September 20, 2008

Do not purposefully go without health insurance

In 2007 there were 45.7 million people in the USA without health insurance. Many of those people are simply unable to afford insurance. But a significant portion of people choose not to pay for insurance to save money even though they are able to afford it. If you are one of those people going without health insurance intentionally to save the money then I'd strongly recommend you go get health insurance right now.

Don't think that just because you are young and healthy that you don't have to worry about health care costs. You could break a bone, have your back go out, have your appendix burst, contract a disease, get pregnant, develop kidney stones, etc. Having a major accident or contracting a disease is never something we want to think about happening to ourselves but its something that we should prepare for financially.

Looking at statistics on hospital stays from the Agency for Health Research and quality, they say that about 10 million people aged 18-44 were hospitalized in 2006 with a mean bill of $17,352. Comparing that to the age distribution of our population it looks like Men age 18-44 have around an 8% rate of hospitalization and for women the rate is much higher at 24% due to pregnancies. So there is a fairly good possibility that you could be hospitalized and face a large bill.

You should definitely do your best to at least get some form of basic health insurance coverage.

If you are low income then look to see if your state offers any health insurance programs you might qualify for. You might qualify for Medicaid and if you have children then they are also likely to qualify for aid. The non profit group Foundation For Health Coverage Eduction has information and resources on finding programs you might qualify for.

If you don't qualify for a state program or your state doesn't offer one then you can shop around on your own for individual plans. You can get a quote from a company like eHealthInsurance online. They give quick quotes for insurance and carry a variety of policies from different insurance companies. An insurance plan with a Health Savings Account (HSA) might be a good way to cover health insurance, since it gives you the option to save money towards health expenses pre-tax. If you are currently unemployed then its a good idea to look into a short term health insurance policy. A short term policy covering a few months can run half the cost of a regular monthly insurance policy.

When comparing health insurance here are some things to look for:
1. The annual deductible. The higher the deductible, the lower the premiums. But if you have a high deductible policy then you many never get coverage.
2. Co insurance rate. Policies with co insurance will require you to pay a portion of the bills after your deductible. So lets say your deductible is $2000 and your total bills are $5000 and your coinsurance is 20%. That means you'd have to pay 20% of the amount above the deductible or 20% of $5000-$2000 = 3000 * .2 = $600.
3. Total out of pocket maximums. Policies will have a cap on the amount you have to pay out of pocket. Note if it does or doesn't include the deductible.
4. Look at what kind of coverage the plan offers. Does it cover all the basic procedures? Does it require you to go to specific 'in network' doctors? Can you pick your primary physician or do they force you to go to someone they choose?
5. The Co-pay. Programs with a copay will require you to pay a fee for each and every doctor visit. Generally the co-pay is around $20-25.

Deciding what plan you want is a balance act between what your budget will allow and getting the best coverage you can find.

At minimum, it makes good sense to spend $20-$50 a month on a high deductible plan to protect against the possibility of a very large hospital bill.

I did a sample quote for a 24 year old male who doesn't smoke. eHealthInsurance had a plan for $108 a month with a $2500 deductible, 20% copay and $5000 max out of pocket. Or you could go with a higher deductible and pay $65 a month for a $5000 deductible, 25% copay and $14000 maximum out of pocket. For just $21 a month you could go up to a $10,000 deductible, 50% coinsurance and $15000 maximum out of pocket. You could go with an H.S.A plan for $60 with a $2800 deductible, 50% coinsurance and $5000 total out of pocket limit.

If your budget won't allow much then go for a very low price plan with a high deductible. Even if the deductible is $10,000 this will protect you from a very expensive hospital bill that could wipe you out financially. I found a plan like this for $21 a month for a 24 year old.

If you can afford a bit more then consider an H.S.A. plan. The one plan I found was $60 a month with a $2800 deductible. The additional benefit of putting money into your HSA tax protected helps make the HSA more appealing.

So again, if you are going without health insurance right now and have any option to get it then you really should do so.

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