Ask Stacy: I Can’t Afford Health Insurance. What Can I Do?

Photo (cc) by Official U.S. Navy Imagery

Here’s a recent question I could relate to. If you pay for your health insurance, you probably will too…

I need some direction as to where to look for health insurance.

I am 60 years old, on worker’s comp with one child still under the age of 26. Of course, I have some pre-existing conditions. Who doesn’t at 60 years old? My current insurance just raised my monthly payment $234 per month to a whooping $872 & dental of $120 quarterly through Delta Dental (AARP), which will bring my payments to over $900. Where do they think people are going to get this kind of money?
– Elaine

I feel your pain, Elaine. I’m 57, and this month my $5,000 deductible health insurance policy just went up another 15 percent. I’m now paying $800 monthly for insurance for what amounts to catastrophic coverage.

This is ridiculous, and it’s one reason I was a supporter of the Patient Protection and Affordable Care Act, also known as Obamacare.

Don’t get me wrong: This new health care law has plenty of problems. But I hope it will ultimately address the disgraceful cost of health care in this country. It was certainly about time somebody tried something. The idea behind the Affordable Care Act is to get more people paying into the insurance system to spread the risk and reduce overall costs, as well as to increase competition. Only time will tell if it will work: In the meantime, here are a couple of suggestions.

What to do when you can’t afford insurance

1. Shop

Back in 2007, I was researching a TV news story about health insurance and needed video of an online health insurance quote. So I went to a comparison site, input my personal information, and got a quote from my current company. The cost? $346.50 a month. The problem? I had been with this company for seven years, and thanks to annual increases, they were charging me $743 a month for the same policy.

As you might imagine, I wasn’t a happy camper. When I called the company and asked how they could justify charging new customers half what I was paying for the same coverage, they mumbled something about premiums increasing over time. So I promptly switched to identical coverage at a different company for half the price. (Avoiding, of course, the cardinal sin in insurance: canceling existing coverage prior to new coverage being in place.)

We have an insurance shopping tool for comparing quotes – check it out. But the single best place to shop for health insurance is this page of healthcare.gov. Here you can find the various carriers, options and prices in your state. But before you do…

2. Understand what you’re paying for

While insurance isn’t rocket science, it involves unique terms and odd language that can make it confusing. Before you start comparing policies, learn what to look for. Rather than giving you the complete rundown here, check out this post: Shopping Health Insurance.

3. Pare down your coverage

I don’t have a dental plan, because I don’t think they’re worth the money. As we said in Is Dental Insurance Worth It?, the maximum benefit of most policies has changed little over the years, even as costs have increased. Result? You’re paying too much and getting too little. These policies can cost $50 monthly for an annual benefit that’s capped at as little as $1,000. They often pay only 50 percent of the cost of restorative care and oral surgery, and nothing for cosmetic care. So unless Elaine knows in advance that she’s going to need covered dental work, dental is an expense I’d consider – pardon the pun – taking a bite out of.

After shopping, the best way to save on health insurance, as well as most other types of insurance, is to raise the deductible – the amount you pay yourself before the insurance company picks up the tab. As I mentioned above, my policy has a $5,000 deductible, which means I pay the first $5,000 of medical expenses annually.

Since I’ve never (knock on wood) spent close to $5,000 in any given year on medical expenses, this means I’m paying close to $10,000 annually for nothing: except, that is, the peace of mind that comes from knowing that should disaster strike, I won’t go bankrupt.

Is this ideal? Hardly. Especially when insurance company executives are raking in the dough: See Insurance Outrage: Hike Prices, Pay CEO $100,000,000. But this is the world we live in – a world that I hope will change as the Affordable Care Act kicks in.

Whether a high-deductible policy makes sense depends on the person. I rarely go to the doctor – Elaine may need regular medical care she can’t afford to finance herself. But it’s something to look at, especially if the only other option is to…

4. Go without insurance

You should never go without insurance if you can afford it. But if you’re without savings and/or income, you do have options other than the emergency room.

In Can’t Afford Health Insurance? Here’s What to Do, we visited one of more than 8,000 Federally Qualified Health Centers nationwide. These are essentially medical facilities that charge what you can afford to pay – which includes zero if you’re earning zero.

According to this page of the Health Resources and Services Administration’s website, here’s what these health centers can do:

  1. Checkups when you’re well
  2. Treatment when you’re sick
  3. Complete care when you’re pregnant
  4. Immunizations and checkups for your children
  5. Dental care and prescription drugs for your family
  6. Mental health and substance abuse care if you need it

To find one near you, go to the HRSA search page and type in your address. And if you’re imagining these places look like some squalid clinic resembling the DMV, think again. While I obviously can’t speak for all, the one I went to looked no better or worse than my doctor’s office. These aren’t government clinics: They’re private clinics that receive part of their funding from the government.

If none of these ideas will help, there’s just one thing left to do:

5. Wait for Obamacare to kick in

While some parts of the Affordable Care Act have already been implemented, two of the biggest provisions won’t start until 2014: state insurance exchanges that are supposed to drive down prices through increased competition, and government subsidies to help more people afford insurance.

If your income is at or below 133 percent of the federal poverty level, you’ll be eligible for Medicaid. (You can see what the federal poverty level is here: While it depends on the number of people in the household, for the 2012-2013 fiscal year, it’s $11,170 for a single person.) You may also be eligible with a higher income, depending on state rules.

If your income is more than 133 percent of the poverty level, but less than 400 percent, you’ll get help with insurance purchased through an exchange. (In other words, not through an employer.) To see what assistance you might qualify for, use this handy calculator from the Kaiser Family Foundation. I put in some made-up numbers for Elaine to see what it would look like: I said she was single, and will earn $30,000 in 2014. Here are the results:

Income: $30,000 – This is 261 percent of poverty level
Unsubsidized health insurance premium: $10,172 (This is an estimate of what she’d be likely to pay in 2014 without a subsidy)
Maximum % of income required if eligible for a subsidy 8.36 percent
Required premium payment: $2,509 (8.36 percent of income covering 25 percent of the overall premium)
Government tax credit: $7,663 ($10,172 minus $2,509)

So to boil all that down, people making less than 400 percent of the federal poverty level won’t pay more than a certain percentage of the their income for health insurance. In Elaine’s case in the example above, 8.36 percent. Because of tax credits, her insurance expense will drop from around $800 monthly to $200.

Now you can see why it’s called the Affordable Care Act.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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