It all started with Karyn Bosnak.
In 2002, Bosnak, an out-of-work TV producer, asked strangers on the internet to help her pay off $20,000 in credit card debt. She figured that if 20,000 people each gave her a dollar, she’d be able to pay off her balance. And certainly, she thought, there were that many generous people willing to help. Little did Bosnak know at the time, but her website, SaveKaryn.com, would go on to spawn the individual crowdfunding movement.
Since then, a variety of websites have popped up that enable individuals to solicit money. The most popular of these is GoFundMe.com, which raised more than $9 billion in its first decade of existence.
GoFundMe also calls itself the “leader in online medical fundraising,” with more than 250,000 yearly medical fundraisers that yield more than $650 million each year. The company’s website advertises, “Whatever your need, you can get help on GoFundMe,” whether it’s support for cancer, surgery, IVF, or a host of other medical conditions.
Why are so many Americans turning to crowdfunding to pay for their medical expenses? And what can employers do to help their employees figure out better ways to make healthcare more affordable?
Healthcare is expensive, but crowdfunding isn’t a sustainable way to pay for medical bills
In the last decade, healthcare premiums have gone up 55%. Meanwhile, the average American’s income has only risen by 27%. In other words, healthcare costs have risen twice as fast as workers’ earnings. And, since 2008, healthcare deductibles have increased eight times faster than wages. That means we literally can’t afford our own healthcare.
With so many Americans living paycheck to paycheck, there’s little left over to cover unexpected medical bills. Even those with health insurance often face high deductibles and copays that are difficult to handle. And for those with rare or serious diseases and injuries, prolonged treatment can result in hundreds of thousands of dollars in medical bills, wiping out savings and retirement accounts. Perhaps that’s why more than two-thirds of bankruptcies in the U.S. are the result of medical bills.
To avoid this fate, people have started looking for alternative sources of funds. Many have turned to sites like GoFundMe, MedGift, and social media for crowdfunding when a tragedy or emergency strikes and their health insurance coverage falls short.
Today, a third of fundraisers on the platform are asking for help covering medical costs. To date, these medical crowdfunding campaigns have raised $3.7 billion. The most common medical condition seeking support on GoFundMe is cancer, followed by trauma and injuries.
But what about those campaigns that don’t get any traction? For every campaign that gets a donation, many others don’t. In fact, most crowdfunding campaigns don’t reach their goals. Unless a campaign tells a moving story and has a large social following, it’s not likely to be fully funded. Moreover, campaigns for one-time conditions or illnesses that can be quickly resolved tend to hit their fundraising targets more often than campaigns with long-term or incurable diseases—and those are often the campaigns that need the most support.
Then there are the problems with putting the decision about who deserves healthcare in a donor’s hands. For example, a donor’s biases, conscious or unconscious, may come into play. The GoFundMe algorithm may boost the prominence of stories that are well-told and illustrated with frequent updates and photos. Plus, the risk of scam profiles and the inability to verify claims may deter some would-be funders from contributing at all.
Why you need to educate your employees about their benefits options
Choosing medical coverage is a challenge for most employees. More than half of employees (52%) say that deciding between health plans is stressful. And nearly half (46%) worry that they haven’t selected a medical benefits plan that delivers coverage at the lowest cost.
That’s because a lot of information shared with employees, particularly during open enrollment, is complex, long, and overwhelming. Only 39% of respondents in a recent survey said they fully understood their health insurance policies, and 19% said they didn’t understand everything they signed up for.
Even worse is that many employees don’t know what they don’t know about their benefits. Studies have shown that most people don’t understand deductibles, co-insurance levels, and benefits maximums. And even if they do have questions about their benefits plans, they don’t feel comfortable asking them. Many only discover that they have questions when it’s too late—often when they’re dealing with a problem that may not be covered.
This lack of knowledge means that employees’ annual benefit enrollment patterns largely stay the same. Year after year, 93% of employees sign up for the same benefits. And year after year, employers don’t take effective steps to close the gap in their employees’ understanding.
5 steps to take to improve your employees’ benefits knowledge
When you look at the high cost of healthcare and the risk that employees won’t take full advantage of the benefits options you offer, it’s wise to invest time in helping your employees make the right choices. Plus, spending time on employee education will lead to greater engagement: one in five employees say they want more benefits education from their employer.
Here are five steps you can take to educate your employees about making smarter benefits choices that can help them save money.
1. Help your employees select the right healthcare plan
Employees who choose the wrong health insurance plan cost their employer $500 to $2,100 a year. That’s why it’s so important to help your employees sort through plans to identify the one that will save them—and you—the most money.
To do that, you’ll need to help your employees understand all of the costs they may face when they choose a plan. It’s important for them to comprehend these costs—not in the abstract, but in a way that reflects their health and financial status. They need to realize how choosing a doctor outside their plan’s network might affect their cost and what might happen if the unexpected happens, like an accident that requires an MRI or even hospitalization.
Another way to get competitive and attract talent? Fully cover your employees’ medical premiums. We know…it’s expensive. But only 19% of employers fully cover their employees’ premiums (that’s right, their employees pay $0 each month). So if you can find a way to offset those upfront costs, it might just help you win the talent bidding war we’re all too familiar with right now.
2. Encourage employees to use a health savings account (HSA)
The good news: 41% of employers offer tax savings accounts like HSAs or FSAs. But only 11% of employees say they understand their HSA. That’s a problem, because HSAs help employees with high-deductible health plans (HDHPs) save on medical expenses (and they’re beneficial for you as the employer, too).
Help your employees understand how their HSA works by sharing information about their potential tax savings. For example, you can show employees how much they can save by contributing to their HSA at different levels, using the average tax rate as a benchmark.
You should also clarify the difference between HSAs and flexible spending accounts (FSAs). Perhaps the most important difference to emphasize is that HSAs don’t expire. Remind them that they can use their HSA as an extra retirement fund because their funds will grow year after year and can be spent on non-medical expenses when they turn 65.
And don’t forget to remind employees that they can enroll in and contribute to an HSA at any time, not just during open enrollment. Prime times for reminders are at the beginning of the year, during tax season, and after a raise or promotion.
3. Show employees how to make better healthcare spending decisions
Employees have more control over their healthcare spending than ever before. But they often don’t understand their options well enough to make budget-friendly decisions. This is where you can offer additional information that will impact your employee’s wallet and your bottom line.
For example, you can suggest how employees can find the best price for their prescriptions. You might also promote the convenience, low cost, and other benefits of telemedicine. Or you might recommend the use of urgent care over an emergency room for non-life-threatening illnesses and give examples of which providers to visit for different types of healthcare needs.
4. Remind employees about the importance of preventive care
Preventive care detects many medical issues and diseases before they become serious problems. But too many people let these paid-for benefits go to waste.
Encourage employees to take advantage of the services paid for in their plan, including routine physicals. Explain the value of the care they’re getting in terms of dollars (such as the value of their physical, lab tests, and evaluation) to encourage them to take advantage of these opportunities.
5. Adopt an online platform that personalizes the benefits experience
Employee questions about benefits are likely to pop up outside business hours. And if you have a platform that’s ready to answer those questions 24/7/365, you’ll be able to better engage your employees and guide them toward the best possible choices—during enrollment, and whenever employees have a healthcare need.
Platforms like ALEX personalize benefits information to each employee’s healthcare circumstances, including their family needs, chronic conditions, prescription drugs, and more. Plus, ALEX is an unbiased, nonjudgmental ear that can listen to their most private concerns and offer clear guidance at every step of their decision-making process.
And the surprising news? Only a select few employers offer a tool like ALEX—so again, if you’re looking to attract and retain talent, a benefits engagement platform could set you apart from the competition:
When you break down benefits information and personalize it to your employees, you’re giving them the best possible chance to make an informed decision about their healthcare—plus tools that will help them keep more money in their pockets.