Rising health care costs are eroding the financial security of American employees.
According to a new report from Bank of America Merrill Lynch released Monday, 79% of employees surveyed reported higher health care costs in 2016 — up from 69% in 2015 — and more than half said they were either spending less overall or contributing less to fund financial goals as a result.
Of that 56% that cut back, almost two-thirds said they were saving less for retirement, about 50% said they were reducing debt payments and almost 40% were investing less.
The supplemental report is based on an online survey of 1,242 employees conducted by Boston Research Technologies on behalf of Bank of America Merrill Lynch about a year ago for its 2017 Workplace Benefits Report. All respondents were participants in 401(k) plans, not necessarily involving Merrill, and the firm was not identified as the study’s sponsor.
The survey also found that the impact of rising health care costs on savings, investments and debt servicing contributed to employees’ financial stress, which, in turn, negatively affected the health of six in 10 respondents.
The supplement recommends that employers consider enhancing financial education for their employees so that employees understand health care options, the financial implications of their choices and how to manage health care costs. It recommends that employers consider expanding their benefits package to offer more health care management tools, such as Health Savings Accounts, which use pretax dollars to cover health care expenses and allow for tax-free withdrawals in retirement so long as withdrawals are used for medical expenses.
The report also suggests that employers consider providing employees access to a financial professional, financial education that’s tailored to their age or the issues they’re facing and expert-delivered training to help them address a funn range of financial needs, from retirement planning to savings and debt management.
It makes no mention of whether employers should reduce health care premiums or deductibles in their plans for employees or expand additional coverage beyond including an HSA.
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