Is It Cheaper to Skip Health Insurance?
The Kaiser Family Foundation recently released its 22nd Employer Health Benefits Survey. According to the report, employer-sponsored health insurance premiums rose four percent during the past year. This figure outpaced the rate of employee wages and the inflation rate in 2019. The economic downturn has left American families scrambling for extra money. Many search for ways to cut costs. Since health insurance isn't cheap, some consider dropping their coverage to save money. But is it cheaper for people to drop their healthcare insurance? In this article, you'll learn why healthcare insurance is essential to protect your health and financial future.
You Can Go Bankrupt Because of a Medical Emergency
When shopping for healthcare coverage, some people get sticker shock when they see the price of health insurance plans. According to KFF, the average price for health insurance plans for single people were $7,470 for single people, and $21,342 for families. These high costs tempt some people to skip this coverage, especially when they believe their overall health is good.
Others may quit their policies because they want to stop their employers from deducting money from their check. These workers believe they can use the additional money to pay off their debt or daily living expenses. In a recent column, Charles Schwab’s Senior Vice President for Community Services discussed why health coverage is essential to Americans. Carrie Schwab-Pomerantz said skipping health insurance can cause catastrophic financial consequences. She says it protects the insured people by transferring their largest financial risk to an insurer in exchange for a premium.
Although skipping healthcare coverage may provide uninsured people with immediate extra income, it may come at a price down the line. When individuals don't carry enough insurance coverage, it can place their finances in jeopardy if they suffer an unexpected injury, illness, or medical emergency.
For example, a person named Amanda calls an ambulance after experiencing severe chest pains. After an ambulance ride, doctors admit her to the emergency room, where she undergoes MRI screenings and stress tests. She stays overnight in the hospital, but her cardiologists release her the following day after they determine she had a panic attack. But her hospital stay is expensive. Since Amanda doesn’t have insurance, she is responsible for thousands of dollars in screenings and other fees out of her own pocket. She must also pay for the ambulance ride to the hospital, which is over $1,000. Having insurance would have reduced the costs or paid for many of these expenses greatly. The price of the emergency visit may have only required a small copay if Amanda had an HMO.
Even with insurance, medical services can still cost a lot of money, depending on the policy terms. But insured people will probably have to shoulder a lower burden of the cost than if they didn’t have coverage.
What Is Health Insurance?
Health insurance is coverage that pays for medical expenses. It protects people from carrying the full financial costs of doctors' visits and hospital stays. Health insurers agree to reimburse part of the medical costs in exchange for premiums that individuals pay each month. The insurance company makes payments based on the discounts they negotiate with providers and hospitals.
You may get health insurance through a private insurer, your employer or through the government (public health insurance). Every health insurance plan is unique, but they typically cover the following:
- Doctor Visits
- Prescription Drugs
- Dental Appointments
- Skilled Nursing Care
- Wellness Visits
- Emergency Care
These policies can reimburse plan holders for expenses they pay for medical care. People may buy these plans as part of a benefits package provided by their workplace. Employers can cover these premiums; however, they may deduct part of these expenses from their employees' paycheck. The price of healthcare premiums is deductible for the payer, and individuals receive the benefits tax-free, except for S-Corporation employees.
Health Insurance and the Affordable Care Act (ACA)
In 2019, the federal government eliminated the tax penalty for uninsured people. A few states may have mandates that require health insurance coverage, including California and Massachusetts. Although the government no longer imposes a financial penalty, having health insurance is still essential since it protects you from expensive debt that can ruin your finances. You can sign up for health care insurance privately or through your employer. If you are low income, visit your state’s health insurance exchanges. If you search for a suitable plan using SmartFinancial’s insurance rate comparison tool, you’ll fill out our quick application, and they will provide you with a list of quotes from different health insurance companies within your area.Find Affordable Health Insurance
Four Benefits of Insurance Plans
Buying healthcare insurance, it comes with fantastic benefits that can help lower your future costs. Here are four advantages of purchasing coverage.
1. Early Intervention and Preventative Care for Medical Issues
When people don’t have insurance, they may avoid getting treated for minor health conditions that could turn into major health crises. For example, Adam has let his health insurance lapse to save money. While jogging in a park, he trips and falls. He sprains an ankle and hears a pop in his knee. He’s suffered an anterior cruciate ligament (ACL) injury. Adam doesn’t visit a doctor because he lacks medical insurance. His knee swells, and his injury worsens. Since he never consulted with a physician or sought early treatment, he may require a future surgery.
2. Coverage for Preventative Medical Care
Preventative medicine is the best way to avoid expensive stays in hospitals since it helps doctors detect serious health conditions at earlier, more treatable stages. These include cancers, diabetes, heart conditions and chronic conditions like HIV. Medical facilities charge higher rates to uninsured people. Insurers negotiate rates with medical providers, hospitals, and skilled nursing facilities to get optimal rates for their customers. In exchange, insurance companies send their customers to these healthcare providers. Insurers pass along these savings to their customers. Some plans offer negotiated fees for in-network providers, others give them for out-of-network providers.
3. Cost Sharing
Most health insurance plans have annual deductibles and out-of-pocket maximums. Deductibles are the shared costs that insured people must pay before the insurance company pays for your medical care. Out-of-pocket maximums are higher than your deductible. After a covered person pays these fees, the insurance company is responsible for the rest of your medical costs. Cost-sharing differs depending on the health insurance plan you have. Traditional plans not only have co-pays; they also have coinsurance, which is the percentage of a discounted rate for a medical bill rate that insured people must pay. Co-pays are the set amount that the insured must pay when they receive healthcare services such as prescription drugs, doctor’s visits, specialist visits, and emergency care. There are separate deductibles for prescription medications and medical care. These fees will also be different if your health care plan has out-of-pocket network coverage.
4. Remote Healthcare Options
Buying a healthcare insurance plan can also open up additional medical options available to you. These features may include nurse helplines, telemedicine, and healthcare management. Telemedicine: Plan members can meet with their doctor over the phone or through a video chat through telemedicine options. Some companies offer these services as supplemental plans. Others may charge a fee each time you consult with a doctor. The appointment can be faster and cheaper than meeting with a doctor or visiting urgent care.
Nurse helplines: These give patients quick access to medical care without leaving their homes. A healthcare professional can answer questions and tell plan members how to schedule an appointment.
Care management programs: This option offers advice and ongoing support to patients that want to improve their health.
Select the Health Insurance Plan that’s Right for You
If you’re searching for a healthcare plan, you can select one based on your budget and needs. Here are several healthcare options available on the market.
1. Traditional (indemnity) or fee-for-service plans
These are regular health insurance plans. They allow you to see any physician, hospital, or specialist you’d like. You'll pay more money in out-of-pocket fees than managed care plans. Some require members to pay a deductible and pay only 80 percent coverage on remaining medical bills.
2. Managed Care Health Plans
These insurance plans fall under four different healthcare options:
- Health Maintenance Organizations (HMO)
- Point of Service (POS)
- Preferred Provider Organization (PPO)
- Fee For Service
Under these health care choices, insurers allow their members to visit a closed network of medical facilities and physicians. They also have subscribers share some costs for their health care. These strategies allow insurance companies to lower the cost of healthcare long term. Individuals can visit out-of-network specialists under PPO and POS options. Although PPOs are the lowest-cost plans, they won’t pay for out-of-network visits, and patients must receive a referral from a doctor before seeing a specialist.
3. High-Deductible Health Plan (HDHP) and Health Saving Accounts (HSA)
Insurers consider High-Deductible Health Plans as catastrophic insurance. They offer lower monthly premiums, but have higher deductibles than other insurance plans. They are a better choice for people who don’t use a lot of medical services. HDHPs require members to pay more out-of-pocket costs than other plans, but they are tax-free. According to Carrie Schwab-Pomerantz, many Americans neglect to fund their HSA after they open an HDHP. She offers three tips for consumers who use these healthcare plans.
Open up a Health Savings Account (HSA).
Don’t forget to use your premium savings to fund your HSA. Set aside money every month to place in your HSA to ensure you can pay out-of-pocket expenses and meet your insurance deductible.
Put your savings to work by investing it whenever you can.
Once you satisfy your deductible, the insurance company will pay out the rest of your bills. Still, you’ll have lower fees. Instead of a $60,000, you may only have to pay $6,000, and it will be less likely to leave you bankrupt.
4. Short-Term, Limited Duration (STLD) Plans
Some people may consider short-term plans based on lower premiums alone. This coverage, which only lasts for one year, provides limited benefits and reduced protections compared to ACA-qualified plans. Short-term insurance may not pay for maternity care, substance abuse recovery programs, or visits with a therapist. Insurers that sell STLD plans reserve them for healthy people with no pre-existing health conditions. They turn down people that have conditions like cancer, asthma, diabetes, and other issues. Although these plans provide limited insurance, it’s still better than having no coverage at all. Before enrolling, find out what each insurer offers.
5. Health Coverage Options for Young People
Young people can stay on their parents' insurance plans if it covers dependents until the age of 26 years old. They can remain covered even if they’re married, not living at home, or are not attending school. Check with each insurance company's enrollment requirements and qualifications. College students can use their campus health plan. Before signing up, find out if it counts as qualifying coverage under the ACA. If not, enrollees may receive fewer insurance benefits. There may not be any coverage for the 10 Essential Health Care Benefits listed under the ACA, including maternity care, mental health therapy, and other basics. After age 26, if you’re healthy and vibrant, you may want to consider a low-cost Bronze tier health plan, which is inexpensive.
6. Healthcare Coverage for Workers
More than half of Americans get healthcare coverage through their workplace. These plans are usually employer-subsidized, so they provide lower premiums, deductibles, and other costs to workers. Employees can also select from several customized options. Workers should speak with your employer’s human resource director to find out which healthcare coverage your organization offers. You can also schedule a meeting with a benefits advisor to find out which plans best fit your needs. When joining a new company, consider what types of insurance plans they offer before accepting a job offer.
Finding the Best Healthcare Plan for Your Needs
Healthcare is a necessity. It will not only protect your health; it can prevent you from facing bankruptcy or financial ruin because of medical expenses. Here are a few questions you can ask yourself to find out a good plan. Are you in good physical health? Do you regularly visit your doctor and engage in physical activity to stay healthy? Do you have a risky occupation that can endanger your well-being? You should purchase insurance needs based on your degree of risk and healthcare needs.
How often do you need to see a doctor? Next, estimate how many times you visit your physician each year. Do you spend money on co-pays, prescription drugs, and urgent care for office visits? Are you required to undergo regular screenings for lab work? Write the number of visits to determine how much coverage you’ll need. When calculating this amount, plan for the possibility of emergency room visits, surprise procedures, and unexpected hospital stays.
What current healthcare options? If your employer provides health insurance, you should consider getting one of their healthcare plans. You can also search for plans using your state healthcare’s exchange or group policies from different organizations.
How often do you need to see a physician – You can choose a plan with higher deductibles to lower your premiums if you don’t see the doctor very often. If you make frequent visits, you should choose a plan with low deductibles and co-pays.
How much coverage do you need – Compare different plans that fit your needs. Don’t just pick a plan based on price if it doesn’t provide the value you’ll need.
Speak with an insurance professional – If shopping for a plan is daunting, speak with an insurance agent who can help you sort through the options. You can also use SmartFinancial’s insurance comparison tool to find a plan that’s right for you.
Five Tips to Find Affordable Healthcare Coverage
Are you searching for lower-cost health care coverage? Here are several tips that can help. Learn health insurance basics before buying a plan. Familiarize yourself with terms used in this industry. For instance, find out the difference between deductibles, co-pays, and coinsurance. Also, discover what HMOs, PPOs, and other plans provide. This step will help you calculate costs to see if you're getting the best insurance deal.
Find out about the health insurance choices available to you - Take a few moments to find out about the different plans, coverages, and rates available on the market.
Do comparison shopping - Compare rates and coverages from different companies using SmartFinancial's insurance technology. Just complete our quick application, and we can connect you with local health insurance companies within your area.
Ask if you qualify for subsidies - Are you shopping for an ACA-compliant healthcare plan? You can see if you qualify for a subsidy by completing the application process.
Look for health insurance alternatives - If you still can't find affordable health insurance within your price range, seek insurance alternatives like low-cost, short-term health plans.
Do you need affordable healthcare coverage for yourself or your family? SmartFinancial’s transparent insurance technology can help connect you with plans that best fit your needs. Just enter your zip code and complete the quick application to get started.
Get a Free Health Insurance Quote Online Now.
The federal agency also says that 50 percent of the U.S. population will receive a mental illness diagnosis at some point during their lives. To help you along your journey, here are 16 books on mental illness that can help you heal.
If you are healthy and looking for a couple of preventative care checkups a year, you may want to consider a high-deductible health plan or a bronze tier plan. You’ll like the cost.
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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.