Medical debt continues to persist despite health law

Through the Affordable Care Act millions of Americans will get health insurance that will protect them from the possibly disastrous medical expenses. However according to a new USA TODAY analysis, the health plans people can choose still leave them vulnerable to thousands in deductibles and other out-of-pocket costs each year.

Medical insurance deductibles for plans on the federal exchange covering 34 states average $3,000, and those for the least expensive, bronze-level plans average $5,082, as reported by the USA TODAY analysis of deductible data for HealthCare.gov. Unfortunately, according to a recent study, those costs may still be more than many people can afford.

The USA TODAY analysis has also shown that the lowest out-of-pocket limits on HealthCare.gov plans were $4,350 for individuals on bronze plans and $8,700 for families, even though these weren’t the norm and are likely paired with high premiums.

Relatively modest cost sharing can prove unaffordable as well because expenses are often unexpected - most Americans have less than $3,000 to cover such costs, according to a new Kaiser Family Foundation report on medical debt among the insured concludes.

The new healthcare law requires consumers' portions of health care expenses — known as cost sharing — to be capped at $6,350 for individuals and $12,700 for families.

A lot of plans have lower limits on out-of-pocket costs than the federal limit, but the plans increasingly have separate deductibles as well for prescription drugs. Also, expenses for drugs that are not covered by plans or for out-of-network physicians are not actually applied against limits.

According to Matt Eyles, executive vice president at consulting firm Avalere Health, more likely consumers, especially those with chronic health conditions such as asthma or high blood pressure, will be hitting these out-of-pocket maximums.

The 40% portion of medical bills borne by those with bronze plans may also shock many consumers when the bills start rolling in. Consumers with incomes below 250% of the federal poverty level ($28,725 for an individual) have lower cost-sharing limits if they buy silver plans on the exchanges. However, families of four with incomes above 400% of poverty ($94,200) are ineligible for financial assistance and unlikely to have enough cash on hand to pay even the deductible for many plans – according to the Kaiser study.

According to Kaiser these families tend to have about $12,000 in liquid assets, but when other consumer debt is taken into consideration, most have net liquid assets of $5,200 or even less.

A USA TODAY analysis of premiums on the HealthCare.gov site found more than half of counties lacked a plan that would meet the federal affordability test for a couple making about $62,000 a year, or just over the amount eligible for subsidies. A third didn't have a plan deemed affordable for an individual above 400% of the poverty level or about $47,000, meaning the premium cost more than about 8% of annual income.

Whilst deductibles are increasing in amount, they are increasingly applied even before co-payments start. So while preventive care is covered in full under ACA, many plans will charge the full cost of visits for injuries or ailments until the deductible is met. This is going to create some sticker shock for consumers used to paying small co-pays for these, says Nancy Thompson, senior vice president at CBIZ Benefits and Insurance Services.