You might be surprised to discover that even with health insurance there is no guarantee that you have financial security.
The new survey by Kaiser Family Foundation and the New York Times discovered that 20% of Americans of working age that have health insurance say that they are having difficulty paying off their medical bills. For those without health insurance the number jumps to 53%.
One of the reasons for this problem is that the benefits of health insurance plan are reduced – consumers are paying more for insurance and dealing with higher deductibles. So if you have a bad string of luck and find yourself dealing with an illness or accident, you could find yourself buried in medical bills you don’t have the money to pay for.
The effects of medical debt
A part of the Kaiser Family Foundation survey looked at how medical debt affected day-to-day life. The results were sobering.
Among the Americans that were insured and with medical debt troubles, 63% reported having used up all or most of their savings, while 42% reported increasing their hours or taking an extra job; 38% have taken on extra credit card debt. Even more startling is that 35% of respondents who were dealing with medical bill problems said that they could not pay for the basics like heat, food, and housing expenses.
In addition, medical debt can also affect your credit. By the latter part of 2014 there were over 43 million Americans who had medical debt that was overdue on their credit reports, and even more startling was the fact that more than 50% of all overdue debt on credit reports was medical debt.
It is evident that medical debt affects Americans from a variety of backgrounds, putting a strain on their whole life.
Health insurance tips for Americans
It’s common for people to find themselves facing medical debt because of an accident or unexpected illness, and being prepared might seem next to impossible. It’s pretty difficult to protect yourself against the unknown, but when you have health insurance, it provides you with some protection to help keep your financially secure.
Carefully choose your healthcare plan. Since the Affordable Care Act passed, the inexpensive co-pays and low deductible healthcare plans are becoming very hard to find. From 1999 to now, health insurance premiums have increased by 203%, which is faster than both the increase of earnings and inflation. For example, if you were to choose the bronze Obamacare plan, which has the lowest premium of the silver, gold, and platinum plans, but the trouble is that it also has the highest deductibles, which means the most out-of-pocket costs. This could mean much larger bills in the future, so when choosing a plan, you would want to consider all of the possibilities before making decision. You should balance your current savings with the potential for future risk.
Plan for emergencies. If this information tells you anything, it’s that even when you are being responsible, it doesn’t always save you from financial trouble. Having emergency savings can save you from a cycle of debt, growing interest payments, and collections, so it makes a lot of sense for you to build an emergency fund that’s ready for use in the event that something goes wrong. It can help take into account both your co-pays and your deductibles when you are deciding how much money to set aside in your emergency fund. For example, if you have an annual deductible of $5,000, having a $2,000 in emergency savings won’t be enough.
Choose the right provider. According to the New York Times and the KFF study, among those insured Americans that had trouble with medical debt, 32% said that they got care from an out-of-network provider; 69% of that group said that when they received care, they did not know their provider was out-of-network. It is important to make sure that your healthcare provider is a good fit for you, and that they are covered by your insurance plan. To find out, you can call your provider and ask whether they are in-network.
Be proactive about your health. Many Americans who have been stressed out over medical expenses, handled it by visiting their doctor less. 43% skipped tests or treatments they should have had, 41% did not fill prescriptions, and 62% postponed dental care. It makes sense for you to be proactive about your health by regularly exercising, eating healthy foods, and including preventative measures that can help you remain healthier and keep your future costs down.
What if you are uninsured?
Approx. 13% of Americans still remain uninsured. Many of these people would have difficulty paying their medical bills as well. The majority of uninsured Americans are low-income families, with more than 48% of adults saying that health insurance costs too much.
In addition, many uninsured Americans are still confused about the Affordable Care Act and how it actually works. For example, a survey in May 2015 done by the Commonwealth Fund, found that 53% of adults that were uninsured did not know about the expanded Medicaid eligibility some states offered. Others believe that these healthcare requirement do not apply to them or would be more willing to pay the government penalty rather than pay for health insurance.
Some basic tips such as being proactive about your health or creating an emergency fund which are important to everyone whether insured or not. However, for those Americans who live paycheck to paycheck, making healthy choices and budgeting for your health is even more important.
Since the Affordable Care Act passed, there are more Americans insured now than ever before. However, medical debt is still a huge problem, even for those that have health insurance coverage. Be vigilant about your health and your finances and also save for a rainy day or in case a medical emergency.
[Featured image credit: National Debt Relief / Image cropped]