Health Insurance and Finances

Have you ever thought of health insurance as a financial tool?  You are thinking that 401Ks, annuities, IRAs, life insurance plans are financial tools but not health insurance.  Health insurance actually does play into your finances.  How you use health insurance actually affects your ability to pay for healthcare.  Basically, you have two options:  without health insurance or with health insurance.

Let’s put the Patient Protection and Affordable Care Act (PPACA, ACA, Obamacare) mandate aside for just a minute.

A lot of people equate not having health insurance with zero access to healthcare or prescription drugs.  That’s not true.  Just because you don’t have health insurance doesn’t mean you can’t go to the Doctor.  It just means you will pay, in full, for office visit yourself, along with prescription drugs.   You can pay for any type of healthcare yourself as long as you have the money to cover it.

But what happens if you have a catastrophic event – auto accident, life-threatening illness?  Can you afford to pay for the thousands of dollars of medical expenses without going bankrupt?  Are you willing to go untreated for a life-threatening illness?

That’s why there is health insurance.  Just like auto insurance, it’s there to help offset your expenses.  The majority of people don’t go without auto insurance so why should you go without health insurance?  Let’s bring the ACA mandate of requiring health insurance back into the picture now.  Under the ACA, there are four metallic plans for health insurance – Bronze, Silver, Gold, and Platinum.  The amount of the premium tax credit you may be eligible for within the Health Insurance Marketplace (or Exchange) will be based on the Silver plan level.  The Silver plan is based on an 80/20 ratio.  This means the insurance carrier will pay for 80% of your healthcare costs and you will be responsible for 20% (a combination of deductibles, co-pays, and co-insurance on a yearly basis to the maximum out-of-pocket per your metallic plan.)  But you aren’t required to purchase the Silver plan within the Exchange.  You could choose the Bronze plan.  This means that Instead of the 80%/20% ratio, it’s now a 70%/30% ratio, the insurance carrier will pay for 70% of your healthcare costs and you will be responsible for the remaining 30%.  The Bronze plan will have lower premiums but higher out-of-pocket expenses.  The opposite goes for the Gold and then the Platinum level plans.  Gold level plans have a ratio of 90%/10%.  Platinum is 100%/0% ratio with out of pocket expenses aside.  The higher the plan the level, the more expensive your premiums will be BUT the less you will be paying in out of pocket expenses. 

You can now see how health insurance can actually be a financial tool.  Look at the different plan levels and determine which one fits within your budget. Can you afford to go without health coverage and pay for everything yourself 100%?  Can you afford smaller monthly insurance premiums and can pay a bit more out of pocket for routine doctor visits and prescription drugs?   Or, are you prone to illness, afraid of an accident, are willing to pay for a higher premium for lower out of pocket expenses?  The really big expense of healthcare comes when you need specialty services (MRIs, emergency room visits, specialty physicians, hospital stay, etc).

So, put pencil to paper.  Get out the calculator.  And have a heart-to-heart with your head and your checkbook and then decide which avenue works best for you.

No Comments

Comments are closed.

Call Now Button