Do I Really Need Health Insurance?

What You Need to Know 

Health insurance coverage can be expensive, but it protects you from potential financial catastrophe if you get sick or injured. People with health insurance usually spend less out-of-pocket on healthcare and have more peace of mind than people without insurance. 

There are multiple health insurance options available, including low-cost plans.

Do You Need Health Insurance? 

Health insurance is a type of coverage that pays a portion or all of your medical bills for doctor visits, hospital stays, prescription drugs and other healthcare services. You pay premiums (either through your paycheck or direct billing) for your coverage. 

If you’re young and relatively healthy, you may wonder: Is health insurance worth the money? 

Despite the cost of health insurance, having it can make a big difference when you need medical services. If you’re healthy, your routine care may be covered at no charge. Preventive care is covered if you are healthy or not.

If you need regular visits or prescriptions, coverage can reduce or eliminate your out-of-pocket costs. You also have more options when you go to the hospital for non-emergency reasons. If you don’t have coverage, the hospital could refuse to treat you.

And since one injury or emergency room visit can leave you hundreds, if not thousands, of dollars in debt, health insurance can protect you from catastrophic bills.  

Is Health Insurance Worth It? 

While out-of-pocket healthcare costs can get expensive even with insurance, coverage can provide you with an important layer of financial protection. Medical debt represents more than one-third of the debts among the uninsured–twice the rate for those with insurance.¹ 

One study found that almost two-thirds of personal bankruptcies are due to medical expenses.²  Fortunately, people with health insurance are more likely to use preventive services—which can identify health issues before they become acute, chronic and expensive–and get treatment for chronic conditions.³

Even if you don’t think you need health coverage, your state might require you to have it. Since 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.  

What Are Other Advantages of Having Health Insurance?

Health insurance offers financial protection plus peace of mind in case of an unexpected illness or accident. Other benefits include:

• Your own doctor: Having insurance increases the likelihood that you’ll have a primary care provider — who knows your health history, risks, and concerns and helps you get any care you need.
• Help with billing errors: If you’re billed incorrectly for services, your health insurer may work with the doctor or facility to help get the issue resolved. 
• Free care: For many people, the only care they need is an annual checkup and the occasional vaccine. With health coverage that meets Affordable Care Act (ACA) requirements, these services are covered at no charge.
• A safety net: If you get sick or injured and can’t work, it may be even harder to pay medical bills on your own. With health insurance, you have more financial protection. 

What Are Your Health Insurance Options? 

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

• Job-based health insurance: Nearly half of Americans get health insurance through a group plan arranged by their employer.⁴ Most employers offer several choices, including high-deductible health plans, which have lower monthly costs but require you to pay more up front out-of-pocket for services. High-deductible plans may be paired with a health savings account that lets you use pretax dollars for healthcare costs—and reduce your taxes.⁵
• Your parents: If you’re under age 26, one of your parents may be able to cover you under his or her employer’s health plan.
• COBRA: The Consolidated Omnibus Budget Reconciliation Act (COBRA) lets you stay on a group health insurance plan, generally for 18 months, after you leave the group. That means you can temporarily keep your health insurance after leaving a job, or stay on your parents’ plan after you turn 26. COBRA can be expensive because you have to pay the full premium plus a small administrative fee.
• Health Insurance Marketplace: Under the Affordable Care Act (ACA), you can sign up for an individual plan via the federal or state Health Insurance Marketplace. ACA-compliant plans must offer certain “essential health benefits” like hospitalization, maternity care and mental health services, and they can’t reject you based on any existing health issues you may have. Depending on your income, you may qualify for subsidies, making coverage more affordable. The American Rescue Plan Act expanded subsidies in 2021. An estimated four out of five enrollees can find coverage for $10 per month or less.⁶
• Medicaid: This federal and state program offers health insurance for low-income and disabled people. Eligibility varies by state. If you qualify, you can get free or low-cost comprehensive coverage. 
• Short-term health insurance/catastrophic coverage: Also called “skinny plans,” short-term 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 don’t have to cover preexisting conditions and can reject you for coverage. Catastrophic plans may also 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, members, often of the same religious faith, pool monthly payments to cover other members’ medical bills. These mostly unregulated plans aren’t required to offer ACA protections and aren’t technically considered health insurance. They can offer limited benefits.⁷ 

How Do You Choose Health Insurance? 

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

• Your current health: Do you have a chronic illness, like asthma or diabetes, that requires regular monitoring and management? If so, you might want a more comprehensive plan with lower copayments (and slightly higher premiums).
• Your healthcare usage: Do you need to visit specialists often? Do you take prescription drugs? If so, make sure your plan will cover the specific services you’re most likely to use. 
• Your healthcare needs: If you have ongoing physical or mental health needs, you may need more coverage. If there are specific doctors or facilities you need to visit, make sure they accept the plan you choose. 
• Your budget: What can you afford? Are you able to budget for a set monthly cost, or would you rather keep regular costs low and try to save up for any unexpected medical bills? Consider which 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 advisor to go over your health situation and your budget with you. 

If you’re offered health insurance through work, see if your human resources department offers guidance to help you pick the right plan for you. Beware of turning to helpful friends, family members or coworkers; unless they’re benefit experts, 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 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 might qualify for Medicaid, reach out to your state’s Medicaid agency to get more details and apply. Either way, there are experts available to answer your questions and help you make a decision.