Benefits and Compensation

When Your Health Plan Serves Up More Financial Exposure Than Your Employees Can Handle

Considering that the vast majority of Americans live paycheck to paycheck and 40% struggle to cover a $400 emergency expense, it’s no wonder why so many employees consider themselves functionally uninsured despite being covered by their employer’s health plan. The standard employer-sponsored health plan comes with nearly an $8,000 out-of-pocket expense. And, when an employer’s price tag to purchase that insurance for a family now exceeds $20,000 a year, no HR professional likes to hear that the employee “benefit” the company offers has become an employee “liability.”

As most health plans are turning the odometers on their deductibles back to $0, employees and their family members will need help managing and paying their out-of-pocket costs—particularly those that hit early in the year. Studies show that individuals enrolled in high-deductible plans are skipping care, which has costly consequences. Employees who skip care stay sicker for longer, and as a result, employers lose worker productivity. When outcomes erode and care is delayed, employers also see an increase in health plan expenses. Bottom line: Aside from wanting to keep employees happy, HR professionals want to keep their employees healthy.

So, what’s an HR professional to do? Here are a few ideas:   

  1. Provide your employees with a financial security benefit. Providing employees with guaranteed access to credit for medical expenses on consumer-friendly terms they may not have access to on their own is of tremendous benefit. By providing a financial security benefit as an accompaniment to your health plan offering, employees can seek care with confidence and prevent any unhealthy ripple effects. A benefit like this gives employees something their health plan alone can’t: financial security. 
  1. Look out for your HSA enrollees. While health savings accounts (HSAs) work for many employees, particularly as the price tag for the premium is right, the specter of a onetime deductible exposure strikes fear in the hearts of many enrollees. And, while lower premiums paired with some employer HSA contributions can often cover that exposure, employees worry about the timing of these expenses, particularly if they arrive early in the plan year. Providing a financial security benefit to help employees pay for their healthcare expenses—whenever they are incurred—removes a major barrier to HSA plan election. Furthermore, adding a financial security benefit is much more cost-effective for the employer than front-loading the HSA with hard dollars at the beginning of the plan year.
  1. Consider offering voluntary benefits to fill in gaps. Voluntary benefits that pay for the occurrence of accidents or defined illnesses (e.g., cancer policies) have been around for years. Most HR professionals have made decisions in the past about whether these plans make sense for their employee population. Given the financial impact of 2020, it may be time to give these policies a second look if you don’t already offer them. One suggestion is to offer policies that pay out small amounts (in the $1,000 range or so) per injury. These slim policies come with very low premiums and help take the edge off employees’ financial exposure. Look for programs that give a meaningful benefit relative to total exposure but that do not eat up the lion’s share of employees’ paychecks.
  1. Create an employee loan program. With a plan document, some nondiscriminatory policies, and a few other legal requirements (check with your legal counsel), you can create an employee loan program that gives small, short-term loans to employees who find themselves in a financial jam. For employees with early-in-the-year medical expenses, this could be just the financial safety net they need. Knowing that this program is available may help employees or their family members get the right care at the right time, which, as every HR professional knows, is the reason behind offering healthcare benefits.     

Consider adding benefits that help employees pay for and manage their out-of-pocket healthcare expenses not only as a means of providing a much-needed benefit to your employees but also as a tool to keep your total healthcare costs down and your workforce up and running. Put the “benefit” back into your employee benefit. It’s an addition that will pay dividends for years to come. 

Amy O’Meara Chambers is the COO and Cofounder of HealthBridge. She has over 25 years of experience working in the healthcare industry as both an employee benefits attorney and a business builder. Chambers is the author of the great American novel Health Savings Accounts for Dummies and holds a JD from the University of Michigan Law School and a BA from the University of Chicago.