Cold and flu season is upon us. It won’t be long and everyone will be missing class or work because they are feeling under the weather. Although catching a cold or getting the flu is an awful experience, you likely won’t suffer financially to get better. Sometimes you can get by without visiting a doctor; all it takes is rest, over-the-counter medicine, and plenty of fluids and in a few days you start feeling better. Other times, you may find yourself in a doctor’s office if you have trouble getting rid of it. Even so, your expenses likely won’t be drastic.
But what happens if you end up in a hospital for a more serious reason? What if you are diagnosed with an illness that requires serious treatment? What if you get in an accident and are hospitalized or are faced with expensive surgical costs? The average one night stay at a hospital can cost you $3,949 according to Debt.org. If your visit to the hospital requires surgery, your costs can set you back tens of thousands of dollars. No wonder 60% of all bankruptcies result from medical expenses! For more information on medical care costs, visit https://www.debt.org/medical/hospital-surgery-costs/
Because of these reasons, obtaining a good health insurance policy can be one of the most financially sound decisions you can make. It’s similar to having a 3-6 month emergency savings account; it acts as a cushion in case something bad happens in life. Choosing the right coverage can be hard if you don’t understand the terminology behind it.
A premium is a payment you make to keep the insurance policy in force. It is usually monthly payments for health insurance. A deductible is an amount you have to pay out of pocket before the insurance coverage kicks in. After you hit your deductible, you may have to pay what’s called coinsurance. If you have to pay coinsurance, you pay a certain percentage of health expenses. For instance, you may pay 20% of all costs after your deductible and the health insurer will pay 80%. You are required to pay this percentage until your out-of-pocket max. At this point, the insurance pays for all covered health expenses. Copays are a flat fee that you pay out of pocket for certain services like a visit to the doctor’s office or a prescription.
Private health insurance plans are expensive. The average monthly premium in 2018 for an individual that is 18-24 years was $257 according to ehealthinsurance.com. The average family plan was $1,168/month.
There are ways to save on health insurance, but you need to evaluate your risks before cutting corners on health plans. First, if your parents have a family health plan, you are covered under that plan until your 26th birthday. Increasing your deductible and the amount of coinsurance you pay can reduce your premiums but will also increase how much you will pay out of pocket for expenses. You can also save by choosing a plan that isn’t as flexible. This type of plan requires you to choose a single physician that you will go to every time you need care.
Many employers offer health insurance plans as part of your compensation. With most of these plans, you can get pretty good coverage for little cost. If your employer does not offer a plan, you may qualify for a subsidy from the government known as a premium tax credit. It’s meant for those who may not be able to afford health insurance. There are certain rules for this subsidy, so make sure you understand each.
It is important to never risk more than you can afford to lose. A lot of people look at the costs associated with owning health insurance and choose to go without. In reality, the cost of NOT having health insurance could be 10 or even 20 times more than your premiums if you were to get sick or injured. If you’re worried about how to fit health insurance premiums into your budget, or curious about how you can be better prepared for emergencies, visit a Peer Counselor at Powercat Financial! You can schedule an appointment at https://www.k-state.edu/powercatfinancial/
Peer Counselor II