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Health insurance isn’t cheap, but it’s necessary

March 21, 2012

Your health insurance premium takes a lot of your paycheck, but not having it could take everything.

I write this week’s article the night before I go to the hospital to have hernia surgery. I’m not exactly sure when or how I got the hernia, but nonetheless I go under the knife tomorrow.

My family and I have had our fair share of time spent in medical facilities this past year. Our son, Brooks, was born in July, and Kerri had an outpatient medical procedure a few days before my surgery. And with a 4-year-old and infant, we have had plenty of other visits to medical facilities.

Altogether, we have had about $50,000 in medical bills during the past 12 months. Fortunately, with our insurance, we have paid about $1,500 for these expenses. While insurance is a huge blessing when you really need it, it is not cheap — every month, my employer pays around $900, and I pay an additional $500 for this insurance.

For some, this figure can be 20 to 25 percent of their net pay. That makes it difficult to make a budget work, once other basics such as taxes, housing, food and transportation are added.

Along with being a major expense, it also is an expense that grows higher than inflation in recent years. This past year, premiums increased an average of nine percent across the country, and in the past decade we saw years of double digit increases. These increases and expenses take away money companies could use for salary increases and are a major deterrent for many who want to start their own business.

With the major expense that health insurance is, are there any other options? First, you should have some type of health insurance. A Harvard University study showed that 62 percent of all bankruptcy are related to medical expenses. Out of that 62 percent, 78 percent had health insurance, so the type of insurance you have is important.

Sometimes it can be tempting to go for some of the plans with the lowest monthly premium, but these aren’t always the best. Some employers, mostly those with hourly employees, offer optional plans that have low monthly premiums, but don’t cover major medical events. Your health insurance should be there mainly to cover the major events. This is what can keep you out of bankruptcy.

If your employer offers a group plan that covers major medical expenses, this is usually your best route. Even though the monthly premiums may be difficult, it can be hard to find individual insurance at the same rate as group insurance, especially if your employer will pick up some of the cost.

You may be able to save on your medical expenses if you stay healthy. First, if you don’t get sick or injured as much, you can save on deductibles and co-pays.

Second, if your employer offers a high-deductible health insurance plan, you can usually lower your monthly premiums, start saving up money in a Health Savings Account, and build your health savings so when you do get sick or injured, you have savings to cover the high deductible and you get to keep your low monthly premiums.

This is usually a good option if you are younger and in good health. This generally is not a good option if you usually have more than $5,000 in medical expenses every year.

If you need to shop for health insurance on your own, there are a few things that can help you out. First, it is very beneficial to find a health insurance agent with the heart of a teacher. You need to find someone who isn’t simply trying to sell another premium for the commission, but someone who can explain the different options and how they may affect your individual situation.

Second, see if there are any groups you are involved with that offer group insurance. Companies such as Costco and Sam’s Club offer insurance to members as well as members of the National Association of the Self-Employed and the National Federation of Independent Businesses. Some other groups may have group coverage available as well.

There are no easy answers when it comes to health insurance. It is expensive, but you need its protection against the huge health insurance costs we all may experience. It is important as an individual to look and see what your best option is, but we also need to come together as a country to try and control medical expenses. We pay about two and-a-half times as much as other developed countries.

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3 Comments leave one →
  1. getrichpoint permalink
    April 11, 2012 3:01 am

    How are you feeling after the surgery Andy? Is everything fine? I found your comment at getrichslowly.org and hence landed at your blog.
    And I totally agree with you :
    The importance of health insurance can not be exaggerated. It is a must.

  2. getrichpoint permalink
    April 11, 2012 3:09 am

    How are you feeling after the surgery Andy ? I found your comment at getrichslowly.org and hence landed on your blog. And yes! The importance of health insurance can not be exaggerated. It is a must. I have seen people bending to the knees because of medical bill.

    • April 11, 2012 9:09 pm

      Thanks for checking out my blog. I’m still a little sore, but getting better every day. The stories of people going bankrupt without health insurance is sad, the stories of people losing their health insurance because of sickness/illness related causes and then going broke are heartbreaking. As a country we should be better than this.

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