Many workers are financially vulnerable to unexpected medical expenses despite having access to at least some employer-sponsored benefits, according to new research from the Employee Benefit Research Institute in collaboration with Lincoln Financial.
“Our findings suggest that many workers simply do not have the financial cushion to absorb today’s health care costs,” said Bridget Bearden, director of member growth and partnerships at EBRI. “Medical expenses are not always isolated events. Many employees have little savings set aside to absorb these costs, and affordability concerns are causing some workers to delay needed care. As health care costs continue to rise, strengthening workers’ financial resilience will become increasingly important.”
Although more than half of employees with a recent medical event paid at least $1,000 out of pocket, fewer than 3 in 10 said they were “very prepared” for an unexpected expense of this amount. This expense caused at least moderate financial difficulty for at least half of survey respondents. Forty-five percent said they still were experiencing financial difficulty related to past medical expenses, while more than one-third had a medical bill sent to collections.
One way brokers and employers can help alleviate these concerns is through improved benefits education. Only slightly more than half of respondents said they have a high level of understanding of either health insurance or retirement benefits. The numbers are even lower for supplemental insurance, with 40% of less reporting high understanding of critical illness insurance or hospital indemnity insurance.
Better benefits education could help employees make more informed enrollment decisions and strengthen their financial resilience. Simply making employees aware of their benefit options is a good first step. For example, although 46% of employers reported offering accident insurance, fewer than 3 in 10 workers said they knew this coverage was available to them.
Fifty-five percent of respondents primarily relied on information supplied by their employer when making benefits decisions. Something as simple as describing benefits in clear, easy-to-understand language also can make a significant difference. After reading concise benefit descriptions. More than 8 in 10 employees were somewhat or very interested in dental insurance. Interest was similarly high for vision (79%), accident (71%) and hospital indemnity (63%) insurance.
“Employers invest significantly in their benefits programs, but that investment delivers the greatest value when employees understand and use the benefits available to them,” said Kerry Brooks, senior vice president, group protection product, workplace solutions marketing and customer experience, at Lincoln Financial. “These findings reinforce the importance of clear communication and education in helping employees make informed benefits decisions while strengthening their financial protection.”