Here’s an unfortunate truth: Just because you have health insurance doesn’t mean you’re fully protected.
Sure, you may have a standard health plan with basic features, but it could leave you exposed in ways you might not realize, like forcing you to reach a high deductible you can’t afford or pay extreme out-of-pocket costs that zero out your savings.
If that sounds like you, you might be underinsured. That means you have health insurance — just not enough to meet your needs. Nearly 30% of working-age adults fit this description, according to a recent survey from the Commonwealth Fund. Among people who buy their own insurance, like entrepreneurs or freelancers, underinsurance runs even more rampant, affecting a staggering 42%.
Income Levels for Underinsurance
The Commonwealth Fund survey categorized underinsurance by three major factors:
- Your out-of-pocket costs over the past year were at least 10% of your household income.
- Your out-of-pocket costs over the past year were at least 5% of your household income and you make less than $24,120 (for an individual) or $49,200 (for a family of four).
- Your deductible is at least 5% of your household income.
If you meet any one of these factors, then … we hate to break it to you, but you’re officially underinsured.
Why Is It a Problem?
Underinsurance makes it hard to afford normal health care costs, not just big-ticket items like surgeries, procedures or major health conditions. Little things, from prescriptions and doctors’ visits, factor in as well. The costs of all these health needs, even if they’re relatively minor, can keep you from getting the care you need to stay healthy.
For example, the survey uncovered some disturbing realities among underinsured people:
- 1 in 4 didn’t fill a prescription they needed.
- 24% didn’t see the doctor for a medical problem.
- 17% didn’t get care that they needed from a specialist.
Can you imagine not filling a prescription, skipping a doctor’s visit or forgoing treatment altogether because you couldn’t afford it? It happens more than you might think: All told, according to the survey, 41% of underinsured people missed out on some degree of health care they needed because of the cost.
It’s a problem — but it’s one you can solve with a little preparation.
3 Tips to Protect Yourself From Underinsurance
If you’re underinsured, it just means you have some gaps to fill — either financially or in terms of your insurance coverage, or maybe even both. Follow these three tips to get yourself to a more protected place:
- Adjust your health plan. Just because you signed up for one plan doesn’t mean you’re stuck with it forever. During the next open enrollment (or earlier, if you qualify for a special enrollment period) consider choosing another plan that offers a lower deductible or out-of-pocket limit. You might have to pay higher premiums, but at least that’s a consistent cost you can budget for on a monthly basis.
- Build up your nest egg. This one goes without saying, but we’ll say it anyway: A well-stocked savings account and emergency fund can pay off in dividends now (if you need it) or later (if you don’t). Experts recommend stocking away at least six months of your expenses, but it never hurts to save more.
- Buy a supplemental plan. Supplemental insurance plans like hospital indemnity or accident insurance were made to fill in gaps — in other words, to supplement — traditional health plans with lump-sum payouts that you can use for anything at any time.
Most of all, know this: You’re not doomed to underinsurance. Yes, you might need to fill in gaps here and there, but it’s not so daunting when you plan ahead to protect yourself for all of life’s unknowns. That way, you don’t have to worry about the cost when you need a doctor, prescription or treatment. You can just worry about the important stuff: Feeling your best.