————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————
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?
Looking at the big picture, I suppose the “revelation” that people are unable to afford health insurance shouldn’t come as too much of a shock to me.
After all, I’ve probably been hearing for about 8 years now about the statistics of how 16.3% of the US population is without health insurance (source – CNN) . And, since I have faith in people and believe they are not dumb, it’s reasonable to believe (hopefully) that they would pay for health insurance first and foremost. The CNN article above stated that the average cost of an independent health insurance plan for a family is now up to $13,77
0. Personally, I would say that this figure falls in to the “unaffordable” category for most middle class families.
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
As a result of involvement in present or past jobs or hobbies, many people have become members of professional and/or formal organizations during their lifetime. However, one thing that a lot of people do not know is that many of these organizations will have pre-negotiated group discount rates on health insurance that they offer to members. Now, they won’t directly pay for part of your health insurance like an actual employer will, but these discounts can defray the costs.
So, take a second and think about any professional, union, chamber of commerce, or alumni organizations you are a part of currently or have been a part of in the past. Next, go to Google and search to see if one of the benefits of being a member is getting a discount on health insurance. If you are not a member of any organization, you might think about joining one that offers health insurance discounts. A good way to start doing this is to search for the phrase “membership benefits health insurance” in Google.
While writing the paragraphs above, I thought to myself – “This sounds great, but really how much of a discount can a person get from these organizations? It can’t be all that much, can it – enough to make health insurance affordable?”
So, let’s take an organization that I am a part of as a result of my graduate school job – The American Chemical Society. In briefly searching around their website, I found that they do offer a group insurance program. Great! However, when I went and tried to find what sort of discount members generally receive for getting health insurance with the organization, I couldn’t find anything.
Furthermore, in doing an exhaustive search on the Internet, I could find no disclosure of any estimates for how much of a discount people get for health insurance when it is purchased through a membership organization. This is partly understandable since as you can imagine, the rates for health insurance vary quite a bit person-to-person. However, since there were no instances of people saying, “HEY! I SAVED $200 PER MONTH BY GETTING COVERAGE THROUGH THIS ORGANIZATION,” it makes me think that the savings aren’t that great. But, you may be able to get more complete coverage through an organization with fewer barriers to entry than searching for health coverage by yourself.
Conclusion for Option 3 – Overall, it’s worth checking to see what sorts of rates you can get through membership organizations and determine if it is affordable. Even though you can probably get more complete coverage through one of these organizations, I have not seen the evidence yet to convince me that you will save all that much. Anyone have more experience with this option than me to prove I’m wrong and/or set me straight?
Option 4 – Get a part-time job that includes health insurance benefits
Instantly, I became a fan of this option, especially thinking of people without health insurance who are between jobs or only working part of the week. Another reason why I like this option is that it really puts you in the driver’s seat of controlling your financial well being.
The only drawback to this option (aside from any competition to get these jobs) is that there is a 20 hour per week working minimum to qualify for obtaining health insurance with many of the jobs. So, if you already work one job, it will by no means be a “piece of cake” to obtain coverage this way, but I think that the peace of mind that you’ll obtain in knowing that your family is taken care of will make the 20 hours per week well worth it. For example, the 20 hours could be knocked out by working 5 pm to close twice per week and then on Saturday/Sunday.
Conclusion for Option 4 – In my mind, a great option for people to really take charge of their financial well being and obtain health insurance paid for in part by their part time employer. However, you have to be willing to put in the hours to qualify.
Option 5 – State-specific affordable health insurance programs
Continuing with the list brings us to the somewhat variable option of affordable health insurance plans funded at the state level. As you can imagine, you’ll have to check with your state’s Department of Health website for the specific details of the program offered in your state (usually, a good way to find this to Google, “cannot afford health insurance + your state).
For example, Washington State offers a Basic Health Plan to limited income earners who make 133% of the poverty level (so less than $20,000) and the State of Virginia offers low income earner coverage through the Virginia Health Care Foundation.
Conclusion for Option 5 – No guarantee that you’ll be able to get coverage from a state program (especially if you earn above the poverty level), but it’s worth checking at the very least.
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
