2014
AOL CEO Tim Armstrong took a lot of flack for mentioning the million dollar claims for two premature babies covered under the company health plan.
What’s the big deal? There isn’t any, and those who criticize don’t know what they are talking about.
Most large employers are self-insured meaning they pay no insurance premiums but instead pay the actual claims submitted on behalf of employees and their families which are adjudicated using a third party, possibly a large insurance company that receives a fixed amount per employee for claim processing and other services.
Managing these benefits includes tracking large claims and many other data regarding the claims. Such information helps in plan design, cost sharing with employees and cost projections. All this is permitted under the law.
I managed a large employer plan for many years. We always tracked this information and routinely shared it with senior management. In fact, we shared some of such data with all employees to help them understand rising costs and payroll deductions and to help them understand the value of the coverage if a catastrophic event were to hit their family.
What is not shared is personal information or any information that would allow a person to identify the individuals incurring the charges. However, in my experience this would hardly matter because in many, if not most, cases the affected employee generally shares the information with fellow workers either praising the coverage or complaining about their out-of-pocket costs.
So for all those pundits attacking Armstrong, find another cause to inflate beyond reality. And Mr Armstrong, there was nothing to apologize for.
QUINNSCOMMENTARY 
When first hearing this story I was curious to know whether the AOL health plan provided infertility benefits, and whether any artificial reproductive technology (ART) played a role in these high risk births.
The answer to the first question is yes – AOL provides a lifetime benefit of $40,000 for medical services, and $30,000 for related prescription services.
We may never know the answer to the second. I wonder what the reaction might have been if the response was to remove the infertility benefits? Couples undergoing ART are far more likely to conceive multiples, which often deliver preterm, and generate these outsized medical expenses.
Click to access 2012%20AOL%20Wrap%20SPD%20FINAL.pdf
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Kudos Dick – excellent fact driven, unemotional and rational post.
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Seriously? The flack wasn’t about whether or not the company tracks the claims and makes changes based on them, it was that the company changed the retirement plan (not the healthcare plan), with consequences for all employees, and effectively publicly blamed two of his employees for the change. That was a terrible move by a “leader”.
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Not really, much of the criticism was over the CEO knowing and talking about a specific claim. Actually, it may have been poor PR to link the two issues, but perfectly logical. Whether the $2,000,000 was spent on medical bills or other expenses it’s still $2 million. Whether that was sufficient to truly affect the retirement plan is another matter. He made a poor attempt to link all employee related expenses and their impact in total. Another example of our inability to separate emotion and health care costs. It’s like what is spent on health care, especially for an emotional situation is not real money, but in some other category.
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