Medical costs are going through the roof, there is little or any effective cost containment. These skyrocketing costs have to be passed on some how to the policy holder and the most effective way is under insurance.
The purpose of insurance is to protect you financially from loss such as home insurance or auto insurance. Under insurance gives you little if any real protection in a medical emergency. Under insurance leaves you holding the bag in case of a major medical event and places a severe financial hardship on you and your family often bankrupting them. As a guideline about 60% of all bankruptcies in the country are because of medical bills and about 70% of those going bankrupt because of medical bills have medical insurance - medical under insurance that is. If they had real protection odds are they wouldn't be going banko.
Under insurance really isn't worth more than the paper than it's written own. More people are opting to be under insured because it's more affordable than real medical insurance protection which is often unavailable because of pre-existing conditions or is simply not affordable to most people. Many employers are also priced out of offering real insurance programs and cannot offer a decent medical insurance policy to their employees.
Signs of under insurance
- Not being able to afford all of your medications even though you have an insurance policy.
- Having to borrow money or take out a second mortgage to pay medical bills even though you have an insurance policy.
- Not being able to pay for necessities such as utility bills, food, transportation etc, beccause of medical bills.
- No coverage on eye exams or glasses.
- Large out of pockets medical costs.
- Large deductibles, the largest I heard of was $10,000 but I'm sure there are other that could be larger.
Let's take a look at a few of the more common forms of under insurance.
80/20- That may have been OK 25-30 years ago but medical costs has exceeded the rate of inflation and wages. This means the protection value has dropped dramatically over the years and thus represents under insurance. In a typical 80/20 you pay a deductible of let's say the first 3,000 bucks and the insurance company splits the remainder on a 80/20 split.
On a 80,000 dollar procedure means you'll be on the hook for about $18,400 bucks. If you have the misfortune to have another family member get sick or need emergency care for let's say a 60,000 heart attack this will tack on another $14,400 there about and leave you with about $33,000 in medical bills rounded. Add on physical therapy or some type of rehab and prescriptions and you really under stand why this is under insurance. This is an affordable under insurance policy that will leave most people broke or in debt for years. Also remember while you got this 33,000 buck medical bill you also have to pay your mortgage, car note, save for retirement, save for your kids college etc.
1400 per month COBRA- COBRA is a continuation of your former employer medical insurance after you get laid off. This is a joke in and of itself because how can a person pay a 1,000, 1,200 or 1,400 dollars a month for an insurance policy and they don't have a job! And need to think about keeping a roof over their head and some food in the kids stomach.
The $1400 per month COBRA
The $10,000 deductible- Just watch the clip on this one but someone found a policy with a 10,000 buck deductible because of some pre-existing condition. With a 10,000 buck deductible this policy really isn't worth the paper it's written on.
There you have it, the difference between insurance and under insurance which is becoming more and more pervasive as medical costs exceed the rate of inflation and wages.
Some folks say that on a large medical bills let's say 60,000 bucks you can pay 25 bucks a month to keep the wolf (bill collector) from the front door- I never heard of this actually working. Paying a 60,000 buck medical bill at 25 dollar per month will take only 200 years to pay off ,not counting interest!
The $10,000 deductible