Published by Trustmark Voluntary Benefits on June 6th, 2019

Sometimes, life throws you the unexpected. And, when that unexpected event happens, it can throw your finances into chaos. More or less, that’s the basis of the entire insurance industry. 

Of course, this also supposes that people aren’t financially prepared for that unexpected event and need protection. More often than not, that tends to be the case. For a better understanding, let’s look at the financial challenges facing employees and what their existing insurance coverage looks like.

 

Americans continue to live paycheck to paycheck

The fact that so many Americans live paycheck to paycheck is not a new trend, but it’s one that doesn’t seem to be going away. A recent study found that 51 percent of working adults in the U.S. would need to access savings to cover necessities if they missed more than one paycheck.1

Even with their paycheck, it could only take one unforeseen expense to throw a wrench in many Americans’ lifestyles. Research from the Federal Reserve found that four in 10 Americans couldn’t afford a $400 emergency.1

Planning for the future? Not so much

What’s clear from the fine line that separates many from serious financial strain is that Americans aren’t saving. The statistics bear this out as well. Almost 30 percent of households have less than $1,000 saved.2 So, when you consider the statistic about how many would need to access their savings after missing more than one paycheck, for many, those savings aren’t significant. 

A retirement account may be another option to cover unforeseen expenses. However, dipping into a 401(k) plan or retirement savings isn’t generally the recommended option and for many, it may not be an option at all. Nearly half of Americans have no savings in a 401(k) or individual retirement account.3

HDHPs raise the stakes

Many may believe that their major medical coverage through their employer is what provides protection from unforeseen health events. However, that isn’t always the case and the stakes for many are higher than ever due to the prevalence of high-deductible health plans (HDHP). The number of people enrolled in these plans is increasing yearly with 43 percent of people currently enrolled in an HDHP. Even more concerning is that 24.4 percent of people are not just enrolled in an HDHP, they also have no Health Savings Account (HSA) to cover them for out of pocket costs.4

How can we turn it around?

Now, that financial snapshot may sound like gloom and doom. While it’s certainly a troubling situation, there are some ways to counter these challenges. First and foremost, we need better financial education in the workplace. Employees need to understand their insurance options, their retirement needs, their insurance needs and their options to cover out-of-pocket expenses. This can come in the form of a financial wellness program, but it can also be addressed through a one-on-one voluntary benefits enrollment. Not only will it provide options for added protection, but enrollment can fulfill the purpose of reaching employees about their options. 

It’s also important for employers and brokers to offer the tools employees need to personalize their coverage and fill in gaps. Yes, voluntary benefits are a part of the solution, but so are an HSA/FSA/HRA, so be sure to explore all your options and find what fits best for each employee group. Most of all, be sure that employees understand these options with resources for education. Knowledge is power and, while the financial snapshot for many workers isn’t ideal, there are plenty of ways we can help. 

1 “Millions of Americans are just one paycheck away from ‘financial disaster’. Marketwatch. May 2019.
3 “Here’s how much money Americans have saved”. CNBC. 2018.
3 “Half of Older Americans Have Nothing in Retirement Savings”. March, 2019.
4 “High-deductible Health Plan Enrollment Among Adults Aged 18–64 With Employment-based Insurance Coverage”. CDC. August, 2018.