The Connection Between Money and Health

Health savings pathways, a 3-part series

As an employer benefits team, you’re invested in the overall well-being of your employees as much as your organization’s success. That makes your employee benefits strategy — including health plans, health benefits accounts, HSAs and more — one of your greatest assets.

In 2022, Optum Financial conducted research that showed almost half of employers consider value to employees when deciding which benefits to offer. And when it comes to return on investment, most employers consider if a benefit is used and if it attracts and retains talent.¹

So how can employers continually offer benefits that help employees live well — and work well? It starts with a commitment to understanding the evolving needs of individuals and families.

In this 3-part series, we’ll explore the wellness challenges employees face, the real results employers can achieve through their benefits strategy and the best practices employers can use to optimize their approach to health and wellness benefits.

Part 1: The wellness challenges individuals and families face

To stay competitive, your employer benefits must continually adapt to support each employee’s unpredictable journey of life situations and health scenarios.

Recent studies show that each individual’s well-being is an intricate balance of physical, mental and financial health, which changes and evolves over time.² Because of this balance, and because health isn’t always linear, stress in one area may affect other aspects of wellness.

Individuals and families are continually dealing with outside factors that can significantly impact wellness, specifically the complex relationship between money and health. This relationship is shaped by the:

Cost of healthcare
Impact of financial stress
Intertwined connection of the two

Healthcare costs are trending up

Inflation in a post-COVID world is reaching all areas of the economy across all income brackets. Individuals and families feel growing stress about paying for necessary expenses, including healthcare.

In 2022, the consumer price index rose more than 8% across all spending categories. Some categories saw even larger jumps, such as food (13%), gasoline (18%) and health insurance (28%).³

But inflation isn’t the only factor that’s been raising the cost of healthcare over the past few decades.⁴

Notably, healthcare costs have been going up due to the rapidly aging U.S. population. Increased demand from older adults needing care for chronic conditions impacts the entire healthcare system, from providers and health plans to employers, individuals and families.

Technological advances also drive costs by creating treatments that are more effective but more expensive. For example, prescription drug prices have seen a substantial increase in recent years due to extensive research and development.

Health insurance cost increases aren’t expected to stop rising anytime soon. McKinsey & Company estimates healthcare costs will be $370 billion higher than pre-pandemic levels by 2027.⁵

McKinsey also estimates that employers could see an extra 9–10% increase in their health insurance premiums by 2025.

If that happens, employers will be faced with the decision to absorb costs or pass more costs on to employees by:

Increasing the percentage of the overall health plan premium the employee pays
Changing to high-deductible health plans
Reducing other various benefits⁵

Financial stress shows up in the workplace

The effects of inflation reach beyond wallets, impacting employee wellness — and their employers’ wellness too.

Difficulty affording healthcare can lead to individuals and families quickly feeling extra financial and mental stress. And as rising costs make care harder to access, the toll on overall health can greatly impact employee performance at work.

According to a 2023 MetLife study, almost 50% of employees cited money worries as the cause of their low mental health, up from 31% in 2022.²

These money worries are widespread. In fact, 63% of Americans across all income brackets reported living paycheck to paycheck and not having enough money to pay for future expenses until their next payday.⁶

In addition to feeling financial stress in their mental and physical health, employees also report that it has a considerable impact on their sleep, self-esteem and relationships at home.7

There's more. The 2023 PwC Employee Financial Wellness Survey found that poor holistic health shows up at work as well. It affects employee attendance, productivity and even retention.

In this study, financially stressed employees were twice as likely to look for a new job compared with their more confident peers.

Employee distress may not always be easy to see, as 41% of financially stressed employees also reported being embarrassed to ask for help.⁷ Various fears or stigmas may keep individuals from speaking openly about their experiences.

Employers should be mindful of significantly misjudging their employees’ well-being. In 2023, 83% of employers perceived their workers to be financially well, an overestimation of 28 percentage points.²

Staying connected to your employees makes a big difference in supporting a healthier workplace. Understanding their needs helps identify ways to promote wellness in all areas of your employees’ lives.

Money impacts how individuals and families access healthcare

With high out-of-pocket healthcare costs, people are less likely to seek the care they need. They might assume the cost is more than they can afford. Or maybe they’re unsure of what the cost will be and if they can pay for it.

A 2022 Gallup poll found that 38% of people delayed or avoided medical care in the past year due to cost. This is a record high — and a sharp increase over 21% in 2021.⁸

Of those who delayed healthcare, 27% said it was for a very or somewhat serious condition.

About 56% of people surveyed by Change Healthcare in 2022 reported avoiding care because they didn’t know what the cost would be.⁹

Lower-income earners are more likely to delay care.

Those who delayed care for serious conditions were more likely to live in households that earned less than $40,000 per year (34%). By comparison, only 18% did the same in households earning $100,000 or more.

According to a 2023 Bankrate survey, only 4 in 10 respondents said they had enough savings to pay for a surprise $1,000 bill.10 Inflation is the most common reason, with 68% of respondents blaming it for their decreased savings.

Avoiding care for fear of costs can lead to serious consequences. Skipping regular screenings, for example, can result in delayed detection of conditions such as cancer. That can mean worse outcomes — and even bigger bills — down the line. This cycle can go on and on.

Better financial health links to better overall health

Your organization and employees will continue to face increases in healthcare costs and financial stress. As you develop your benefit strategy, you can help your employees live well by making decisions that account for the connection between money and health.

No matter the situation, people are more likely to make healthier choices when they feel confident they can afford the care they need. They gain that confidence by understanding their health and wellness benefits and what those benefits offer at various points on their path.

In part 2 of the health savings pathways series, we’ll share our research on the employer benefit strategies that support positive behaviors and better health outcomes for your employees.