Insurance plays the role of the life-saving jacket when your boat is vulnerable to sinking or has already sunk into the depths of dark waters. In simple words, insurance offers you financial protection during an emergency or loss.
How do insurance systems work? To explain this, imagine you bought a health insurance policy from XYZ company, and the company promises to pay for your medical bills during your health-related emergency. But do you think XYZ will pay from its pocket?
Of course, no. You must pay monthly premiums to get financial protection from an insurance company, and it is an amount you pay in exchange for financial security in unforeseen events.
Now, are you wondering whether is paying for health insurance always cheaper? A workplace health insurance plan will cost you fewer bucks than an individual health plan.
Unfortunately, many people don’t comprehend the significance of getting insurance. In 2020, CBO claimed that around 31 million people in the US are uninsured, and the statistics will increase in the upcoming years.
These people don’t even just once think about what is one cost of avoiding insurance? Maybe they are not aware of the usefulness of insurance.
Today’s blog revolves around diverse issues, like adverse consequences of not getting insurance, insurance costs, and much more.
4 Damaging Consequences Of Not Having Health Insurance
Not having health insurance can render you with expensive and deadly outcomes. Imagine you are suffering from a severe disease and don’t have money to afford treatment. Lack of treatment may lead you to death and leave your kith and kin traumatized.
Now visualize the same situation but with a whiff of twist. And the twist is that you have health insurance, which pays for your treatment. Neither you will have to meet your death, nor your family will be in despair since your health insurance company will pay for your treatment.
This section revolves around four worse consequences you may face without having health insurance. Let’s start.
1. Financial Burden And Debt
A person without health insurance pays more medical coverage, thereby inviting financial problems in the household. For example, your doctor diagnoses you with blood cancer.
Being diagnosed as a blood cancer patient out of the blue may overwhelm you, as the treatments to cure cancer are expensive. Above that, you earn $42000 per year, and what would transpire is that you will disburse more than half of your monthly salary on your cancer therapy.
As a result, there will be a lack of money to pay for your monthly electricity bills, water bills, grocery, kid’s high school fees, pet food, transportation fare, gas bills, and more.
To combat this lack of money, you may start getting medical loans to kick away your cancer.
Inability to pay back loans may cause you to opt for personal bankruptcy. Nerd Wallet (a private finance company) concluded through their research that medical bills are the primary reason people go for personal bankruptcy.
Briefly, Medical debts lower your credit score. However, you won’t have to face this issue with health insurance. Once you make a claim, the health insurance claim will pay your medical bills.
2. Delays In Treatment And Care
Apart from severe illnesses and mishaps, health insurance covers preventative care and routine checkups. The benefit of preventive care is that your doctor can recognize potential problems and instantly offer effective treatment.
People without health insurance can’t take advantage of routine checkups, and they may keep ignoring loud symptoms of the disease. Ultimately, this negligence of symptoms and lack of proper care may lead to their demise.
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A report published by Families USA says that 26100 people died in 2010 due to a lack of health insurance.
Also, the American College of Physicians published a report between 2000 to 2004 which says that the absence of health insurance poses financial obstacles to receiving medical treatment and care.
Overall, uninsured people receive half of the medical care received by the insured.
3. No Screening And Quality Care For Serious Diseases
Effective treatment and management of deadly diseases require early screening and detection. Medicare beneficiaries conducted a study in 2004 which shows how important it is to detect cancer earlier for survival.
People without health insurance are less likely to receive screening and preventative care than insured ones. Not only this, hospitals and medical centers don’t care much about offering quality care to the uninsured.
US laws state that the emergency room should offer immediate treatment to the insured. However, once the patient’s health stabilizes, the post-care is least.
By this time, you are aware that uninsured people don’t have to face just one cost of avoiding insurance but many.
4. Tax Penalties
Barack Obama, the former President of the US, signed a health reform law on March 23, 2010, which states that every US citizen must enroll in healthcare insurance or bear tax consequences.
The goal of the law is to provide affordable health insurance plans to citizens and improve healthcare. If you don’t buy health insurance, prepare to pay tax fines. And the penalty is $95 or 1% of your income.
However, you are not liable to pay fines if
- Your income is less than 138% of the Federal Poverty Level.
- You are an illegal immigrant–incarcerated or an Indian Tribal member.
- Your religion offers you healthcare.
- You do not live within the US.
Now that you know one cost of avoiding insurance let’s further dig into whether health insurance is cheap or expensive.
3 Ways To Lower Your Health Insurance Costs
Sickness or mishappenings are not your puppets, and you don’t know when you fall sick or meet with an accident. However, insurance is something you rely on in your dark times.
Buying an insurance plan is simple. You may be worried about insurance costs; don’t let fret clutch your heart. There are three ways through which you can minimize your health insurance costs, and these are discussed below.
– Pick HMO Over PPO
The main difference between HMO and PPO is the size of their networks of physicians, doctors, and hospitals and the diversity of coverage. HMO implies Health Maintenance Organization.
HMO is a network of doctors and medical centers that may provide your medical care and treatment at low rates. HMO recommends a doctor, and you have no choice.
Only in an emergency do you get treatment from another doctor when required. With PPO, you can choose the doctor or hospital you like, but you have to pay higher premiums.
Briefly, it would help if you opted for HMO to lower your health insurance costs.
– Pick A Plan With A High Deductible
Let’s first see what a deductible is. It is an amount you have to pay for your health care treatment before your insurance company starts covering you.
Insurance companies offer plans with high and low deductibles. Plans with high deductibles require you to pay lower premiums, whereas low deductible plans require you to pay higher premiums.
Now see, if you don’t visit your doctor frequently, you don’t have to pay your deductible. On top of that, your premiums will be low if you have chosen a high deductible plan.
Overall, choosing a plan with a high deductible will lower your health insurance costs.
– Opt For A Plan That Goes Along With HSAs
A health saving account(HSA) will kill two birds with a stone. How? First, you can use that account to pay for your medical and pharmacy expenses. Second, you don’t have to pay taxes at all.
If you choose an insurance plan that pairs with a health saving account, you may have to pay lower premiums as these plans have high deductibles.
Is There Anything That Health Insurance Does Not Cover?
After gaining valuable insights on one cost of avoiding insurance, you might ask: what does insurance not cover? There are a few things that health insurance doesn’t cover.
Finding out that your health insurance won’t pay your medical bills can leave you stunned later. You can always avoid that if you are oblivious of what health insurance doesn’t include.
This section covers five surprising things excluded by health insurance. Let’s dive in.
a) Illegal Acts
If you catch fire while cooking sandwiches, your health insurance company will pay for your damages. Your health insurance company will step backward if you see fire while freebasing cocaine.
They won’t offer coverage as you were engaged in illegal activity, and their policy excludes unlawful acts. Illegal act exclusions become effective when the policyholder suffers damages due to the commission of an unlawful act.
Even if your hospital prescribes medicinal marijuana, your health insurance won’t cover you.
b) Travel Vaccinations
Health insurance companies do not cover travel vaccinations. In simple language, if you want to travel across Africa and you want yellow fiver vaccination, your health insurance company will not forward its helping hand.
It would help you if some wild monkey bit you while you are in the US or any other country. Briefly. Health insurance companies do not offer you coverage for vaccinations before travelling, and you have to get that from your pocket.
c) Prior Authorization Doesn’t Mean Health Insurance Will Cover You
Prior authorization is an approval your doctor gets from your health insurance company before prescribing a particular medicine or performing any operation or test.
If the doctor disapproves, your health insurance company may not offer coverage for that medicine or operation. In that case, you have to pay from your pocket.
Why do health insurance companies require prior authorization? They need that to keep their costs in check. They want to ensure that the medicine or operation your doctor wants for you is necessary or not.
For instance, Medicine A(cheap) and Medicine B(costly) can treat your illness equally. However, your doctor prescribed you medicine B but fails to provide your health insurance company valid reason for choosing medicine B over A.
Your health insurance company won’t cover your Medicine B cost in such a situation. In short, prior authorizations don’t mean you get covered.
d) Wrong Hospital Admission Status
You should be aware of your admission status when you are admitted to the hospital. What does it mean?
If your health insurance company finds that you should have been in observation status while you were admitted to inpatient status, your insurance company will say no to hospital bills.
Therefore, it is essential to know your admission status for the sake of your pocket.
e) Nursing Home Care
No insurance company will pay for long-term nursing home care. After all, they are a business, not an NGO.
If you don’t have a long-term health insurance policy, you may have to pay for your nursing home or living facility from your pocket. However, it doesn’t mean a health insurance company won’t cover you.
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The company may pay for a short period for skilled rehabilitative services in a nursing home only if you have been in the hospital for three days as an inpatient before being shifted to the skilled nursing facility.
Hopefully, by this time, you know what cost is not paid by the insurance company. So, let’s see other types of insurance you should consider.
5 Types Of Insurance You Shouldn’t Skip
Apart from health insurance, there are more types of insurance that you shouldn’t skip. Uncertainty isn’t only present in health-related matters. What would happen if you lose your ability to work due to accidental disability?
What would you do if a hacker messed with your payment systems and stole your money? It would help if you had financial protection in these matters too. In this section, you will learn about five more insurance types you should consider.
1. Identity Theft Protection
Identity theft isn’t something to be taken leniently. You may have heard about cybercrimes–how cybercriminals break into your payment system and buy a mortgage in your name, file a false tax return, etc., and do other illegal activities.
There must be some protection against these online identity stealing crimes. Identity theft insurance will get you covered in times of need. Insurance Information Institute claims that identity theft insurance cost ranges between $ 25 and $50 per year.
Identity theft insurance usually covers lost wages, notary fees, legal fees, child care costs, credit monitoring services, copies of your credit reports, long-distance or international phone calls, and mailing documents.
Sometimes, it is already covered in homeowners’ or renters’ insurance policy; other times, you have to buy it separately. You may be slightly disappointed that this insurance policy has benefit limits.
The benefits range from $10,000-$15,000. You have to pay from your pocket if your identity theft cost exceeds the range. Also, this insurance doesn’t cover direct financial losses.
2. Long-term Disability Insurance
Physical disabilities steal not only your movement but also your ability to earn. Long-term disability insurance ensures that your injuries don’t stop you from receiving income and paying for your groceries and rent.
Long-term disability insurance covers Sprains and strains, Heart attack
Stroke, Coronary artery disease, Back pain, Scoliosis, Pneumonia, Pregnancy complications, and Rheumatism.
Don’t forget to get yourself covered. These days, top companies offer long-term and short-term disability insurance, and you don’t have to worry about anything.
You might also ask here: what is one cost of avoiding insurance? The cost of avoiding long-term disability insurance is the lack of income. Hence, more difficulties.
3. Auto Insurance
Auto insurance protects you against financial loss after an accident or theft and offers coverage for property, liability, and medical treatments. Your auto insurance policy will cover you and your family members regardless of whose car you are driving.
Every US state requires car owners to have bodily injury liability and property damage liability. The former covers expenses associated with injuries caused at the hands of you or your driver, and the latter covers costs related to damage you or your driver causes to another vehicle or property.
Many US states also require personal injury protection and uninsured motorist coverage, and the former covers expenses related to your or your passenger’s injuries.
The latter covers a situation when the driver who caused your accident doesn’t have enough liability coverage. On top of that, you can also buy underinsured motorist coverage.
Underinsured motorist coverage comes into play when another driver lacks coverage to pay the expenses for your accident on his behalf.
4. Homeowners Insurance
Homeowners insurance provides coverage for homes after mishaps like fire disasters, theft, natural disaster(lightning, wind, hailstorm), falling tree, and vandalism. Most insurance policies also cover furniture, clothing, and other objects.
Additionally, the policy also covers the medical costs of someone else injured on your property. Your insurance company may cover your yard, garage, swimming pool, fireplaces, walls, patio, swing sets, and fences.
Collectibles like artwork and jewellery won’t get coverage under this policy. Above that, this policy does not include damages caused by earthquakes and floods. However, it may vary from company to company.
If your company doesn’t cover floods, National Flood Insurance Program nursed by the Federal Emergency Management Agency will have your back.
5. Term Life Insurance
Death doesn’t knock on your door before arriving. If you die out of the blue, how will your family earn their bread and butter, mainly if they depend on you? There is no need to mention one cost of avoiding insurance?
They, too, need financial protection after you are gone. In this situation, term life insurance will be their life saviour, offering coverage for a certain period.
If the policyholder dies during that period, the death benefit (payout) will get paid to the spouse, children, parents, or even NGO. What exactly does term life insurance cover?
Term life insurance covers whatever your loved ones need, including short-term and long-term expenses. Overall, term life insurance is a legacy you leave behind for your loved ones.
And yes, if you die after your term life insurance is over, you get no coverage. Nevertheless, you can again buy a new life term insurance after your existing policy ends.
Frequently Asked Questions (FAQs)
Is insurance debited or credited?
For a policyholder, insurance is a debit balance since it includes the amount utilized to offer protection in case of adversity of any kind. For more clarity, you pay a premium from your pocket every month; hence, it is a debit balance.
What is the insurance cost for a life insurance plan?
Although insurance cost for a life insurance plan varies from company to company. Yet, Quotacy, a life insurance broker, provided data that a 40 years old man buying a 20-year, $500,000 term life policy has to pay a $27 premium every month. Also, factors such as gender or age may cause fluctuations in your insurance rates.
What should you keep a few things in mind while buying an insurance plan?
First, an insurance policy is a contract between the insurance company and the person or the company. Reading your insurance policy before paying for it is necessary, and you don’t want to encounter bitter surprises in the future.
The policy contains the insurance company’s responsibilities, premium rates, what is covered and not covered under the insurance policy, terms and conditions, etc.
Can you lower your health insurance costs?
Controlling illnesses and mishaps are beyond your control. However, there are ways through which you can lower your health insurance costs. You can choose an insurance plan with a higher deductible.
When you do so, you have to pay low monthly premiums. See, if you don’t visit your doctor frequently or take medications, you get no chance to pay your deductible.
This way, your premiums are also low, and you don’t have to bear the burden of deductibles.
Do employers offer health insurance?
Yes, employers provide health insurance to retain employees for long periods. Also, according to the Affordable Care Act, employers have to offer affordable health insurance plans to their full-time employees, or they will have to bear penalties.
What are America’s best insurance companies in 2022?
Top 10 American insurance companies include AAA Insurance, AAA Life Insurance, Aflac, AKC Pet Insurance, AllCare Health, Allianz, American Family Insurance, American National Insurance, Amica, and Anthem.
Is it better to have a $400 or $800 deductible?
High deductible insurance plans come with lower premiums and involve expenditure from your side before your insurance starts covering your treatment and care. Conversely, low deductible insurance plans provide enough coverage and often predict expenses, and they come with higher premiums. Choose the method according to your needs.
Is it reasonable to have a $0 deductible?
Zero deductible insurance plans may be more costly, and zero deductibles imply high premiums. Nevertheless, you don’t have to pay anything from your pocket in an emergency. Your insurance company will cover everything for you.
Is insurance a one-time cost?
Your age, gender, health, and death benefits are the factors that decide the cost of life insurance. To your question, is insurance a one-time cost? You pay this fee once a month.