Quote-of-the-day mailing list
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Subject: qotd: Workers not prepared financially for unexpected health costs
Date: Wed, 24 Apr 2013 13:28:07 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
April 24, 2013
2013 Aflac WorkForces Report
American Workers on an Uphill Road with Consumer-Driven Health Care
New Aflac survey reveals employees are not prepared for increased costs,
may not want control and lack education
The 2013 Aflac WorkForces Report is the 3rd annual Aflac employee
benefits study examining benefit trends and attitudes.
Not Prepared Financially
* Only 24 percent of workers completely agree or strongly agree they
will be financially prepared in the event of an unexpected emergency or
* Further, 46 percent of employees have less than $1,000 to be able to
pay for out-of-pocket expenses associated with an unexpected serious
illness or accident, and 25 percent of employees have less than $500.
* Four-in-ten (40 percent) workers would have to borrow from their
401(k), friends and family to pay for out-of-pocket expenses associated
with an unexpected serious illness or accident; 28 percent would have to
use a credit card.
Centers for Medicare and Medicaid Services
The Center for Consumer Information & Insurance Oversight
Section 1402 of the Affordable Care Act requires reductions in the
maximum out-of-pocket limits on silver plans for individuals with
household incomes between 100 and 400 percent of the FPL. However, the
statute also requires the Secretary to ensure that the reductions in the
maximum out-of-pocket limits do not cause the AVs (actuarial values) of
these silver plan variations to exceed certain levels.
For reasons described in more detail below, we do not plan to reduce the
maximum out-of-pocket limits for individuals with income between 250 and
400 percent of FPL.
Comment: With a major trend expanding in the direction of
employer-sponsored consumer-driven health care, this new Aflac report
shows that workers are not ready for the change. If you look only at the
financial challenge, workers may never be ready. They cannot afford to
pay the out-of-pocket expenses that they would face should they or their
families develop significant medical problems.
Although the Aflac study was limited to employer-sponsored benefit
programs, most people purchasing plans in the new state insurance
exchanges also will be selecting plans that use high-deductibles - the
defining characteristic of consumer-driven health plans.
The Affordable Care Act (ACA) does require reductions in out-of-pocket
expenses for individuals with household incomes between 100 and 400
percent of the federal poverty level (FPL), but another ACA requirement
prohibits the covered silver plans from having an actuarial value over
70 percent (the percent the plan pays on average) for individuals with
household incomes over 250 percent of FPL ($27,925 for an individual).
Since it is impossible to keep the actuarial value down at 70 percent if
out-of-pocket expenses are subsidized, it was decided to eliminate
out-of-pocket support for individuals above 250 percent of FPL.
Some workers will benefit from employer contributions to health spending
accounts (HSAs and HRAs), just as some individuals will benefit from
out-of-pocket subsidies in the exchanges. In either instance, it can be
anticipated that far too many still will not be prepared financially for
unanticipated medical costs, just as the Aflac study reported.
Newer employer-sponsored plans and plans under ACA are moving in the
wrong direction. We need a program that removes financial barriers to
care, not plans that erect them. All you have to do is read the 16 page
CCIIO/CMS bulletin on actuarial value and cost-sharing reductions (link
above) to see how ridiculously complicated and irrational we made this
We really do need a single payer system. Then everyone would be prepared
financially in the event of medical need.