Health insurance is not cheap, and it can be tempting to go without coverage, especially if you never get sick. With the expensive monthly cost and out-of-pocket expenses, you may be wondering how much you really need coverage.
Many people in their 20s may feel they are healthy enough to skip out on health insurance. When you rarely see a doctor, and especially if things are tight financially, it may seem like a good idea to cut the health insurance expense completely from your budget.
You can pay for medical expenses as you go instead of worrying about the insurance premiums and co-payments on the way. However, this could be very difficult if you have a serious illness, an accident, or an ongoing health issue because the costs can become very large, very quickly. This is why it's essential for everyone to always have some form of health insurance.
Medical Emergencies Can Bankrupt You
Medical emergencies are very expensive. If you have the misfortune of undergoing a medical emergency without insurance, it is easy to find yourself with a crippling amount of medical debt, and seemingly no way out of the mess.
If you take good, preventative care of your health, it's hard to see why you'd really need insurance. However, missing that last stair at home and dislocating an ankle, or having an accident on the ski slope and breaking an arm could cause an injury that costs you thousands of dollars in medical bills, and it can quickly climb higher if you need surgery or any kind of ongoing rehabilitation. Emergency surgeries such as an appendectomy can be very expensive as well.
You may not be able to work while you're laid up, and that means that you could lose out on pay as well. Even with insurance, you may find it difficult to pay for health care costs in these instances. It is very hard to pay for medical costs without health insurance, especially if you are checked into a hospital even just overnight.
Health Insurance and the Affordable Care Act (ACA)
As of 2019, you will no longer have to pay a penalty on your federal tax return if you're not insured, as the fine was rescinded for the 2019 tax year, though some states may still have mandates.
Even though there's no longer a penalty, you're protecting both your health and your financial status by taking out a health insurance policy.
There are health insurance exchanges or marketplaces in each state that you can use to sign up for health insurance, or you can look at other options such as your employer's health care plan or health share ministries.
Preventative Care and Early Intervention
When you don't have insurance, you may avoid getting treated for minor issues which can escalate into bigger problems quickly. Preventive medicine and quick treatment are the best ways to avoid expensive hospital stays.
If you have insurance, then you won't need to worry about this as much. Additionally, if you put off going in for treatment and wind up developing a serious medical condition, you may have a difficult time finding health insurance after you have not had any for so long.
Which Plan Fits Your Needs?
Health insurance is not a luxury; it's a necessity. There are many other things you should go without before you choose to go without health insurance.
If you want insurance but feel unsure about what coverage works for you, there are some questions you can answer to find out.
- How's your health? Are you currently in good health, do you see a doctor regularly, and do you engage in any risky sports or occupations? Like other forms of insurance, your insurance needs are based on your degree of risk.
- How often do you go to the doctor? Did you go several times last year and spend money on copays for office visits, lab work, urgent care, and prescription drugs? Add all of this up to get an idea of your typical annual health care needs.
- What current options do you have? See if you can get cost-effective, quality health insurance through your employer, your state's health care exchange, a health share ministry or even group insurance through membership in organizations such as Costco.
- What are your priorities? If you see the doctor often, you'll probably want a plan with lower copays and deductibles. If your monthly expenses are already straining your paycheck, perhaps you're better off with a plan that has lower monthly premiums. High-deductible plans can lower your premiums, and if you don't go to the doctor very often, it doesn't make sense to pay large premiums for a low-deductible plan.
- What are your coverage needs? Boil down all of the available insurance plan options to those that fit your needs, then dig into the details. While the cheapest plan may grab your attention, it may not provide as much value per dollar as some other plans.
- Have you gotten an expert opinion? Some people find the whole experience of health insurance shopping overwhelming, and there are many insurance agents that can help you sort through the options. These agents spend their days immersed in insurance and can make quick work of finding your best-fit plan. Find an independent agent who can get you quotes from a large variety of health insurance companies.
Examples of Potential Health Insurance Plans
While the array of potential options is fairly complex when it comes to health insurance, plans can be categorized into a few different types.
Traditional (indemnity) or fee-for-service plans are the original type of health insurance. You can go to any doctor, hospital or specialist you'd like, but in exchange, you'll pay more expenses out of pocket, have a deductible, and may only receive 80% coverage on remaining medical bills.
Managed Care insurance plans include Preferred Provider Organizations (PPOs), Point-of-Service (POS), and Health Maintenance Organizations (HMOs). All of these plans work only with providers in a closed network. In exchange, patients pay lower premiums and have lower or no copays. PPO and POS insurance allows patients to go to providers outside their network and self-refer to a specialist, while PPOs are the lowest-cost plans, but don't pay for any out-of-network visits, and patients must be referred to specialists by their doctor.
High-deductible insurance plans, sometimes known as catastrophic plans, are much lower in cost than other insurance plans, although you'll have to pay a large amount of out-of-pocket money if you need care, so it still makes sense to put money aside each month, even if it's into your own savings account instead of paid as a premium for insurance.
Typically, you will be responsible for the cost of your medical care until you satisfy the (usually large) deductible, but then the insurance plan will pick up the rest of the bills. It is much easier to find a way to pay $5,000 in medical bills as opposed to $50,000. You can often work out a payment plan for the $5,000. This means that you won't face bankruptcy due to medical bills.
Health share ministry plans are not insurance, per se—they work as a cooperative of members that agree to pay a share of other members' medical bills, in addition to a monthly premium. This may be a low-cost option for some, although since it's not technically insurance, it doesn't offer some of the protections offered by regulated insurance plans.