When employees' health plan out-of-pocket costs exceed savings
The author makes the case for point-of-care health care loans.
The average health plan out-of-pocket maximum is $8,000, yet 37% of Americans struggle to cover a $400 emergency expense. It is no wonder that many employees consider themselves functionally uninsured despite being enrolled in an employer-sponsored health plan.
As the divide grows with each passing plan year, employers are witnessing their employee “benefit” suddenly become a “liability” — particularly for those employees who have little access to savings, have poor credit, or, like most Americans, live paycheck-to-paycheck.
Related: Out-of-pocket drug costs continue to vex consumers
Offering guaranteed financial assistance to employees who need help paying high out-of-pocket medical and pharmacy costs may be the only way for employers to receive full benefit for the policies they purchase for their employees. Studies show that the majority of employees enrolled in high-deductible health plans report skipping or delaying care, which can have catastrophic consequences. Employees who skip care stay sicker for longer, and when outcomes are eroded, employers see an increase in health plan expenses as well as absenteeism/presenteeism.
Employee financial assistance to help offset health plan out-of-pocket costs come in a number of forms that permit the employer contribution to be deductible by the employer and non-taxable to the plan participant.
Employer contributions to HSAs, HRAs, and FSAs are the most common forms of this type of financial support. Employers can also sponsor employer loan plans that provide access to employer dollars when they need them to offset health care costs.
By providing a financial security benefit like an employer loan program as an accompaniment to the health plan offering creates an affordable and efficient way to help employees seek care with confidence and prevent any unhealthy ripple effects from occurring. The health care loans can be requested by the employee on more of an “as needed” basis so long as the loans are provided on a non-discriminatory basis and supported by compliant plan documents and administration.
Offering employer loan programs can often help the employees who really need the financial support the most as opposed to blanketing all employees, some of which have dependable access to capital. By adding financial assistance programs as part of the employee benefit package during open enrollment, employers set their employees up to seek care with confidence, restore value to their healthcare benefits, keep total healthcare costs down over time, and their workforce up and running.
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