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Avoiding the Medical Debt Trap

Ask any of your clients… When talking about medical plan design or building a benefits package for their employees, employers will tell you that medical debt is a noteworthy issue impacting their workforce. Financial Health Network recently conducted a survey of U.S. employees, resulting in data that supports the above statement. 37% of employees reported having medical debt with a median amount of $2000 alongside 32% of respondents saying they had difficulty finding the funds to pay for outstanding medical bills in the last year. This is also teamed with approximately half of those surveyed reporting reductions in household spending for basic needs, such as food and clothing, to pay for outstanding medical bills.

Recently (if you ask us here at Coterie it's been for quite a while) employers have come into the spotlight as an important potential catalyst for change regarding the current national debt crisis, as well as in the financial health space becoming more and more of a topic of conversation. In an article by our colleagues over at The Society for Human Resources Management (SHRM), 62% of employers feel extreme responsibility for their employees’ financial well being, juxtaposed to just over 13% in 2013. With feelings of increased responsibility felt by employers to support and in most cases ameliorate financial health within their employee base, closely tied to insurance and employee recruitment and retention in the U.S., most if not all employers are poised to have the ability to impact their workers facing medical debt.

Below we include some talking points brokers need to understand and in most cases discuss with potential and existing clients.

Employer-Sponsored Health Insurance May Not Always Be Enough

While it is an integral part in creating a safety net, health insurance, especially High Deductible Health Plans, don’t always support sufficient financial protection for U.S. workers. Research from The Commonwealth Fund indicates that as of 2020, 12.5% of non-elderly U.S. adults were uninsured. This is overshadowed by 43% being considered underinsured, defined as having out-of-pocket health insurance costs representing at least 10% of household income (less for lower-income people) or having a deductible at least 5% of household income. Nearly a quarter (24%) of underinsured adults reported they do not visit physician for medical issues, and 25% do not fill the necessary prescriptions they’ve been ordered to take. When cost concerns discourage receipt of needed care, it often correlates with larger expenses for care downline; eventually resulting into higher health insurance costs for your client, the employer. Increases in cost-sharing for employees has also shown to contribute to negative long-term financial effects that include eroded savings, lowered credit scores, greater credit card debt, and even bankruptcy.

Ways To Minimize Medical Debt

While there are a number of potential policy and health plan design solutions that can be implemented to assist in prevention of medical debt, there are instantaneous and actionable steps your clients can take to support their employees in reducing and preventing medical debt.

1. Help Clients create an understanding as it relates to the financial vulnerabilities of their employees, paying close mind when discussing healthcare needs and costs. At Coterie Advisory Group we gather the appropriate data and provide statistical modeling to aid in decision support. This helps your clients determine theirs and employees’ financial risk as it relates to plan design and utilization.

2. Help your Client teach employees a basic understanding of insurance, while making sure to explain out-of-pocket expectations, including up front and ongoing costs as needed. According to the NIH a majority of working U.S. adults do not have a complete understanding of basic insurance terms, including annual out-of-pocket and deductible amounts. Many report difficulties using their health insurance because there is a lack in understanding how to use them. Both Brokers and their clients have a responsibility in ensuring employees are aware of important price transparency information and decision-support tools to empower the choices employees are making.

3. Help your clients offer benefit options or insurance plans based on usability and actual employee needs which benefit their financial circumstances and healthcare needs. Providing the cheapest High Deductible Health Plan(HDHP) options with the most benefits may not be the best strategy – even though it may appear the benefits available far outweigh the cost to your client and employees. If your client or their employees can’t afford the premiums or the forever increasing deductibles when and where they need the plan, your client’s organization will pay the price with higher turnover of employees, reduction in talent, and workers constantly stressed with having to pay out of pocket for a plan they can’t afford.

Rather than presenting the lowest-cost plan, provide the best value. That might look different depending on the needs that best serve your clients' employees. And the strategy will vary depending on the size of their business – what works for large companies might not make sense for smaller employers or businesses operating in a space with high turnover rates of employees. For some employers that may be a Level Funded plan utilizing Stop-Loss insurance to minimize excess claim risk. By taking a thoughtful approach, you can strike the right balance between cost and benefit, ultimately giving your client a tool for employee retention and recruitment instead of an overpriced, underutilized plan resulting in even more medical debt that employees can’t afford.

We offer Affordability Based Medical Insurance Plans

Coterie Advisory Group’s Fundamental Care® programs are Affordability-Based Medical Plans which are designed for various niche-markets, including: small business and their employees, part-time, hourly, seasonal employees at enterprise-level companies, independent contractors, gig-economy workers, and association members. Fundamental Care is designed to meet the needs of the underserved, by providing access to unique and affordable health insurance benefits on a guaranteed issue basis. Limited-Day and Limited-Benefit Indemnity plans can be customized and structured with affordable premiums and no deductibles. Coterie Advisor's can also provide Minimum Essential Coverage (MEC) and bronze-level Minimum Value Plan (MVP) options for client's needing a solution for their full-time equivalent employees. The combined offering of the Fundamental Care plans is unique to the marketplace. Through Coterie's Affordability Based Medical Plan Strategy, the plans not only provide needed healthcare to the insured employees but also offer companies a strategy to improve recruiting and reduce turnover by rewarding a carve-out class or more-tenured employees.

Fundamental Care offers two Affordability-Based Medical insurance options which can assist:

  • An employer-sponsored, level-funded, Limited-Day Health Plan for small to mid-size employers and carve-out classes of large employers. Plans cost 30-40% less than HDHPs with no deductibles. A near-comprehensive plan that both employers and employees can afford.


      • An affordable Bronze MVP plan – with no deductible

      • An affordable mid-range MEC plan with limited days of hospitalization– with no deductible

      • A Value priced outpatient expense MEC plan- with no deductible

  • A Limited-Benefit Indemnity Plan for large employers with part-time, hourly, and seasonal employees; and for associations and affinity groups. An affordable option for the uninsured that provides coverage for basic medical expenses.

    • Available with or without Minimum Essential Coverage (MEC) and Minimum Value Plans (MVP)

Both can be customized and structured with affordable premiums and no deductibles. The plans are high in potential coverage, guaranteed issue, and include upfront, day-one benefits.

Coterie Advisory Group, Inc. is a National insurance program manager and consultative advisor who delivers Affordability Based Medical Plan Strategies to help benefit brokers, consultants, employers, and associations in the benefits industry.


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