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Fix Plan Member Out-of-Pocket Cost Debacle

Fix Plan Member Out-of-Pocket Cost Debacle

By: Eric Bricker, MD

According to the Federal Reserve, 36% of Americans would have difficulty paying a $400 unexpected expense.1 Unfortunately, even those with health insurance have out-of-pocket expenses far in excess of $400. 

As reported by the Kaiser Family Foundation, the average individual health insurance deductible is $1,669… well above $400.2 

Many Americans with insurance simply cannot afford the out-of-pocket costs associated with their employer-sponsored health plan. 

One suboptimal solution many people use is to put their out-of-pocket expenses on a credit card. 

According to a Forbes, putting medical expenses on a credit card can be a bad idea.3 First, credit cards have high interest fees.  The average credit card interest rate is 14.6%!  Second, you could max out your credit card and be unable to use it for other expenses.  Third, maxing out your credit card actually hurts your credit score. 

However, there is a better way.  

Here are three solutions to reduce the burden of employee health plan out-of-pocket costs.  

  1. Eliminate the deductible.  You don’t HAVE to have a deductible.  Innovative alternative health plans now offer copay-only plans with ZERO deductible.  Copays are used for all medical services, not just doctor visits.  There are straight forward copays for labs, imaging, procedures, surgery and inpatient hospital stays. 


  1. Offer employees payment plans with interest rates MUCH lower than their credit cards… and even offer interest-free payment terms.  There are consumer lenders that offer financing for medical expenses with better terms than credit cards.  You can take the financing from these lenders right into your employee health plan to make it easy for employees. 


  1. Put all medical expenses on one monthly statement that replaces ALL the non-sensical EOBs.  I have literally heard the CEO of one of the largest health insurance companies in America say that the EOB is the most worthless piece of paper ever created.  You can ditch the EOB.  Alternatively, when an employee has one monthly statement for all their out-of-pocket medical expenses it looks just like something they are already familiar with—their credit card statement—except, without the crazy 14% interest rate. 


But, But, But… you have an HSA-compliant plan that NEEDS a deductible? 

To be HSA-compliant the only change to the above three solutions is to remove the copays and have any deductible expenses automatically qualify for the low-interest, non-credit card financing and still show up on the one monthly statement rather than the EOBs.  

A key to making all this simplicity happen for employees is to take the provider OUT OF THE BILLING and COLLECTION PROCESS.  A major source of the billing nightmare in healthcare is the confusing and error-prone billing and collection practices of doctors and hospitals. 

Get rid of it.  Shield employees from the chaos and put the burden on your third-party administrator (TPA).  It’s what your TPA should have been doing all along… administering your plan.  

All of the tools to make healthcare out-of-pocket costs affordable are out there.  You can do a great service to your organization and your employees by putting them in place. 




  1. https://www.minneapolisfed.org/article/2021/what-a-400-dollar-emergency-expense-tells-us-about-the-economy 


  1. https://www.kff.org/health-costs/report/2021-employer-health-benefits-survey/#:~:text=The%20average%20deductible%20among%20covered,overall%20offer%20rate%20of%2059%25. 


  1. https://www.forbes.com/advisor/credit-cards/should-you-use-a-credit-card-to-pay-for-medical-bills/