| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Labor Arbitrators' Awards and Biographies | ||
5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
From Spencer's Benefits Reports: Although lower premiums in high-deductible health plans (HDHPs) might increase the ability of the uninsured to buy some coverage, high out-of-pocket liability might leave families exposed to costs that they cannot meet, according to a recent Kaiser Family Foundation study published in an April online edition of Health Affairs.
Paul Jacobs and Gary Claxton of Kaiser Family Foundation studied how many uninsured households had sufficient financial assets in 2004 to cover the deductible and other out-of-pocket expenses associated with HDHPs that were compatible with health savings accounts (HSAs). The study used the 2004 Survey of Consumer Finances (SCF), which is a triennial, nationally representative household survey conducted by the Federal Reserve Board. The sample was limited to 18,194 households headed by a person ages 18-64.
Financial assets had three components: liquid assets were the sum of funds available in checking and savings accounts, money market accounts, certificates of deposit, and savings bonds; gross financial assets included all liquid assets, as well as the value of equity in stocks, corporate/municipal bonds, and mutual funds; and net financial assets were defined as gross financial assets minus the amount of unsecured debt, which is defined as any debt not backed by collateral (such as credit card debt, educational loans, and installment plans for consumer products or automobiles).
The study compared these assets to three different cost-sharing levels associated with HSA-qualified HDHPs in 2004. The first was the minimum deductible that would qualify an HDHP to be HSA-eligible: $1,000 for single coverage and $2,000 for family coverage. The second set of limits considered was the average reported HSA deductible ($2,364 for single coverage and $4,653 for family coverage). The third limit was the maximum out-of-pocket expense an individual ($5,000) or family ($10,000) could incur under an HSA-qualified HDHP. Out-of-pocket maximum limits are the largest amounts that individuals or families would have had to pay toward covered in-network benefits.
Regardless of insurance status, the study found “striking differences” in asset levels by poverty level among families, which highlights the role of income and household size in building an asset base. The results also show that many uninsured households did not have sufficient gross financial assets to pay the cost sharing that might be imposed under HSA-qualified HDHPs.
Approximately half of households with one uninsured member had gross or liquid assets sufficient to cover the minimum HSA deductible ($1,000). Fewer than one in three had sufficient gross or liquid assets to cover the higher average HSA deductible level ($2,364), and the percentage fell to less than one in four for the HSA maximum out-of-pocket limit ($5,000).
Households with more than one uninsured member were less likely than those with only one uninsured member to have enough assets to meet the corresponding HSA limit. Fewer than one-third had sufficient liquid or gross assets to meet the minimum family deductible ($2,000). About one in five had sufficient liquid or gross assets to meet the average deductible threshold ($4,653), and fewer than one in 11 had sufficient liquid or gross assets to meet the out-of-pocket maximum threshold ($10,000).
According to the study, even if premiums are made more affordable, many uninsured households do not have a sufficient financial cushion to absorb the potential out-of-pocket liability under HSA-compatible HDHPs: “In particular, low-income (under 300% of poverty) uninsured households, with median gross financial assets of $300 in 2004, would seem to be a poor match for policies with large cost-sharing exposure,” the study stated. “For such families with little cash flow and high levels of debt, the onset of a chronic condition or a serious illness would merely add to their already poor financial condition.”
The study concluded that “higher cost sharing reduces the premium burden, but the resulting products might not provide adequate financial protection for lower-income families with high medical needs. Those interested in cost-conscious approaches for increasing coverage may need to look beyond the current high-deductible approach and consider options that vary cost sharing with family means. Such products might be more popular if they were tailored to the financial circumstances of lower-income families who often lack financial assets.”
For more information on the study, “Comparing the Assets of Uninsured Households to Cost Sharing Under High-Deductible Health Plans,” visit http://www.healthaffairs.org/ or http://www.kff.org/.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
Visit our News Library to read more news stories.
©2005-2024 CCH Incorporated or its affiliates
