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Your Guide to Health Insurance

By Erik Folgate

The bottom line with health insurance is that too few people have it, and the people that do have it pay a chunk load of money to have it.  The feeling of NOT having health insurance is always an uneasy one.  Even if you are in general good health, the possibility of an accident or freak illness is in the back of someone’s mind.  There are statistics that show that health related bills account for much of the bankruptcys that take place in America.  So what should you do about the health insurance dilemma as a young person?  You have options.  Some are good, and some are not so good. 

Option #1:  The first, and usually the best option is to take part in your company’s health insurance plan.  This is assuming that you are not self-employed and you work for a medium to large size company.  For Instance, my company pays for 80% of my premium and then I pay for my wife to be on the plan.  We pay about $130 a month, which is still a lot of money, but it could be worse.  Most likely, your company will offer a great plan and they will pay for most of your premium, so I would never pass up that deal if you are young and single, or married with no kids. 

Option #2:  The government has set up some decent alternatives to traditional health insurance plans called an MSA and an HSA.  I do not know much about the MSA, but from what I have heard, an HSA (Health Savings Account) is a better option.  This option is best for a self-employed young person or someone who very rarely gets sick and likes to save money.  This is how the HSA works.  You pay a premium for a high deductible insurance policy.  The policies are usually very adequate in there coverage, it is just that the deductible is about 2 or 3 grand out of your pocket, and then the health insurance picks up 100% of the tab.  You can see whomever you’d like, and there are no referrals.  Attached to this low-premium policy is a health savings account that you throw money in at your discretion.  The cap is about $5,000 a year, but the money gets invested into mutual funds like an IRA.  The money in this account can be used for ANYTHING that is health related, including dental work, eye care, prescriptions and other related things.  It is really not a bad deal, and you should check it out if you are paying $300 – 400 a month in premium, but never using your health care.

Option #3:  Self insuring your health care is another option that you have.  You put your money away in a 4-5% online savings account, and pay yourself a premium per month.  This sounds ludicrous, but if you are paying a large premium, and you are generally healthy, then it makes more sense.  Granted, there is always that black cloud of a freak accident that looms in the back of your mind, but you’ll still pay a deductible and some other out-of-pocket expenses with a traditional health insurance plan.  Honestly, if you are considering this option because you don’t want to deal with insurance companies, I would suggest checking into the HSA/high-deductible policy before self insuring yourself.  THe only time that I would recommend this is if you make greater than $100,000 a year.

Some Tips to Keep your Health Premium Low:

  1. Quit smoking!  This is equivalent to being a completely reckless driver on the road with auto insurance, except you are just being reckless with your life.
  2. Get a yearly physical.
  3. Opt for an HMO, and not a PPO. 
  4. Opt for a higher deductible, if it is an option.
  5. Eat right and exercise daily.  If everyone did this, the health insurance crisis would not exist, but instead, America tries to politicize the fact that we’re just getting fatter and lazier.  (Oops, did I just say that?)

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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