Some workplace benefits may help ease consumer worries about costly medical events
Consumers have more debt than ever before, which means they need to find appropriate financial strategies to protect themselves against unexpected medical events. Increased consumer debt coupled with the continued rise of health care costs make establishing an effective financial plan a pressing priority for millions of American workers who are often left wanting by their traditional health insurance plans.
As cited by a recent Harvard study, half of all bankruptcies were the result of a medical event. This means 1.9 million to 2.2 million Americans have experienced a medical bankruptcy.
The researchers also found more than 75% of the respondents who filed bankruptcy had major medical coverage at the time of the unexpected health event. Despite having traditional health insurance, survey respondents reported they still incurred out-of-pocket expenses averaging nearly $12,000.
Because of the upsurge in medical costs, many employers are making decisions to raise deductibles and increase co-payments in their major medical plans, adding an extra cost burden to employees. This cost-shifting trend may help employers save money but leaves workers and their families exposed to more financial risks.
As a result, consumer concerns over balancing high health care costs with daily living expenses continue to grow at an increasing rate.
In July 2005, Aflac commissioned a nationwide telephone study of more than 2,000 Americans, 18 years of age and older, to understand better the general population's concerns over increasing health care costs and the subsequent impact on their way of life.
The random survey found that nearly 90% of respondents agreed Americans are challenged to balance daily living expenses with rising health care costs. Based on the survey findings, female respondents were even more concerned than their male counterparts. Overall, 92% of women reported that they were challenged to balance living expenses with rising health care costs, while 86% of men agreed to being challenged by expensive medical care.
The study also revealed similar worries across generations. A total of 84% of baby boomers reported being concerned about health care costs and the subsequent effect on their financial well-being. Likewise, 84% of Generation Xers said they would be concerned about paying daily living expenses–like mortgage, rent or utilities–if they became ill or injured and could not work.
Considering that baby boomers and Generation Xers make up the vast majority of the American work force, accounting for more than 84% of employees throughout the country, these survey findings should be of particular interest to insurance agents and brokers who sell insurance through worksite marketing.
Because of the continuing rise of health care costs, consumers are becoming more active in searching for benefits that will provide additional protection at affordable prices. The Aflac survey found that for 7 out of 10 Americans, having additional health insurance signifies a better sense of security, financial protection and stability. These sentiments were shared across gender, age, income, ethnicities and regions. Consequently, more than half of the people polled reported they would be likely to buy benefits sold on a voluntary basis at the worksite to help protect their financial security.
To meet this demand, insurance providers should offer new and innovative products that will continue to provide expanded coverage for employees who seek a plan to counter expensive medical bills. This increasing demand for insurance products that may help to counteract exploding health care prices creates a unique opportunity for insurance sales professionals. Worksite marketing is an effective medium for reaching workers who need cost-saving mechanisms.
The role of worksite marketing is becoming increasingly important as consumers persist in weighing their options for offsetting the rising price of medical care. Insurance sold on a voluntary basis at the workplace can help mitigate the financial risks created by employer cost-shifting by assisting employees with co-payments and other major expenses incurred by an unplanned medical event.
Once the territory of small businesses only, worksite marketing has become prevalent at large organizations employing numerous employees–many of whom seek relief from expensive medical care or who want additional health coverage that can help provide a sense of financial security.
The marketplace for benefits sold on a voluntary basis will continue to evolve as consumers increasingly consider these insurance products as an effective strategy to help protect their financial assets against soaring health care prices. As employees are asked to help shoulder the cost of rising medical care through higher deductibles, co-payments and premiums, this further erodes their savings and increases the need for a strategy to be prepared for life's unexpected health events. Insurance products sold on a voluntary basis at the worksite can serve as a workable solution.
Teresa L. White is senior vice president and director of sales support and administration at Aflac, Columbus, Ga.
Breaking the Bank
The Connection Between Illness and Bankruptcies
==50% of all bankruptcies are illness related.
==75% of respondents filing for bankruptcy had major medical coverage at the time of filing.
==Even with health insurance, the average out-of-pocket medical costs were $12,000.
Source: Harvard study.
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