The purpose of insurance is to protect you from unexpected financial burdens due to catastrophic events. If a tornado takes the roof off your house, your homeowner’s insurance helps to replace it. If you get into a car accident and damage your car; auto insurance helps pay for repairs.
Health insurance serves the same purpose — to protect you from large medical bills due to illness or injury. And it offers additional coverage that other insurance doesn’t. Preventive services are a prime example. Annual physicals and regular screenings to help maintain your overall health before major illness strikes are fitting examples of this extra coverage.
Maintain Your Health
Maintaining your health through regular checkups keeps overall costs low. It also makes it easier to catch conditions like cancer or diabetes early so treatment can start right away. Early detection also increases your chances of better outcomes if your doctor does find something.
Since the passage of the Affordable Care Act, health insurance covers most preventive services at no added cost to you. As long as your doctor or medical provider codes your visit as “preventive”, your insurance will pay. If, however, you are being seen to monitor a condition like high blood pressure, those visits aren’t preventive.
Making better lifestyle choices can keep you healthy and your medical costs low. For instance, eating healthy foods, regular exercise, and low to moderate alcohol consumption contribute to better overall health.
Benjamin Franklin said, “An ounce of prevention is worth a pound of cure.” By making healthy choices and getting regular checkups, you can make an ounce of prevention and save a pound.
Cost of Care
Large medical bills put you and your family at financial risk. With health insurance, medical services can cost several hundred dollars; without it, care could cost thousands or more. A search on the Nevada health exchange showed the costs for several services with and without health insurance.1 Among them:
|Service||Cost with Insurance||Cost without Insurance|
|Mammogram Screening||No cost or copayment||$80 to $212|
|ACL Reconstruction||$800 to $3,000||$20,000 to $50,000|
|Brain MRI||$20 to $100+ copayment||$1,000 to $5,000|
|Hernia Repair||$700 to $2,000||$4,000 to $11,000|
|Emergency Room Visit||$50 to $150 copay||$150 to $3,000+|
|Well Baby Doctor Visit||$10 to $30 per visit||$95 per visit average|
Your policy also caps how much you pay. Once you reach that limit, or “out-of-pocket maximum,” your insurer bears responsibility for remaining covered costs.
In addition to saving at the doctor or hospital, your medications cost less with health insurance.
Instead of paying the full cost of prescription drugs, you pay a fraction of the actual price. This is a copayment. It can be as low as $10 or $20 for a 30- or 90-day supply. You can also save money by shopping around since prices vary by pharmacy.
Once you have seen your doctor and received a clean bill of health, follow-up is critical. If you’re healthy, good for you! Create a plan to stay that way.
If your doctor found something wrong, create a plan with your provider to treat the condition. Stick with it and see your doctor regularly. Paying for office visits and checkups will cost much less than ignoring your condition and getting treatment in the emergency room.
According to the Centers for Disease Control and Prevention, 7 out of 10 adults in the United States die every year due to chronic conditions.1 Those deaths account for 75% of total healthcare expenditures. The economic toll is staggering: $199 billion per year in healthcare costs plus an additional $131 billion in lost job productivity.
With the cost of care so high, the effect on a family can be financially catastrophic. According to CNBC, recent academic studies show that 66.5% of bankruptcies filed in the U.S. cited medical issues as the primary reason for filing.2 The cause is related to outstanding medical bills and lost work hours. Without health insurance, your costs can soar into the thousands of dollars very quickly. One hospital stay for you or a family member can reach $100,000 in a matter of days.
Options for Coverage
You usually have more than one option for getting health insurance. Over half of people in the United States get their coverage through their employer. The Affordable Care Act makes it easier for individuals to purchase health insurance by creating a national healthcare exchange for states that did not adopt their own. You can also purchase coverage on the open market, either directly through an insurance company or on a healthcare exchange.
Plan types vary from no deductible with copayment to high deductible plans. Access to doctors will be determined by the network or medical providers contracted with your plan. Types of plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Open Access plans. Your premiums can vary from 20% to 30% across plan types.
You should pay close attention to deductibles, copayments, and out-of-pocket maximums when comparing plans. Ultimately, the out-of-pocket maximum (or the most you pay in a calendar year before insurance pays everything), is the most important. This amount is your maximum financial responsibility.
What plan you choose will often depend on how much premium you can afford and the amount of your deductible and out-of-pocket maximum.
The option to forego coverage, as you can see, is not wise. Costs for care and treatment can take all of your savings and then some, should you have to pay full price. Having health insurance can reduce these costs significantly.
Health insurance is a valuable piece of your overall financial picture. Just like saving for retirement and paying down debt are smart financial moves, having health insurance is, too. Be sure to find the right plan for you and your family – the benefits will someday far out way the costs.
1. Raghupathi, Wullianallur and Viju Raghupathi. “An Empirical Study of Chronic Diseases in the United States: A Visual Analytics Approach to Public Health.” International Journal of Environmental Research and Public Health, Vol. 15,3 431, March 1, 2018 (accessed April 2020).
2. Konish, Lorie “This debt could force you into bankruptcy, and it’s not student loans.” CNBC, June 25, 2019 (accessed April 2020).