Millennials have a lot of debt, and everyone has their own reason why. Some are drowning in student loans, while others are saddled with hefty mortgages. According to one recent study, however, there’s one source of debt that most people don’t see coming: medical bills.
Originally published in Health Affairs, the study found that medical collections peak at age 27 and stay there until a person’s mid-40s. Given that same age group’s taste for danger, from reckless driving to adrenaline-fueled travel, millennials might be asking themselves: Do I need accident insurance?
It could be a good idea, even if you don’t text while driving or like to skydive. As supplemental plans, accident policies pay out cash for qualified injuries, including mundane things like throwing out your back while bending over or crushing your hand after realizing that, no, you can’t lift that couch all by yourself.
You can use that cash for all sorts of things, not just the hospital bills themselves (though it certainly helps). Student loans, mortgage, rent, groceries, deductibles, coinsurance — you name it. It’s like having backup cash for life’s unexpected twists, even when an accident means you can’t go back to work.
But before you buy an accident policy, you’ll need to do some thinking, soul-searching and serious question-asking — not just of your broker or insurance company but of yourself, too. Here’s where to start.
1. Can I Afford the Out-of-Pocket Costs for My Standard Health Plan?
If you have a regular health plan, either through your employer or individually, how much does it cover? Let’s say you broke your leg and went to the ER. Would you be on the hook for a high deductible? Would you still need to pay coinsurance after you reach that deductible? And here’s the big question: Could you afford all that? Consider your savings-to-budget ratio to see where you might need a supplemental safety net.
2. Which Accidents Are (and Aren’t) Covered?
Some accident policies limit certain types of accidents, so read the fine print and ask a broker to make sure you’re getting what you need. Restrictions can vary from plan to plan, but if you find yourself in the ER for one of the following types of injuries, chances are you might not be eligible for that payout after all.
- Self-inflicted injuries
- Dental injuries, like broken or missing teeth
- Injuries you got while drinking or taking drugs
- Accidents sustained while you committed a crime
- Injuries that happened because of a prior health issue
3. Will It Interfere With Workers’ Compensation?
If you’re already covered by a workers’ comp plan through your job, you might not be eligible for accident insurance — or you might only get coverage for accidents that don’t happen at work. It can depend on the plan, so ask a broker to make sure.
4. Does It Matter Where I Get My Treatment?
Will you get the same payout for seeking treatment at the emergency room as you would at an urgent care clinic? Accident plans come with fixed payouts they’ll give for each kind of accident. You might see line items for emergency and nonemergency coverage, but the definition of “emergency care” can vary based on the insurance company. Ask to be sure.
5. How Long Will I Have to Wait Before Getting My Lump Sum?
Time is of the essence when you need emergency funds. You’ll want your payout immediately (or at least as soon as possible), so ask how long it typically takes to get the check. Some accident plans have a waiting period before you can file a claim — check that, too. Since you won’t want medical bills to pile up, look for policies with a timetable that suits you.
You’ve probably got a lot on your plate as far as bills go — and adding medical debt to the mix can make things worse. But with some preparation, you can help protect yourself and your family.
Do I need accident insurance? Check out Matt C.’s story for an accident policy in action.