Financial pressures are plaguing employees across industries, with healthcare playing a key role in their worries.

New research from ADP finds that American workers are struggling to make healthcare and financial decisions because of rising costs, creating an opportunity for benefits and HR professionals to emerge as a trusted source of both information and guidance.

“Affordability now outweighs nearly every other factor in benefits decision-making,” ADP researchers write in the ADP TotalSource® Employee Benefits Survey. For instance, employees report that the level of healthcare premiums is the most important consideration for how they evaluate benefits, ahead of plan features, option coverage and the range of benefits.

“This cost-first approach is not just shaping preferences,” ADP says, “it is influencing real decisions and pushing employees to make decisions that can affect their health.”

As healthcare costs rise, so does risk

In 2020, 21% of survey respondents said out-of-pocket healthcare costs prompted them to skip needed medical care—a figure that rose to 26% last year. Similarly, the percentage of respondents who stopped taking or took less needed medication jumped from 17% to 22% in that same timeframe.

Employees are trying to prepare for skyrocketing healthcare costs, with more reporting that they’re putting money away for such expenses; on average, employees have just over $2,300 saved for unexpected healthcare costs. However, 39% say they still feel unprepared, a jump of 8 percentage points since 2020.

And disparities exist: Twenty-eight percent have less than $500 ready to meet such costs, up from 21% six years ago, and women are much more likely than men to feel unprepared and have less money socked away in savings.

The findings suggest that “rising costs and ongoing uncertainty are outpacing individual financial gains,” leading “employees to make harder, and sometimes riskier, healthcare decisions.”

Financial pressure is not just building in the short-term but also in the long-term. When asked the value of their benefits, retirement savings rose to the second spot, following healthcare and surpassing dental insurance. Researchers say employees are increasingly recognizing the link between long-term financial security and overall wellbeing.

“As retirement concerns intensify,” they write, “the presence and quality of employer-sponsored savings plans are becoming a stronger indicator of perceived employer support and long-term commitment to employee wellbeing.”

What can HR do?

The findings send a definitive message: Employees need both “clarity and relevance,” ADP says. They need benefits they can understand and that meet their needs—and they want their employers to provide the guidance that enables good decision-making.

HR and benefits leaders have a “clear opportunity,” researchers write, to strengthen their benefits communication and education and lean into the employee expectation that the employer is an “anchor of trust” in a very uncertain landscape.

“By helping employees better understand their benefits and how to navigate costs,” they say, “employers can play a critical role in instilling confidence and reinforcing a sense of financial security.”

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