Health Insurance

Have a week? That’s what it would take, perhaps longer, to tell you about health insurance. And for a little icing on that cake – it wouldn’t be me! Surprise, surprise, I am not a health insurance expert despite what you’ve heard. But I do know some basic facts that are important to detail in blogs like this because even if you think you might be in the know, odds are there is more to learn. Not sure if I’m the person for that, but I can guarantee you’ll be entertained along the way. And that should count for something!

At its base level, health insurance protects you from the high cost of medical care. If you chose to forego health insurance, a costly accident could easily wipe out your entire life savings. Health care costs are not surprisingly the number one cause of bankruptcies in the U.S. Stateside, health care is pricey. This is not the case in other countries, but it’s far from a black and white issue. There are several reasons (some fixable and some not) that lie at the heart of exorbitant U.S. health care costs. But that should not distract from the fact that unlike car insurance for example (without which you could just take the bus), going without health insurance is quite risky, assuming of course you can’t mend a broken leg by watching a YouTube tutorial.

So now that we’ve agreed (you agree, right?) health insurance is a must, how do you choose between providers. Excellent question, health insurance companies come replete with tons of choices. But before even considering a plan there are some fundamental things to understand. First are monthly premiums. Like homeowner’s insurance or auto insurance, monthly premiums are paid even if you never make a claim. Think of this as cash flow so insurance companies can keep the lights on. Second are deductibles. This is the amount you pay before the insurance company kicks in what they owe. These can be anywhere from $500 per year to $10,000 plus. The range in price equates to the range of benefits.

In general, lower deductibles at least in the U.S. are associated with company-sponsored plans. In line with the deductible is also the copayment per visit. A typical doctor copay is $20 and for a hospital visit - $50. But it doesn’t stop there as you’ll also shell out $10 to $40 per prescription as well. The last item to key in on is coinsurance. This is the percent you will pay for surgeries, hospital stays or procedures. A timely tip – if your doctor visits you in the hospital you could be hit with a copayment for that visit. Ask about this one ahead of time, it’s been known to cause more than a few headaches.

The million-dollar question – why do insurance companies charge copays, deductibles and coinsurance? Well, if they didn’t, you’d be at the doctor’s office for every single cough, runny nose or achy head. These are control mechanisms, and while not perfect, do attempt to control supply and demand as best as possible.  

The big takeaway with this post is shop around, compare options between the previously detailed points, and you will arrive at the plan suited for your price point. But please do it – living without insurance is Russian Roulette with a guaranteed nasty ending.