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How Health Care Costs Are Contributing to Financial Issues Among Employees

Finances are the leading cause of stress for Americans, and it is colliding with their health and work efforts. A significant source of this is the concern about the rising cost of health care.

These unsustainable increases set off an unending cycle as stress further increases expenses on health. Many are familiar with the phrase, happy employees create happy customers, and now there is evidence to support this claim. According to Gallup, organizations that excel in engaging their employees achieve net profit growth that is more than four times that of their competitors.

Employees who are struggling with physical and financial wellbeing are:

  • 11x more likely to have sleepless nights

  • 10x more likely to not finish daily tasks at work

  • 9x more likely to have troubled relationships with their coworkers, and

  • 2x more likely to be looking for a new job

How does this impact a business’s bottom line?

Beyond the impacts on workforce productivity, engagement and retention, employees with financial stress tend to avoid getting health care. Medical expenses are by far the leading cause of personal bankruptcy in the United States, with an estimated 100 million American adults holding some amount of medical debt. These ongoing financial burdens have led more employees to avoid getting care due to worries about how much it will cost. This pattern leads to a cycle of physical neglect, resulting in poorer health outcomes and higher costs for both the employer and employee down the road.

What Employers Can Do

Employers are uniquely positioned to tackle physical and financial stress due to their role as a primary provider of income and benefits. Many organizations rely on a traditional approach that includes managing multiple partners to provide employee benefits, workforce strategy and 401K/financial wellbeing resources. This approach can lead to inefficient and sub-optimal benefit plans, with a high probability for unnecessary human capital spending.

Educating employees on managing their finances alongside their physical health is an essential component of helping them prepare to balance the decisions and costs associated with healthy living and health care. However, more than education is needed, and success will begin with the strategy implemented by employers. As a result of an integrated approach to workforce strategy and employee benefits, employers may experience:

  1. Minimal waste in human capital spend

    When employers look at the total investment in human capital (benefits, retention/engagement, wages, 401K match etc.) in concert, it becomes easier to identify synergies that connect all the components of a workforce strategy together. Where is the overlap in services? Where are the gaps? How can the overall approach be tailored to better address a business's goals or challenges? A holistic viewpoint provides employers with the opportunity to identify underutilized or zero-return benefits, perks or programs, allowing those funds to be reallocated into programs with higher returns to the business.

  2. More strategic viewpoint on workforce operations

    Similarly, when employers view their workforce strategy from a 360-degree angle, they can create a cohesive and efficient approach. How do systems and vendors interact? What processes are the most time consuming and create the greatest liabilities from an administrative perspective? What technologies can be employed to increase efficiencies?

  3. Improved employee outcomes

    Lastly, a holistic approach focused on employee overall wellbeing can improve health care and productivity outcomes as well as increased financial stability and retirement readiness. How does the employee onboarding process prepare employees for success? How is employee communication used to drive participation and engagement?

The potential rewards from a more balanced, integrated approach are vast. By offering the right blend of high performing health benefits, financial benefits and experience strategy, an organization can manifest better business results, nurture a more positive workforce, optimize productivity, and enhance culture.

To learn more about the role that employers can play in the financial health of their employees, consider this blog on financial wellness programs.