One of the biggest financial news stories right now is the approaching deadline to sign up for health insurance under Obamacare. If you aren’t covered by a health plan right now, you have until March 31, 2014 to sign up — or face the possibility of a penalty next year when you file your tax return.
Before you decide that paying the penalty is cheaper than buying health insurance coverage, however, it’s a good idea to consider the possible costs associated with not having insurance.
The High Cost of Medical Care
Health care in the United States is quite expensive. If you have a catastrophic accident or illness, your pocketbook could be affected — even if you have insurance. Without coverage, the effect can be devastating. According to a recent study from NerdWallet Health, one of the biggest factors in bankruptcy filings is medical bills.
Can you imagine the cost of a hospital stay out-of-pocket?
Health insurance can help you cover those costs. Even seemingly healthy people get sick, and you never know when an accident will strike. So, while you might think it’s cheaper to pay the penalty and avoid the coverage, the truth is that you’re taking a risk with your finances.
How to Reduce Health Insurance Costs
One of the hardest things for some consumers to do is buy health insurance when they have relatively few health needs. This is a bit of a challenge for me, since we mainly just go in for preventative care, along with a couple of regular prescriptions. We really don’t spend much on health care.
However, I do like to have insurance, just in case. What happens if my son falls on the playground and breaks his arm? Or my husband ends up with a major illness and has to stay in the hospital for a week? I feel better knowing these situations won’t bankrupt me, because the health insurance is there to help.
In order to make it a little more palatable, I make an effort to reduce my health insurance costs. One of the ways you can reduce your premiums (if you have few health care needs) is to get a high deductible plan. You pay more out of pocket, but your monthly premiums are much lower. You can combine this plan with a Health Savings Account to get a tax deduction and save up for the out-of-pocket costs. I’ve found that the HSA is a great way to help me reduce my overall health insurance bills.
If you don’t have coverage right now, and you qualify to buy on the exchanges, you might be eligible for a subsidy. Some consumers can buy a “Bronze” level health plan on the exchange for a very small amount, once the subsidy is considered.
Before you make any decisions, run the numbers. It might make sense for you to get health coverage after all.
Do you have health insurance? If not, have you signed up for coverage under Obamacare yet?