"Forty percent of people whose deductible equaled 5 percent or more of their income said they had decided not to go to the doctor when they were sick or had chosen not to get a test or go to a specialist..."
In a survey conducted by the Commonwealth Fund, forty percent of people whose deductible equaled 5 percent or more of their income said they had decided not to go to the doctor when they were sick or had chosen not to get a test or go to a specialist.
Impact for your company? One of those people could be one of your best employees who turns out to be a ticking health care time bomb catastrophe.
This wasn't what you had in mind when you made the move to a high-deductible health plan. You wanted to save your company and your employees money, and empower your employees to be consumers -- not cause your employees to avoid seeking care.
High deductible health care plans have been touted as the answer to a number of problems in the US health care system.
Even before the Affordable Care Act began promoting them as a way towards consumer-driven health care, employers and individuals alike saw them as a way to save money on premiums. Beginning in 2018, the ACA will be enforcing what has been deemed a "Cadillac Tax" of forty percent on expensive, first dollar plans, which also point to high deductible plans as the way to go.
In an ideal world, we agree that high deductible plans make sense. But we don't live in that ideal world yet. Employees don't have an extra $6,000 lying around, so they are avoiding seeking medical care as a result. There is also the issue of how little medical care $6,000 will actually buy.
We have to address these issues if we are really going to move towards the ideal health care system we all desire.
The current reality? Kaiser, a health policy research group that conducts a yearly survey of employer health benefits, found four of five workers who receive their insurance through an employer now pay a deductible. Currently, One in five workers has a deductible of $2,000 or more.
Drew Altman, CEO at Kaiser, predicts that we could see the steady increase in deductibles turn into a “spurt” if the Cadillac Tax goes into effect.
Companies have traditionally relied on higher deductibles to reduce premiums, both to lower their own costs and to reduce what they take out of the employees’ pay for coverage, said Laurel Pickering, the chief executive of the Northeast Business Group on Health, an employer group. “Clearly, it’s the go-to solution,” she said.
Total premiums are increasing modestly. The cost of a plan for both a single person and a family rose an average of 4 percent this year, according to Kaiser, well below the double-digit increases that were the norm a decade ago.
The average cost of a family plan rose to $17,545, with employees paying an average of $5,000 toward their premiums.
When it comes to consumers taking the wheel in driving health care, we agree that is where we want to go. In fact, we doubt health care costs will ever be pulled in line until there is transparency and consumers are empowered to be consumers.
In that vein, employers also justify the higher deductibles as a way to make sure workers have a financial stake in choosing their doctor or ordering a test. “It truly is to
engage employees as better health care consumers,” Ms. Pickering said.
A higher deductible puts more of the onus on the employee to decide whether a doctor’s visit or test at a certain facility is worth it, said Robert Reiff, who heads the
employee benefits consulting business for Lockton Companies, an insurance brokerage firm that advises midsize companies.
Employers “are putting more decision-making authority in the employees’ hands,” he said. Many more of his clients are offering high-deductible plans, frequently accompanied by a health savings account (HSA) that the employee can fund as a way of helping pay for medical bills, he says. In some cases, employers may also put some money in those HSA accounts.
To help employees make better decisions, companies are offering them online tools that show them the cost of a particular test or doctor’s visit before they go. Many are also providing employees with access to a doctor or a nurse over the telephone or computer as an alternative to a costly doctor’s visit or trip to the emergency room.
While we believe all of these are steps in the right direction, we have to recognize that employees are getting caught today, somewhere between the health care of yesterday where employer plans were paying for just about everything and tomorrow where they are supposed to be driving their own health care.
Caught unprepared, many Americans are making difficult choices about what care they can afford. About two
years ago, Beth Landrum, a 52-year-old teacher, insured through her husband’s job as an engineer, saw her family's deductible increase to $3,300 a year.
While her doctor recommended she have an M.R.I. every three years, after having a noncancerous brain tumor ten years ago that required surgery and radiation -- she decided to delay. “My doctor’s really mad at me because I haven’t had the M.R.I.,” she said, but she points out the money is just not there, it is a cost that she and her husband will have to save for.
If something unexpected happened, like a hospital stay, she knows they could owe thousands of dollars in medical bills because of their increased deductible. “It’s really scary,” Ms. Landrum said.
Matt Freedman didn't get to choose. Freedman, 34, chose a plan last year that had a $6,000 deductible. “I knew it was a risky plan,” he said, but he considered himself
healthy and unlikely to encounter significant medical bills. After minor surgery, however, he developed a serious infection that led to a hospital stay. “You never think something terrible is going to happen,” he said.
The least expensive offerings on the ACA marketplace exchanges are also high-deductible plans. Rebecca Bullard, 27, chose a plan this year with a $6,000 annual deductible so she could afford the $129 a month in premiums. When she worried that she had cracked a rib after playing roller derby, she chose to ask friends on social media about what to do rather than go to the doctor. Although she had a plan with a $2,500 deductible before, she had not been worried about what she would pay out-of-pocket. “Now I don’t even want to go to the doctor,” she said.
Policy experts and employers are concerned about the evidence they see that higher deductibles are causing people to forgo care, even when they have serious conditions. “It may be tamping down on unnecessary care, but we’re seeing a lot of evidence of skimping on necessary care,” said Sara R. Collins, vice president for health care coverage and access at the Commonwealth Fund, a nonprofit group that conducted the mentioned
survey last fall about the effect of out-of-pocket health care costs on consumers.
Companies are seeing a lower utilization, with fewer of their employees going to the doctor or getting lab tests when a high-deductible plan is in place, a recent Truven Health Analytics review of employers' insurance claims
showed. But they are also seeing a decline in care for people with chronic conditions. In some cases, even when preventive care was covered under a high-deductible plan, employees were getting fewer mammograms and cervical cancer screenings.
This defeats the purpose. This trend is not sustainable. While high-deductible plans save money now on premiums, if Americans are not receiving appropriate medical care -- we've lost.
“There’s a real risk people won’t get the care they need,” said David Lansky, the chief executive of the Pacific Business Group on Health, a West Coast employer
group. Many of the companies he works with are now hesitant to raise deductibles much higher. Those employers believe “we’ve gone as far as we should go,” he said.
So what can we do?
Until we succeed in pulling health care costs in line with the rest of the economy through accountability, transparency, and continued efforts to empower consumers, and until Americans can see a way to save more money, adding inexpensive supplemental insurance to this high-deductible/HSA mix is a necessity to fill in the gaps.
For instance, Aflac, the pioneer in supplemental insurance, provides some stark examples of the out-of-pocket expenses employees face with their benefits estimator.
I ran a couple scenarios for myself, a 34-year-old male.
Aflac's research estimates $13,477 in medical expenses, $6,774 in household expenses that would need to be covered while laid up, and another $7,741 in extra out-of-pocket expenses like child-care and transportation to follow-up visits, for a real cost total of $27,992. In this case, Aflac's group coverage would provide $21,199 in cash to your employee to be used the best way they see fit towards that total.
The real cost estimate is $5,825 ($2,886-medical, $2,258-household, $681-out-of-pocket expenses), with Aflac's group coverage providing $3,802 to offset those costs.
These two examples are on extreme ends of the spectrum, and, of course, estimated costs vary based on age and other variables. Aflac has provided the details of how they came up with those numbers if you want to see their research.
So how do these scenarios look when added on to a high-deductible/HSA mix? The major medical is there for catastrophes, and whatever an employee has managed to save in their HSA will help to offset any medical costs not already covered. Fact is, though, neither the health plan or the HSA will cover any out-of-pocket expenses above and beyond the medical costs that gap insurance will. It just makes sense to put them all together.
This is doable for most Americans. The cost is, too. At least in California, each of Aflac's supplemental insurance policies range from $8 to $56 per month (we can't speak to other gap insurance carrier prices -- so far, only Aflac has met our criteria and standards. If something better comes along, we'll definitely be offering it and letting you know). Further cost savings are realized by employees getting to pick and choose which coverage makes sense for them. Employers can offer this coverage as voluntary at the employee's expense, can share in the costs, or pay for them outright.
"In California, each Aflac supplemental insurance policy ranges from $8 to $56 per month. Further cost savings are realized by employees getting to pick and choose which coverage makes sense for them. Employers can offer this coverage as voluntary at the employee's expense, can share in the costs, or pay for them outright."
Wellness benefits are also included in several of Aflac's policies. Now with the ACA, a lot of preventive screenings are free, but your employees will still receive payment from Aflac for their wellness visits and tests. Further encouragement to be healthy.
But, of course, this is all from Aflac's point of view -- and their agenda is to sell us supplemental insurance.
While we have oodles of happy employee stories when we work with our group benefit clients to put all three of these vehicles -- high-deductible major medical plan / HSA / gap insurance -- together, we don't have permission to print them here.
So, we searched on the internet for "is Aflac worth it" and found some random posts in online forums from employees who are real fans of Aflac and gap insurance, and their stories mirror what we are hearing from our client companies and their employees.
Here are some stories from just one of the forums. In this case, the employer is offering Aflac, and one employee is asking others for their advise on whether Aflac is worth it:
"I have a couple of their supplemental policies.... the hospital/intensive care and short term disability policies were VERY helpful when I was hospitalized on bedrest and then gave birth to a 25 weeker. Every day of the 99 days she was in the NICU paid out, plus the time I spent in the ICU and in the hospital. And the time I spent off work. I didn't file until she was discharged. We received a check for more than $43,000.00. Considering that I was then off work for almost 4 years....became a SAHM... best money I ever spent!!! I have the accident and cancer policies too. The cancer policy has a wellness benefit that pays you for receiving an annual cancer screening... for each member of the family that you have covered.... and the accident policy has come in handy a few times!"
"I have 2 Aflac policies and I’m 21. I have the cancer one and the accident one. With both policies I pay about $40something each pay check (I get paid every 15th and 30th of the month). With the cancer policy I pay a little extra each pay check so if in 20 years I am not diagnosed with cancer I will get all my money back that I put into it and if I want I can start the policy over again. The cancer policy has the wellness benefit and I just got $20 back for getting a PAP.
I’ve been really happy with it! HTH!"
"If claim processing time is a concern, I can vouch for them being the best in the industry. I have faxed in claims (from NC) on a Friday after 4 PM, and gotten a check in the mail by the following Tuesday (comes out of Columbus GA). I have never seen anything to beat it. Also we have a cancer policy, that when my husband was diagnosed 4 years ago, paid out about $10,000 on top of whatever his medical insurance paid. It also pays us back for followup testing enough to more than cover the ongoing cost of the insurance."
"You are far more likely to have an illness or accident that leaves you unable to work for a period of time than you are to die. Everyone protects their family in the event of death with life insurance but ignores the much more likely catastrophic illness.
I sit on the HR committee for my company and pushed hard for AFLAC!"
"We have a couple of policies through them. One policy that my husband bought costs us around $17/month and covers specific health issues (heart attach, stroke, coma, and a couple of others). Well, right before I turned 34, I had a couple of minor strokes. They were full-fledged strokes, not TIA, but I was able to recover completely.
That AFLAC policy ended up paying my around $8,000. My out of pocket costs after my regular health insurance paid were $4,000, so I ended up with about $4,000 left over that I could use however I wanted.
Most of their policies offer some sort of wellness benefit. One of ours will pay $60 per person on the policy that has any kind of doctor visit. Another policy pays $75 per person for any cancer screening (Pap, PSA test, mammogram).
You can download the claim forms from their website, fax them in and they pay within a few weeks.
AFLAC has definitely been worth the money for us!"
"YES YES YES!!!! GET IT!!!!
We got ours in July of last year and I was in an accident in August and they paid us out around 4K when we had only paid them one months premium of $48.00. The Aflac rep in our area was so helpful and answered emails within minutes. This is one thing I will not let my DH cancel!!!"
"Yes! Yes! I agree also. I just love the accidental.. I fell yesterday up in Indy and today went to the urgent care for xrays, etc.. I submitted my info and should have a check in 7 business days or less. they are really good about turnaround times on claims. so far this year I have had to use it 4 times between the kids and I.. I also carry the cancer policy.
we pay $48 biweekly for the family for both policies..
I'm pretty darn healthy too along with the kids but accidents happen- we didn't use it at all last year and 4 times so far this year. That doesn't include or payments for well check up, cancer checks, etc.. its like any other insurance- its there when you need it and it really helps when you need it.."
"As a mother of four rambunctious kids I would have to say we've got our monies worth! My DS was in the NICU for 93 days when he was born. AFLAC cut us a check for $350 a day for that entire time (just over $30,000!). Last month DD3 dislocated her thumb-They paid us $150 for the injury, $35 for the follow up Dr's visit. (our co-pay for the whole thing was $15). In Dec DD10 fell and cracked her head open-$350 for the stitches, $35 for follow up visit. I get $60 every year for having my annual pap. These are just a few examples. We probably have 3-5 claims a year in our family. It has been more than worth it to us."
"I don't usually buy "supplemental" type policy but did recently sign up for their cancer policy. Since we're a family of 5, we signed up for the $75 reimbursement. If we all get a screening each year, that plus the pre-tax savings makes the policy super cheap on an annual basis.
After having several friends & family w/cancer over the last 2 years - 2 w/double masectomies (sp?), 1 friend's DH, FIL & friend's DD 2 yr battle (now doing great!), it seemed like a nice extra safety net to have. I am more than happy to pay that premium & never need it but I've seen all the expenses out of pocket that come up if it is needed."
"I don't personally have Aflac, but I am a breast cancer survivor that chats on the Komen message board a lot. There have been several women on there that have Aflac and they all say they are thrilled with it! For many of them it helped cover their deductibles or made it possible to cut their work hours back to part time during their chemo & radiation treatments. If it ever becomes available at my or my husband's work I will make sure to get it.
And for those of you that think you are in good health and young....I was 40 years old, had my first mammogram which was completely normal. Fast forward 7 months later and I had a 2-1/2 inch tumor that was cancer. I should have been the poster child for who shouldn't get cancer. I went from being a healthy person to being in the group of the sickest people in the world in just one day. Thank goodness we had very good medical insurance, because here are the approximate costs...
Mastectomy - $40,000
Chemo - $18,000 per round x 8 rounds
Radiation - $75,000 for 6.5 weeks
Reconstruction - $70,000
I do wish we had Aflac because it would have helped pay for those things that medical insurance didn't....gas for driving to doctors appointments, co-pays, babysitter to watch kids while you go to appointments, pay for house cleaner, special foods, hundreds of dollars worth of over the counter drugs not covered by insurance, etc..."
"I *love* having Aflac. I'm not sure the exact price as it's taken out of my husbands pay. They pay me to stay on top of my screenings (I'm paid for mammo or pap and because of strong history I've been going for a few years, and I just turned 33). I also have a friend who had cancer and said they were very thankful to have Aflac."
...And there are a lot more stories like these on just this forum. We also found similar stories on other forums -- but you should definitely be getting the idea.
Maybe someday in the future we won't need supplemental insurance -- but right now -- we do.
Which stories would you rather be hearing from your employees?
Health Insurance Deductibles Outpacing
Wage Increases, Study Finds
By REED ABELSON SEPT. 22, 2015
Aflac Benefit Estimator:
Rylan Klaseen & Associates
Rylan Klaseen & Associates
Serving Southern California: