Why Do I Need Health Insurance?

Health insurance isn’t cheap, and it can be tempting to stay uninsured, especially if you never get sick. With the expensive monthly cost and out-of-pocket expenses, you may be wondering how much insurance you really need.

Many people in their 20s may think they are healthy enough to bypass health insurance. It may seem like a good idea to cut health insurance costs out of your budget when you rarely see a doctor, and especially when things are tight financially.

Instead of worrying about insurance premiums and additional payments on the go, you can pay your healthcare expenses as you go. But this can be very difficult if you have a serious illness, an accident, or an ongoing health condition because the costs can become very large very quickly. That’s why it’s so important for everyone to have some form of health insurance at all times.

What Are the Other Advantages of Having Health Insurance?

Health insurance offers financial protection and peace of mind in the event of an unexpected illness or accident. Other advantages are:

  • Your own doctor: Having insurance increases your odds of having a primary care provider who knows your health history, risks and concerns, and can help you get whatever care you need.
  • Help with billing errors: If you’ve been billed incorrectly for services, your health insurer can work with the doctor or facility to help resolve the issue.
  • Complimentary care: For many people, the only care they need is an annual checkup and the occasional vaccination. These services are provided free of charge with health insurance that meets Affordable Care Act (ACA) requirements.
  • Safety net: If you get sick or injured and are unable to work, it can be even harder to pay medical bills on your own. With health insurance, you have greater financial protection.

Medical Emergencies Can Make You Bankrupt

Medical emergencies are very expensive. If you have the misfortune of going into an uninsured medical emergency, it’s easy to find yourself in crippling amounts of medical debt, and there seems to be no way out of the mess.

It’s hard to understand why you really need insurance if you take good, preventative care of your health. However, getting hit and seriously injured by a car, or even missing the last step home and dislodging an ankle, can result in an injury costing you thousands of dollars in medical bills and can quickly climb higher if surgery or surgery is required. any ongoing rehabilitation. Emergency surgery, such as appendicitis surgery, can also be very expensive.

You may not be able to work while lying down and that means you may lose your salary as well. Even if you are insured, you may find it difficult to pay for health care costs in these situations. It is very difficult to pay for medical expenses without health insurance, especially if you are hospitalized even overnight.

Health Insurance and Affordable Care Act (ACA)

As of 2019, although some states still have jurisdiction, you no longer have to pay a penalty on your federal tax return if you’re not insured, as the penalty for the 2019 tax year has been waived. (1)

Although there is no penalty anymore, you protect both your health and financial situation by getting health insurance.

You can sign up for health insurance at the Health Insurance Marketplace or at a health insurance exchange in your state, or look for other options, such as your employer’s health plan.

Preventive Maintenance and Early Intervention

When you don’t have insurance, you can avoid getting treatment for minor issues that can quickly turn into bigger problems. Preventive medicine and prompt treatment are the best ways to avoid expensive hospitalizations.

If you have insurance, then you won’t have to worry so much. Additionally, if you delay going to treatment and develop a serious medical condition, you may have a hard time finding health insurance when you haven’t had health insurance for this long.

Which Plan Is Right For Your Needs?

Health insurance is not a luxury; this is a must. There are many more things you should not do before you choose to go without insurance.

If you want insurance but aren’t sure which coverage works for you, here are some questions you can answer to find out.

  • How is your health? Are you currently in good health, do you go to the doctor regularly, and do you engage in risky sports or occupations? Like other types of insurance, your insurance needs depend on your degree of risk.
  • How often do you go to the doctor? Have you been several times in the last year and spent money on payments for office visits, lab work, emergency care, and prescription medications? Add all of this to get an idea of ​​your typical annual healthcare needs.
  • What available options do you have? See if you can get affordable, quality health insurance through your employer, the Health Insurance Marketplace, or your state’s health care exchange, or group insurance through membership with organizations like Costco.
  • What are your priorities? If you see the doctor often, you’ll probably want a plan with lower payments and deductibles. If your monthly expenses are already straining your paycheck, perhaps you’re better off with a plan with lower monthly premiums. Highly discounted plans can lower your premiums, and it doesn’t make sense to pay huge premiums for a low-fee plan unless you go to the doctor very often.
  • What are your coverage needs? Boil all the available insurance plan options to suit your needs, then go through the details. While the cheapest plan may grab your attention, it may not provide as much value per dollar as some other plans.
  • Did you get an expert opinion? Some people find the whole experience of shopping for health insurance overwhelming, and there are many insurance agents that can help you sort through your options. These agents spend their days immersed in insurance and can work quickly to find your most suitable plan. Find an independent agent who can get you quotes from a wide variety of health insurance companies.

Types of Potential Health Insurance Plans

While the array of potential options is quite complex when it comes to insurance, plans can be broken down into several different types.

Traditional (compensation) or fee-for-service plans are the original types of health insurance. You can go to any doctor, hospital, or specialist you want, but for this, you pay more out of pocket, you have an exemption and you can only cover 80% of the remaining medical bills.

Managed Care insurance plans include Preferred Provider Organizations (PPOs), Point of Service (POS), and Health Care Organizations (HMOs). All these plans only work with providers in a closed network. In return, patients pay lower premiums and no lower or no payments. PPO and POS insurance allow patients to go to providers outside of their network and self-refer to a specialist. HMOs are the lowest cost plans but do not pay for out-of-network visits and patients must be referred to specialists by their doctors.

The highly deductible insurance plans, sometimes known as disaster plans, cost much less than other insurance plans, but you’ll have to pay a large amount of out-of-pocket money before coverage starts, so it still makes sense. Put money aside each month, even if it’s in your own savings account rather than paying as insurance premiums.

In some cases, health savings accounts (HSAs) are also available through these plans. HSAs allow you to contribute tax-deferred dollars to an account and then use those dollars to pay for your deductible or other maintenance costs.

Typically, on a high deductible insurance plan, you will be responsible for the cost of your medical care until you cover the (usually large) exemption, but then the insurance plan will take the rest of the bills. It’s still preferable to go uninsured. It’s much easier to find a way to pay $5,000 in medical bills instead of $50,000. You can usually make a payment schedule for the amount you owe. This means you won’t go bankrupt because of medical bills.

Why Do I Need Health Insurance?

What Are Your Health Insurance Options?

There are multiple ways to access insurance coverage. Here are the most common options:

  • Work-based health insurance: About half of Americans get health insurance through a group plan organized by their employer.(1) Most employers offer a variety of options, including high-deductible health plans that have lower monthly costs but require you to pay more upfront. out-of-pocket for services. Highly deductible plans can be paired with a health savings account, allowing you to use pre-tax dollars for healthcare costs and reduce your taxes.(3)
  • Your parents: If you are under 26, one of your parents can cover you under their employer’s health plan.
  • COBRA: The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to stay on a group health insurance plan, usually for 18 months after leaving the group. This means you can keep your health insurance temporarily after you leave your job or stay on your parent’s plan after you turn 26. COBRA can be expensive as you have to pay the full premium plus a small administrative fee.
  • Health Insurance Marketplace: Under the Affordable Care Act (ACA), you can enroll in an individual plan through the federal or state Health Insurance Marketplace. ACA-compliant plans must offer certain “essential health benefits” such as hospitalization, maternity care, and mental health services, and they cannot refuse you because of your existing health problems. Depending on your income, you may qualify for subsidies and make coverage more affordable. The American Recovery Plan Act expanded subsidies in 2021. An estimated four in five enrollees can find insurance coverage for $10 a month or less.(4)
  • Medicaid: This federal and state program offers health insurance for people with low incomes and disabilities. Eligibility varies by state. If you qualify, you can get free or low-cost comprehensive coverage.
  • Short-term health insurance/disaster coverage: Short-term plans, also called “skinny plans,” provide temporary health insurance that may cost less per month than long-term or ACA-compliant plans, but also offer less coverage. Short-term plans do not need to cover pre-existing conditions and may reject you for coverage. Disaster plans may cost less per month than full coverage plans, but offer limited coverage and higher out-of-pocket costs.
  • Health-sharing ministry plans: In these plans, usually members of the same religious faith combine monthly payments to cover other members’ medical bills. These mostly unregulated plans are not required to offer ACA protection and are not technically considered health insurance. They may offer limited benefits.(5)

How Do You Choose Health Insurance?

Choosing insurance can be overwhelming. If you’re trying to find the best health insurance for you, here are some factors to consider:

  • Your current health: Do you have a chronic illness such as asthma or diabetes that requires regular monitoring and treatment? If so, you might want a more comprehensive plan with lower co-pays (and slightly higher premiums).
  • Your healthcare use: Do you need to visit specialists often? Do you take prescription drugs? If so, make sure your plan covers the specific services you’re most likely to use.
  • Your health needs: If you have ongoing physical or mental health needs, you may need more coverage. If there are certain doctors or facilities you need to visit, make sure they agree with the plan you choose.
  • Your Budget: What can you afford? Can you budget for a specific monthly cost, or do you want to keep regular costs low and try to save money for unexpected medical bills? Consider which one works better for you.

Next steps

Health insurance is a big decision and an important part of your financial security. If you need help comparing your options, find a trusted counselor who will review your health and budget with you.

If you are offered health insurance through work, see if your human resources department can offer guidance to help you choose the right plan for you. Avoid appealing to helpful friends, family members, or colleagues; Unless they are utility professionals, they may not have the expertise to help you make a good decision to meet your individual needs. What’s right for them may not be what’s best for you.

You can also visit your state Health Insurance Marketplace site or the federal Marketplace site to compare and apply for ACA plans. If you think you may qualify for Medicaid, contact your state’s Medicaid agency for more details and to apply. Either way, there are experts out there to answer your questions and help you decide.

Is Health Insurance Worth It?

While out-of-pocket health care costs can be expensive, even with insurance, insurance coverage can provide you with an important layer of financial protection. Medical debt represents more than a third of debt among the uninsured – twice that of the insured. (6)

One study found that nearly two-thirds of personal bankruptcies are due to medical expenses.2 Fortunately, people with health insurance are more likely to use preventive services that can detect and treat health problems before they become acute, chronic, and expensive. for chronic conditions. (7)

Even if you don’t think you need health insurance, your state may require you to have it. As of 2019, there is no federal tax penalty for being uninsured, but Washington, D.C., and five states (California, Massachusetts, New Jersey, Rhode Island, and Vermont) have their own health insurance mandates.

3 thoughts on “Why Do I Need Health Insurance?”

Leave a Comment