Health Insurance: is it worth the gamble?

Unlike in Canada and parts of Europe where the bulk of health care costs are put on a government tab, most able-bodied, mentally sound Americans under the age of 65 must generally rely on themselves to manage personal health care funding. For most Americans, that means incorporating some kind of health insurance into their overall personal financial strategy.

Over time, however, the costs of health care insurance add up, and the total spent can be staggering. So should you have health insurance? Is it worth the gamble? There is no single answer to these questions, of course, but there are several items you should consider before making a decision one way or the other about your health care insurance future.

First of all, about 44 million Americans do not have any health insurance coverage. Many of these people are members of poor families who do not qualify for Medicaid, employment-based health insurance and who cannot afford, or who have been refused for, individual coverage. If you are looking to purchase individual health care insurance coverage, be aware that the costs tend to be higher than employer-sponsored plans and the plans less user-friendly.

With so many types and ranges of personal or individual private health care insurance available, it can be confusing as to what kind of health insurance you should buy, and how much coverage you should have. You may not think you need several hundred thousand dollars worth of coverage, but consider how much one hospital visit costs if you need a serious (yet common) procedure like a heart bypass or even minor surgery to remove a gall bladder or appendix. Even slight complications can result in an enormous bill.

If you receive a health benefits package as part of your employment, you will be accepted under the company’s plan regardless of your health status. However, when you apply for individual coverage, there are no such guarantees and you many not be able to secure the coverage you need, even with reduced benefits. The same is true when it comes to renewing your health care insurance. If you are employed and are covered under your company plan, you can renew your coverage as necessary, even if you are sick. With most individual plans, there is no guarantee your policy will not be cancelled.

Similarly, there are differences between job-based and individual-based insurance when it comes to limitations and portability. If you have had a pre-existing condition when you apply for job-based medical coverage, there is a limit of about a year to a year and a half on what can be counted ‘against’ you. With individual coverage, limitations are prescribed by the state, and vary greatly state-to-state, but generally, you may not be eligible for coverage of costs related to a pre-existing medical condition for the entire duration of your policy.

When it comes to portability, again, depending on the state in which you reside, it is possible that you may receive no credit for past coverage. That means even if you are lucky enough to qualify for health insurance coverage, you could end up waiting for the entire pre-existing condition exclusion period.

Whether you choose job-based, employer-sponsored health insurance or a private, individual plan, health care insurance is going to cost you a lot of money, especially if you have a family or if you have any ongoing medical issues. The exact amount depends on your particular situation needs. You may never need medical attention, and in that case, you might consider the money spent on health care insurance wasted.

However, most of us need medical attention at some time or another. Even healthy, positive lifestyle-oriented people have unexpected health events, car accidents and broken bones. You can’t anticipate when these events will happen, or how severe they will be, but without significant financial means or a decent health care insurance plan, you could end up financially devastated. Are you willing to make that gamble? To assume the risk of not being able to pay for medical services or products that you or a member of your family needs? Money spent on premiums is certainly a consideration when deciding whether to purchase health care insurance, but there are other priceless things to consider before you make a final decision.