Lack of preparedness can erode the financial wellbeing for many in the workforce.
Recent research commissioned by New York Life Group Benefit Solutions* spotlights the financial strain of unexpected medical expenses on employees and their subsequent payment methods. Such unforeseen costs significantly influence the overall financial wellbeing of employees, often necessitating the use of credit cards or payment plans.
Among adults who have experienced an unexpected medical issue, over half (58%) reported they paid at least $400 out-of-pocket on healthcare costs. To cover these unanticipated expenses, the most common payment methods included using a credit card (42%), dipping into personal savings (40%), or setting up a payment plan (29%). These findings underscore a growing concern: many employees lack sufficient savings or health coverage to comfortably manage sudden medical expenses.
Moreover, this financial pressure often does not merely impact the present. When employees resort to credit cards or payment plans, they often face high-interest rates, potentially leading to a cycle of debt that can prove challenging to escape. This debt can further impede their ability to save for the future, invest, or even meet daily living expenses, thereby undermining their overall financial stability.
The financial strain of unexpected medical costs also influences healthcare decisions. More than half of adults (57%) admitted to delaying medical treatment due to concerns about being able to pay for the expenses (29%). Worryingly, job responsibilities and working hours restrictions were also a significant factor (27%) in such decisions.
Among different age groups, Millennials were the most likely to postpone medical treatment (70%), primarily due to apprehensions about their ability to pay (38%). This delay could potentially escalate health issues, leading to higher treatment costs in the long run, and further exacerbating their financial stress.
The financial impact of unexpected medical costs can extend far beyond the immediate expense. It can affect employees' financial wellbeing, influencing their healthcare decisions and potentially leading to a debt cycle that is difficult to break. As such, it underscores the importance for employers to provide comprehensive health benefits and financial wellness education, equipping employees to manage such scenarios better and safeguard their financial future.
*New York Life Group Benefit Solutions commissioned an online poll between September 29-October 5, 2023 of nearly 2,000 adults employed in the private or government sector. Survey results have a margin of error of plus or minus two percentage points.