'Job lock is real': 1 in 4 workers feel trapped in their job just to keep their health insurance. Good pay isn't enough

According to a study by the West Health-Gallup Center on Healthcare in America, nearly one in four (24%) of American workers say they’re “afraid” of losing their health insurance, and this fear is keeping them in their jobs. That’s an 8% rise from 221, the study noted.

Given the skyrocketing costs of health insurance, as employer-sponsored family health insurance premiums have increased by about 26% over the past five years, that fear is justifiable.

Gallup reported that 44% of working Americans who own healthcare debt say they remain in an unwanted job for insurance, which doubles the rate of workers without medical debt (21%). Unsurprisingly, job lock rates top out at 27% among workers in households earning $48,000 to less than $90,000 a year and are typically lower among those earning higher incomes.

“The most powerful type of golden handcuffs in the U.S. labor market is health insurance,” Cassidy Blair, a physician and founder of Blair Wellness Group, told Moneywise. “Salary can be negotiated, and so can retirement, but a waiting period on a pre-existing condition can’t.”

Job lock directly impacts U.S. companies, too

Job lock alone runs about $137,000 per 100 employees per year in added productivity drag, on top of the costs from attrition, disengagement and reputational damage, Ethan McCarty, Integral’s founder and CEO, told Moneywise. The data comes from the Integral Index, an annual workforce study conducted with The Harris Poll.

“Across a 1,000-person company, that’s over a million dollars a year from job lock specifically, inside a broader disengagement cost that tops $5 million,” McCarty said. “Most employers aren’t measuring this because they’re measuring retention, not the reason behind it.”

There’s a good reason employees value their health insurance plans

U.S. employer healthcare plans are often viewed as the best and most complete by employees, compared to other health care plans, as they’re primarily built with lower deductibles, pharmacy benefits and other supplementals like accident coverage, critical illness and hospital indemnity.

“I recently had a client in Florida who was paying over $3,600 per month for a family of five,” Thyrza Oliveira, a licensed health insurance agent in 31 states and founder of FindCoverage.net, told Moneywise.

The client was thinking about leaving her job and, while finally leaving the job because of the health insurance benefits alone, the process took a long time. “She was comfortable with her insurance; all her doctors and meds were covered,” Oliveira said. “We talked, and I priced private plans for her; we walked through the trade-offs, and ended up saving her around 30% a month.”

Oliveira said that experience and others convinced her that employees are scared of the individual market, as Affordable Care Act plan deductibles and out-of-pocket costs are getting higher and higher, and networks are getting narrower. “We’re also seeing big companies leaving the marketplace, rules for subsidies changing, medical costs rising, and everyone has heard stories about denied claims,” Oliveira noted.

By and large, employees are used to their employer’s healthcare coverage, know how it works, and know it’s effective. “Consequently, they’d rather stay in a toxic job and accept lower pay forever in exchange for the feeling of safety,” Oliveira added.

Yet there are big caveats to employer-sponsored healthcare plans, especially when employees are adding family members to the plan. “The employer coverage is often a good deal for the employee alone,” Oliveira said. “The moment you add a family, it can get expensive

For example, FindCoverage.net had a client in Texas with a family of four, whose employer plan runs over $584 a week for health only, and no dental or vision. His wife’s employer plan wasn’t much different, but adding him to her plan would cost an extra $1000 a month for one person.

“We see a lot of people are trapped in a job by misinformation,” Oliveira noted. “They’ve never actually priced their options.”