Tuesday, November 17, 2015

The costs of health insurance, or what to do when that tree falls?

Before the Affordable Care Act, there were millions of Americans with no health insurance and facing bankruptcy due to medical bills. Now with the ACA, there are still millions of Americans facing medical bills. The biggest problem is high deductible health insurance policies.

As a way to keep costs down, many people opt for high deductible plans. These are ones with deductibles as high as $13,200, which is the out of pocket maximum expense allowed under the ACA. So there are some very unhappy people who still cannot afford medical care.

Okay, I get this. People try to keep their insurance costs low and opt for high deductible plans. This makes sense. But if you have any health issues its not going to help you. If you have health issues, you need a plan with a realistic deductible that fits your medical needs.

At a previous job, available health insurance policies varied. My office was next to a guy who was married with four kids. For me it was a no-brainer, I needed some coverage and I didn't mind paying a higher co-pay to reduce my premiums (because I used to be relatively  healthy), and only went to the doctor a few times a year. But for my co-worker with four young children who went to the doctor regularly it was in his best interest to keep the co-pay low as he was going to be using his insurance much more frequently. Everyone's needs vary.

The whole point of insurance in general is to cover you in case of an issue. With your mortgage, you are probably required to have home owners insurance in case a tree falls on your house. No one wants to have a tree fall on their house, but sometimes s**t happens and a tree falls. Would you rather pay your home owners insurance policy every year or cross your fingers and hope that tree doesn't fall? And the more expensive your house, the more expensive your policy will cost. But if you didn't have insurance and that tree fell and damaged your house and your neighbor's and your car, you might be facing a $50,000 bill.

Medical insurance is the same thing. You want insurance in case the tree falls on you (and your house). There is no way to predict when that tree will fall but sooner or later, it probably will. So you want insurance just in case. If you have a low income, the math gets more complicated. If you want to keep your premiums low and opt for a high deductible plan, that needs to be part of your plan for daily living and budgeting.

If that tree falls without insurance you would be faced with some big bills and if you don't get medical care, you might not make it or face long term medical issues if not treated. So what would you do then? How would you pay for that care? What would you do? Crossing your fingers and hoping for the best is not a good choice.

Ideally we could all save enough to cover our potential medical expenses, and for that exotic vacation we all dream about and have that six months living expenses set aside in case of job loss. But reality tells us that is not always possible. The lower  your income, the more difficult it is to save any amount.

With insurance you know what your maximum out of pocket expenses will be so you have an idea of what size bill you can expect. Even if you are low income, you need a plan. Would it be a second job, a shop on Etsy or reducing your living expenses?

Its not really about the costs of health insurance but the costs of staying healthy.

1 comment:

Anonymous said...

I think it's really about the good old US of A being the ONLY developed nation that still does not provide universal health insurance. We are like fish oblivious to the water we swim in, it doesn't have to be this way.