4 ways employers can help ease healthcare cost worries

Everyone needs healthcare. Whether it’s preventative care like routine checkups or an acute need like a broken bone, at one point or another we all go to the doctor. In fact, to recognize this universal truth, in 2018 the United Nations affirmed healthcare as a human right.¹ So, if we all need healthcare and it’s a basic human right, why is it so hard to afford healthcare in America? The answer is long and complicated.

Paying for healthcare in America

Setting aside the politics, the fact is, the US does not have universal healthcare—a system where citizens are assured healthcare access regardless of ability to pay. The US healthcare system is best described as a mixed system with some public and some private coverage.² In this system, affording medical treatment takes planning.

That’s all to say, healthcare in America is complex. For the purposes of this article, we’ll focus on cases where individuals have healthcare coverage provided through an employer and still face difficulties paying for certain types of care.

Employees worry about medical bills

Depending on the type of health insurance, there are still items to pay for even when an individual has healthcare coverage.

To gain insight into the effects of healthcare costs and understanding of benefits, HealthEquity conducted a survey in 2024 with over 600 American employees who have health insurance through their employers.³ Those surveyed included people enrolled in either a high-deductible health plan (HDHP) with a Health Savings Account (HSA), an HDHP without an HSA, or a plan other than an HDHP.

The research shows one in three employees with an HDHP + HSA or a non-HDHP plan say out-of-pocket costs are their greatest concern. Digging a little deeper, employees can face financial strain from a wide array of medical costs, including:

• Out-of-pocket costs, which include co-pays for doctor visits and deductibles—the amount you pay before your insurance kicks in.

• Premiums, which are the monthly expenses just to keep your insurance active.

• Prescription drugs and over-the-counter treatments, a category that can be a significant portion of healthcare spending.

• Long-term care, dental procedures, and natural remedies—items that may be lumped under other healthcare needs and are often not fully covered by insurance.

What happens when people face healthcare costs they can’t afford?

It’s one thing to worry about medical bills, it’s another thing when it comes time to figure out what to do. It depends on the situation, but when the money simply isn’t there to cover unexpected treatment costs, people can resort to:

• Not filling certain prescriptions, splitting pills, or skipping doses.

• Delaying care or going without certain screenings or procedures.

• Adding to a high interest credit card.

• Tapping into retirement savings as a hardship withdrawal.³

Get this. The survey found, regardless of health plan type, 52% took drastic measures to pay for healthcare costs.³ And within that group, 36% put off another planned expense while 33% delayed care.

Actions like these can certainly create problems down the road—mounting debt, fewer savings for retirement, and even potentially facing more serious health conditions if important medical treatments are delayed too long.

Not everyone can afford surprise expenses

The financial implications of healthcare costs are more than just numbers on a bill; they affect real lives and wellbeing. About half of US adults report difficulties in affording healthcare costs, with one in four experiencing issues paying for care in the past year. Even more telling, about half of the adults would be unable to pay an unexpected medical bill of $500 without falling into debt.⁴

Did you know? The same HealthEquity survey discovered employees with an HDHP who lack a HSA tend to use up more of their household income on medical expenses. This indicates that these employees could potentially improve their financial situation by utilizing the tax savings⁵ provided by HSAs.³

What’s the impact at work?

It’s not just employees who feel the pinch. Employers can also face significant challenges when employees avoid or delay medical treatment due to high healthcare costs. This avoidance can translate into reduced productivity, higher rates of employee turnover, and increased absenteeism at work, according to a 2024 report from SoFi at Work.⁶

Untreated conditions can lead to more severe health issues, requiring employees to take extended time off, and may damage mental wellbeing. The SoFi at Work study reported half (47%) of employees who feel financial stress say it negatively impacts their mental health—an 11% increase from the previous year.⁶

At the end of the day, high healthcare costs can have a double whammy—burdening employees with financial stress and health risks plus placing a considerable strain on employers. It’s easy to see how that can affect the overall work environment and operational efficiency.

How employers can take the sting out of painful medical bills

OK, this sounds like a lot of bad news. While it’s sobering, there is hope on the horizon. And there are ways employers can make a grim situation better.

At a high level, there are a variety of tools and programs that can improve healthcare affordability for employees. Here are four ways employers can help ease employees’ healthcare cost worries.

1. Benefits literacy. A great starting point is to give employees several avenues to better understand their benefits. If some aren’t using all your available benefits, they may be leaving money on the table. When folks know how to take full advantage of your full suite of benefits, they can be in a better financial position.

2. Health Savings Accounts (HSAs). If you offer an HDHP paired with an HSA, your employees have several ways to spend smarter, save more, and potentially invest their funds. An HDHP generally provides lower health insurance premiums per paycheck. And HSAs are tax-advantaged accounts that allow employees to save for medical expenses, offering a proactive way to manage healthcare costs.

3. Lifestyle Spending Accounts (LSAs). Employers can utilize LSAs to support their employees in covering a broader range of wellness and health-related expenses not typically included in traditional health plans. These accounts can be tailored to include funds for veterinary services for pets, holistic treatments, and other wellness activities, acknowledging the diverse healthcare needs of their workforce.

4. Health Payment Accounts (HPAs). Other innovative companies are working on creative solutions for employers to help employees cover out-of-pocket expenses. One solution is an HPA, an employer-sponsored benefit that provides an interest-free healthcare line of credit to employees with the option to repay through payroll deduction.⁷

By investing in any—or all—of these options, employers can boost their employees’ wellbeing. Moves like this can also foster a culture of health and wellness within the organization. Overall, you have several ways to alleviate the financial strain associated with healthcare.

Looking Forward on healthcare affordability

We just threw a lot of statistics at you. From an economic aspect, the data underscore financial challenges in our current health system. And at a human level, there are multiple ways to support workers and families. It’s good to know both time-tested and new insurance solutions can offer helpful coverage without breaking the bank.