In 2022, 38 percent of Americans reported delaying medical care—a 20-year high. But as with many things, the burden of paying for healthcare doesn’t affect all Americans equally.
Lower-income communities, for example, tend to have higher incidences of disease and therefore a greater need for healthcare. And in a vicious catch-22, those with lower incomes, Black and Hispanic adults, and women often have health benefits mis-sized to their income, which contributes to higher incidences of delayed or forgone care.
If we seek to make healthcare more equitable, we must ensure people have the right-sized ability to pay for care that fits alongside their insurance card. A new style of employee benefit known as Health Payment Accounts (HPAs) gives employers a better way to protect and ensure the financial health of employees when they get sick.
What Is a Health Payment Account?
Health Payment Accounts (HPAs) were conceived as a way to help everyone access and afford care by giving them a new source of funding and the flexibility to pay for care over time. The HPA is interest-free credit structured as a benefit and built into the health plan. Sponsored by the employer, the HPA fills in the deductible and is a painkiller for the frustrations and anxiety of out-of-pocket costs. Employees can simply use their HPA card to turn a $200 copay into twenty payments of $10. They can also choose the funding source (payroll deduction or a linked bank account) and repayment timeline that works best for their budget. They can also make a payment from an HSA account if they’d like to use tax-advantaged dollars to pay for care.
There are no interest charges or fees associated with HPA transactions because the cards are sponsored by employers, health insurers, and hospital systems. Importantly, there is no credit check required for members to get their card, which boosts health equity by ensuring employees can use the HPA regardless of credit history.
By affording everyone the same opportunity to get care, HPAs cure the regressive nature of deductibles and encourage earlier visits to doctors, dentists, therapists, and so much more. This reduces the likelihood of severe claims, improves productivity, boosts retention, and puts less pressure on health benefit prices in subsequent years.
HPAs Improve Health Equity
75 percent of Americans grade the affordability of healthcare in the US as a D or F. And high costs are a leading reason why. In fact, the average annual deductible for individual coverage is, on its own, nearly $2,000. That makes a single unexpected medical event financially untenable for many of the 57 percent of Americans who can’t afford a $1,000 emergency expense.
To help address this and manage costs, traditionally-minded employers may choose to offer employees high-deductible plans with health savings accounts (HSAs). It’s a time-tested option. But a 2022 report showed that 60% of HSA accounts have a balance of less than $1,000 – well below the $2,800 annual deductible currently required for HSA eligibility.
According to the Kaiser Family Foundation, financial realities like these have led four in ten Americans to carry debt due to medical bills. With lower income workers – those most likely to be on high deductible plans – disproportionately affected.
Another survey found 12% of adults in the US carry healthcare debt of $10,000 – or more.
The fact is, even the methods traditionally relied on to promote affordable access to care are often found to be out of reach by those who most need them.
A health payment account (HPA), however, is a proactive, equitable solution to help cover medical costs regardless of a patient’s insurance plan, deductible, or personal savings. With an HPA, patients can pay for care over time without fees or interest.
Employers offering HPAs will establish the credit limit, typically ranging from $500 to $5,000, on their employees’ HPA cards. Employees can then use these cards to pay for healthcare-related out-of-pocket expenses up to the set limit. This enables employees to receive necessary care without postponing it or resorting to high-interest credit cards, which can be more expensive in the long term. And HPAs can then be repaid through adaptable repayment schedules linked to an employee’s payroll.
Healthier Employees Are More Engaged and Productive
Nobody does their best work when they’re sick. But in America’s healthcare reality, it’s not just sickness itself that can tank employee productivity: those with financial worries miss more work, are less engaged, and are less productive in their jobs.
Increasingly, we are in discussions with employers who see their role as evolving beyond checking the box with health benefits to becoming an active architect of population health. Rather than simply transferring risk, they are seeking real solutions that more equitably reduce risk in the first place. The HPA is something that has a tangible, measurable, disproportionate impact on historically vulnerable populations—the people who could benefit most from being lifted to a position where they can proactively manage their healthcare costs.
About Brian Whorley
Brian Whorley is the founder and CEO of Paytient, a company which helps people access and afford care. Prior to Paytient, Brian was Director of Business Development and Planning at Boone Hospital Center.
