Health insurance protects your money
In the US, a medical bill is the biggest risk to your savings. Here is how coverage works.
4 min read
In the US, health care is also a money question. Medical bills are a common cause of serious debt. A few days in the hospital without insurance can cost more than a year's pay.
That is why health insurance belongs in your money plan. It protects everything else you are building.
Where to get coverage
- Your employer. This is the most common way, and usually the cheapest, because your employer pays part. You can join when you start the job, or once a year during open enrollment. A big life change, like a marriage or a baby, also lets you join.
- The Marketplace at healthcare.gov. This is where you buy your own plan. Help based on your income can lower the price a lot. Many people get more help than they expect.
- Medicaid and CHIP. Free or low-cost coverage for people with lower incomes. The rules depend on your state. Children often qualify even when adults don't.
- Community health centers. They charge what you can pay. They see patients with or without insurance.
Five words that cost money
- Premium: what you pay every month to have insurance.
- Deductible: what you pay yourself before the plan starts paying.
- Copay and coinsurance: your share of each visit or service after the deductible.
- Out-of-pocket maximum: the most you pay in one year. After that, the plan pays 100%.
- In-network: doctors and hospitals that work with your plan. Going out of network can cost several times more.
Here is who pays as your medical bills add up during one year:
- You pay everything, up to your deductibleExample: the first $2,000 of bills.
- You and the plan share the costExample: you pay 20% until you have paid $6,000 in total.
- The plan pays everythingYou reached your out-of-pocket maximum. You pay $0 more this year.
The lowest premium is not always the cheapest plan. A low premium with a high deductible can cost more in a year when you need care.
If you already have a medical bill
- Don't ignore it. Every option is better if you ask early.
- Ask for an itemized bill and check it. Billing mistakes are common.
- Ask about financial assistance, also called charity care. Nonprofit hospitals must offer it, but they rarely advertise it.
- Ask for a payment plan before you use a credit card. Hospital payment plans are often interest-free. Credit cards never are.