Medical Insurance May Not Be Enough to Protect Employees Prt.3
Medical Insurance May Not Be Enough to Protect Employees Prt.3
Feb 19, 2020
Legal Problems are the Cause of Many Debt Issues
Like medical debts caused by huge out-of-pocket medical costs, there are other problems that arise unexpectedly and wreak havoc with an employee’s finances. These problems cause huge financial costs that can devastate an employee’s or their family’s financial health, and comprise other unexpected high dollar costs that arise without warning, including a number of different kinds of legal problems.1
Being involved in an accident regardless of one’s fault takes time away from work and adds expenses to negotiate and fix the damage. Injuries add to these expenses, especially if one party that caused the accident does not have the right level of insurance (underinsured or uninsured motorists’ coverage) and if the medical bills are higher than any applicable policy limits. Additionally, a newly purchased vehicle involved in an accident is sometimes worth less damaged than the lease or purchase costs that still have to be paid.
Many legal problems can rise to very serious levels and thousands of employees suffer through these each year:
- Domestic abuse arrest
- CPS allegations about very good mother – employee – child taken away
- Elder domestic abuse arrest
- Wealthy-appearing, seemingly successful employee facing home foreclosure when interest rates rise
- Employee with son abusing drugs – stole everything from their bank account
- Employee with parent in abusive nursing home
- Employee (VP) who gets a note at work from spouse of other employee as he/she is having affair with disclosure imminent
- Single father’s alleged abuse of son or daughter made up by mother’s family – mom in prison for drug issues
- Employee’s 10-year old child accused of sexual abuse
- 12-year old employee expelled from school for bullying
In each case, some type of tangle with the legal system is involved. And any time the legal system is involved it means huge legal fees and a substantial potential for court-ordered losses.
Legal problems are occurring in every facet of life today. Legal issues can affect American employees in both widespread frequency and in severity of the underlying legal problem. There is an American Bar Association Study that highlights how legal and financial problems are being suffered by more than 70% of Americans.2
Many legal problems are private, frustrating, emotionally upsetting and oftentimes embarrassing. Picture the employee that misses work after being arrested, or the manager whose son was arrested for the fourth time for drug possession or the employee whose spouse was jailed for a felony gun possession. Employees are involved in all types of legal issues, many of which are not their fault. Regardless, almost all legal problems bring with them an enormous amount of embarrassment or humiliation. And these problems are almost always financially threatening to a family’s savings.
Many legal problems also threaten an employee’s job security. Company drivers cannot suffer through repeated driving violations in a year if their policy manual provides for termination after two violations; employees on work probation cannot miss a day of work to go to court for any legal matter; or former spouses fighting over the kids’ carpool can create repetitive employee tardiness issues. The list of effects of legal problems is endless, and most of these legal problems are embarrassing and job threatening.
Many Employee Financial Problems are Extraordinarily Real and Devastating:
With so many difficult issues, each with a financial impact, comes so much stress in the employee or individual’s life. The search for solutions is endless and the need for emergency funds to fight these unexpected problems is huge.
It is also clear from understanding the nature of these legal problems is a fact that pervades this discussion – these problems are not likely to be publicized. Employees who suffer through them are likely to be embarrassed, upset and certainly engaged in every effort to keep them as private as possible. It is completely unlikely that HR will ever know their employees are suffering through these seriously embarrassing legal problems. And this makes understanding the scope of the problem very difficult and impossible in many situations.
The Current Problem – a Causational Misunderstanding that Leads to a “Everything’s Okay” Mindset
The way employees encounter the legal world is something that needs more consideration. Traditional legal retainers, the hiring of lawyers tends to be prescriptive – addressing legal needs only once the individual has an acute legal problem. Legal problems can create massive stress issues and huge disruptions in employees’ lives. Absences, fear, frustration, emotional upset, anger and a range of emotions can be experienced by employees when a legal problem arises.
But do employees have legal concerns that HR managers may not know about? Or is the extent of their employees’ legal problems fully appreciated at the HR level? The problem is that because these legal encounters may not occur in a predictable manner for most people, there isn’t an overwhelming feeling that a legal problem might arise. That often leads employees to a lack of focus or planning for legal problems, leading many employees to believe that they will not need legal help to protect their families. In fact, when polled many employees say that “I do not have a legal problem,” or “I don’t need that legal help program.”
But legal system statistics tell a different story. Typical usage on a legal insurance plan shows that in excess of 80% usage is normal for employees and the use of the legal plan for at least one legal matter is very likely each year. 3
The net result of all of these financial-impact legal problems for employees is a large component of the financial wellness equation that is not served by financial wellness programs. The reason - the causation analysis underlying major financial issues is simply not understood in HR and benefits manager circles. And if it is understood, the magnitude of the problem for a company’s employees is not understood.
Next time we will discuss how employers can help by understanding the causes of employee financial issues. Stay tuned...
By: Robert L. Heston, Jr., 2019
1/ LegalEASE Employee Health; Legal & Financial Stress Impact Study, 2018
2/ "Public Perceptions of Lawyers Consumer Research Findings," American Bar Association Study, 2002
3/ Legal Access Plans, L.L.C., 2019 Internal Study