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In most personal finance self-help books I’ve read, one of the first, most important, and fundamental assumptions made before proceeding to discuss the usual personal finance topics such as 401ks, IRA’s, emergency funds, etc is that a person should have health insurance to protect themselves in the event of a health emergency.
Indeed, even in the My Personal Finance Journey Account Hierarchy, securing adequate health insurance is listed as the highest and most basic priority for your funds as they come in. However, no detail is gone in to about how to secure this coverage.
Because of the very fact that health insurance is listed first in the pecking order, having health insurance is something that I think a lot of people take for granted in focusing their discussions about personal finance. This is either because they figure health insurance is provided as a health benefit at people’s work or they simply use the first funds they receive each month to pay the monthly premiums, and they have plenty of money left over to cover their other necessary expenses.
However, in today’s economy with many people out of work, facing tight budgets, or having to take ANY job that comes their way in the stale job market, I’ve begun to realize (after talking with several friends facing this problem) that many people are 1) left to obtain independent health insurance coverage, 2) unable to cover the cost of an independent health insurance plan because it is so expensive, and 3) earn income above the poverty level and as such, do not qualify for government health coverage.
Because of this realization, I thought it would be valuable to discuss today about the various options that exist (if any) for people that are having trouble affording this crucial life need.
But first, let’s take a step back and look at the health insurance landscape we are currently facing…
How Many People Do Not Have Health Insurance in Today’s Society and What Percentage of Full Time Jobs Do Not Include Health Insurance?
Yet another fascinating statistic to look at (also sourced from the same CNN article above) is the percentage of employers that offer health insurance to their full time employees. To my shock, only 55.3% of employees have health insurance through their employer – down from 65% in 2000.
I suppose this decrease in company health insurance coverage makes sense with the recession we have experienced and companies trying to cut costs. Looking at this statistic, it really makes you feel thankful if you are one of the ones that gets health insurance through your employer. Personally, I had no idea that this figure was this low.
So, What Do You Do If You Cannot Afford Health Insurance?
It’s clear that the numbers shared above do not paint a very pretty picture – with approximately 50 million Americans without health insurance and only half of employers paying for health insurance plans.
Putting politics aside (please – this is not a politics blog), it leaves a person asking the following – “With the high price of health care, what are my options within my control if I simply cannot afford standard health insurance? I don’t want to get hurt and owe $80,000 for the surgery bill.”
Listed below are several things I could come up with after searching around and applying some interpretations of my own. I will approach this issue by taking the perspective of someone that is above the poverty level, earning $20,000-$30,000 per year. I’ll also assume you’re not yet old enough to qualify for senior citizen coverage through Medicare, are looking for a somewhat long term solution, and cannot afford COBRA extension coverage through your old job.
Option 1 – If you’re 26 years of age or under, get on your parents’ health insurance plan –
I know. I know. This option won’t work for the many of you out there reading who are above 26 years of age. But, it’s worth mentioning since young adults age 19-25 represent one of the largest groups of un-insured in the nation. The CNN article above mentioned that some 70% of young adults in this age group are uninsured. This is simply amazing. Please, don’t think you are invincible. Talk to your parents to get on their health insurance plan if this is at all possible.
Conclusion for Option 1 – Great if you’re 26 or younger, but useless for everyone else.
Option 2 – Get coverage for your family (or at least your children) through Medicaid / Children’s Health Insurance Program (CHIP)
Listed below are the eligibility requirements for Medicaid/Children’s Health Insurance Program:
- Pregnant women earning below $20,000 for a family of two.
- Parents (the Medicaid.gov website says that income limits vary by state).
- However, I would guess that it’s unlikely that you’ll be able to qualify unless your income is lower than $15,000-$20,000.
- People with disabilities with income up to $2,000 (not very high!).
- On the other hand, the government places a priority on trying to get health insurance for children. Families with incomes up to $44,000 can qualify to place only their children (not the parents) on Medicaid. Furthermore, families with incomes above this can qualify to get their children health coverage through the Children’s Health Insurance Program.
Conclusion for Option 2 – Medicaid and CHIP are great for people below the poverty level, but useless for higher income earnings that are simply going through a tough time in life or earning $20,000 – $30,000. However, your child (not you though) can still be covered through these programs if you earn a higher income. So, that’s one positive thing to give you peace of mind.
Option 3 – Get reduced rate group health insurance coverage through organizational memberships
Option 4 – Get a part-time job that includes health insurance benefits
Option 5 – State-specific affordable health insurance programs
Option 6 – A “Mixed Bag Approach” Using Emergency Only Insurance Coverage + Low Cost Health Care Options
The last option I found (and optimized slightly) when researching about this topic was a somewhat mixed approach. It was also one of my most favorite (along with getting on your parents plan if you’re under 26 and getting a part time job that has health insurance) because it is very concrete and doesn’t hinge on income level requirements, etc.
Essentially, this strategy is based on the purpose of insurance in general at it’s most bare-bones level being to protect you from financial disaster by not letting you go in to multiple ten’s of thousands of Dollars in debt (not to pay for routine visits to the doctor, etc). Using this underlying purpose in assuming that health insurance is A MUST, this strategy involves the following steps:
- Get a high deductible coverage insurance policy (essentially, the cheapest policy available with no office visit coverage). By high deductible, I mean high – something to the tune of $10,000.
- Kevin from Out of Your Rut found that for a married couple with 2 children, a normal health insurance policy with a deductible of $1000 would carry a monthly premium of $1213. However, when the deductible was increased to $10,000, the monthly premium went down to $303. This makes the coverage go from non-feasible to feasible, but still a pain.
- Once you have the policy, you will only use it in the event of a major surgery/injury, since you would have to pay $10,000 to access your coverage and you have no office visit stipulations.
- For routine health care (prescriptions, doctor visits, etc), do not go to the emergency room. Even though they are required by law to treat you (and only collect payment on about 70% of the patients they see), this is one of the most expensive places to receive treatment.
- Instead, take advantage of free and/or affordable community health care clinics available in your area.
- To find one of these discounted clinics, click here to go to the US Department of Health and Human services page where you can perform a search.
- When I searched around my area, I found about 4 federally supported/affordable health care centers within 50 miles.
In putting this post together, I was thinking about any negative aspects to mention about free clinics – such as strict low income requirements or long wait times. Therefore, I reached out to my Mom, who worked in a free clinic several years ago for her experience. Her input is quoted below, in the true full sentence form that she always writes emails in no matter what the topic or brevity of the message (she reads this blog by email feed and will probably think it’s neat to be included here):
I last worked in a free community health clinic in 1994. We had good staffing and all people were seen during each clinic period in the evening. They had to wait several hours, some waiting for about 3 hours. All services were free, including some medications. People could show up at the clinic and be seen. There were not many restrictions on receiving this care.
Conclusion for Option 6 – While not perfect, using a high deductible health insurance plan coupled with community health care clinics can save you from bankruptcy by providing you with health coverage for expensive surgeries/injuries at a feasible cost.
To wrap up this post, today, we’ve explored 6 options for people that are having trouble affording health insurance. While none of them are as ideal as simply having a full time job that you commit yourself to (and then have weekends off) that provides low cost health insurance, they are worth exploring in order to obtain health care coverage. It is my belief that having health insurance is STILL the most important financial priority, so it really is essential to not take this lightly and obtain coverage. Thanks for reading!
How about you all? Do you have health insurance? If so, did you obtain the coverage from your employer or through an independent plan? What do you pay for health insurance premiums each month?
Have you ever tried any of the 6 options mentioned above or know anyone that has?
Share your experiences by commenting below!
***Photo courtesy of http://farm4.static.flickr.com/3110/2898187808_744e8b82a5.jpg