Addressing the Income Insurance Gap

05/09/2024 Written by: AP Employee Benefits

Across the United States, there is a widening coverage gap between income received and income insured amongst the American workforce. Many Americans underestimate the chance that they or someone in their household may be at risk for an income-disrupting event, putting them at significant financial risk. 30% of U.S. households have had a primary wage-earner experience an injury, illness or condition that results in either short or long-term medical leave.

Financial security is one of the top stressors to American households today, so it is important to communicate to your employees the importance of protecting their income. When financial hardship is placed on a household as a result of medical expenses, many Americans are more likely to forgo or postpone seeking the care that they need. This could ultimately result in later-stage diagnoses requiring more invasive and expensive treatment plans for the employee. These more costly treatment plans impact the bottom line for both employer and employee. Ensuring that there is some financial security in place while proper - and timely - medical care is received can help ease some of the additional stress being placed on the employee and their family.

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In recent years, the overall rate of disability insurance ownership by American workers has been on the decline, falling from 58% to 51% from 2018 to 2023, according to a recent Guardian report. When compared to the other insurance products, the perceived value of disability insurance ranks significantly lower as an employer offering when evaluating the overall employee benefits package. According to a recent Guardian report, disability insurance ranks at 7%, only slightly higher than the importance placed on pet insurance coming in at 3%, while medical and dental insurance rank at 75% and 25% respectively. While the perceived value of disability insurance may be startingly low, the financial impact felt by uninsured employees in their time of need can be even more significant.

Of those who do own disability insurance, 91% of those obtained coverage through their employer, further confirming that this employer-sponsored benefit captures a large majority of its intended audience. When many Americans are not able to cover a small unexpected medical expense, being placed on medical disability without having the appropriate income protection in place can pose an even more significant financial hardship on the household. Many American workers are of the mindset that since they are healthy right now, they don’t have as much exposure to the financial impact of a serious medical diagnosis or accident.

As an employer, the low employee participation of these disability benefits can mean a significant portion of your population is left financially vulnerable. As your organization looks to evaluate your financial wellness strategy, reach out to your AssuredPartners team for more information on the role of group and supplemental individual disability coverage.

Need more insights? Your local AssuredPartners team can help.

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