Several people have asked me for some tips on how to find health insurance. I didn’t mean to scare anyone, but if my intense pain reminds someone to get insurance, at least something good came out of it! I did do some searching myself last year – the good news is that if you are young and in good health, you can get some high-deductible insurance for around $100 a month. The deductibles may still reach in the thousands, but $5,000 would be the least of your worries if you had just one serious incident. A reader got billed $3,075 for each CT scan taken!
Full-time Students
If your parents have family health insurance, you can usually remain covered under their plan until age 23 as long as you are a full-time student. For some states the age limit is even higher now. I know I did this as long as I could.
Otherwise, many universities will offer their own insurance package at a reduced cost. I knew someone over 40 who took a few units of community college every semester solely to qualify for the school’s cheap health coverage because it was cheap and took everyone regardless of pre-existing medical conditions. In my experience the quality of the plans varies wildly though, so I’d call around and compare first before signing up for rocks for jocks. I wonder if any online colleges are part of an affordable group plan?
Plans For Young Adults
A popular comparison site for health insurance is eHealthInsurance. I like it because they list a lot of the major insurers like Blue Cross Blue Shield, and you don’t have to give them your name or other personal information before seeing the plan’s specifics like monthly premium, deductible, and coinsurance percentage. They do require birth date and zip code. The quotes are usually for those in good health, so if you have pre-existing health problems the actual cost will be higher. Here are some sample results for a 28 year old male non-smoker in Oregon:
Cheapest:
Middle of the road: Lower deductible, higher monthly premium:
Another option to check out for those in CA, CO, GA, CT, NH, and NV is Tonik Health. It’s specifically for young hip folks (could they make the website any more tacky?), and they have plans starting from about $75 a month.
In certain states like Massachusetts, there may be special programs available directly from the state targeting young adults.
Otherwise, one might try a local independent insurance broker. (Yellow Pages?) I’ve never used one, but if you have specific needs or requests they might be able to better tailor a custom package. I did ask my State Farm insurance agent for a quote back when I was looking around, and it was pretty competitive.
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To me, a high deductible plan with a Health Savings Account is the best option.
I’ve discussed, at length, why this is most likely the best option.
http://broknowrchlatr.mypfblogs.com/2007/04/03/choosing-an-insurance-plan-and-why-you-need-an-hsa/
For this case, it is definately the best option if the person is in the 25% tax bracket or already maxes out their 401k and IRA. If not, It is a tougher decision. When you have a HSA, you can very your contributions from month to month based on your health care expenditures. So, you can have all your deductibles and coinsurance payments deducted from your taxes. In the other plan, this is only possible one your healthcare expenses get really high.
In this case, the HDHP costs $804 less per year. If you are in the 15% marginal tax bracket and your state tax is 5%, a HDHP is the better option if your healthcare costs are under about $1600. At $1600, the other plan would pay $1248 for the annual premium plus 30% of $1600 for a total of $1728. With the HDHP, you’ll pay $444 for the annual premium plus 80% of $1600 (the 20% is the tax savings you get from putting the $1600 in the HSA and then paying for the espenses from there. So, the HDHP annual cost is $1720. It is not very common for a 28 year old male non-smoker to have health care costs that high. I’m a 27 yo male non-smoker and have not had more than $500 in expenses in any year I ever recall.
Now, if you are in the 25% tax braket and already max out your 401k and IRA, the HDHP plus HSA is more attractive. Using the same math as above, the break-even point is $2000 in health care expenses. Beyond that, you can contribute more to the account up to $2850 a year (for 2007, $5650 for family coverage). All the extra contributions can be invested in the account to pay for future expenses or can be saved for retirement income. Essentially, it is like extending your IRA contribution limit.
It can also be shown that Family coverage analysis results in a break even point that is much higher, pushing more dramatically toward the HSA use.
Don’t forget about Golden Rule… I carried that all through grad school. Never had to use it, but they had some great rates.
The most interesting I thought were there short term health insurance plans. You can get a 6 month policy, which you can reapply for as many times as you like (just don’t get real sick, because they’ll drop you after 6 months)
I can get $1000 deductible insurance with and 20% copay on the next $5000 for $37 in my state (MD).
For regular insurance with not set expiration dates, I can get a $1000 deductible with 20% copay on the next $15K for $75 a month.
I checked Golden Rule’s website: they don’t offer coverage in Oregon or Washington.
30% coinsurance is mean. While you get the advantage of contractual allowances from hospitals and physicians (around a 50% discount on average), you are still stuck with 30% of the remainder. Which is about 15% of the originally billed amount, ouch.
If you were to need an organ transplant, you would be on the hook for close to $100,000 (considering the procedure and the long-term care afterward), you may not even qualify to have the procedure with such poor insurance. (Doctors won’t “waste an organ” on someone they are not sure will follow through with anti-rejection medication $$$).
Also, you need to look into what these plans cover. Some cheaper plans do not cover aggressive medical procedures.
In other words, you get what you pay for.
Ira, read a little first. Most all insurance have an annual OOP cap. Usually the copay limits go up to the first 5-10K of covered expenses.
Nobody pays 20 or 30% of an organ transplant with any insurance.
It’s also illegal for organ donor lists to consider insurance status of the patient.
Dood, no need for arrogance.
Yes, most insurance plans do have annual OOP limits; however, some cheaper plans do not. I went and looked up the ones posted, and they do, but do not assume a plan does or has a reasonable OOP limit.
Moreover, some plans have a maximum incident, yearly, or lifetime benefit, which is arguably even worse. These are what really get you into trouble for expensive procedures. I had a student plan while in school that had a maximum benefit of $100,000. Luckily the college had a medical school which offered charity to its students in such cases.
Finally, your idealistic comment about donor lists is technically true. Yes, donor lists do not consider insurance status. However, physicians and hospitals are free to. There is nothing to compel a hospital and it’s staff to perform a procedure for which it will not be paid. So, in practice, insurance status does matter.
Slight clarity correction. Physicians are compelled under ethical guidelines to provide emergency care. Organ transplantation is not widely considered among these procedures.
Finally, some cheaper plans explicitly exclude coverage for certain disease/procedures. Organ transplantation is among those that are sometimes excluded.
Hey Jonathan, thanks for posting this!
My wife and I are about to apply for insurance for the next year. Our school’s plan is about $1900/year for the both of us (which is about $80/mo per person–which doesn’t look that bad anymore). We decided to stick with the school plan since if we have any problems we will have some school staff able to help us out, or at least students to commiserate with.
Anyways, we’re both 23 and just got married. After adding up all the $$$ gifts we got from the wedding, we have more in our bank accounts than we’ve ever had before.
I suppose that I’ve been coping with getting married and becoming an adult by trying to really get a handle on “personal finance.” Your blog has done a lot to whip me into shape. ; )
I appreciate your values and the good-natured tone with which you write here, by the way. Enough of this love note!
Yes, it is imperative that you actually look at all the features of each insurance policy. Maximum out-of-pocket per year and maximum lifetime/yearly benefit are definitely important things to look for.
I used to have a good resource link for this stuff, but it’s dead now. Maybe I’ll try to write another post about it. Yet another thing where simplicity and clarity instead of 68 pages of fine print would be nice.
Yeah, a Health Savings Plan is a great “add-on” if you make sure you buy an eligible plan. I think these should be available for everyone, regardless of health plan. I mean, to me it’s kind of promoting these high-deductible plans when that may not be the right choice for people. Why not let everyone save some tax-shielded money for a rainy (sick) day? You can only spend it on healthcare anyways.
Another variable is any possible upcoming system-wide changes after the next presidential election. There could be a big shake-up.
The Health Savings Account (HSA) in conjunction with a high deductible heath plan is the way to go if you are healthy. For me, in addition to getting $1500 a year in premium pass through, (which is money that would have been paid directly to the insurance company otherwise) I can contribute an additional $1350 on a tax free basis. It’s great because no taxes are paid on the way in or the way out if spent on a qualified health expense (which includes lasik eye surgery in my near future). If I leave my job or change plans, I get to keep the money and it rolls over year after year.
Preventative medical and dental are paid at 100% and once my $2500 deductible is hit, my coinsurance is 10%. Currently, I do not expect to come anywhere close to my deductible (knock on wood for no kidney stones). Given that I feel the purpose of health insurance is to protect yourself against catastrophic incidents and not provide prepaid health care, the $4000 out of pocket catastrophic limit associated with my plan seems reasonable.
Additionally, the HSA has definitely influenced me to shop around for procedures with the best ‘value’ ? just the consumer behavior the plans were intended to cause. If all health care consumers did this, I expect competition in health would increase and service would improve and be less expensive – while at the same time paying less to the insurance companies and more to the actual health care providers.
-Good luck with the passing, John, I will drink a beer for ya!
Take Tylenol for any sickness and u should be fine 🙂
I think Kaiser is a great option in some of the western states (Colorado, California, Oregon?).
I have had Kaiser since I was a child and we have been pretty unhappy with our other options since graduating college. We decided to keep Kaiser private insurance. I shop around every couple of years, but to pay less elewhere we generally have to take significant deductibles, increase our hassle greatly, take on more subpar care, etc. So overall we are pretty loyal to Kaiser. They also started rolling out a bunch of high-deductible plans. With a family of 4 I just can’t justify those (1 ambulance rise or car accident could ruin us), though we may have no choice if rates continue to rise as they have. We are already paying $675/month for a family of 4. But our out of pocket expenses are guaranteed to remain VERY low. If I took my employer’s “discounted” insurance we would pay more for a high deductible plan that I hear sucks.
When I was first out of school I paid $80 for individual coverage whereas my co-workers paid $60/month as singles with crappy high-deductible plans. Give me Kaiser any day. It’s not exactly affordable unfortunately, but gives you a lot more bang for your buck. I keep dreading the day when my employer options are so cheap I have to jump the Kaiser ship. But every year it looks like Kaiser is our cheapest option anyway.
IIRC, the only non-employer based health insurance plan that can operate in New York is the “HealthyNY” plan, which is partly subsidized by the state government. When I had to use that (after graduating college and only having a part-time job at the time), the monthly premium was something like $225.
None of the really cheap “catastrophic coverage”-only health insurance plans can operate in NY, unfortunately.
Jonathan, I can’t say enough about the importance of everyone having some sort of health insurance, even if it’s very basic and high deductible. Many young people just assume they can’t afford it for themselves. I’ve got a friend who’s a single father of two kids under 5 years old. He works mostly for tips at a casino, which doesn’t offer health insurance, and he’s living paycheck-to-paycheck, like so many. I haven’t been able to convince him that no matter how much insurance costs, he can’t afford NOT to have any, to protect himself and his children. If (God forbid) he gets diagnosed with a serious illness, bills will quickly mount and he may eventually have to file bankruptcy, which would set him back for years (medical bills are one of the main causes of bankruptcy). This is also a plug for life and disability insurance, which is so cheap right now. A few dollars a month could ensure that your family is taken care of for years in the event of your unexpected death or disability. (No, I don’t sell insurance, I just did a lot of research on this last year so I could be more informed)
Another subject I’d be interested in reading about, if you could address it, concerns coverage when a couple has separate health insurance providers. When I had a pricey medical procedure last year, I was responsible for roughly $800 out of pocket, after insurance. My parents were surprised, as they assumed my husband’s insurance would then cover the amount my insurance didn’t. I guess that’s the way it goes in their state, but when I investigated further with our insurance companies, that wasn’t the case – unless we paid extra premiums on each other thru our separate plans, which we don’t. Anyone know more about this subject?
The Plan makes a huge difference. For Example I have a Blue Cross plan currently. $250 Deductable, $10 Doctor Co-OP in network or 10% of allowable out of network, $5 genric Prescriptions or $10 brand name, 10% in hospital stay co-pay max $2K per stay. And my premium is $318 per month for single male under the age of 30. Raising my deductable from $250 to $1000 would only save me $22 a month but if I raised my deductable to $5k and hospital cap to $5K and raising my Prescriptions to $20/40 that would lower my premium down to $172 per month except I know unless I landed in the hospital I would never hit the deductable either and currently after 1-2 docters vists I hit the deductable.
Also blue cross told me If I raise my deductables there is no grantee later on they will allow me to get back my current plan either.
Well I just signed up for a cheap $46 package at healthnet. Anyone know if they are good? They have the location of my hospitals and the plan was perfect for me. I am healthy and rarely visit the doctor, this plan protects me against major health expenses. Only $1500 deductible and $4000 out of the pocket.
Hi Everyone,
There are some great points being made on this topic and I just wanted to add one bit of advice. ehealthinsurance.com is a broker just like your local agent and takes the same commission. In many states the commissions are built into the insurance rates and you’ll pay them regardless of who you purchase the plan through. That said, I would recommend finding some plans you like through ehealthinsurance.com and then checking with a local agent to make the final purchase. This way if there is a claim problem (happens more than it should) you have someone with a vested interest in solving the problem, rather than a CSR at ehealthinsurance.com. The overall rates are also regulated by the states so if someone tells you they can get you a plan for cheaper than the rest run, it’s probably a similar plan with higher coinsurance or lower limits. Once again, I’m really impressed with the level of insurance knowledge here!
Even if you have insurance, if it’s not an immediate emergency there’s a much more affordable option and you will get BETTER care. Hop on a plane and get your surgery or major dental work done at one of the medical tourism destinations. I’m living in one of those destinations, Thailand. The healthcare is fantastic and a fraction of the price of what you get in the U.S. Plenty of good info about this, including current prices at The Medical Travel Site.
Don’t be fearful. This isn’t a novel concept any longer. Hundreds of thousands of people are doing it every year now.
Hi,
Do you have any advice for people living in the state of NJ? You will see your premiums skyrocket no matter what website you use.
Cheers
Those rate quotes are cheap! Aetna quoted me $89 at the bare minimum but copays would be $50 …
My friend’s a reasonably healthy 33-year-old female. She quit her job to start her own company and pays $350 a month for health insurance! The price of health care …
We’re saving our members hundreds of millions of dollars in supplemental healthcare benefits since 1992. Our company offers a service that is helping individuals and families across the country save precious dollars on their costly healthcare needs.
I can’t help shaking my head as I read this. Truly pathetic that the US, alone among ALL developed countries, can not provide health care to its citizens…
People having to scrounge between overpriced private medical providers and unscrupulous private “health insurers” — or simply take a chance that nothing will happen to them, with financial ruin lying in wait if it does — is fundamentally inhumane, uncivilized and in no way befitting of a “great nation”.
Maybe Obama will redress at least part of this injustice in the next eight years…
I have been researching insurance and trying to figure out what to help my son with. He is only a part time college student and working where he does not get insurance. This is very difficult to figure out.
FYI, girls watch out: Most bare-bones health insurance plans DON’T COVER PREGNANCY. So if you “win” the birth control lottery, you may be faced with a huge economic as well as emotional issue.
So ladies of childbearing age make sure this is covered — and I warn you it will be hundreds of $$$ more per month!
There may be some veterans reading this who have not signed up with the Veterans Administration for their healthcare. I have had 1000’s of dollars worth of care and never have seen any paper work or bills. Alan