Health and Productivity Challenges for Lower-income Workers

Health Insurance, Plan Design and Barriers to Care

Lower-income employees may be at a particularly high risk of experiencing cost-related barriers to care. Even when they have employment-based health insurance, high-deductibles, coinsurance, and health care and prescription medication costs can often keep health care out of their reach.

To explore the productivity losses that cost-related barriers to care can impose on employers, IBI analyzed the links between lower-income employees’ health insurance, cost-related barriers to care, and illness-related absences from work.We found that barriers to care were linked to significantly higher sick day absences—the value of which may negate savings from cost-sharing strategies. Findings for employees with family incomes above $35,000 suggest similarly high lost productivity.

Study highlights

  • From 2007 to 2017, two out of five lower-income employees (with annual family incomes less than $35,000) were uninsured. Among the insured, one in six were enrolled in high-deductible plans (defined as greater than $1,100 for a single person and $2,200 for two or more enrollees in a plan). Half of insured lower-income employees did not have coverage for prescription medications.
  • One in three lower-income employees experienced a cost-related barrier to care over the course of 12 months. Nearly one in four delayed needed care, compared to about one in five who could not afford medical care, and almost one in six who could not afford prescription medications. Only about one in 20 reported that they needed but could not afford mental health care.
  • More than half of uninsured lower-income employees experienced a cost-related barrier to care, compared to about one fifth of insured lower-income employees.
  • Compared to insured employees in plans with low deductibles, lower-income employees enrolled in high-deductible plans were 75% more likely to experience a cost-related barrier to care. Health savings accounts did not reduce the risk of experiencing cost-related barriers for employees with high-deductibles. However, flexible spending accounts and coverage for prescription medications were associated with reduced risk of experiencing cost-related barriers to care.
  • On average, a lower-income employee who experienced a cost-related barrier to care had 1.9 more lost workdays per year than a lower-income employee who experienced no barriers to care—a 70% increase in lost work time from a baseline of 2.7 days.
  • While employees with incomes above $35,000 experienced fewer barriers to care, the association with health insurance and plan design was stronger than was observed at lower income levels. Barriers to care had a similar impact on lost workdays across the income distribution.

Guidance for Employers

Rising health care costs impact both insurance plan sponsors and patients. For this reason, employers will likely include some form of cost-sharing in their employee health benefits for the foreseeable future.

To help employers design benefits policies that balance the need to manage treatment costs against enrollees’ access to cost-effective, timely and beneficial care, IBI sought input from experts at leading healthcare, benefits and absence management firms. A summary of their guidance follows.

Develop a Data-Driven View of Unmet Needs for Care

Lower-income employees might have affordability issues in both participating in benefits or paying for care. Data in payroll, leave and healthcare systems6 can help focus benefit strategies on the employees most at risk of barriers to care and illness-related lost work time.
Use payroll records to assess how many employees fall into different wage or salary levels.

Review the affordability of your health insurance premiums for employees at each wage/salary level and compare against the participation rates for eligible employees.

Analyze healthcare claims or survey data to understand the health risks of lower-income employees, their largest healthcare cost drivers, and how expanding access to preventive services could lower avoidable costs.

Recognize the Full Financial Impact of Cost-Sharing Strategies

Savings from higher cost-sharing may in fact drive routine treatment expenses elsewhere, such as emergency room visits32-34 and disability leaves. Strategies to improve the affordability of care for employees may increase expenses in the short-term, but ultimately lead to higher value for employers.
Where possible, consider implementing employee premium contributions, co-pays and coinsurance on a sliding scale based on income.

Determine feasible employee contributions to HSAs and FSAs to ensure that sufficient funds exist if a medical emergency occurs. Where necessary, consider making HSA contributions to cover the difference between employee contributions and deductible levels.

Leverage a Spectrum of Employee Benefits to Promote Access to Care

Employee benefits that are designed to complement one another may help remove barriers related to the costs of care—but also barriers imposed by work schedules and other logistical challenges. Using a variety of resources can help ensure that employees have access to care when they need it—and provides a backstop if their need for care becomes critical.

On-site clinics and telehealth services can bridge gaps in access to care.

Allowing short intervals of paid time off during working hours or granting a half-day each year for an annual check-up can facilitate the scheduling of provider appointments when offices are generally open.

Transportation supports such as shuttle services or reimbursements for public transit or rideshare costs to and from healthcare appointments may also remove care barriers.

In times of severe need, benefits such as short-term disability (STD), long-term disability (LTD), accidental injury, hospital, or critical illness insurance allow employees to access necessary medical care and recover from an episode of illness or injury without incurring severe financial hardships.

Financial wellness education and savings support can help employees with limited resources develop manageable budgets that include savings for health-related emergencies

Programs such as interest-free health care loans and reimbursements for certain non-medical health devices could also ease the burden of costly conditions.

Prioritize Prevention, Healthy Living and Cost-Effective Care as the Default Choices

Encouraging employees to seek preventive care can minimize the needs for more expensive care and may decrease overall health care spending. Helping them understand their health risks and the availability of lifestyle and care management resources can support their efforts to engage in healthy behaviors.

Make every effort to ensure that employees and dependents understand which preventive services (such vaccinations and screenings) are either free or low-cost under their plan.

Periodic education on less costly care alternatives for obtaining care can help employees make better care decisions.

Free, annual onsite biometric screenings or confidential health risk assessments can give employees insights into their health risks. Continuous education on the long-term impact of unhealthy behaviors such as lack of sleep, poor diet, lack of exercise, smoking, and excessive alcohol consumption should include a focus on how these impact families’ out-of-pocket costs—and how following guidance to adopt healthier habits can save employees money.

Worksite disease and care management programs offer a convenient way to provide information, care resources, and social support for employees with serious chronic conditions (such as diabetes).

Lifestyle management programs focused on stress management, nutrition, and fitness can encourage healthier behaviors. Subsidized gym memberships, on-site fitness facilities and healthy options in cafeterias can also help reinforce the importance of a healthy lifestyle.

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