New medical payment benefit can improve employee wellbeing

HSAs and HRAs are wonderful benefits for helping employees save for future health care expenses. But today’s workers and their families are facing a growing medical payment crisis that requires more immediate attention and flexibility than these current benefits allow.

New research shows that rising out-of-pocket (OOP) health care costs, unexpected medical expenses, and medical inflation are reaching critical levels for a growing number of families with employer-sponsored health coverage.

It is an urgent concern for benefits managers and brokers because financial stress leads to unhealthy employees. Left unchecked, employers will experience more employees who delay or avoid care. This trend, in turn, could lead to cost increases for their health plans, increased absenteeism, lower productivity, and greater employee dissatisfaction with their benefits.

The 2023 Healthcare Payments and Financial Disparities Study found that paying for health care increases physical, mental, and financial stress for employees. More than half (52%) of them

feel stressed about paying medical bills, and 92% said that the stress has impacted their physical and mental health. In response, nearly half (43%) are avoiding care according to the study’s respondents.

Employees are also looking to benefits managers and brokers for a solution to help navigate complex health care billing systems. The study found that a majority (60%) of employees said their employers should be responsible for providing financial strategies to deal with the confusion, such as simplified billing, flexible payment options, and low-interest credit. Yet, less than 1 in 5 report that their employers provide a payment solution that offers credit or a solution that simplifies the billing experience.

But benefits managers and brokers can help alleviate stress and foster financial wellbeing for employees thanks to a new kind of health care payment model. In a nutshell, the new model focuses on relieving consumers’ medical costs with affordable repayment plans while also ensuring providers get fully paid.

It also eliminates the endless bills, statements, and notices that add to the stress and dissatisfaction that employees experience. With this new capability, benefits managers and brokers can play a much more significant role in helping employees get the right amount of care they need at the right time and show them how to avoid costly mistakes.

How it works

The new health care payment model addresses this problem with affordability, flexibility, and simplicity. It helps employees reduce medical billing stress by giving them flexible and manageable payment options over time, regardless of their credit histories.

Providers are open to this solution because it ensures they get paid upfront. A third-party service guarantees prompt full payment to them in exchange for giving employees more affordable and interest-free repayment plans without additional fees.

The model shifts the financial relationship away from providers to specialized services that remove the system’s inefficiencies and streamline the payment process for all involved. They pay the patient invoice to the provider upfront and then assume the extended payment relationship with the patient. As soon as a claim is adjudicated, the service provider sends providers 100% of the in-network allowed amount.

Employees with high deductible and co-pay plans benefit by gaining manageable repayment plans for all allowed in-network charges up to their OOP maximum amount.

It also addresses the confusion and stress employees experience with their bills. Instead of receiving a blizzard of statements and notices, employees get a single, consolidated statement summarizing the totality of their care, regardless of where they received the care. It creates, in essence, a simple “super EOB.” This billing approach not only improves employee satisfaction rates, it improves access to care by alleviating the rigid collection processes from providers.

This simplification, in turn, makes employees better informed and more in control of their medical expenses, as well as more engaged with their health care. This credit-for-all approach ensures employees can make prudent decisions about their medical care – receiving services when they need them instead of when they feel they can afford them.

Read more: 2024 employer health care costs projected to jump 8.5%: Here’s why

The model also benefits employers. The service can automatically enroll employees on behalf of the employer, even if some employees have less-favorable credit histories. All employees can be issued credit for all allowed charges up to their out-of-pocket max, regardless of their credit standing.

Final thoughts

Unaffordable medical bills, higher deductible health plans, and confusing billing statements have caused an increase in physical and mental health issues for a majority of insured Americans. The impact of medical payments is forcing employees to make tough financial decisions, with many dipping into savings, delaying payments, and avoiding care.

Benefits managers and brokers have the opportunity to address this crisis with a solution that improves employee wellbeing, reduces complexity, and improves their company’s/client’s bottom line.

Brian Marsella, President, HPS/Paymedix