Even with employer-sponsored health insurance, 43% struggle with medical debt
Almost 4 in 10 at some point have been unable to afford rent, groceries or utilities because of medical bills.
Employers walk a tightrope as they attempt to provide competitive health benefits to workers while navigating steadily rising premiums. Despite their best efforts, more than 4 in 10 employees report having experienced medical debt.
“Providing quality health care benefits — and ensuring the physical and financial health of employees — is an essential responsibility of employers,” said CEO Mike Waterbury of Goodroot, a community of health care companies. “But health benefits are increasingly expensive, resulting in benefit cuts that decrease coverage or shift more of the cost burden to employees, leaving them at greater risk for medical debt following a large hospital bill or other expense.”
Employers spent an average of $17,393 for family coverage per employee in 2023, an increase of nearly 48% since 2013. Although employers are spending millions to provide quality health care benefit, employees still are struggling with medical debt. A recent Goodroot survey of 2,000 adults painted a stark picture of the state of medical debt in the United States:
- Nearly half of Americans who currently are in medical debt owe more than $2,500.
- Almost 4 in 10 at some point have been unable to afford rent, groceries or utilities because of medical bills.
- Eighty-six percent of Americans who have experienced medical debt have delayed care because of the anticipated cost.
- Younger workers are 29% more likely than older ones to have experienced medical debt, and their debts are larger. Of employees aged 42 or under with medical debt, 59% owe more than $2,500, compared to just 45% of employees aged 43 or older.
- Medical debt remains the leading cause of bankruptcy in the United States.
Employees often are unaware that help is available. In return for nonprofit and tax-exempt status, hospitals are federally mandated to offer “community benefits, including free or discounted urgent and medically necessary care to patients unable to pay.” Each hospital or health system has its own financial assistance policy, eligibility criteria and application form.
Although each hospital has slight differences, both insured and uninsured individuals who meet the hospital’s set income limits typically are eligible for financial assistance. In some areas, a family of four making up to $180,000 qualifies for discounted care. However, the survey found that employers underutilize these programs, with 53% of employees from households earning less than $100,000 per year unaware of their existence.
For those earning less than $50,000, 45% incorrectly assumed that their income was too high or that employer-provided health insurance disqualified them from receiving hospital financial assistance. And for those with incomes between $50,000 and $99,999, two-thirds didn’t apply for hospital financial assistance because they believed their income was too high or that employer-provided health insurance disqualified them from receiving hospital financial assistance
“When employees are struggling with a massive, unpayable medical bill, it not only puts tremendous stress on their family but also harms their ability to be productive and contribute to company culture,” Waterbury said. “Employers can’t assume that their team will find and apply for these programs.”
Related: Medical debt is dropping from credit reports (but patients still being sued for unpaid bills)
Applying for hospital financial assistance can be a cumbersome and confusing experience for patients. With practices varying significantly between hospitals, from outdated paper application forms to instructions hidden deep within hospital websites, the current system lacks the ease and intuitiveness necessary for a stress-free application experience.
Employers can help by integrating hospital financial assistance into overall health benefits. Waterbury recommends that employers provide a health-cost navigator in addition to health care benefits. Navigators work directly with employees to help them understand their benefits,
“In order to ensure the financial health of their employees and protect them from medical debt, employers need to think beyond simply providing health care insurance,” he said. “Ensuring that programs like hospital financial assistance are integrated into the benefits gives employees the best chance of keeping health care costs low and avoiding medical debt.
“Offering care navigation to ensure that employees use their benefits effectively, and to provide comparison pricing and bill review and negotiation, is another essential layer of protection against medical debt. These measures are very cost-effective as well, especially compared to the overall cost of health care benefits.”