Heading Out on Your Own: A Young Man’s Guide to Health Insurance

by Brett & Kate McKay on May 31, 2011 · 63 comments

in Money & Career

I can distinctly remember the day I had to sign up for my own health insurance plan. Kate and I were getting married which meant I would be kicked off my parents’ plan. I sat down at my bachelor’s thrift store kitchen table and looked through the paperwork. I felt like a grown man. I was cutting the strings from my parents and becoming self-reliant.

But I also remember feeling super confused by the crazy terms and acronyms before me. Which plan was right for me? How much was this going to cost? Why don’t they teach this crap in school? It took me a couple of weeks, but I was finally able to adequately wrap my 22 year old head around the health insurance labyrinth and pick a plan that was right for us.

This will only hurt for a second.

Sure, health insurance isn’t a very sexy topic, but learning those life skills basics is part of growing up, and if you’re like me, no one ever sat you down and explained how this stuff works. So to help those young men out there who are about to enter into the grown-up world of health insurance, I offer this primer in hopes of them avoiding my state of utter confusion. Of course, this post is aimed at American men; other countries have their own systems (although this post is not the place to debate them!).

Why It’s Important to Have Health Insurance

According to the Independent Insurance Agents and Brokers of America, young people ages 18-24 are less likely to be insured than any other demographic. In fact, only 1 in 3 young people ages 18-24 are insured.

Many young men forego insurance because they feel like it’s an expense they simply don’t need. Men in these demographics are typically healthy and probably haven’t visited a doctor in a few years. They think they’re invincible and that nothing bad will ever happen to them.

While I understand the cocksure attitude, it’s always better to be safe than sorry. If you’re one of those young guns who doesn’t think he needs insurance, here are a few reasons you might reconsider:

Unpaid medical bills lead to debt and bankruptcy. I worked at the U.S. Trustees office a few years ago. They’re the agency that manages bankruptcy cases in the U.S. Most of the people who filed for bankruptcy did so because they couldn’t afford to pay their medical bills.

Health insurance can’t always save you from astronomical debt if something catastrophic happens to you, but it can sometimes keep you from falling into that hole or at least mitigate the debt. Health insurance plus a fully funded emergency fund can go a long way to keeping you out of financial disasters. Remember, an ounce of prevention is worth a pound of cure.

Healthcare is cheaper with health insurance. Health insurance companies negotiate with healthcare providers to lower the costs of healthcare. So for example, a doctor might charge $250 to cast an arm. The health insurance company will look at that price and tell the doctor, “Make that $100 and you got yourself a deal.” The health insurance company will then pay its portion of the $100, and the doctor will bill you for the rest.

If you didn’t have health insurance, you’d have to pay the entire $250 or negotiate for a lower price on your own. Because health insurance companies are so big, they have a lot of leverage in haggling, which often means you can get a better deal.

You miss out on preventative care and screenings. It’s much cheaper to prevent medical conditions than it is to cure them. Yearly physicals can catch health issues before they become full blown problems. Many health insurance plans offer these screenings for free.

Health Insurance Lingo You Need to Know

To navigate health insurance, you need to know the lingo. Here are three key terms you’ll see thrown around as you try to pick your insurance plan.

Premium: a fixed monthly rate you pay to have insurance. How much you pay for your premium each month depends on your health insurance plan.

Deductible. Your deductible is the pre-determined amount YOU have to pay out-of-pocket on health services before the insurance company starts to pony up. So for example, let’s say you have a plan with a $1,000 deductible. That means you’ll need to pay $1,000 with your own money in a given year before your insurance will start picking up the bill.

Plans with high deductibles will have lower premiums, i.e., the more you pay out-of-pocket, the less you have to pay on a monthly basis to be covered.

One caveat with deductibles: Many health plans allow you to use services like a trip to the emergency room or a routine doctor’s visit without meeting the deductible first. Your insurance will cover part of the cost upfront for those sorts of things before you’ve paid your deductible. You’ll get a bill from the doctor a few weeks later for the costs that weren’t covered.

Co-Payment. Many plans require you to pay a co-payment for doctor’s visits or for medications. A co-payment is a fixed payment required by an insurer as a cost sharing arrangement. For instance, you can pay $20 for an office visit and $10 for a prescription. After that initial co-payment from you, your health plan covers the rest.

Now you might be asking yourself, do your co-payments count towards your deductible? Depends on the plan, but for most plans, co-pays don’t count. Drat!

Different Kinds of Plans

Health Maintenance Organization (HMO). Under an HMO, your insurer gives you a list of primary care physicians (PCP) you can choose from. You can only choose from that list. If the doctor you’ve been visiting since you were a wee lad isn’t on the list, you can’t see him. Sorry. After you choose your PCP, you must visit him/her for any medical issues. The PCP then decides whether your ailment is bad enough to warrant a visit to a specialist. But again, your HMO dictates what specialists you can see.

In short, HMOs put restrictions on services a patient can receive and make going to see a specialist rather inconvenient. However, the lack of choices keeps premiums low, thus making HMOs an affordable option.

Preferred Provider Organization (PPO). PPOs give patients a bit more choice in their healthcare than HMOs. You can go to any doctor you want, but visits are more affordable if you stay within the network of physicians that work with the PPO healthcare plan. PPOs will cover visits to out-of-network doctors and hospitals, but not as much as if you had used a pre-approved doctor.  Another benefit is you don’t have to get a referral from a primary care physician before seeing a specialist. However, if you visit a specialist outside your network of physicians, expect to pay more. The increased flexibility often results in higher premiums and co-pays.

Point of Service (POS). POS plans are a hybrid of HMOs and PPOs. Like an HMO, patients are required to get referrals from a primary care physician before seeing a specialist. Like a PPO, patients have more flexibility on who they pick as their PCP.

Exclusive Provider Organization (EPO). EPOs are similar to PPOs in that patients don’t need to visit a primary care physician before visiting a specialist. As long as a doctor is in your plan’s network, an EPO will cover the service. Unlike PPOs, EPOs do not cover visits to out-of-network doctors at all. You can visit an out-of-network doctor if you want, but you’ll be stuck covering all of the doctor’s bill.

High Deductible Plan+Health Savings Account. An affordable healthcare option for healthy individuals is a high deductible health plan along with a health savings account (HSA). In exchange for having a higher deductible, you pay a lower monthly premium. Most PPOs and EPOs provide high deductible options. After you sign-up with a high deductible plan, you’re eligible to open an HSA.

HSAs have some pretty awesome tax advantages. If you have a family, you can deposit up to $5,950 a year tax free ($3,000 if you’re single). You’ll get a debit card with your HSA. Anytime you need to pay for qualified medical expenses (co-pays, drugs, bandages), you use your debit card. Basically, when you put money into an HSA, you don’t have to pay income tax on it. You can write off contributions at tax time.

A nice feature with HSAs is that any money left over in your account at the end of the year rolls over to the following year. It’s not like Flex Savings Accounts (see below) where you have to spend your contributions by the end of the year or you lose it.

High Deductible Plan+Flex Savings Account. Works pretty much the same way as an HSA. Employees can contribute a part of their paycheck to an FSA that can be used for qualified medical expenses. The big difference between FSAs and HSAs is that with FSAs, if you don’t spend your contributions by the end of the year, you forfeit the money to your employer. It’s called the “use it or lose it” rule. Personally, I think HSAs are much better than FSAs.

Which Plan Is Right for You?

Deciding which plan is right for you can be a daunting task. With so many choices, it’s easy to become overwhelmed. Be sure to read all the materials on different plans and work through the different worksheets that many health insurance companies provide to help you determine which plan is right for you.

As you browse through the different plans, here’s a short list of questions you might consider to help you narrow in on a plan that fits your needs:

  • Did I get sick a lot last year? Do I have any conditions that require me to visit a doctor more than a few times during the year? If so, you might consider a higher premium plan so you can visit the doctor more often without having to pay a lot out-of-pocket for your deductible. If you’re healthy and don’t visit the doctor all that often, a higher deductible plan with lower monthly premiums might be a better option.
  • Do I want to be able to go directly to a specialist without seeing a PCP? If so, avoid HMOs and POSs and opt for a PPO or EPO.
  • Is my current doctor in my plan’s network? If he’s not, you won’t be able to use him if you have an HMO. Even if you go with a PPO, you’ll have to pay extra to visit your out-of-network doc. You’ll have to decide if the extra cost is worth it and if you’re willing to switch doctors.
  • Am I getting married soon? How easy is it to add a spouse to my plan?
  • Am I planning on becoming a dad soon? Many plans require that you pay for maternity coverage for an entire year before your wife gets pregnant. If you don’t, they might not cover the costs of maternity check-ups or even delivery. Check with your insurance company before you and the Mrs. decide to start making babies.

Getting Health Insurance Through Work

Congratulations! You landed your first adult job with a salary and health benefits. *Firm handshake, slap on the back*

Now for your first assignment: picking your health insurance coverage. Some companies only give their employees one crappy option while others provide a Chili’s-length menu of different plans. It can be pretty intimidating to pick which plan is right for you, so don’t be afraid to ask your co-workers or an HR person for some advice.

Just because you have a job, health insurance isn’t free. Big companies can buy insurance for less than individuals because their size gives them greater bargaining power and discounts. But a big misconception that many young employees have about health insurance from work is that it’s entirely free. Unless you’re working for some super generous company that covers all your healthcare costs without docking your pay, you’re still going to have to pay a monthly premium. While not free, many companies do pay part of your health insurance plan, and the part that you pay is deducted from your paychecks.

What coverage you go with will affect how large of a premium you pay, and consequently, how much your paycheck will be. If you pick the plan with all the bells and whistles, expect a smaller paycheck than you would get if you had picked a more bare bones plan.

Once you pick a plan, you’re usually stuck for a year. When choosing your plan, choose wisely because you’re going to be stuck with it for awhile. Most companies only allow employees to make changes to their health benefits one time a year during a period called open-enrollment. There are a few exceptions to this rule for things like getting married or having a kid.

What to Do If You’re Unemployed or Self-Employed

If you’ve recently graduated from college and still haven’t landed a job or if you’ve decided to be your own boss, it might seem like getting affordable health insurance is out of your reach. Never fear. You do have some options.

Buy individual coverage. Believe it or not, most health insurance companies offer pretty affordable individual and family coverage. When Kate and I were first married and in school, we bought a plan directly from Blue Cross Blue Shield of Oklahoma. Today, now that we’re self-employed we’re buying our healthcare coverage directly from BCBS again.

Because Kate, Gus, and I are healthy and don’t have any major problems, we have a high deductible plan with a health savings account. Despite being a high deductible plan, I haven’t had to pay much out-of-pocket for routine visits or medication. Our plan actually covers a great deal of those costs up front without me having to pay a deductible first. For coverage for all us, including dental and maternity coverage (in case Kate gets pregnant again) we’re paying $426 a month. And I make sure to set aside as much money as I can each month in our tax free health savings account. The plan comes with free yearly physicals and free immunizations.

To find a plan right for you, check out ehealthinsurance.com. You just enter your zip code and you’ll get quotes from insurance companies in your area.

Stay on your parents’ plan. It used to be as soon as you turned 19, stopped going to school full-time, or got hitched, you got kicked off your parents’ health insurance (that’s what happened to me when I got married). Under the new healthcare legislation, adult children can stay enrolled on their parents health insurance plan until age 26. If buying your own health insurance isn’t an option, ask your parents if you can stay on their plan. Offer to contribute some money every month to help offset the cost of covering you. There are some caveats with this law. For example, while you can remain on your parents’ plan even if you’re married, your spouse and kids won’t be covered. For more details on staying on your parents’ plan, check out healthcare.gov.

Get a job flipping burgers. Or making coffee. Or folding clothes. The job market is tough right now for recent college grads. While you’re waiting to get your first big 9 to 5 job, get a stopgap job in retail or food service. Many of those sorts of jobs offer group health insurance plans you can take advantage of.

Short-term health insurance. Short-term plans are a low cost way to get coverage while you’re in-between jobs. Short-term health insurance plans have low monthly premiums, but a very high deductible, and they only cover you for a limited amount of time–usually 30 to 120 days. These are great plans for healthy people who want to avoid the crippling debt that can come with a major medical emergency. For more info about short-term health plans, check out gradguard.com and ehealthinsurance.com.

I hope this short little primer on health insurance was useful for you gents new to the game. For those of you who have been dealing with health insurance for awhile now, do you have any advice or insights to add? Share them with us in the comments.

{ 63 comments… read them below or add one }

1 Jake May 31, 2011 at 11:37 pm

This is one of the more helpful articles I’ve seen in a while.

2 Alex J. May 31, 2011 at 11:58 pm

Great article, especially for those of us who are younger gentlemen and are unfamiliar with such verbiage.

3 Lee June 1, 2011 at 12:17 am

I agree with Jake, well written and extremely helpful. A great guide to help those new young men out. I even learned a thing or two. Thanks for taking the time to write it.

4 Jeff June 1, 2011 at 12:21 am

I don’t usually post comments but this article was particularly helpful to me. Thanks!

5 Tony June 1, 2011 at 12:53 am

This is a great resource. How about a follow-up article on what how often to get checkups and what exams to get by age? I’m mid-20′s, haven’t been to the doc in a couple years, and been researching and don’t really have a sense of the real answer. I HATE going to the doctor but want to make I get in at least the bare minimum.

Thanks again for an informative resource.

6 ThomsonsPier June 1, 2011 at 5:40 am

This is also an interesting article from the perspective of an Englishman; I’m lost in online discussions about US healthcare, so it’s nice to have some things explained.

7 Peter June 1, 2011 at 7:41 am

As somebody who’ll need to to find his own health insurance next year (graduating from college), this article was immensely helpful. Thanks a lot!

8 Westicles June 1, 2011 at 8:11 am

GREAT POST! Very accurate and consise. The only suggestion I would have is a small little disclaimer on foreign travel. Most insurance carriers do not cover you if in a foreign country and you are injured. To avoid financial catastrophe, it may be wise to seek added insurance when traveling. Just a thought.

Can you do a piece on retirement plans?

9 Art Forrest June 1, 2011 at 8:31 am

Great article, very helpful advice. Here’s another “tip” I’d like to add: you’ve mentioned ehealthinsurance.com as a resource to find plans and prices. They are one of the largest online insurance agencies and sell all over the country. However, plans & prices vary widely from state to state, so I’d be more inclined to suggest folks find a broker in their specific area who specializes in health insurance. How? Visit the NAHU website (http://nahu.org/consumer/findagent2.cfm) to find one near you. NAHU is the professional association of insurance brokers who specialize in health insurance for individuals and businesses. You’ll be able to find someone near you who is familiar with the best companies and plans in your area. Finally, and as you indicated in the post, be sure to NOT buy more coverage than you need – do you want “insurance” (something to help pay for big, expensive, unexpected stuff) or health care “financing” (coverage for routine, preventive things)? Here’s something everyone should consider: does your auto insurance pay for oil changes, new tires, & that brake job? If it did, do you think you might pay more for your car insurance? Same thing w/ your health insurance. Here’s my philosophy – insure the “big” stuff and budget for the rest. Great post!

10 Jack B. June 1, 2011 at 8:35 am

“Adult children”? At age 26?

That’s an odd term to see on Art of “Manliness.”

11 Ben June 1, 2011 at 8:57 am

One important point to remember is that the health care industry exists solely to extract the most money out of you as possible. The health care industry has never made anyone healthy. Rather it makes you broke and often severely injures or kills you in the process.

If you want to be healthy, eat a good healthful diet (no prepackaged foods, plenty of whole wheat grains, fruits and vegetables), and get plenty of exercise. If you want to be bankrupted and used as a guinea pig for all sorts of bizarre experimental voodoo and chemical poisons, get your regular physicals and checkups.

12 Chris A June 1, 2011 at 8:58 am

Thanks for the great info! It still amazes me that this type of practical information, like how to choose health insurance and how to take care of personal finances, are not taught, or at least made mandatory, in high schools or colleges. I learned plenty about micro and macro economic theories, but nothing regarding the practical things that I needed to know as I became independent.

13 JB June 1, 2011 at 9:33 am

Great article but there is one very large error. Healthcare, specifically health insurance, is where I make my living so I have been doing my best to correct misconceptions.

Health insurance through an employer is in fact significantly more expensive than if you buy it individually and is one of the main reasons the cost of healthcare is so high. The amount you pay for your insurance will be cheaper, however keep in mind most employers will pay 80 to 90% of premium cost leaving you to only pay 10%. Therefore if you are a 25 year old man and your employer is charging you $60 a month to pay 10% of your premium your actual premium is truly about $600 a month, however as an individual a 25 year old man could get a policy for around $125 a month.

Larger groups mean unpredictable risk for an insurer therefore more expense, individuals are more predictable and therefore cheaper. I used to believe the same thing about group insurance but now that I’ve worked for a health insurance company the last 6 years I know better. This is a myth we need to slay in order to begin addressing the issue with the expense of health insurance.

14 Eric June 1, 2011 at 9:42 am

Great article. Another thing to consider is that some plans have an out-of-pocket limit which caps the total amount you are required to pay. If you have an out-of-pocket limit, then your total potential liability is the total annual premium paid + the out-of-pocket limit. If you have a lot of medical expenses, then you should consider what your total annual liability would be under each of the different plans. The conventional wisdom is to purchase a higher premium plan if you have a lot of medical expenses, but in my case it was much cheaper to purchase a high deductible plan even though we were having a baby.

15 Sean June 1, 2011 at 9:45 am

Great article! I read everyday and this one really helped me out… how about doing one on IRA’s? I’ve been considering starting one (finally), but wading through all the information online is exhausting.

16 Eric June 1, 2011 at 10:00 am

@JB
“Health insurance through an employer is in fact significantly more expensive than if you buy it individually”

In my experience that is only true if you are young and healthy. If you are older or have health problems individual insurance is prohibitively expensive if it is available at all.

If you have suggestions, I would love to hear them. My parents and in-laws are currently facing this problem.

17 Nick Estelle June 1, 2011 at 10:06 am

As an independent insurance agent, I love the way that you’ve broken a very complicated subject down into layman’s terms.

I would caution readers to steer clear of short term policies whenever possible, simply because they have an expiration date. If you are on the plan and you get diagnosed with cancer (for example), you’ve got X number of days before coverage runs out, and suddenly it’s much more difficult to qualify for the low rates.

18 Rustybadger June 1, 2011 at 10:17 am

On the other hand, it’s probably easier in the short term and cheaper in the long run to just move to Canada, where we don’t have those problems! Pick a province that doesn’t charge healthcare premiums, if you really want to save money.

Of course, there’s downsides to tax-funded healthcare: namely, taxes. But when you don’t have a bloated military running all over the world killing people for Fun And Profit, you have a bit extra to spend on things like medical care and infrastructure maintenance.

19 Ben June 1, 2011 at 10:27 am

Thanks, I’m going through this same thing right now since I’ve started a new job that doesn’t offer health insurance. Good to know what I’m getting myself into.

20 John June 1, 2011 at 10:56 am

Some people of faith choose to opt out of health insurance for several reasons. SamaritanMinistries.org is the option we use, and we’re very happy with the community approach to meeting our health care needs.

21 JB June 1, 2011 at 11:36 am

@Rustybadger. You’re a jack a**. No way to sugar coat it. Thanks for insulting our military nitwit and good luck getting healthcare when you’re actually sick. Socialized medicine is great when you don’t need it. When you do get sick you will discover why there are so many hospitals right over the border in the US. We know we there is a lot of traffic from Canada. Also our “bloated military” is the only reason half the world (Canada included) isn’t speaking German or flying a Soviet flag over their capitol. We’re not going bankrupt because of our military, we’re bankrupt because of our social programs.

@Eric. You are correct, it is the young and healthy who are punished most by employer sponsored plans. If you are older the difference in rates isn’t as cost prohibitive as you might expect (unless you are in an over regulated state like New York or California), depending on your health. As an example 50 year old man with no major health issues and a non-smoker can get a policy with Blue Cross Blue Shield in the state of TN at around $185 a month ($2,500 deductible, $3,000 max out of pocket). Obviously that dynamic changes a good bit if they have pressing health issues and people never like to hear it but it should change based on your utilization just as auto insurance does. If you are looking for less expensive insurance United Healthcare has some reasonable plans through Pacificare, Great West Life has some very good rates, and an HMO is always cheaper than a PPO. Does that help at all?

22 Dennis June 1, 2011 at 11:50 am

An FYI for people considering HSA/FSA. Part of the recent changes in health care included new restrictions on what you can spend the money on. Before you could spend it on OTC (over-the-counter) medicines, bandages, etc. in addition to other medical expenses. As of 2011, that’s no longer allowed.

Having said that, I still chose the high deductible/HSA option because it fits best for my current place in life (30, single and healthy) and I highly recommend it. The money can go toward co-pays, your medical deductible AND (this is the best part) it can also be spent on dental and vision expenses, as they qualify. It comes in really handy as, even with insurance, dental and vision costs can still be expensive. (and as was stated in the article, the HSA/FSA money is tax-free).

23 Bill June 1, 2011 at 12:17 pm

JB. Those are terrible cheapshots at Canada and universal healthcare. The George W. Bush fearmongering has to stop. Canada has one of the best healthcare systems in the world as well as one of the highest longevity. So do the English and French. What they also don’t have is a gigantic lobby group composed of healthcare providers who want to keep it private so that their bloated profits will continue. The instant you get sick, you are covered where there is universal healthcare. When you aren’t sick, your taxes will cover those who are. Do you want to take the risk that when you need it, the coverage won’t be there? Americans have that issue. Also, the number one cause of American bankruptcies is medical costs. Canadian, English and French tax rates are not that much higher than American ones, but that security is there. I will take that any time.

24 Abhisek Bhowmik June 1, 2011 at 12:31 pm

Great article. Can someone advise some info on another piece of health insurance – Visitor health insurance. My parents are planning to visit US – can they buy standard health insurance plans..it seems they are cheaper than visitor insurance plans.

25 Ian June 1, 2011 at 12:37 pm

“Healthcare is cheaper with health insurance. Health insurance companies negotiate with healthcare providers to lower the costs of healthcare. So for example, a doctor might charge $250 to cast an arm. The health insurance company will look at that price and tell the doctor, “Make that $100 and you got yourself a deal.” The health insurance company will then pay its portion of the $100, and the doctor will bill you for the rest.

If you didn’t have health insurance, you’d have to pay the entire $250 or negotiate for a lower price on your own. Because health insurance companies are so big, they have a lot of leverage in haggling, which often means you can get a better deal.”

Perhaps in some cases. On the other hand, many docs will give you a significant discount if you don’t have insurance, but will pay cash-that means the green stuff, not the little plastic card in your wallet. The reason is that he may have to wait several months to get a check from the insurance company and clear your debt from his books, as opposed to receiving payment at the time of service and having a completed transaction.

The problem with this method is that, even with the discount, the total cost is likely more than your co-pay, depending on the procedure. If you are uninsured, though, it never hurts to ask and it could make the difference between getting treatment or going without.

26 tman June 1, 2011 at 1:26 pm

In America it is nice to have health care insurance, but it is not totally necessary, that is at least in CA. Most county health services will take care of your emergency needs at little or no cost, depending upon your income. If you have a high enough income then by all means go out and get insurance, hopefully your employer will provide. But when I think of the ammount of money I have spent over the years compared to the payout I’m apalled imagine paying $60 a month for 10 years that comes to a total of $7200 out of pocket, include the additional $500 a month that my employer paid and you get $67,200 paid in 10 years time. imagine what you could do with that money. If you saved that money, then, by chance, became seriously ill you could just draw from that account, take a wonderful trip to India or Thailand and recieve excellent service at 1/3 the cost and have money left over. Remember most doctors ar American trained, and hospital service is usually superior. An anual checkup shouldn,t cost over a couple a hundred and there are many clinics with theseservices available.

27 Broklynite June 1, 2011 at 1:49 pm

I feel that one more point needs to be added.

Make sure to keep every single document pertaining to your health insurance. Any documents that you sign and send away, make a copy and hold onto that. A few years ago, I found myself in my mid-20′s in the hospital with kidney stones. Afterwards, I found myself with a bill for ~$15,000, and my health insurance refused to pay for one dime of it because they claimed that I had never been a member. All documentation I had signed had been sent off and never heard from again, and I had never received a card. The money had been taken out of my checks, but that was all there was to indicate that I had health insurance. If you don’t have a card, make a call immediately. Also, make sure whether or not you have vision or dental- those cards may come separately, and the insurance companies sometimes conveniently forget to send those too.

And don’t be afraid to fight when you know you’re in the right! I was in the hospital again a couple of years ago, having caught swine flu (yea, I’m a lucky guy). I had new insurance by this point. But this time, the hospital decided to add a separate line in the ER bill for the attending doctor looking in on me (har har). Well, my insurance has different companies that cover different kinds of bills. The one that handles hospital bills looked and said “Oh no, this is a doctor’s bill. We don’t pay that.” so the hospital sent it to the doctor’s bill company, who took a look and said “Oh no, this is a hospital bill, we don’t pay that.” So, the hospital contacted a collection agency and sent them after me. I calmly but firmly wrote to them, explaining in detail the situation with dates, reference numbers, etc to back me up. I also told them that if they wanted to take me to court, I’d laugh my way to the bank when I cashed the check I won from the countersuit I would lay against them for harrasment. Curiously, I haven’t heard back since, so maybe they’ve decided to straighten things out without harrasing me. But let this be a lesson to you- insurance companies don’t make a profit by just paying money or fulfilling their contracts. Always cover your ass!

28 Eric June 1, 2011 at 1:58 pm

Much needed. I’m thirty now and I wish this article was around when I was getting out of college. However, me and my wife just found out that her individual plan through BCBS of Texas (and it goes for most individual plans) DOES NOT include maternity coverage. In group/work coverages it does, but not through individual plans.

Be aware if having a kid is in your future.

29 RichP June 1, 2011 at 2:03 pm

A famous article from the American Medical Association includes a frightening statistic: medical system errors/dysfunctions/misdiagnoses are the third leading cause of death in the United States (Starfield, 2000). For example, about 12,000 people per year die due to unnecessary surgeries. I would be interested to see if similar studies have been done in other countries for comparison’s sake.

So this lends some credence to Ben’s post. Due diligence when it comes to selecting insurance plans is important, but you should also be aware of how the system operates and what risks it poses to you. Even though I have health insurance, I do everything in my power to avoid being sucked into the medical system because it’s quite hazardous to your health.

Link to the paper: http://www.jhsph.edu/bin/s/k/2000_JAMA_Starfield.pdf

30 Robert Weedall June 1, 2011 at 3:06 pm

Fortunatly my country already has full medical cover for all, but I am interested in seeing how the system works over in the US from an individuals perspective. Thanks guys.

@RichP: The UK’s might still be off thanks to Harold Shipman…

31 Kyle Webs June 1, 2011 at 3:34 pm

Thank you for this post! It’s just what I needed. ….Only 1/3 of people aged 18-24 have health insurance. I think that’s some pretty strong proof that maybe schools should stop teaching BS and start teaching things that actually matter in the real world.

32 Chris R. June 1, 2011 at 3:59 pm

I JUST finished doing open enrollment at my job and even though I’ve been doing this for ~6 years I’m still confused. Most confusing parts for me were the in-network and out-of-network deductible and out-of-pocket maximums. I think I have them figured out, still not sure, lol!

WE (wife and I) do have on going medical expenses and are planning for children in the future and one thing that I found surprising was even with the expenses the high deductible plan was still the cheapest of them all for us. For us when the higher deductible was met the plan actually had better benefits than the other lower deductible plans, and a lower premium, which was pretty significant. So going far enough over actually lead to better value. I just hope my math was right :)

33 Steve Treacle June 1, 2011 at 4:04 pm

I am so glad I have the British National Health Service, with healthcare free at the point of delivery to all who are in need.

If I were ill and in the USA, I’d probably take a rowing boat to Havana and let the Cubans treat me; then, as part of my convalsecence, I could drink daiquiris and smoke fantastic cigars!

Hasta la victoria, Siempre!

34 Kelly June 1, 2011 at 4:41 pm

Tman wrote:
“In America it is nice to have health care insurance, but it is not totally necessary, that is at least in CA. Most county health services will take care of your emergency needs at little or no cost, depending upon your income.”
Where do you think these ‘emergency services’ for low income people get paid from? Taxes. If you can afford health insurance and bought a plan, you’d be helping to lower everyone’s taxes just a tiny bit because we wouldn’t have to cover the thousands of dollars in bills that one ‘emergency’ visit to that county health service provider costs.

“…But when I think of the ammount [sic] of money I have spent over the years compared to the payout I’m apalled [sic] imagine paying $60 a month for 10 years that comes to a total of $7200 out of pocket, include the additional $500 a month that my employer paid and you get $67,200 paid in 10 years time. imagine what you could do with that money. If you saved that money, then, by chance, became seriously ill you could just draw from that account, take a wonderful trip to India or Thailand and recieve excellent service at 1/3 the cost and have money left over. Remember most doctors ar [sic] American trained, and hospital service is usually superior. An anual [sic] checkup shouldn,t [sic] cost over a couple a hundred and there are many clinics with these services available.”

Two points on this.
Point one: If you get ‘seriously ill’, good luck having the time to plan a trip to India or Thailand, let alone having the time to find a skilled and qualified doctor in a country you’ve never been to. Let’s say this ‘seriously ill’ involves appendicitis. You’ve got maybe a day from onset of symptoms to not being able to walk. This means you’ll be going to a local Emergency Room looking for treatment. You’re idea to simply go to another country to get cheaper (and likely less skilled) surgery works well when you have a lot of time to plan such a trip, not in emergency situations (which is why people get health insurance in the first place…).

Point two: With a decent health insurance plan, a typical appendectomy surgery might cost you a $50 copay. Even with a reasonable high deductible plan, you’re looking at maybe a thousand dollars out of pocket. Without insurance, however, you’re looking at paying $10,000 MINIMUM, and it’ll probably be closer to $20-30,0000 after the anesthesia bills, hospital stay, and doctor/surgery bills are all tallied. Yes, you could apply for their ‘charity care’ program are get much of the bill waived in a couple years when you’re approved, but doing so simply raises the prices the hospital charges to everyone else to recoup their losses, and is just relying on the ‘insurance’ of the hospital’s charity care program. In the end, this single surgery example would easily cover your $7,200 in premiums paid over 10 years, and would likely cover double or triple that amount. So putting that money in the bank instead of using it to buy insurance would still leave you with thousands of dollars of unpaid medical expenses from this single trip, and the follow up collections damage would likely destroy your credit for the next 7 years.

Another example: My friend had a baby who was in the NICU for 2 weeks due to some complications with the birth (resulting from the cord wrapping around the child’s neck in the womb, which is a fairly common occurrence as complications go). The NICU bill was $80,000 excluding the cost of the actual delivery. Yes, that’s $80,000. She had insurance (thank god), but without it, it would have bankrupted their family and/or cost them their house. A tragic emergency like this would *easily* cover your example of paying ~$68,000 over the course of ten years between you and your employer.

Bottom line: You’re wrong.

35 Warren June 1, 2011 at 4:56 pm

hehe, health insurance,. I love being canadian

36 Matt June 1, 2011 at 5:04 pm

You can also get insurance through a trade association, if you’re a member. I’m thinking of dumping my insurance and going with a health sharing group for ethical reasons.

37 Peter V June 1, 2011 at 5:15 pm

While not for everyone, another alternative to health insurance (besides being Canadian) is a medical expense sharing program such as Samaritan or Medi-Share. Technically not insurance, these plans have your medical bills reimbursed (usually after you’ve paid out of pocket) directly by other members. Instead of paying a premium, you send your monthly check to whoever the program tells you needs it that month. They tend to cost a lot less than insurance, and have the added benefit of a personal touch (e.g. when people send you money they pray for you). Most of them are religiously affiliated.

38 Will June 1, 2011 at 6:14 pm

Great article! This is exactly what I needed right now. Funny little synchronicity. Thanks a lot guys!

39 Blake June 1, 2011 at 6:41 pm

Thanks a lot for posting this. It really clears up a lot of gray area in health care.

40 Pete Ness June 1, 2011 at 8:03 pm

JB, if there’s a Jackass here. it’s you. You state that you make your living in the health area, so it comes as no surprise you try to perpetuate the myths about Canadian health care that Republicans and the American health insurance companies propagate. Health care has always been available when I’ve needed it in Canada, and I’ve had to use it a lot. I’ve had dialysis in both Canada and the U.S., and I had never even heard of reusing dialyzers (the filter) until I dialyzed in Florida. New dialyzers are always used in Canadian hospitals and dialysis units. We may pay higher taxes, but in Quebec, I pay no premiums, have no deductible, no limits, no issues with pre-existing conditions and merely show my card (looks like a credit card) when I need medical services. I’m going to the hospital tomorrow to have cortisone shots in my knees, and I don’t need an insurance adjuster to approve it, which is often the case with your health insurance coverage. Sure, we have a shortage of doctors in some rural areas and certain fields of practice, but I’ve seen events in the States where thousands of people show up for free medical care. We lose a lot of our doctors to the States, since you pay twice as much per patient in your system, but a lot come back after seeing the malpractice premiums, and dealing with your insurance companies.
And don’t get me started on the nightmare a person has in the States dealing with insurance and multiple doctors who don’t communicate with each other.
As for your military, why does a country with 5% of the world’s population spend 25% of the world’s military expenditures? Maybe you should have listened to President Eisenhower’s warnings about the military industrial complex. And saved a trillion or two by staying out of Iraq.
I apologize for my tirade to those of you who just wanted info on health insurance.

41 N.D. Jones June 1, 2011 at 8:11 pm

Great Article, A Quick note if anyine finds themselves in the situatuin my wife and I were in this past August. I am employed by local government and my insurance is covered. My wife found insurance through her employer. Since we each were covered we didn;t anticipate a family plan being required and in good standing at least nine months before a child is covered. We found this out and we have a wonderful set of fraternal twins, Liam and Gabbie. Wouldn’t take anything for them but would’ve appreciated knowing that prenatal/delivery/ultrasounds/labs will not be covered. I did negotiate (read haggled) cash rates for everything). I further complicated this by being Libertarian in my approach to life so, state welfare was out of the question, An expensive lesson, so please insure that you and your loved ones are COVERED.

42 Zohaib A. June 1, 2011 at 10:08 pm

One way to save costs on health insurance is to join a professional organization. Many offer discounted rates on health and life insurance as long as you are a member, and joining an organization can be a great gateway to professional networking and a library of knowledge.

43 Jonathan June 2, 2011 at 6:21 am

@ Pete Ness, JB, Rusty Badger,
Recognizing your right to voicing your opinions, I request you move your discussion on problems with American health-care system to another forum. This particular article deals with how the system works, not whether or not it works correctly or which nation has the superior system.

44 Andrew#2 June 2, 2011 at 9:40 am

Regards health care:

Jonathan it’s not really fair to ask for the discussion re: the viability of health care to moved elsewhere. It’s a valid discussion and argument for anything to do with health insurance.

While the Canadian/British/French/Norwegian/Swiss/Brazilian/every other civilized country on earth gives their citizens the opportunity to live without looking over their shoulder, the American system doesn’t. I am a conservative, both fiscally and socially, Canadian, but I can not justifiably see how socialized medicine, at least to a degree, is a bad thing.

I do not see how helping the poor or the everyman is un-American.

By law a Canadian is covered for healthcare. Period. An unsustainable burden? Doubtful — all it does is create an opportunity for new people and businesses to make a living.

Living without having to look over my shoulder is priceless. It allows me to concentrate on making a living and gaining wealth and prosperity. It protects me from incredible unforeseen financial risk.

45 Hilarie June 2, 2011 at 9:41 am

What a great article on health insurance – and so rare to find! Thanks to the readers for leaving helpful comments about their experiences.

46 MC June 2, 2011 at 6:11 pm

Brett,
Since I don’t see it here, I think it would be helpful to tell guys about COBRA, which is an option to keep them covered for up to 18 months after they lose their job:
http://en.wikipedia.org/wiki/Consolidated_Omnibus_Budget_Reconciliation_Act_of_1985

47 Buphill June 2, 2011 at 9:45 pm

This type of article could be turned into a great series of articles. Practical and aimed at young men, aka me. Thanks Brett

48 Pete Ness June 2, 2011 at 10:29 pm

Thank you Andrew. Jonathan , your request is respectfully denied. Our health care is health insurance, several non-Americans have weighed in, and as far as I’m concerned, I can respond to JB’s comments in the forum in which they were made.

49 Tim June 2, 2011 at 11:13 pm

I think Australia has a good balance of public/private insurance.
I recently had a bike crash and needed surgery. I was admitted to hospital and had surgery plus follow up care for Free. It’s a relief to not have that burden hanging over my head.
On the other hand if it was elective surgery we have a waiting list, where people unfortunately need to wait several months to receive surgery which, rightly so, is a major is a political issue. Therefore people who can afford it take up private health insurance and get care allot quicker, problem is the Private insurers need to offer gimmicks like massage in their packages to be competitive. Everyone is cared for, some unfortunately need to wait. The Australian government spends 9% of GDP on Health care, USA spends 16+% and we don’t have international health charities providing primary care in our cities either. GWB tried to lobby our government to get rid of the Pharmaceutical benefits Scheme because it hurts US pharmaceutical companies.

50 SK June 3, 2011 at 3:43 am

I wish it was this easy. I’m 30 and moved back in with my parents last year. I have no job, no insurance, and only a few hundred bucks. No debt, thankfully. I’ve been applying to any job I can find – even stuff in the fast food industry. Hundreds of resumes and cover letters, only 2 interviews, and no job prospects. Even if I got a full-time job, it wouldn’t make enough to rent a studio apartment. Anyhow, health insurance and marriage are definitely on my list once I get a job. Sure hope I find one this year!

51 Armi Legge June 4, 2011 at 7:53 pm

The best health insurance is to stay healthy in the first place.

You obviously can’t avoid all catastrophes, but it’s much better to prevent disease than to treat it. Still, I want to have my butt covered if I get hit by a truck!

Great work guys,

-Armi

52 Val June 5, 2011 at 4:02 am

Nice article. Being a European citizen, though, I don’t deal with this kind of problems. :)

53 Dianna June 5, 2011 at 12:37 pm

As an ER nurse, I want to print this article and give it to the many uninsured people I meet. Excellent information, in a easy to digest format. Great job!

54 Gunnar June 6, 2011 at 9:12 am

Interesting article, if the 426$ covers everything for a family of three it actually costs about the same as in Belgium. Since here 13% is taken from your wage as tax to cover for national health insurance. In numbers: you’ld pay the same in Belgium if you would earn 3000$ a month as a couple. I think it’s quite similar in neighbouring EU countries.

I calculated this some time ago after reading the article, I wasn’t going to post it but since I read several comments about “europeans: no problem here” I just wanted to bring this up with some exact numbers. There’s only an advantage for people without a wage in Europe, with no job security this is ofcourse a big advantage.

The challenge in the US seems to be to pick the right plan and this article must be very helpful to achieve that.

55 KierO June 6, 2011 at 10:01 am

God bless the National Health Service, here in the UK there is no such thing as health insurance. You can of cource choose to go private, but 99% of all health care in this country is provided to us by the government, all we pay is a small tax called “National Insurance” and then care is free at POS. No questions, no pre-approval, no co-pays or deductables, you need help you get help.

I hate insurance at the best of time (Car, Home etc..) I am so glad that I never have to deal with this for the purposes of health. Full credit to you for providing this information to people that will no-doubt find the entire system confusing.

56 Hunter Stockton June 10, 2011 at 9:45 am

I thought little of Health Insurance for quite a long time – I was in full-time employment and, living in the Channel Islands (it’s like the UK but without the bad bits) we have healthcare provided free-of-charge by the government. It’s a very sensible way of doing things and really doesn’t cost much. Bearing in mind our basic rate of tax is 20% (applied to all up to a certain level of income), Social Security (which covers healthcare) is a further, iirc, 5% on top from both the employee and employer.

HOWEVER – when moving to a new job, I was offered health insurance. It wasn’t covered by the Company, but comes straight out of my salary. I considered it and, thankfully, went for it. Having it through my employer costs half the money that it would cost by doing it myself – around £720 per annum.

Shortly after signing up privately, I had some serious medical problems that required two fairly major bouts of surgery and left me on crutches for six months.

I could have gone through the public system for this, however if I had I would likely be still waiting for a scan, let alone surgery. With my insurance it was a case of calling throguh to my insurance Company, getting approval for the scan/clinical appointment/surgery and then having the procedure done, normally within a couple of days.

Going privately and paying for these myself would have cost me in the region of £35-40,000 ($58-66,000 at todays rates). Aside from the cost, the level of treatment provided was astonishing. The man operating on my ankle (one of my conditions necessitated the replacement of my achilles tendon) also operates on the GB 2012 Olympic Team and was a Senior Clinical Lecturer at Imperial College London – one of the UK’s top Medical Colleges. Being a private patient put me at the front of the queue.

Sorry for the long and, probably, quite boring comment, however I cannot speak highly enough of Private Medical Insurance. I understand that the situation is very different in the US, but often lacking even the most basic of free medical care would, to my mind, make health insurance all the more important.

57 Kevin June 10, 2011 at 12:55 pm

I actually have my because of the Health Benifits it provides. I had an incident with a wasp stinging me, alergic reaction. An abulance ride ensued. My Insurence covered it all. 30k I did not pay a dime. The debit could cripple, if I was not covered.
As healthy as you may think you are. It is always good to be safe.

58 GLRules June 13, 2011 at 11:25 am

Don’t forget, your out-of-pocket costs for your own health premiums are TAX DEDUCTIONS! Save your statements and receipts!

Through your work, it’s counted as a Benefit and you can be taxed on it as income. Yay America.

59 Caleb June 13, 2011 at 11:50 am

Could we get one of these for Life Insurance, too? I hear rates are lower or me now at 23 than they’ll ever be again, but I don’t know what I should do or how it will benefit me down the road, exactly.

60 joe June 15, 2011 at 11:00 am

” Don’t forget, your out-of-pocket costs for your own health premiums are TAX DEDUCTIONS! Save your statements and receipts!

Through your work, it’s counted as a Benefit and you can be taxed on it as income. Yay America.”

only to the extent that expenses exceed 7% of your AGI

61 Kyle June 19, 2011 at 8:41 pm

Yeah i think one of these on life insurance would be extremely helpful. Also one on retirement would be good!

62 Robert October 30, 2012 at 12:44 am

Apparently, there are fees for ambulance rides. Did you know that? I didn’t. I only found out about it from one of my research about looking for health insurance. Anyway, that article got me thinking—maybe I’d need to make sure it was covered by the health insurance provider I’m getting for me and Christine. We’re expecting our first baby so we’re going to need all the help we can get; having that ambulance fee covered can help us even just a bit. So I suggest discussing that with your insurance providers. I’ve talked about my wife’s pregnancy with representatives from http://www.nib.com.au . They were pretty easy to talk to and gave me a lot of insight. So I guess the point is to be open about your health concerns regardless of your insurance provider. I realised that asking several questions from various insurance companies about stuff that were confusing me was way better than signing up with a health care provider… only to find out in the end that my needs weren’t going to be met.

63 JrOMM January 24, 2014 at 1:36 pm

Great article with sufficient information to have a better understanding about health insurance. For I know now what type of plan is best for me and my family. Thanks alot!

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