminating medical debt. Offering a transparent health plan with preventive care benefits results in long-term cost savings, better health outcomes, and reduced medical debt for your employees. Educating employees about the preventive services that are covered by their plan and equipping them with resources to navigate it increases the likelihood they’ll seek access, enhancing employee health and well-being.
In summary, medical debt’s impact reaches beyond a single employee’s physical health. Employers face the consequences of medical debt as well, particularly in terms of employee productivity, recruitment, and retention rates. Addressing medical debt as part of a comprehensive approach to employee health and well-being fosters a positive workplace culture where workers feel comfortable discussing their health journeys and confident that their employer values their futures.
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Gordon, D. (13 Oct 2021). 50% of Americans now carry medical debt, a new chronic condition for millions. Forbes. https://www.forbes.com/sites/debgordon/2021/10/13/50-of-americans-now-carry-medical-debt-a-new-chronic-condition-for-millions/?sh=21b0a7cd5e5d
Medical debt is hurting your employees—here’s how to help. (2 June 2022). Financial Health Network. https://finhealthnetwork.org/medical-debt-is-hurting-your-employees-heres-how-to-help/
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