Why Do I Need Insurance?

One may ask, “why do I need health insurance?” The simple answer is to protect ourselves against high medical costs and bankruptcy.

Insurance is a contract or policy that gives you financial protection in unlikely, but costly, events (with this being true for essentially all insurance types). Health insurance goes a step further and  also helps with regular costs like prescriptions, check-ups, and routine care.

Health insurance charges a premium, and then has a cost sharing structure for medical, drug, and surgical needs. Meanwhile, life insurance pays out a stated amount in case of death, and property and casualty insurance on your house or car help protect you from the loss of those precious items.

All these insurance types are a smart bet in worst case scenarios for the same reason, to avoid bankruptcy and other significant losses, but health insurance has other considerations due to many plans covering routine costs as well.

What Does Insurance Cover?

Insurance policies do not cover everything. You need to understand what is covered by your employer, or your government. You also need to know that there will always be a trade off between the money paid and coverage given. The more money you pay or someone pays for you, the more protection you will have.

Every insurance policy covers a particular risk. Medical insurance will typically not cover long-term care; homeowners insurance might cover a broken water pipe but not flood damage. Car insurance may cover damage to your vehicle or not. You need special policies or riders, for each risk.

How Do I Get Insurance?

Insurance agents can help you find the right type of insurance for your needs and can help you buy it. You can also deal with insurance companies yourself. You might get health insurance through an employer or a government program such as Medicare, Medicaid, or CHIP. Each of these programs has enrollment requirements based on age and financial status. You can find information on these programs at Healthcare.gov.

If you do not get health insurance through an employer, you can enroll in health insurance under the ACA either during Open Enrollment from November 1, 2017, to December 15, 2017, during your state’s open enrollment period, or during a Special Enrollment Period. You may qualify for special enrollment if you lose insurance along with your job, are losing COBRA, or going through a major life change like having a baby.

Update: Regulations put in place by the Trump Administration cut open enrollment in half.[1] Last year Americans had two months to enroll. This year, we have only one month on the federal exchange. However, some states have decided to extend the open enrollment period on their state exchanges. As of September 8,2017, six states have extended enrollment: Washington (Nov. 1, 2017 – January 15, 2018), California (Nov 1, 2017 – Jan. 12, 2018), Minnesota (Nov 1, 2017 – Jan. 14, 2018), Connecticut (Nov 1, 2017 – Jan. 31, 2018), District of Columbia (Nov.1, 2017 – January 31, 2018), and Rhode Island (Nov 1, 2017 – December. 31, 2017).

New York, Idaho, Maryland, Vermont, Connecticut, and Massachusetts are still legally permitted to extend open enrollment.[2]

How do I use The Affordable Care Act Marketplace?

Some states use the federal marketplace, while others have state exchanges. See Healthcare.gov for information on federal healthcare.[3] See State Run Exchanges for information on those.[4]

Update: President Trump continues his effort to change the Affordable Care Act, which is also known as ObamaCare. As a result, we cannot yet tell you how the final program is going to look.

Misusing Credit or Loans Can Force You into Bankruptcy.

If you are not insured, paying for an accident or sickness can force you to use up their savings and lines of credit or take out loans. You may even have to declare bankruptcy if you can’t pay for your loss.

Expanding health insurance under the Affordable Care Act, also known as ObamaCare, has given more Americans access to health insurance. One of the results has been cutting personal bankruptcies from 1,536,799 in 2010 to 770,846 in 2016.[5]

Summary

We are all vulnerable to illness, accident, and loss. Please get insured against loss when you can.

Citations

  1. Regulations put in place by the Trump Administration cut open enrollment in half
  2. States That Have Extended Health Insurance Open Enrollment for 2018 (and States That Still Can)
  3. Healthcare.gov
  4. State Run Exchanges
  5. How the Affordable Care Act Drove Down Personal Bankruptcy

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