Do you really need health insurance? Top personal finance experts weigh in
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A lot of people don’t plan ahead for their annual health insurance decision. While most understand the inherent trade-offs that come with plan benefits and premium price, some simply see it as a game of chance: "I might not even use it, so I'll be paying all of this money for nothing!"But you want to hear about a real game of chance? Of people who are uninsured, it's estimated that 20% will have health bills that exceed $13,300, and 5% will have health bills that exceed $47,300.Think about how easily it is to get in over your head with medical bills. Are you willing to play with those odds?
Sometimes it can be hard to see the value of health insurance. That’s why we enlisted the help of some of our favorite personal finance experts to explain why health insurance is so important:
So what’s the real value of health insurance? Here are 5 reasons why the nation's top personal finance experts think you need to buy health insurance.
Did you know that medical bills are the leading cause of personal bankruptcy in the United States, even more so than credit card debt? Unpaid medical debt is also one of the leading causes of credit score decline. You may have fixed yourself up with that doctor’s visit, but you could be doing a lot of damage to your financial life.Think again about that stat on how much you could end up paying if you’re uninsured. Half of American families can’t cover a $400 emergency expense; how many more people can’t cover a $13,000 emergency, or a $47,000 emergency?Health insurance protects you when the worst happens. Savvy people can even go even further by reducing their healthcare costs – therefore reducing the amount they have to pay out-of-pocket. You can do this by looking for common billing errors and working out a payment plan, but the best way is to find the cheapest procedure before you even step foot in the doctor’s office.We’re big fan of Amino’s medical cost calculator. It allows you to see what providers are in your area for a certain procedure and to compare costs instantly. You can even put in your insurance to filter the results by in-network doctors. Say you need surgery for a broken hand done in the New York City area:
Your research doesn’t stop there – you should still vet the doctor, see how comfortable you are, and look into non-cost-related factors – but the combination of smart shopping and health insurance will allow you to keep your medical debt to a minimum so your finances don’t flatline.
In case you didn’t get the premise of this article yet, health insurance is important. But it’s not just insurance for preventive care, it’s a big part of your larger financial safety net.What do we mean by that? Well, your plans for handling financial hurdles should be more than just . You should have some savings in place so that you can handle anything that comes your way. Part of this is your emergency fund: three to six months’ worth of money set aside for – you guessed it – emergencies. That can come in the form of unexpected medical bills, getting laid off from your job, or any other time where you’ll need a little extra cash to pay the bills.It’s also planning for retirement so you don’t find yourself at 65 years old with no end in sight for your working days. Investing and using retirement products like a 401(k) and/or an IRA help you get there.The final part of your financial safety net is insurance. If this isn’t your first time here, you know we’re big on life insurance. It’s the best way to protect your family in case of a worst-of-the-worst scenario (death) and helps your loved ones pay for college, their mortgage, and everything else when you’re gone. Long-term disability insurance protects your income if you can’t work. Homeowners and renters insurance protects your home in the case of accidents. You get the idea.Health insurance belongs in this category, too, and you’ll probably use it more often than you will other insurance types. Whether it’s a routine procedure or a more extensive treatment, we tend to find ourselves visiting our doctor fairly frequently.Need to find you where the gaps in your safety net are? We have an insurance checkup where you can review your primary coverage areas and get suggestions on how to complete your safety net where you might have holes.
As important as we think life insurance is, it’s not legally required. Health insurance, on the other hand, is.The Patient Protection and Affordable Care Act (PPACA) – better known as the Affordable Care Act (ACA) and even better known as Obamacare – made health insurance a mandatory product for all Americans. How is it enforced? With a penalty, or mandate, if you don’t have health insurance.The health insurance penalty is calculated in one of two ways (whichever is higher):
2.5% of your household income
$695 per adult ($347.50 per child)
There are caps to these fees, but think about it: you have to pay anyway. Wouldn’t you rather pay and get something in return (financial security and peace of mind)? Some people think that insurance is paying for nothing, but in the case of the mandate, you literally are paying for nothing.
As much as we all think we’re invincible as some point in our lives, the truth is we aren’t. Like a classic car, we require some upkeep over the years.When you have health insurance, you have access to basic preventative care services. Just like you’re legally required to have health insurance, carriers are legally required to provide these services. That means you get them no matter what plan you have.There are dozens of different procedures that are covered. Are you an adult who wants to get screened for diabetes or high cholesterol? You’re covered. Are you a woman looking for a mammogram? You’re covered. Are you pregnant (or planning on getting pregnant) and want a clean bill of health first? You’re covered. Are you a child who is strangely into health insurance and wondering what covers you? No less than 26 services and 12 immunizations.Preventative care can help with your current health but also, as the name implies, it helps you stay healthy down the road. If you can nip some diseases in the bud, you can save yourself from the costs that come with complications later on.In short, a little maintenance goes a long way, and you get that with health insurance.
The big point of all insurance types is that the future is unknown. It’s like that old saying: hope for the best, prepare for the worst.You don’t want to go to the hospital, but the reality is that you – or a loved one – might end up there. You can’t predict the future, but you can plan for it. Health insurance is the best way to ensure that you don’t get overwhelmed by medical bills and can keep your family healthy for years to come.If you’re uninsured, there’s no better time to buy than now. And even if you are insured, with the number of insurers pulling out of marketplaces and the sharp rise in premiums, it might be time to look for a plan that better meets your budget and needs. Get started shopping today.
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