While U.S.
According to a report by LendingClub and PYMNTS, 60% of U.S. adults live paycheck-to-paycheck. Meanwhile, a GoBankingRates survey found that nearly 33% of respondents have no more than $100 in their savings account — last year just 22% had $100 or less. And if Aon's predictions are correct, healthcare costs will jump by 8.5% in 2024, adding more fuel to the financial fire.
It's only getting
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"Think of your HPA as a credit card provided by your employer or insurer," says Whorley. "You can use that card and then repay it over time, always without interest or fees. This gives people that liquidity to actually pay for their healthcare expenses."
The insurer or employer pays a fee per member per month to provide the account. From there, the user is only expected to pay back what their care cost and can use their FSA and HSA to make their repayments. While an HPA doesn't exactly solve the healthcare cost crisis in the U.S., it does buy employees time and helps weaken the barrier to care. For example, if an employee has a high-deductible health plan — meaning they need to spend at least $1,500 for an individual and $3,000 for a family on care before getting coverage from their insurer — they may not have enough money in their HSA to meet their deductible or even chip away at the deductible, notes Whorley.
If an employee has an FSA, which means they must use the money within the account in a year or lose it, then there's a chance they may underfund or overfund the account trying to predict their healthcare needs. In both scenarios, an HPA can cover costs so an employee can plan to repay on their own timeline, Whorley says.
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"Most healthcare is unplanned; it's an episodic expense," he says. "We're just trying to give people the easiest way to pay."
Still, credit card debt is less than ideal. Credit card debt in the U.S. stands at $1.08 trillion, according to the Federal Reserve Bank of New York, and interest rates reached record highs at an average of 20% this year. The Administrative Office of the U.S. Courts found that bankruptcy fillings are up by 10% compared to 2022. It's understandable that Americans would be wary of adding another credit card to the mix.
Meanwhile, medical debt in the U.S. is estimated to fall at $195 billion, according to the Kaiser Family Foundation, and paying off a medical bill through a hospital comes with its own set of challenges. Notably, an individual could be making regular payments and still find their bill given to debt collectors because they aren't paying fast enough. Debt collectors can eventually take the debtor to court.
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"We're enhancing the autonomy and dignity of people going through very difficult moments," says Whorley. "They can avoid interest-bearing fees and 'gotcha' sort of products that prey on people when they're vulnerable."
At the least, Whorley hopes that when the unexpected strikes, HPAs prevent patients from deferring care out of fear that there is no path to pay for it. He advises employers to consider whether their plans truly encourage people to seek care, or if it acts like another barrier.
"We've been fortunate enough to have 1,200 plus partnerships with employers and [insurers] who are consciously making the decision to provide something to help folks," says Whorley. " We're really privileged for the opportunity to help folks all across the country to more easily and effortlessly get care."
