There has been lots of discussion around the health care debate that 45 million Americans are uninsured and that 62 percent of bankruptcies occur due to medical expenses. However, what has not been heard is that there are 25 million Americans who pay for insurance but don’t have adequate and/or affordable coverage. Not only that, but 80 percent of those medically related bankruptcies are filed by people who have health insurance. These people are considered underinsured.
A host of factors have contributed to this new reality, not the least of which is increasing pressure on company leaders and HR executives to streamline finances in order to simply stay afloat during this wave of economic uncertainty. Regardless of how the country got here, the stark reality is that many Americans are underinsured — generally defined as people who have health insurance but spend 10 percent or more of their income on out-of-pocket medical expenses.
Workers’ financial strain = employer’s financial pain
Slashed payrolls, furloughs, and disappearing bonuses have all led to an understandably anxious public focused on protecting their families and finances. At the same time, employers are seeking cost-effective ways to safeguard and retain a healthy and productive workforce. In fact, research indicates that people who are underinsured are more likely to go without needed health care and have problems paying medical bills, compared with people who have adequate health insurance.
Many companies are acknowledging the effect that financial stress and distraction can have on their bottom line. Sixty percent of employers agree that productivity declines when employees are dealing with an illness or accident in their families, and employees’ financial problems affect their job performance. Employers estimate that an average of 11 percent of payroll was lost due to absences last year.
Closing the insurance gap
Voluntary insurance policies are valuable tools to help close the insurance gaps among Americans in any economy, as well as protecting workers against an unexpected health event, associated expenses, and potential missed time. Voluntary insurance pays workers cash in the event of an accident or illness to help cover expenses such as mortgage, rent, and utility bills — ultimately helping to reduce financial burdens and related stressors associated with medical events.
Voluntary insurance can be a cost-effective way for employers to bolster benefits packages because it is at no direct cost to employers. Further, well-protected, adequately insured individuals make for more productive workers because with less time to worry about how they’ll pay the bills, there’s more time to focus on getting the job done. In fact, according to the 2009 Aflac study “Small Business — Now More Than Ever,” employees with voluntary insurance coverage are less concerned overall with medical finances than those without voluntary insurance.