Healthcare is the biggest ripoff in America. Most people get little-to-no medical usage while still having to pay on average $20,000 a year in healthcare premiums.
The reason why there isn't a bigger uproar is because most of an employee's healthcare costs are subsidized by the employer. The same goes for paying higher taxes.
Once you become a business owner, you feel the pain of paying all the various taxes much more acutely. Therefore, you tend to stop voting incessantly to raise more taxes to pay for more wasteful government spending.
One of the reasons why healthcare is so expensive in the United States is because Americans are so unhealthy. Over 70% of Americans are now overweight or obese because of our extreme intake of sugar and other unhealthy foods.
The minority of Americans who are healthy are subsidizing the majority who are unhealthy. And because the percentage of unhealthy continue to grow each year, the cost burden simply increases.
Reasons To Get A High Deductible Health Plan
The main benefit of a High Deductible Health Plan is lower monthly premiums versus a low-or-low-deductible health plan.
Here are the main reasons for why you might want to get a HDHP:
- You rarely get sick or injured. Folks in their 20s and 30s may be prime targets.
- You can afford to pay your deductible without having to go into debt.
- You're willing to pay your deductible to get medical treatment.
- You have enough money to fund an HSA each month.
- You don't have little ones or sick dependents.
- You want another financial way to support your retirement.
- The Out Of Pocket Maximum is affordable.
A lot of people like having an HDHP because you are then eligible to contribute to a Health Savings Plan (HSA).
The Benefits Of Having A HSA
If you are eligible you can contribute up to $3,500 pre-tax to an HSA if you have single coverage or up to $7,000 pre-tax for family coverage in 2019. If you’re 55 or older anytime in 2019, you’ll continue to be able to contribute an extra $1,000.
HSA funds can pay for any “qualified medical expense,” even if the expense is not covered by your HDHP. If the money from the HSA is used for qualified medical expenses, including dental and vision, then the money spent is tax-free.
If the money is used for other than qualified medical expenses, the expenditure will be taxed and, for individuals who are not disabled or over age 65, subject to a 10% tax penalty.
The unused balance in a Health Savings Account automatically rolls over year after year. You won’t lose your money if you don’t spend it within the year. Further, the money in your HSA can be invested and earn compound gains tax-free.
Reasons To Get A Low Or No-Deductible Health Plan
Low-deductible or no-deductible plans have higher premiums. Despite the higher premiums, however, it makes healthcare expenses easier to estimate.
Here are other reasons for having a low- or no-deductible plan:
- You are pregnant, planning to become pregnant, or have small children.
- You have a chronic condition or need to see a doctor frequently.
- You’re considering or anticipating a big surgery.
- You take several expensive prescription medications.
- You or your children like to partake in high-risk activities such as mountain climbing, scuba diving, sky diving, skiing/snowboarding, and the like.
- You're not a good budgeter and like more certainty.
- You put a premium on peace of mind and want to minimize the stress of dealing with health insurance providers who may refuse payments.
- You're rich and don't mind paying the higher premiums.
- You're already maxing out your 401(k) and other pre-tax retirement accounts
There is absolutely a correlation with price and quality. The higher the price, or premium in this case, the higher the quality of care. Some doctors even provide high-level concierge service for an extra $5,000 – $20,000 a fee.
One centimillionaire friend pays $20,000 a year to have a private line and e-mail to a doctor so he can ask for help whenever he wants.
Health Insurance Horror Stories
Some insurance companies always seem to find a way not to pay out a claim, despite years of receiving premiums. The lower quality health plan you have, the higher the chance of you running into a lot of red tape.
Here are some headlines from Vox, which has done a great job uncovering individual health insurance horror stories here in SF.
- A $20,243 Bike Crash: Zuckerberg Hospital’s Aggressive Tactics Leave Patients With Big Bills
- Hit by a city bus — and hit with a $27,660 city hospital bill
- She tried to go to an in-network emergency room. She ended up with a $28,254 bill anyway.
These stories are atrocious. If you are having a large medical event, the last thing you want to do is then stress out about your insurance coverage.
I have friends who are doctors and they tell me straight up the worst part about their job is dealing with insurance companies followed by increasing bureaucracy.
A couple of doctors have admitted to me that if their patient has a “more difficult” health insurance plan, they are more reluctant to return calls or e-mails or fit them into their schedules.
Related: Is It Worth Getting A High Deductible Healthcare Plan To Get an HSA?
Go With What Fits Your Needs
The good thing about a HDHP or a low or no-deductible health plan is that so long as you have one, you are insured from disaster.
Medical related expenses is the #1 reason for bankruptcy in America. By having a health insurance, you save yourself from such risk, especially if you have a no-deductible health plan.
Make sure you know what your maximum out of pocket expense is for each plan. Once you've run some calculations with various scenarios, choose the plan that's right for you.
Here are some other considerations:
- How generous is your employer with paying deductibles?
- What is your maximum out of pocket expenses?
- What is your future earnings power?
- Does your family have a history of medical issues?
Once you've got the proper health plan, you should consider the best term life insurance policy possible. Check out PolicyGenius, the #1 marketplace for custom and free health insurance quotes. PolicyGenius helps you find the best plans for you in the market, instead of you having to go apply one by one to get a quote.