Workers are Unprepared for Critical Illness Diagnosis


Recent research shows that about 90 percent of the country’s middle-income citizens are not prepared financially for critical illness diagnoses. Only 10 percent of Americans say they feel confident that they have adequate savings to pay for the costs of possible critical illnesses. The survey examined approximately 1,000 Americans between the ages of 30 and 66 with annual household incomes higher than $35,000 and less than $100,000. Today’s middle-income Americans face greater risks of developing critical illnesses. These include Alzheimer’s disease, heart disease, stroke and cancer. When a person is diagnosed with one of these critical illnesses, his or her life changes on a personal level and on a financial level.

Personal Savings Levels

The survey showed that most middle-income Americans would be forced to pay upfront for any critical illness expenses that their insurance policies would not cover. However, the majority of respondents did not have any savings. If they did, the amounts of money in most participants’ accounts were insufficient. About 25 percent had no savings, 50 percent had less than $2,000 saved and 75 percent had less than $20,000 in savings.

Resources For Covering Medical Costs

Almost 30 percent of survey respondents said they would use credit cards to pay for expenses if they developed a critical illness. Nearly 25 percent said they would ask for a loan from family members or friends. Slightly less than 20 percent said they would ask financial institutions for funds. Almost 25 percent of participants said they were not sure how they would pay for expenses. Younger generations said they were more likely to use credit cards or financial institution loans.

Financial Impact Perceptions

Almost 40 percent of survey participants said they thought they may never be able to recover financially following a cancer diagnosis. Another 45 percent said they would not be able to recover financially from a dementia or Alzheimer’s diagnosis. The survey also found that very few Americans have discussed the possibilities of financial implications of critical illnesses with loved ones. Nearly 90 percent said they had not discussed any of these issues at all, and about 60 percent said still had yet to discuss only the financial implications of potential critical illnesses. Experts say it is important for Americans of all ages to educate themselves about the costs of critical illnesses. They encourage people to read their insurance policies to understand exactly what is covered and what is not covered.

Why does it make sense to have a Flexible Spending Account?

One way to benefit from a Flexible Spending Account is to take advantage of the tax savings. A cafeteria plan allows you to contribute a certain amount of gross income to an account before Federal, Social Security, and some State taxes are calculated. Click here to view a savings table that will show potential net pay increases by participating in an Flexible Spending Account (FSA).

  • Improve employee morale
  • Improve your total benefits package
  • Reduce turnover, hiring, interviewing and training costs
  • Soften the blow of escalating health insurance costs.

Workers are financially unprepared for out-of-pocket medical expenses

45% <$1,000 to pay for out-of-pocket medical expenses
25% <$500 to pay for out-of-pocket medical expenses
40% Have to borrow money from friend/family
28% Have to use a credit card
14% Don’t know how they would pay

43% of workers are not very or not at all prepared to pay for out-of-pocket medical expenses for illness of accident.