The Supplemental Portfolio

Many Americans with Employer-Sponsored Health Insurance, Especially Millennials, Struggling with Rising Out-of-Pocket Costs

Less than half of employees are aware of supplemental group insurance benefits designed to help them manage the unexpected expenses of an injury or illness

July 17, 2017 — ST. PAUL, Minn.–(BUSINESS WIRE)–With deductibles continuing to climb, many Americans who have health insurance through their employers, particularly younger workers, are struggling when it comes to out-of-pocket medical expenses.

According to a new survey from Securian Financial Group, a provider of supplemental group insurance products, nearly four in 10 workers on employer-sponsored health plans are personally experiencing or know someone who is having financial difficulty due to medical bills. Notably, more than half (52 percent) of Millennials on a health plan through their employer are personally struggling or know someone who is struggling to pay medical bills.

While solutions for combating unexpected medical expenses are available, most workers do not know about them. The survey found that fewer than half of Americans with health insurance through work (44 percent) are aware that many employers provide supplemental group insurance options to help employees pay for out-of-pocket expenses and other costs associated with an accidental injury, hospital stay or critical illness.

Enter Supplemental Portfolio

“The rising cost of health care has driven many employers to offer supplemental group insurance products, often in conjunction with a Health Savings Account,” said Elias Vogen, a director with Securian. “This combination can be cost-effective for both employer and employee, and our survey shows that when employees are aware that these benefits are available to them through work they opt in at a high rate—64 percent for accident insurance, 59 percent for hospital indemnity insurance and 47 percent for critical illness insurance.”

A unique kind of coverage

Benefit payouts for supplemental group insurance—often referred to as “voluntary benefits” because employees typically pay the full cost of premiums but at a discounted group rate—are provided in a lump sum to help cover a range of expenses, not just out-of-pocket medical bills. This relieves a key concern for employees: While the survey revealed that paying for out-of-pocket medical expenses would be the top financial concern for a plurality (42 percent) of workers facing a debilitating injury, a critical illness diagnosis or a hospitalization, 58 percent say their top concern would be lost wages from work, the ability to pay for regular monthly expenses such as groceries, or the need to take on additional expenses such as lawn care or cleaning.

“If you break your leg, or your critically ill spouse needs specialized medical care out of state, these benefits can be used to help pay for expenses like hiring out your household chores, paying for travel costs, extra child care and more,” said Vogen. “You don’t have to turn in your receipts; you’re able to use the funds as you wish. The flexible nature of these benefits can be instrumental in warding off financial troubles from an unexpected health event.”

The toll of out-of-pocket medical expenses

According to the survey, 28 percent of employees with health insurance through work facing an out-of-pocket expense of $5,000 or more would use their personal savings to pay rather than other means, including a Health Savings Account (8 percent) or supplemental group insurance (7 percent). However, a majority of respondents said they do not know how they would pay (21 percent), or that they would need to rely on credit cards (12 percent), a loan from their 401k (7 percent) or family/friends (4 percent), their tax return (5 percent), or by selling/pawning a personal possession (2 percent). Four percent said they would not pay at all. Other survey findings include:

  • Over the past year, Millennials (32 percent) on employer-sponsored health plans with deductibles are the most likely age group to have paid out-of-pocket expenses for an accidental injury like a broken bone or laceration when compared to Generation X (18 percent) and Baby Boomers (16 percent).
  • Among low-income Americans (household income of $35,000 or less) with health insurance through work, 55 percent report knowing someone or personally having financial difficulty due to medical bills.
  • Across all generations, 31 percent of workers with employer-sponsored health insurance report having paid or knowing a family member who has paid an unexpected out-of-pocket medical expense in the past five years due to a critical illness such as cancer, a heart attack or stroke.

Cost increases are hitting employer bottom lines

58 percent say their top concern would be lost wages from work, the ability to pay for regular monthly expenses such as groceries, or the need to take on additional expenses such as lawn care or cleaning

“Employers recognize that health care costs have become burdensome to their workers and their families, and it’s important to remember that these cost increases have impacted employers’ bottom lines as well,” said Terry Holloway, an employee benefits advisor and executive vice president with insurance broker Cobbs Allen. “Supplemental group insurance benefits are a cost-effective solution for both employers and employees. We have seen a significant increase in employer interest in these and other voluntary benefit platforms in the past five years, along with innovative enrollment solutions from insurance carriers.”

Securian’s survey was conducted online by KRC Research from June 8 to June 12, 2017. A total of 1,010 survey respondents answered an initial screener question on the source of their health insurance. The rest of the survey was answered by a base of 573 respondents who participate in a health insurance plan provided by their employer or their spouse’s employer. The sample was weighted by demographics such as age, gender, race, region and income to ensure reliable and accurate representation of the national population age 18 and older.

Related Links

Supplemental Group Insurance Factsheet

Securian Supplemental Group Insurance Benefits

Securian Benefits Survey Report




About Securian Financial Group
Since 1880, Securian Financial Group and its affiliates have provided financial security for individuals and businesses in the form of insurance, investments and retirement plans. Now one of the nation’s largest financial services providers, Securian is the holding company parent of a group of companies that offer a broad range of financial services.