Benefits Column Long Road to Recovery

A life-altering car accident provides an opportunity to reflect on the costs associated with surviving such an event -- and how similar events can impact employees' financial health.

Tuesday, July 26, 2016
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July 28 was the one-year anniversary of my alive day -- a term popularized by military veterans talking about a near-death experience. For the larger population, it can also refer to a life-threatening illness or dangerous near-miss event.

In my case, a driver from a ride-sharing service struck me as I was crossing the street during a work-related trip. While I fortunately did not suffer injuries as extreme as our wounded warriors, I've spent the year addressing a collection of hurts. I've made continued progress, but still have an upcoming surgery and cope on a daily basis with accident-associated tinnitus.

I share this personal story because a good deal of my focus in this column this year has been on employer empathy for employees' life situations and helping employees through times of financial hardship. If there's one thing my alive day taught me, it's that health care is expensive -- even when you have insurance.

In my case, my company's workers' compensation insurance covered traditional healthcare expenses such as physicians' visits, physical therapy and radiologic testing (although often not without a lot of discussion, follow-up and phone calls). What it did not cover was complementary health services that dealt with how my injuries affected my ability to function at work. Not one to sit idly by, I paid approximately $300 every week for out-of-pocket treatments that included acupuncture and massage therapy. These interventions allowed me to fully participate at work after about an initial two-week recovery period. But when I calculate how much I paid to facilitate my recovery so far, I find I laid out about $16,000.

I'm fortunate that I possess the financial ability to cover these expenses, but we know from the Federal Reserve survey that 47 percent of Americans could not pay for an emergency expense costing $400 without selling something or borrowing money. So approximately half of them could not afford one week of the additional services that allowed me to work. The survey revealed that 31 percent of the respondents said they had to forego some form of medical care because they could not afford it.

Let's take my situation and analyze it from a different angle. If I sustained similar injuries and had to tap into my medical insurance, I would have added my $5,000 deductible to my total expenses along with a variety of other costs such as co-payments, co-insurance and pharmacologic expenditures. This would have made my out-of-pocket expenses rise significantly, especially since my recovery spanned two different "insurance years" (2015 and 2016) and, therefore, would have been subject to a new set of deductibles, co-pays and co-insurance in 2016.

If we expand this discussion and consider the July 2016 Centers for Medicaid and Medicare Services' annual National Health Expenditures Projections 2015-2025, we gain perspective on what employees will face in healthcare expenses grow.

In conjunction with the forecast that the health share of the gross domestic product will grow to 20.1 percent, CMS projects out-of-pocket spending growth for 2020 through 2025 will average 5.5 percent per year (compared with 4.8 percent in 2017-19). CMS relates some of this increase to employer reduction of benefits and a rise in employee cost-sharing as the excise tax goes into effect in 2020 on high-cost insurance plans.

Jane Sarasohn-Kahn, a health economist, takes the CMS forecast one step further. By her calculation, the average American family is already spending around 20 percent of its household dollars on healthcare. She bases this calculation on the individual American's expected $10,345 in healthcare spending in 2016 divided into the median family income of roughly $55,000.

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How can HR executives maintain empathy for their employees and responsibility for the bottom line? You could add critical-illness insurance into your benefits mix if you haven't already. CI insurance would be particularly helpful to employees being treated for cancer since a report in the May 2013 issue of Health Affairs magazine showed that people with cancer are 2.65 more times likely to file for bankruptcy than those without cancer. (Note: The bankruptcy average reported in this study underestimates the financial impact on working adults. Bankruptcy rates for people between the ages of 21 and 65 were two to five times higher than for people over 65 years old.)

Critical-illness insurance, however, would not have helped an employee like me since it largely covers cancer, cardiac disease, heart attacks, strokes and paralysis (although the CI plan design continues to evolve). If employers want to offer a second type of lump-sum coverage, they might want to consider accident insurance, another way to expand employee coverage. In general, this type of coverage provides employees with a single payment that can be used for any purpose, including any of the out-of-pocket expenses incurred as a result of an accident, such as insurance deductibles and co-pays.

As I reflect on my alive day anniversary, I come back to the words of Dr. Marius Barnard, the creator of critical-illness insurance: "Survival entails a price." And, like Dr. Barnard, I don't want employees to survive a life-impacting injury or illness only to face financial devastation.

Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily.


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