Medical care causes financial insecurity for many older employees

August 18, 2023

Difficulties accessing care due to costs

Haynes and Collins, Commonwealth Fund August 10, 2023 LINK

The Commonwealth Fund analyzed its 2022 health survey to focus on employees between 50 and 64 years of age and found that nearly half of low-income respondents (less than 200% of the federal poverty level [FPL], about $60K for a family of four) reported that it was difficult to afford premiums. Over a third of moderate income (200-400% of FPL, up to about $120K for a family of four) reported difficulty affording premiums.

Nearly half of those with low income with employer sponsored health insurance reported that they skipped or delayed medical care due to cost. Those who reported that they were struggling with medical bills were most likely to report they were not confident they had enough money for retirement.

The research showed that over a quarter (26%) of all employees 50-64 were underinsured. The authors defined underinsured in two ways:

a.      Out-of-pocket costs, excluding premium, exceeded 10% of their income (or 5% for those under 200% of the FPL, or

b.     Deductibles exceeded 5% of household income.

Implications for Employers:

-        Affordability is highly relevant to adults ages 50-64 years. Those over 50 are most likely to have significant medical expenses, so deductibles and cost sharing can lead to financial insecurity, especially among low or moderate wage workers.

-        Even some of those with six figure incomes report that they skip care due to cost. If affordability is not addressed, employers may see worse outcomes as employees skip needed care.

-        Many employers are offering a PPO with lower deductibles to address the issue of affordability. Such plans will attract adverse selection (as they are more attractive to those with significant illness), so employers should not expect lower costs from this type of plan.

-        About a quarter of employers who had “full replacement” high deductible health plans have added a plan with lower out of pocket costs over the last five years according to the WTW 2022 Best Practices Survey.

Coming Monday: Hospitals are paid about twice as much by commercial health plans compared to Medicare Advantage plans

You can find previous posts in the Employer Coverage archive

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