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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. What seems like a simple concept was radically changed in 2020. Today, two-thirds of employees are experiencing financial stress and, according to new data from Gallup, 50% fear bankruptcy due to a major health event. Compound financial stress with the mental and physical stress caused by social injustice dominating the news, changing work from home scenarios, and the lingering effects of the pandemic has accelerated the need for employers to take action.

When employers neglect their ability to take a role in controlling the physical and financial wellbeing of employees, it can result in employees who 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. More than half of employees with financial stress say that they avoid getting healthcare 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.

These scenarios beg how the average worker will keep up with these rising costs and improve their financial wellbeing? 

What Employers Can Do

Employers are uniquely positioned to tackle physical and financial stress issues as an employee’s financial life is tied very closely to their employers as their source of primary 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.

Contact a OneDigital strategist to unlock your business potential through the convergence of a holistic workforce strategy.

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