Do I Really Need Health Insurance?

Insurance is a funny concept. It’s probably the most expensive thing you own that you hope you’ll never have to use. You insure your home, your car, your boat, your possessions, even your pet on occasion, without much thought. Yet when it comes to insuring yourself, many consider it unnecessary […]

Insurance is a funny concept. It’s probably the most expensive thing you own that you hope you’ll never have to use. You insure your home, your car, your boat, your possessions, even your pet on occasion, without much thought. Yet when it comes to insuring yourself, many consider it unnecessary or too costly.

No one expects their house to burn down or their car to be wrecked, but it is imperative to have insurance just in case. Likewise, no one expects to get sick or injured, but all of us will need medical care at some point, often when we least expect it. “As we all have learned this year with COVID, you never know what things are going to pop up,” says Nathan Teater, manager of IFP sales, customer care and enrollment for eHealth.

Health insurance may seem costly, but health care – doctors, hospitals, prescription drugs, rehabilitation, medical equipment and a lot more – is prohibitively expensive. In fact, health care burdens are the leading cause of bankruptcy in the U.S., with about two-thirds of all bankruptcy filings including significant medical debt, according to the American Journal of Public Health.

And financial ruin is far from the only risk you face without health insurance.

Follow the Money

Let’s start with money. How much does health care cost? Most people have little or no idea. The Centers for Medicare and Medicaid Services shows how easy it is to underestimate medical care costs:

  • A broken leg can cost up to $7,500 to fix.
  • A three-day hospital stay averages around $30,000.
  • Comprehensive cancer care can cost hundreds of thousands of dollars.

Younger adults often go without health insurance thinking they are invincible. They are, of course, sadly mistaken. While health problems certainly increase with age, anyone can break a leg, anyone can need hospitalization for an accident and cancer knows no age limits. Without health insurance, you are responsible for these costs – the same as if your car is stolen or a tree falls on your house.

“Life happens, and we always try to encourage young people to take second look,” says Linda Greenfeld, chief product officer of L.A. Care Health Plan. “Healthy doesn’t mean that life doesn’t happen, and you don’t break a leg, spend time in the ER and walk out with tens of thousands of dollars in bills.”

An Ounce of Prevention

Gallery: 9 costly Medicare mistakes to avoid (Mediafeed)

a man sitting at a table: Once you turn 65, having the ability to get Medicare can provide significant relief. By getting Medicare coverage, you can get the essential insurance coverage you need for medical and hospital services. Unfortunately, Medicare can be surprisingly complicated.According to the Centers for Medicare and Medicaid Services, there are 62.4 million Medicare beneficiaries in the U.S. If you already have Medicare or you’ll soon be joining that number, it’s important to understand how Medicare and the open enrollment period work so you can avoid making one of these common (and sometimes very costly) mistakes.  Related: 7 money moves to make if you have more than $50,000 in your 401(k)

Any health insurance policy offered under the Affordable Care Act must, by law, cover 10 essential health benefits:

  1. Outpatient care outside of a hospital.
  2. Emergency room visits.
  3. Inpatient care at a hospital.
  4. Maternity care before and after your baby is born.
  5. Mental health and substance use disorder services, including behavioral health treatment, counseling and psychotherapy.
  6. Prescription drugs.
  7. Physical and occupational therapy, speech-language pathology, psychiatric rehabilitation and other services that help recovery after an injury or illness.
  8. Lab tests.
  9. Preventive services to keep you healthy and manage a chronic disease like diabetes or asthma.
  10. Pediatric services, including dental and vision care for kids.

Remember how an ounce of prevention is worth a pound of cure? Specifically note the final two health benefits, which are designed to keep you and your children healthy and reduce the risk of more serious and costly problems down the road. These include vaccines, screenings and some checkups, and vision and dental care for your kids. Better yet, these are usually free of charge.

“By maintaining your health, you can avoid higher downstream costs from a chronic illness and identify issues you might not be aware of, like high blood pressure or prediabetes, that are identified in primary care settings,” says Emma Hoo, a director with Pacific Business Group on Health.

And here’s an important consideration: Whenever a vaccine for coronavirus is approved, insurance will likely cover 100{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} of the cost. “That might be good investment right there. I’m sure it’s not going to be $5. It’s going to be expensive,” says Karen Pollitz, senior fellow of health reform and private insurance with the Kaiser Family Foundation. “If you are uninsured, good luck.”

How Insurance Saves Money

CMS says that health insurance coverage protects you from high medical expenses three ways:

Reduced costs after you meet your deductible. Once you meet your plan’s deductible, marketplace plans cover between 60{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} and 90{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} of your covered expenses, depending on your coverage. You pay the rest in coinsurance or copayments, usually in the range of $5 to $50 per service.

Out-of-pocket maximum. There is a limit to the total amount you’ll have to pay each year, no matter how much covered care you need. For example, if your plan has a $3,000 out-of-pocket maximum, once you pay that $3,000 in deductibles, coinsurance and copayments, the plan pays for all covered care for the rest of the year. This peace of mind, knowing you never have to pay more than your maximum, is priceless.

No yearly or lifetime limits. All health plans in the ACA marketplace, by law, have no limits on how much they’ll spend each year or over your lifetime to cover these essential benefits, once you meet your yearly deductible. It bears repeating that something like cancer care can, over several years, cost several hundred thousand dollars. Your plan must cover it all.

So it sounds good, but coverage is still expensive, especially for those who don’t get health insurance through their employer and have to buy it themselves, right?

Not necessarily. ACA plans are far less expensive than most people know. Tax subsidies are available even for high earners – a single person making about $50,000, a family of four earning more than $100,000 – that can bring premium costs way down. “Famous last words: I can’t afford it,” Greenfield says. “The ACA and the exchanges created by it are a great avenue where people can get subsidies that make premiums much more affordable.” And for those who have lost their jobs and income, Medicaid is available to cover their health care needs if they qualify.

Copyright 2020 U.S. News & World Report

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