How to address diabetes with pre-tax solutions
Published on December 16th, 2022
Tom Trautwein
Guest Post: Tom Trautwein, Alegeus Account Executive II
Over the holidays, I had the wonderful opportunity to spend time with family enjoying delicious consumptions. Of course, during those “gluttonous” moments at the dessert bar (imagine pies, cookies, brownies, leftover marshmallow yams, eggnog, mints) there was the natural kidding about how bad all these desserts probably are for us; the immortal moment. Some family members nervously laughed as they momentarily put aside their pride and announced their struggle with diabetes. Comments ranged from “What can I do, not live?” to “Seems inevitable.” The conversations slid into lamenting a lack of solutions or resources and the probable future ahead. For the record, none of these family members were elder – meaning they were not on Medicare – they were all under 55.
For me, this was another moment I love/hate being in the benefits industry as my mind began calculating the cost to America and employers, as well as on an individual basis, to my friends and family. It was a struggle, as I did not want to change the tone of the holiday joviality and become the guy that educates about the vast commitment our country and its employers are making to help address diabetes.
The reality is the best investment is the one each of us can make in ourselves. For many this investment is free and can be accomplished through wellness and education. This is a big investment we cannot make soon enough – if not for ourselves then for our loved ones, our employers and coworkers, and our country.
The high cost of diabetes
Diabetes is the most expensive chronic condition in our nation.1
- $1 out of every $4 in U.S. healthcare costs is spent on caring for people with diabetes.
- $237 billion is spent each year on direct medical costs and another $90 billion on reduced productivity.
- 48% to 64% of lifetime medical costs for a person with diabetes are for complications related to diabetes, such as heart disease and stroke.
- People with diagnosed diabetes incur average medical expenditures of $16,752 per year, of which about $9,601 is attributed to diabetes.
- On average, people with diagnosed diabetes have medical expenditures approximately 2.3 times higher than what expenditures would be in the absence of diabetes.
It’s no wonder so many businesses have jumped to grab their market share of associated expenditures while hoping to solve America’s problem and why employers’ HR/benefits departments rank diabetes as one of their top priorities for this decade.
On the other side is the personal investment made by Americans and the financial tools that could be better leveraged to pay for these expenses. My family was unaware of available programs, including ways to maximize their diabetes spend.
99% of employers with more than 1,000 employees offer one or more spending account programs.2 Unfortunately, based on the statistics around these programs, these are highly underutilized. As illustrated by the chart below, this is a missed opportunity not just for patients but for employers and vendors as well.
Key notes of importance
- Employers know the urgent need to address diabetes to curtail claims costs and improve productivity.
- Employees realize there is a quality-of-life compromise for themselves or a family member who struggles with diabetes.
- Vendors “see the opportunity” and are committed to helping patients.
- The government has their own interests/programs to support those with diabetes, including allowing those struggling to pay for their associated expenses with pre-tax dollars.
This last bullet can be further explored. For example, employers can tailor communications programs to educate employees on how their FSA and HSA should be leveraged to pay for diabetes-related expenses. Employers can also seed these programs (deposits/matching contributions) to help promote awareness and utilization. Vendors can even partner with fintech providers like Alegeus, or employers can reach out to their spending account administrators who use Alegeus, to offer lifestyle programs to encourage employees to get the care they need so they can be happy, healthy and productive employees.
