Michael McMorris MSW
Director of Health Advising
Time: 3 minutes
Ever since the mid-20th century, employers have been offering healthcare products to employees as a part of a benefits package. Among these financial products and services include health insurance, flexible spending accounts, and health savings and reimbursement accounts.
For the employee, there are several benefits of having access to these products and services. For example, affordability of group health insurance plans in comparison to the individual marketplace is well known, and many employers cover some or all of the monthly premium for employees. Products like flexible spending accounts (FSA), health savings accounts (HSA) and health reimbursement accounts (HRA) can limit the burden of bearing the costs of managing any chronic condition, and can help encourage short and long term planning for expected and unexpected healthcare expenses.
For employers, the benefits of having employees access these resources include an advantage in recruiting and retaining quality employees, limiting utilization of Employee Assistance Programs (EAPs), and making it easier for employees to focus on work (the dilemma of how to pay for health care expenses can be a distracting one!).
So what’s the hold up?
Despite the clear benefits to both employers and employees, the accessibility of these resources can be an issue. We see this regularly during engagement with employees through the Pack Health program. Our Health Advisors regularly help to address our member’s barriers to managing a chronic condition, and navigating financial resources is a common one. In the context of employer-based products, barriers we see most commonly are lack of knowledge as to what might be offered at the place of employment, who to contact with questions, the benefits of certain products, and what to budget aside for healthcare needs for the year.
One specific example is a member who knew the company offered FSAs, but did not fully understand the benefits of tax savings of funding this account, and how much to fund the account. Our Health Advisor supplemented the member’s education about the benefits of having a FSA by explaining how the money that funds the account are removed from gross pay prior to income and other taxes are deducted. Our Health Advisor asked the member to write down all known medical expenses from the previous year as a way to provide a baseline to how much to fund the FSA each year. At the next call, the member admitted they did not know how much they were spending and this was an eye opening experience. They took steps to rectify this, and the member went on to start funding an FSA.
Budgeting for healthcare expenses is different than budgeting for household expenses.
There can be regular recurring expenses for co-pays and maintenance medications, but there are unexpected medical expenses to consider. Hospitalizations, catastrophic medical diagnosis or accidents can greatly increase the chances of members spending at least to the annual deductible. To avoid debt, members need to save up to the annual deductible similar to an emergency fund for household expenses. Some deductibles can be high depending on what type of healthcare plan the member is a part of, but is is common for deductibles to be $5,000 to $10,000.
Again, employer based financial products like interest-bearing HSAs can be utilized and continue to be regularly funded up to federally mandated limit. HSAs do not expire at the end of the year like FSA. However, these accounts need to have regular planned contributions to have any benefit.
Finding Time for Financial Literacy
Our Health Advisors are partners with our members, and often help a member navigate misinformation concerning their healthcare needs. Providing accurate information and directing individuals to qualified staff in their organization’s HR is a part of the Pack Health training for all Health Advisors, and over the last three years, we’ve built in talking points and escalation protocols to ensure financial concerns in particular are addressed. Since summer 2018, Health Advisors have the option to refer patients to one of our Financial Social Work-certified coaches for more hands on consultations as well.
Why, you may ask? Because employer-based financial products are just the tip of the financial literacy iceberg, and we’ve seen how vital this piece of the puzzle can be to our members’ health. So if you’re interested in taking steps to better support your employees’ financial literacy, we’re here to help.