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Health Insurance and Why You Need It

Health Insurance and Why You Need It

| November 16, 2018

Millennials might feel too young and healthy to worry about health insurance and would rather not contribute to an employer health plan. However, your finances can take a big hit if you aren't covered.

It might seem tempting to pocket the $100, $200, $300, or more that your employer deducts monthly from your paycheck for your health insurance. But a sudden injury or illness can devastate your finances for years to come.

Employee health insurance is a good deal. According to the Kaiser Family Foundation, the average employee pays only 18% of the premiums for single coverage under an employer-sponsored health insurance plan.1 The employee contribution rises to 31% for family coverage. The average annual premium for an employee's individual coverage is $1,213, or about $101 per month. Your employer picks up the remaining $5,477 in annual premium cost per employee. That's a pretty good deal for employees.

Deductibles increase your costs. The average out-of-pocket deductible for employer single coverage is $1,505. In addition, you may have to cough up copayments when you receive primary care ($25 on average) or specialty care ($38). Your total out-of-pocket expenses are usually limited to a flat amount, such as $3,000 or $6,000. While these numbers are significant, keep in mind you'll pay a lot more if you're not covered, and you won't pay them at all if you don't need healthcare service during the year.

Being uninsured is risky. How much risk do you undertake when you eschew employer health insurance? Recent statistics show the average hospital stay costs about $10,700.2The top five costliest conditions are heart attack ($20,246), coronary atherosclerosis ($20,936), aneurysms ($34,656), heart valve disorders ($42,647), and congenital heart disease ($63,460). If you are convinced your young heart is healthy, then consider the cost of a traumatic brain injury ($19,539), blood infection ($18,031), or a broken leg ($16,796). You might not use insurance in any given year, but without coverage, you face eye-watering expenses.

Beware of "junk" insurance. Some millennials have chosen to buy short-term (often called "junk") health insurance plans due to their low premiums. You sacrifice a lot with these plans. They may exclude preexisting conditions, refuse to cover essential health benefits, cap annual and lifetime benefits, require high out-of-pocket spending, and cancel coverage retroactively. In 13 states, junk policies don't cover services for hospital patients admitted on the weekend!3

Protect your health by building your wealth. Medical care costs are high, and insurance is only a partial solution. It's therefore prudent to build your savings and investments to cover the gaps in your coverage. I can show you how to use health savings accounts (HSAs), supplemental insurance, and other strategies to help protect your long-term finances from rising medical costs. Call or email me today and let's get started. Don't get caught unprepared by illness and injury.