Average health care costs are steadily rising. And out-of-pocket medical bills, especially from emergency room visits, are becoming all too common for working Americans. Thirty-two percent of Millennials with health insurance deductibles have reported paying out-of-pocket costs.
Some employees are dipping into their retirement savings to pay their medical emergency bills. As the industry urges employees to allocate their dollars toward retirement, covered employees are wondering what dollars they even have left to save.
“Most people think about medical, vision and dental insurance, but these costs are driven after coverage is given,” comments Brad Galiney, senior vice president of Employee Benefits Distribution for Voya Financial. “After their insurance is providing that coverage, there are still a whole host of things to consider.”
Among those considerations are critical illness insurance, group life and disability coverage, supplemental health benefits, and hospital indemnity insurance. As health care costs grow, Galiney says Voya is seeing more employers introducing these benefits and developing high deductible health plans (HDHPs), health insurance plans that offer lower monthly premiums and higher deductibles.
Adding voluntary products provides additional dollars that employees can use however they choose. In many instances, workers will use such products to help offset the cost of their deductible and/or for co-insurance. For example, obtaining critical illness coverage can also provide incremental additional coverage for those who can’t afford to pay medical bills due to an illness or disability, says Lydia Jilek, senior consultant at Willis Towers Watson.
“People don’t necessarily have the savings that they need for them to be able to bridge that gap and maintain their lifestyle, should they have a cancer diagnosis or something similar,” Jilek explains. “A critical illness policy can be a benefit in bridging that gap.”
Such scenarios provide incentive for employers to offer additional benefits. “Now, employers, brokers, consultants and the industry are turning to workplace benefits,” Galiney adds. “Because of these gaps in insurance and Americans’ inability to fund these expenses, these products are becoming more relevant and important to the financial wellness of employees.”
According to a 2019/2020 Voluntary Benefits and Emerging Trends survey, 79% of employers are looking to broaden or enhance their portfolio of benefits. Jilek says the company continues to see a trend in this direction. “These are some of the areas where we’re seeing great potential for growth,” she states. “When we ask employers, ‘Do you offer this now, and are you looking to offer it in the next three years?’ these are products where we see the greatest level of interest.”
At Voya, the Employee Benefits practice provides hospital indemnity and disability insurance to employers and their workers. Both products offer supplemental coverage for occurrences including accidents or illness, but the short-term disability insurance product pays a percentage of a covered employee’s salary should an employee become temporarily disabled and unable to work. The hospital indemnity insurance product can also cover costs related to having a newborn child, entering a rehabilitative facility for treatment for mental health disorders, alcoholism or drug addiction, or other needs.
“We know that the average family in America would have a very tough time if they found out they have a $5,000 outstanding bill because of some medical emergency,” Galiney says. “These products are designed to take the stress away from that.”
When an employer thinks about financial and holistic wellness, it can be critical to have these types of protections, all while understanding the gaps that exist for workers. The average working individual expects to receive and secure coverage via their employer, Galiney argues. There can be a high degree of trust in what an employer offers to them, both in products and advisers.
Similar to how plan sponsors will want to add the right benefits and advisers, employers will need to take a look at how they’re introducing these products to their employees, and how they are continuously communicated. A 2020 Mercer study found employees will typically only spend 14 minutes on average each year enrolling in benefits. Even though the enrollment process is significant to educating employees on their retirement plan, voluntary health benefits and other associated features, incorporating consistent communication can refresh an employee’s distant memory of the products.
“Sometimes employees forget they have coverage as well. It’s a constant education process throughout the year,” Galiney mentions. “We recommend employers have a fluid discussion throughout the year, so people continue to gain insight and make the right decisions for them and their situation.”
Employers need to understand the suitability of a benefit for their specific workforce, Jilek says. For example, if an employer has multiple workers who have dependents such as children, they may consider offering accidental policy or hospital indemnity insurance in the event of accidental injuries or illness.
“It’s important to look at the salaries as well as the genders, ages and the status from a medical benefit perspective,” she adds.
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