Chances are, at least some of your employees struggle to pay their medical expenses. In fact, 41% of the workforce has medical bill problems — and many times, those problems snowball into medical debt and bankruptcy.
If you employ a large number of people under the age of 50, they may be disproportionately affected: Research shows that medical bill collections tend to peak at about age 27 and stay there through a person’s mid-40s.
And just having health insurance doesn’t stave off the risk of medical debt. Out-of-pocket costs, like high deductibles and coinsurance, are a major contributor to medical debt. In fact, more than half of medical collections fall under $600 — well below the average cost of a traditional health plan’s deductible.
Clearly, some of your employees might be silently fighting to get back on track. And it’s in your best interest to help them: Debt contributes heavily to financial stress, which affects their happiness and harms productivity, costing U.S. businesses up to $250 billion each year.
Preventing and Managing Medical Debt
Luckily, employers are in a unique position to help workers take control of their medical debt. Here are four ways to start.
1. Encourage Them to Use HSAs
About 2 in 3 people who have a health savings account (HSA) don’t use up those funds during the plan year — meaning they miss out on the tax advantages. If your benefits package offers an HSA-eligible plan, help your employees open an account. You might even consider making your own monthly contribution as a perk to encourage employees to take advantage of their account.
2. Educate Employees on Surprise Bills
Patients still incur surprise medical bills when they unknowingly go out of network. This problem has prompted lawmakers to propose legislation preventing unexpected high medical expenses. But until those protections become law, many states will continue allowing balance billing practices that put patients deep in the red.
As an employer, you can help educate employees on what to do if they receive surprise bills: They should work with the provider and insurer to negotiate a lower rate or recode the medical expense. Besides connecting workers with financial counseling from employee assistance programs, consider asking human resources, health navigators or benefits administrators to assist those negotiations on the employee’s behalf.
3. Reimburse Them for Certain Expenses
By reimbursing employees for medical expenses — such as through a health reimbursement arrangement (HRA) — employers can help their workers offset the costs of out-of-pocket care while enjoying their own tax benefits from the reimbursement plan. In 2019, an HRA can help pay for costs such as mental health care, birth control, substance abuse treatment and medications, among other expenses.
And if you’re a small employer and you don’t offer a group plan, you may be able to contribute to a reimbursement program through the qualified small employer HRA.
4. Remind Them About Payment Plans
A recent survey showed that more than half of people who had a medical bill totaling more than $1,000 used a payment plan to repay the debt. Some providers offer interest-free payment options, but your employees may not know about them — or they may be too afraid to ask. Take the first step by giving them information and resources that can make paying their medical bills a little easier.
Better Financial Freedom, Better Health, Better Bottom Line
Too often, people skip lifesaving care — or don’t fill needed medications — because they can’t afford the bills that will follow. This negligence has a trickle-down effect, not only on their financial, physical and emotional health but also on your bottom line. But with a little extra support on your end, you can help employees dig themselves out of debt — and take back their financial freedom, health and peace of mind.
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