How to Get Affordable Health Insurance

One key to success in personal finance is to maintain proper insurance coverage. Whether it's auto insurance that really covers the true cost of potentially hitting a $70,000 Mercedes, or health insurance that covers a healthy 30 thirty-old when they trip and break their ankle, you need to expect the unexpected and be ready for it.

Too many Americans are scared by the cost of insurance and go without it. You must never be without health insurance. After shelter and food, it should be a priority in life. There are lower price alternatives by buying group coverage and ways to bring premium prices down to affordable levels. If you have children and financial need, check with your state or local government for children's coverage, which may be offered free.

There are two major risks associated with not having health insurance. If you are un-insured, and are diagnosed with a major illness, you may become officially categorized by insurers as "un-insurable", leaving you unable to obtain insurance in the future. The second risk is financial and very real. Even a basic injury, such as tripping on the curb and breaking an ankle, could cost $30,000. You have ambulance costs, emergency room costs from the hospital, treatment costs from the emergency room physician, x-ray costs from a laboratory company, consulting costs from a radiologist to read the x-rays. You have costs for drugs and other hospital supplies, then additional physician charges for follow-up care. Prescription drugs are very expensive, as is any possible physical therapy required. And no matter how healthy or safe you are, it's the unexpected or the actions of others that will get you.

After working for twenty years in the insurance business at Prudential Financial, Inc., I've always stayed away from HMO (Health Maintenance Organization) plans and anything that forces you into a network. When something goes really bad, you need the option to seek out the finest hospitals and doctors in the country, not the best in the network or organization. We like the PPO (Preferred Provider Organization) plans as they have a wide network of participating providers, and you receive the maximum benefits by visiting these providers. You sometimes receive a lesser benefit if you decide to visit an out-of-network provider, but would receive full coverage in the worst case scenario, after you paid your yearly out-of-pocket amount.

If you've recently lost or left a job, you may be shocked at the monthly cost for continuing your coverage, as the COBRA law allows you to continue the coverage offered by your employer policy, but pay the bill yourself. This cost may be more than $700 a month for an individual and could be over $2000 a month for a family.

Don't let this scare you, this coverage may be top of the line and include extras like low deductibles, all kinds of preventative care, vision and dental care. Not that these are bad things, but they add to the monthly premium cost. Start with basic, emergency coverage and work up from there. Get coverage that covers accidents and injuries with hospital and related care. Coverage that covers major illnesses and surgeries.

Start with a high deductible, which is the amount of money you have to pay out of your pocket before benefits begin. Many inexpensive plans come with a $5000 deductible, which means you must spend $5000 before costs are covered. There may also be a co-pay amount of 20%, meaning if a hospital bill is $10,000, you would pay $2000 of that, the insurance would pay the balance. Many plans have a maximum out-of-pocket, usually around $7500, and after that the plan pays 100%. So in the worst case, if you got a bad disease or injury, you would be responsible for $7500, the plan would pay the rest, which for a week in the hospital with surgery could easily exceed $100,000.

Blue Cross / Blue Shield and their affiliated and related companies (Anthem) offer some good, individual plans. You can check out the plans online and easily connect with a local agent. As an example Our web designer is a single, 40 year old, healthy guy. He has coverage through Anthem California (formerly known as Blue Cross / Blue Shield) with a $5000 deducible, basic PPO policy, he pays $129 a month. Anyone can afford that, especially if they cut down on Starbucks and some other extras. He can choose to increase his benefits as his finances allow.

Some other good suggestions for reduced price health insurance are:

School
Schools, including trade and technical schools, may offers some type of group coverage for students. It may be worth it to take a single class each semester to be eligible for coverage under those plans.

Job
Many jobs provide coverage, if yours does not, ask the boss about helping employees buy insurance at a discount. The company can arrange for the plan, but not pay anything. They may even receive a commission from the insurer for bringing them the business.

Groups
Many civic associations, community groups and fraternal organizations may offer a group policy. Check with your local government as well.

NASE
Another good source for individuals is the National Association of the Self Employed (nase.org). They offer many benefits to small business owners, including health insurance. Anyone can join, you don't really need to own a small business.

More from this contributor:

"What Are Estimated Tax Payments?"

"Which Is Better Whole Life or Term Life Insurance?"

"It's Time To Change Your Financial Thinking"