You would think with all of the attention given to health insurance that this must be the cornerstone of a persons well being. I’m mean with out it, according to the politicians, pundits, and talking heads you might as well say goodbye to a good life, right? It is amazing to me how politics can so easily taint the common sense of the masses. I’m not saying health insurance isn’t important. If you’re self employed, an entrepreneur, or business person it is a MUST HAVE financial tool to protect your assets. However, let’s be clear on what it protects. Notice I didn’t say your health, but your assets. There are several misnomers about health insurance that needs to be cleared up, and more importantly there are financial priorities that need to be understood about insurance as a whole.
1. Health Insurance protects the doctors & hospitals primarily
Think about it. What you are really guarding is the fact that the medical bills can be paid. Many people believe they can’t see a provider if they don’t have insurance. Not true. What is true is the quality of the provider and health care you receive is dependent upon your ability to pay, and this includes how well insured you are, but you can see a physician without insurance if needed. Again I’m not advocating not buying health insurance, but what I am saying is the coverage is primarily to protect your ability to pay a bill, to which this primarily covers your providers more so than you. If you have financial assets to protect like homes, a business, etc, then yes this is a financial MUST HAVE tool. Keep in mind though at the end of the day what protects your health is not insurance, but diet and exercise. This understanding has purposely been conflated for political purposes.
2. Critical Illness & Disability Insurance is more important than health insurance
Health Insurance covers your providers interest, and critical illness & disability covers yours. The reason is simple. If you get hurt, sick, critically ill, or injured these plans pay you directly so you can continue to pay your bills. The check is written directly to you for you to decide how to spend it. I noticed there was a mad rush this year for everyone to purchase health insurance, but where was the line to purchase critical illness or disability? To me this shows how far our politics has gone for people to re-prioritize against their own interest. Again you should have health insurance, but if I had to pick between the two because of budgetary restraints where do you think the priorities should be focused? In one scenario the money is paid directly to the doctor and hospital and in the other scenario money is paid directly to me to spend at my discretion. Oh, and let’s not forget about the cost difference. Health Ins is going to cost at least 3-4x more than the Critical Illness & Disability.
3. Health Insurance through the government exchange is NOT FREE
Well not really. You may be getting a tax credit to offset the premium cost, but if your income is different than what is projected on the application the difference will be owed in the next tax year. So if you project to make $30k and receive a tax credit to off set the premium, but end up making $38k that year the difference of what you were over subsidized will be due the following tax year. Also look at the plan you are choosing. Many people are choosing plans that cost them nothing in premium because their tax credit is paying for the entire premium, but look at the level of coverage you are truly receiving. Many of these plans I see being chosen are bronze plans which means a huge deductible has to be met before the plan ever pays anything. What is the value in a free plan if doesn’t cover anything? Again you need health insurance, but the priorities of your interest must be considered first and foremost.
4. If I don’t buy an approved plan you more than likely will avoid penalties anyway
This is probably the biggest political farce of them all. It’s like going to a room of a hundred people and telling 17 of them if they don’t hand over $10 you will be forced to take $.50 out of the cup holders in their cars. When the whole room hears this, everyone becomes intimidated and starts passing $10 bills up to you. Here’s a little clue on this whole fine situation. If you qualify for a tax credit to purchase health coverage, you probably don’t qualify for the tax fine not to buy it. If you don’t qualify for a tax credit, you are financially better off paying the fine anyway, and buying a non-compliant plan. I did a whole webinar on this tax fine issue that you can look at if you want.
So if you have a friend, or colleague that is in absolute melt down mode over health insurance please forward them this article and tell them to take a deep breath and think about their priorities, goals, and needs first. Many of my clients who are realtors, lawyers, contractors, builders, entrepreneurs, and self employed have gone to the US Realtor Benefits Association that we manage and been able to get a plan off the market that actually offers more coverage for way less in cost.
The biggest problem with the healthcare law is everyones needs are different. Your budgets different, your income and asset class is different from others, in short, your needs are different. What the healthcare law tried to do is put everyone if 4 different boxes. Your either needing a plat, gold, silver, or bronze plan. Well the fact is there are more variables to someones needs then those 4 options provide. Take the time and find out what is right for you and your family.