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Learn About Medical Insurance

Uninsured medical expenses can bankrupt you. So at least have insurance that covers very large bills.

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1 in 10 People Land in a Hospital Each Year

Costing $9,000, On Average, Per Hospitalization

And that’s just the cost of hospitalization. If you get into an accident, have a chronic condition like diabetes, or a serious illness like cancer or heart disease, the cost of doctor visits, diagnostic tests, and prescription drugs can quickly eat up a your life savings and leave you broke.

Your chance of being hospitalized increases as you grow older.

AgeAnnual Hospitalization Rate
65 and over 4 out of 10
45 to 64 1.5 out of 10
15 to 441 out of 10

What You Get and What You Pay

(What You Pay is More Than the Monthly Premium!)

What you get: Health insurance limits the amount you must pay out-of-pocket for medical care – so an unexpected hip-fracture or appendix removal won’t bankrupt you. Most plans cover hospitalizations, doctor visits, emergency care, and prescription drugs.

What you pay: Your monthly insurance premiums are just part of your total medical expenses.

 

Don’t overlook:

  • Copayments: fixed fees you pay for some services, such as $20 for every office visit and fixed percentages you pay for other services, such as 20% of the cost of prescription drugs or 10% of the cost of surgery.
  • Annual deductibles: set-amounts that you must pay before insurance company starts paying your bills. For example, your plan might specify that you are responsible for first $1,000 of covered expenses.
  • Out-of-pocket limits: Most insurance plans limit the deductibles and copayments you are required to pay in a single year. For example, your plan might cover 100% of your medical expenses after you have spent $2,000 on coinsurance and deductibles.

You Can Pay Less In Monthly Premiums

If You Take On More Risk Or Limit Your Options

The average worker paid $345 per month for family medical insurance in 2011. High deductible plans were about $45 less.

You can pay lower monthly premiums in exchange for higher deductibles and copayments, which results in higher out-of-pocket costs should you need a lot of care.

  • If you can handle a rash of “minor” medical expenses without insurance, consider a plan with higher deductibles and copayments and lower monthly premiums.
  • If you value predictable medical expenses, you might nevertheless pick a plan with lower deductibles and copayments, in exchange for a higher monthly premium.

You can also pay lower monthly premiums in a managed care plan, like a HMO (Health Maintenance Organization) or PPO (Preferred Provider Organization), that restricts you to using hospitals and doctors in the plan and generally requires a referral from your primary-care doctor to see specialists or get medical tests.

  • If you find the care provided by an HMO or PPO acceptable, opt for the lower monthly premium.  
  • If you value the freedom to choose doctors, hospitals, or treatments, expect to pay more – higher premiums, deductibles, and/or copayments.

Are You Eligible For Government Insurance?

Medicare, Medicaid, and Veteran Benefits

If you can’t afford any insurance plan, you might qualify for Medicaid. Medicaid is a state-run insurance program for low-income individuals and families. Even if you don’t qualify for Medicaid, your children may qualify for state-subsidized medical insurance.

 Medicaid has different names in different states: MediCal in California, MassHealth in Massachusetts, and SoonerCare in Oklahoma

If you’re over 65 and have worked 10 or more years, you should qualify for Medicare. Medicare is a federal insurance program that covers most (but not all) of the cost of medical care for seniors.  See Learn More About Medical Expenses in Retirement.

If you are a veteran, or the dependent of a veteran, you should qualify for Veterans’ Administration health care, which provides comprehensive health and disability coverage.

For more information, visit healthcare.gov, a website brought to you by the Department of Health and Human Services.

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