Health Care Costs Affect Employees’ Financial Future

In Bank of America Merrill Lynch’s 2017 Workplace Benefits Report, employees indicated that managing their finances—including health care costs such as premiums and out-of-pocket expenses—is a source of stress.

In a supplement to the report, the firm took a closer look at the topic of health care and the role employers can play in helping employees manage their finances, and found two-thirds of respondents rate planning for out-of-pocket cost as the most challenging and stressful aspect of managing their health care. Three-quarters feel fear regarding their health care finances, and half don’t know how to predict current or future out-of-pocket health care costs or determine the appropriate savings vehicle or rate.

Seventy-nine percent of employees indicate they have experienced an increase in health care costs, and of those, 63% say they are reducing the amount they are saving for retirement. Nearly four-in-10 (39%) are contributing less to investment accounts.

Health care costs today are only part of the equation; concerns about future needs also have an impact. Only 14% of respondents say they feel they have a trusted resource to help them understand Medicare options, and only 12% report they feel they have a trusted resource or adviser for information regarding long-term care insurance. Eleven percent indicated they feel they know where to turn to figure out how to cover health care costs in retirement.

At least 40% of respondents would like their employers to provide access to a financial professional; education tailored to their age or the financial issues they are facing; and/or expert-delivered financial training and education. Specifically, health care topics they say they would most value advice and help with include choices regarding Medicare and supplemental plans (50%), how to pay for long-term care if needed (49%) and how much to save to pay for health care throughout retirement (38%).

Bank of America Merrill Lynch says employers should consider enhancing the financial education they provide employees to ensure that it includes content about understanding health care options and maximizing the benefits provided to ensure health care coverage is appropriate. The firm also suggests employers expand their benefits package to offer additional health care management tools, including health savings accounts (HSAs); and offer education and support beyond health care to help employees address their full range of financial needs from retirement planning to general savings habits and debt management.

The supplement report is here.