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?”
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!
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.