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According to LendingClub Corporation, over half of Americans live paycheck to paycheck, while GoBankingRates estimates that nearly 70% of Americans have less than $1,000 in their savings. Yet, UnitedHealthcare, the largest healthcare insurance company in the U.S., reports that the average emergency room visit will cost $2,200.
“The reality is, health insurance was never designed to cover everything,” says Shannon Watkins, chief marketing officer at Aflac. “There will absolutely be gaps that consumers will have to pay for in order to round out their treatment.”
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Aflac, the largest provider of supplemental insurance, is hoping to bring attention to how Americans can plan for these gaps by launching its CareGrant initiative, which will award 20 applicants $5,000 in October and will continue to donate a total of one million dollars to non-Aflac members through the end of 2022. For those who want to apply before the Oct. 31 deadline, they must either submit a 300-word entry or a 90-second video about their struggle with medical debt.
“We want people who faced an unexpected medical event to experience what it feels like when Aflac has your back,” says Watkins. “We want to hear consumers’ stories and shine a light on the urgent issue of medical debt.”
There’s no better time to do so. The role of supplemental insurance may become more essential as Americans try to prepare for the out-of-pocket expenses that are not covered by their insurance — and the last year and a half has especially made it clear just how far health insurance protection extends. According to the healthcare navigation company Castlight Health, if someone with severe COVID symptoms had to visit the emergency room in New York City, their out-of-pocket costs could range between $791 to $7,341.
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However, with the aid of voluntary benefits, such as an accident, hospital or short-term disability insurance, an individual can minimize what they owe. That being said, supplemental insurance is another expense that comes out of a worker’s paycheck, which is already subject to health insurance and retirement contributions. On average, Aflac policies could cost anywhere between $8 and $25 a month, potentially adding up.
Plus, supplemental insurance does not replace a health insurance plan. For instance, if a person had a stroke, which Aflac estimates could result in bills totaling $47,460, an average insurance plan may cover 60% of it. A combination of hospital, short-term disability and critical care and recovery supplemental insurance is estimated to pay its user roughly 14,000. While this is a substantial sum, it still leaves the patient responsible for coming up with nearly $5,000.
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Supplemental insurance can patch gaps in one’s health insurance plans, but it will not serve as the only solution to the U.S. medical debt crisis. Watkins notes that the gaps caused by income inequality are at the heart of this problem, disproportionately affecting people of color. According to the Federal Reserve System, at the start of 2021, the richest 1% of Americans held 32% of the wealth, setting a record-high since these reports began. The bottom 50% of Americans hold only 2% of the wealth. Meanwhile, the Federal Reserve estimates that white families have nearly eight times the net worth of Black families.
In response, an increasing number of healthcare and benefits companies are starting to closely examine these macro causes of medical debt in the U.S. For Aflac’s part, the company has invested $25 million in the Black Economic Development Fund and set aside another $500 million to help develop underrepresented communities in partnership with Sound Point Capital.
“No one should make the difficult decision between paying their rent or buying food and paying for an unexpected medical bill,” says Watkins. “We hope our care grants program can serve as a small way for us to help close those wealth gaps.”
