I frequently write about chasing your wildest dreams: quitting your job, traveling the world, launching a business. (I’ve done all three). But no matter which of these topics I’m discussing, I hear the same question:
“So what do you do about health insurance?”
Yikes. I hear this question constantly. Health costs are the monster on everyone’s mind.
Which makes sense. Normally a person gets health coverage through their boss. How do you insure yourself if you lead an unconventional life?
Step 1: How Much Can You Spend?
Once upon a time, I thought health insurance was supposed to pay every penny related to health care.
A few years ago, I figured this out: Health insurance isn’t necessarily supposed to pay for your flu shots and teeth cleanings. It’s supposed to save you from a financial catastrophe related to illness or injury.
Do you follow?
The insurance companies aren’t saying, “Pay me $X and you’ll never spend a dime on a flu shot again.” They’re saying, “Pay me $X and I’ll protect you from bankruptcy if you break your arm.”
This mental shift makes a huge difference.
Rather than hunting for a plan that spares me from all health spending, I found plans that fits what I can pay without becoming stressed by the payments.
Of course, one man’s “financial catastrophe” is another man’s “That’s not so bad.” Some people draw the line at paying $500 a year. Others draw the line at $15,000.
When I shop for health insurance, long before I ever boot up my computer, I ask myself: “If I got hit by a bus, how much could I REALLY afford?” I pick amount that wouldn’t catapult me into debt. And voila – that’s my “ideal” deductible.
Armed with that information, I know what exactly to look for when I shop around.
Step 2: Shop Around.
I use eHealthInsurance to shop around. This site lists plans from a huge range of providers. You can set your search criteria based on the premium (I wanted a monthly payment less than $175), the deductible (I wanted a deductible less than $2,500), and the yearly out-of-pocket maximum. You can also search based on the insurer’s ranking and popularity.
I found a plan for $120/month with a $1,500 deductible. Not bad, eh?!
Step 3: Follow Through
Here’s what happens too often: A young, healthy person gets a policy with a high deductible and low monthly payments. They reason, “Well, I’m healthy, so this is worst-case-scenario insurance. I’ll pay for small stuff out-of-pocket.”
Something minor happens: a rash, a violent stomach ache. Any normal person would head to the doctor. But the healthy person with the high deductible says, “I’ll just stay home and look this up on WebMD.”
Then they spend $65 on their cable TV bill.
This is penny-wise and pound-foolish. If you buy a policy that requires you to pay for small expenses out-of-pocket, follow through.
Step 4: Be Fearless.
The greatest hurdle is psychological. While I was at my cushy newspaper job, I felt assured knowing I had … something adequate. Maybe. I hope.
You see, I never paid attention to the details of my employer-provided health insurance plan. I assumed – as many people do – that if my insurance is through my company, it must be good. My pseudo-logic went like this: My employer is stable. Therefore, his health insurance must also be stable.
Psychologists call this the “association fallacy.” I call it “not reading the fine print.”
Fortunately I never got sick, so I never put this assumption to the test. But in hindsight, I’m struck by how many years I spent making a massive – and potentially costly – assumption.
In that regard, you’re fortunate that you get to CHOOSE you own health insurance. So start shopping!
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The Bottom Line: Health insurance is a big-ticket item, so do your homework. Your time is limited. Don’t waste it pinching pennies.
Price-compare for an insurance plan that can save you $100 a month. This is a better use of your day than saving 10 cents at the grocery store. (And if you’re a numbers nerd who wants a math breakdown, read this article.)
Photo courtesy Army Medicine.
Alternative is just to move to Canada where all of your basic health needs ARE covered.
Sometimes I think about moving to the States, even temporarily, but it’s the health care issue that scares me a lot.
@Melissa — Don’t worry, it’s not as scary as it sounds! You just need to buy insurance and have some cash to pay for your bills, that’s all. No big deal — it just takes a little more planning if you’re used to getting it all free (which sounds like such a foreign concept that I can’t quite wrap my head around it).
A High deductible policy is more affordable and will cover the big expense if you need it. This is the purpose of insurance, covering the expenses that you either can not afford to pay or don’t want to pay
Great advice, and I’m glad it’s not as hard as everyone makes it sound! Seems like you just need to make sure to do the proper research for a few hours before choosing. I’m going to need to pick this up next year, so I’ll definitely be checking back to this post.
@Jeffrey — Thanks! Best of luck with the process, and feel free to let me know if you have any questions!
I have had a high deductible policy through eHealthinsurance for the last few years. I have to admit I’m guilty of not going to the doctor because I don’t want to pay out of pocket. Like a lot of guys I also put off going to the doctor when I had a low deductible so I can’t completely blame the high deductible for not going to the doctor.
I like how you pointed out that you get insurance to protect yourself from financial ruin. This is important for people to understand. This is why I have insurance and think a major medical plan is important for this very reason. It’s sad how much gray area health insurance plans have. I spoke to an agent recently who informed me that the less gray area, the more expensive the plan is.
I have pretty great insurance through the military, but when I had just graduated college, before I got married, I was still looking for a job and had been dropped by my parents health care coverage. My friends and I would joke that we had a sticky note in our car saying “in case of an accident, don’t call the ambulance. I can’t afford it.” because we didn’t have any form of health care at the time. I think shopping around is key, and while you’re shopping, you need to know what you’re looking for or at least have an understanding of your needs and how health insurance might help you.
This was helpful as I’ll be shopping around for health insurance next year! Thanks for the pointers!
I got super sick 2 days before my health insurance benefits kicked in when I first started working and had to bite the bullet and pay full price to see a doctor. It’s made me really appreciate my insurance benefits ever since! -Sydney
I’d like to add that I used to think the cost for a plan similar to what I had when working would have cost an arm, but there are all kinds of options and one should go with the one that fits both their spending and coverage objectives just like you pointed out. there are options out there (think of so many self employed individuals especially today) and it’s worth researching.
@ Melissa – healthcare maybe free in some countries, but we need to discuss the availability/ease of getting care as well as quality of care providers as well to put things in perspective
very informative, i also pay my health insurance my own, but i think a did not make the good decision. i wish i read you post before… bit it is not too late, i still can change my mind. i found a better service with the best features.
Sounds like a real nightmare….the NHS is not great, but its so simple and easy.