Is Health Insurance Mandatory?
One of the major concerns on people’s minds is their health. At the same time, health care is one of the leading causes of debt in America. In 2018 around 91.5 percent of Americans had health insurance for all or part of the year. But in 2017 there were about 1.9 million more insured Americans compared to 2018. Let’s try to understand why people decide to get health insurance and if it is mandatory.
What Is Health Insurance?
To understand how health care insurance works we need to understand what it is. Health insurance is a form of coverage that can be used to pay medical bills for surgery, pharmaceuticals, dental services and more. With health insurance, the insured has their medical bills paid for either directly by the health insurance company or the insured is reimbursed after paying the bills out of pocket.
Health insurance policies have lots of rules that determine coverage for each service. Health insurance doesn’t always cover 100% of medical costs and there may be some out of pocket expenses.
Most of the time health insurance provides a network of preferred providers, who offer services at a much lower price than providers outside the network. Most often, health insurance does not cover copays which are set fees that the insurer must pay for services such as doctor’s visits or for prescription medications.
Why Is Health Insurance Necessary?
Health insurance is very important as it could help pay for the costly medical bills that can otherwise cause insurmountable debt. In the U.S., nearly two-thirds of the people who filed for bankruptcy stated that they have some sort of medical debt. We rarely anticipate that we’ll suffer from an injury or an unexpected illness that could amount to expensive medical bills. With health insurance you can expect full or nearly full coverage for preventative care such as annual checkups and lab tests. Preventative care is very beneficial for the insurer too, because it translates to fewer diseases to cover in the future.
How Much Is Health Insurance?
The cost of health insurance varies for everyone. In the United States the average monthly cost of health insurance is around $511. Health insurance takes into consideration many factors such as location, plan type, age and pre-existing conditions.
Location is very important in deciding how much health insurance premiums will cost. In California, for example, the average cost is $576 for monthly payments while in Wyoming there is a $766 monthly cost.
Another factor that changes the cost of health insurance is age because we are at a greater risk for disease as we get older. People with pre-existing health conditions tend to have higher insurance costs because they use more services. There are also different types of plans and different tiers of coverage that an insurer can buy. In most cases platinum plans are the most expensive but they do cover more out-of-pocket expenses compared to other plans.
Is Health Insurance Mandatory?
Now that we have seen what health insurance is and how much it costs, it raises the question of whether or not the government mandates their citizens to have health insurance. The answer is no at a federal level but there may be some states that do require citizens to be enrolled in health insurance.
In 2010, former President Barack Obama signed the Affordable Care Act which expanded health care insurance to millions of Americans. The Affordable Care Act or “Obamacare” expanded eligibility for citizens by easing the rules to sign up for health care insurance. This made it harder for insurance companies to reject people with pre-existing conditions and lower income people. This act required individuals to have health care insurance if not they will receive a penalty fee.
In December 2017, Congress passed the Tax Cuts and Jobs Act which was later signed by President Trump. This new law eliminated the individuals mandatory health insurance and eliminated the penalty fee for not having health insurance.
As of 2020, California, Massachusetts, New Jersey, Vermont, Rhode Island, and DC still require health insurance. Otherwise, there is a tax penalty. In California, Covered California is similar to the federal Affordable Care Act but provides services at a state level. WIth this program Californians are able to receive medical insurance with a discount health insurance or the state Medi-Cal program. Similarly to Obamacare, Califronians are required to have some sort of health insurance else they will be punished with a tax fee of 2.5% of the household income or $696 per adult.
Pros and Cons of the Affordable Care Act
Although the laws like the Affordable Care Act seem like a good way to get citizens insured and have healthier lives by having mandatory health care insurances, there may also be a downside to having penalties for not having health care insurance. Below are some of the pros and cons of the Affordable Care Act.
The Affordable Care Act’s main purpose is to expand healthcare for everyone including people with pre-existing health conditions and low-income families. The expansion of health care coverage includes dependent children, who can now be insured until the age of 26 on their parents’ plan. If more citizens have insurance, then citizens would be healthier, which would lower the cost of health insurance for everyone and make it more accessible for low-income families.
Although many may benefit from the Affordable Care Act there may be those who are worse off and can’t afford it and are penalized for not being able to afford to buy health insurance. Not all working-class families qualify for subsidies.
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It’s always a good idea to get acquainted with the way plans are set up and what you’re responsible to pay before open enrollment which takes place in late fall. If you have a qualifying event, like a new job or if you’ve moved, had a baby, gotten divorced or had any life change that affect your coverage, you may be able to buy a new health insurance plan today.
Like auto and homeowners insurance healthcare insurance also has a deductible which needs to be paid before insurance begins to cover expenses. However, healthcare deductibles work a little differently. For instance, your healthcare insurance will pay for some services even before you meet your deductible.
You may be shopping for health insurance because you got a new job, which doesn’t offer health insurance. Some people even prefer to have a health plan separate from their jobs. It’s usually a more expensive option to buy an individual health insurance policy when an employer offers to pay a portion of your premiums each month. However, some people prefer to choose their own insurance company and a plan that fits their needs.