When you hear ‘payroll deductions’, you might think of voluntary deductions like your health insurance premiums or 401k contributions. Or, you might think of involuntary deductions, like wage garnishments, child support payments, and taxes.
Depending on your personal experiences with payroll deductions, you may have a strong negative reaction to the thought of deducting anything else from your paycheck. But if you’re struggling to afford the out-of-pocket cost of your healthcare, it might be worth considering how payroll deductions can offer a healthier option than credit cards, loans, or not getting the care you need. If you’re an employer with employees who struggle to afford their medical care, this is worth a read.
Lower-income individuals are at the highest risk of not being able to afford their out-of-pocket medical, dental, vision, and veterinary expenses. Even with employer-sponsored health insurance, the rising cost of premiums, coupled with rising deductibles, is making it harder for people to actually utilize their health insurance benefits.
The Role of Employers
It’s worth it for employers to help their employees get the medical care they need. Healthy employees are, from an employer’s perspective, better employees: When an individual isn’t facing (their own, or a family member’s) medical issues, or the financial stress related to medical care, they are more likely to be able to do their best work.
Some employers will offer to contribute to employee HSAs to help bridge this affordability gap, but research has shown that it simply doesn’t work: People who do not have the cash to pay out of pocket for medical expenses, also do not have the disposable income to let some money sit in an HSA.
By design, HSAs provide the most benefit to the higher-income individuals who can afford to part with their money long enough to watch it grow. Supporting this, the U.S. Treasury found that over 60 percent of all HSA tax benefits accrue to families earning more than $100,000 annually.
It’s likely, too, if given the option, that the lower-income individuals who struggle most to afford their healthcare will not choose the health plan that has an HSA component; HSAs typically are found as part of high-deductible health plans, which come with higher premiums that lower-income individuals struggle to afford.
Healthier Options for Paying for Care
If not through HSA contributions, how can employees help to bridge the affordability gap for their employees? Beyond paying employee medical bills outright (which is obviously cost prohibitive for most businesses), employers can help by giving employees greater flexibility in how they pay their medical bills.
Offering payment for medical care through payroll deduction can be life-changing for individuals who have historically struggled to pay for their medical care. When strapped for cash, the cost of payment alternatives drives people, and particularly low-income individuals, further into debt.
A benefit like Paytient's Health Payment Accounts (HPAs) gives individuals a healthier way to pay off their bills over time. The impact of allowing low-income individuals to pay for expenses through payroll deductions is quite clear: Individuals are able to use their own money to make ends meet with zero additional costs incurred, a stark contrast to the typical $35 overdraft fee charged by banks or the $30 fee most payday lenders charge for a two-week $200 loan.
Access to payment through “salary link” gives employees the ability to pay for urgent and important expenses without driving them further into debt. It restores the dignity of paying for medical care, so employees can focus on getting well.
And the benefits of this physical and financial wellness extend to the employer, as well: One “salary link” payment provider found that employee turnover was 28% lower among active users who used their product to repay an immediate loan.
Close the Affordability Gap with Paytient
The healthcare industry is seeing record increases in patients’ out-of-pocket costs for care, which is creating a demand for flexible options for payment. But a recent survey by Harvard Kennedy School shows that while 68 percent of patients want to discuss financing options, most families haven’t had the opportunity.
Employers can do their part to close the healthcare affordability gap by providing Paytient to their employees. Offering Paytient greatly reduces the risk that an employee would be so priced out of coverage, that they wouldn’t get the care they or their family needed. It also protects the employee from the financial risks usually associated with paying for medical care.
For just a few dollars per month per employee, employers can give their employees a healthier way to pay for healthcare. Paytient is a low-cost, high-reward benefit that is easy for employers to provide, and for employees to use.
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