Five years ago, the typical individual looking for cheap health insurance was someone who had no coverage. Today, it’s almost as likely to be someone who can’t afford the insurance offered by an employer.
How to approach finding inexpensive medical coverage depends on whether you and your dependents have no coverage or whether any policies for which you’re eligible simply cost too much.
If you’re changing jobs, you might feel secure due to health portability legislation to assure coverage with your new employer. However, once you slip into your new office and open some benefits brochures, you might be in for sticker shock.
For workers who have been laid off, COBRA coverage for up to 18 months is not always a choice. You’ll pay your regular premium plus the employer’s share of the policy cost plus an administrative fee. For some families, this is simply not affordable.
Should you or a family member have a chronic medical condition now or in the past, you will not be able to buy cheap health insurance, period. Health insurance providers consider you an expensive risk.
Cheap health insurance doesn’t just offer relatively low premiums. It typically requires high deductibles, say $1,500 per individual versus $500 a typical group policy stipulates. Its purpose is not to pay for every prescription you need but to keep you from being financially wiped out if you have high medical expenses. If you can live with an elevated deductible, here are the most practical ways to find relatively cheap insurance:
1. Through an association. It might be a college alumni group or the AARP (should you or a spouse meet the age requirement for membership). Most of these groups offer some type of major medical coverage at fairly inexpensive rates to protect you from catastrophic expenses. Many have a smorgasbord from which you can choose, such as major medical, dental, vision and prescription coverage.
2. Online quote. Five minutes on the Internet will yield at least a dozen online sites where you can enter personal information and get a quick quote.
3. Health savings account (HSA). This is a creative approach. The principle is simple: you designate a yearly dollar amount your employer will withhold from your paycheck to cover health-related expenses. These are costs allowable as medical deductions on your Federal income tax return. They’re non-taxable contributions, but if you don’t use the full dollar amount you specify by the end of the calendar year, you can’t carry over the balance for the next year.
If you can’t afford the premiums for the health insurance your employer offers, you should check to see if you can establish an HSA anyway. You will in effect be acting as your own insurer. As you earn, your deductions will accumulate until you reach the amount you specified for the year. This is cash you can use for unexpected medical expenses. However, there are limits on the amount that can go into HSAs, so you should not expect one of these accounts to protect you from a complete financial wipeout. If you resign before the end of the year, customary practice is for your old HSA to pay only for expenses accumulated before you left.
You might be facing surgery yet never enrolled in any of the plans your employer offers. Or you might be retiring without any health insurance but are too young for Medicare.
If you don’t have any policy, you could be just one step away from financial disaster.
They indicate if you’re without any coverage, you should immediately contact your state department of insurance for any available help. You might be fortunate enough to be eligible to join a state pool.
Otherwise, your best bet is probably to try to get an online quote for a bare-bones policy.