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Consumer Healthcare: Out-Of-Pocket Costs Rise, While Revolving Credit Decreases


Despite the fact that the PPACA is meant to lower healthcare costs, a new report from TransUnion Healthcareshows that consumer out-of-pocket expenses have actually increased 11% from 2013 to 2014, while at the same time deductibles have risen by 7% and revolving credit has declined.  Specifically, according to TransUnion the ratio of revolving credit to healthcare costs has decreased from 15.2:1 in 2013 to 13.5:1 in 2014, but out-of-pocket expenses have increased by almost $250 (from $2245 to $2491).  This means that consumers have less money available to pay for ever-increasing healthcare costs.

Adding to that burden, a recent Wall Street Journal blog from Drew Altman, president and CEO of the Kaiser Family Foundation, reports that there is a steadily widening gap between wage growth and employee-costs for healthcare premiums and deductibles. Specifically, since 2006 wages have increased by 23% while healthcare deductible costs have increased by 108%.  This comes at a time when many employers are adopting high-deductible plans for employees in an effort to offset costs and shift more responsibility to the consumer.  Altman says, “ultimately, employers need better ways to control health-care costs.”

Luckily there is a way businesses can both control healthcare expenses and reduce the out-of-pocket burdens on their employees.  Self-funding (or partially self-funding) group healthcare is an option that many businesses, both large and small, are seriously considering as a win-win for both the employer and the employee.  Self-funding allows organizations to finance their own group health plans and pay for costs as they are incurred.  This could result in a savings of up to 12% for the company.  On the employee side, all out-of-pocket expenses are typically covered through an employee-reimbursement account.  At the end of the day, companies save money and are more in tune with their staff’s healthcare needs, and employees receive high-quality care at a minimal cost.

For more information about self-funded and partially self-funded healthcare, and to explore your options,contact us.

The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purp