Saving for the Future and Repaying Debt Shouldn’t Cost You Your Present Health and Wellbeing Series: Part IV

Happy Tuesday, y’all! Apologies for the delay in posts - I ambitiously released 2 posts in a week, got busy, then traveled internationally, so I'm slightly behind. Anywayyy...you ready for some dry AF health insurance talk? I know I am! In my last post, I discussed the importance of mental health maintenance, and I referenced health insurance playing a large role in potentially making that affordable to you. To maximize your insurance benefits, you should consider all of your options carefully and plan your health insurance strategy for the following year before the enrollment period either for ACA insurance or for your company’s plan.

Now obviously, I have no idea how healthcare is going to change from one second to the next and I’m not here to propose any changes or advocate for a specific health insurance strategy for the future (I do have personal thoughts on this, but I'm not going to discuss on the blog). Instead, I am going to walk you through some hypotheticals based on the current health insurance requirements under the ACA and present you with a list of considerations for your health insurance planning. This will be somewhat like choose-your-own-adventure, so not all of it will apply to you. Also, I’m going to break it into a couple of posts because as of now, the full document is more than 2700 words and it’s not even finished. Not about making y’all read novels. Here’s the outline:

• First: we’re going to calculate expected and unexpected healthcare expenses to see how much being uninsured would cost to give you a baseline against which to compare the cost of being insured (Today's post)
• Second: we’ll look at types of insurance plans and their related savings accounts. (Post Part 2)
• Finally, we’ll look at where to get plans and what they might cost from each location. We will then use the baseline calculated in this post to determine your cost of insurance vs. your cost of not being insured. (Post Part 3)

I’ll be using myself as an example throughout the posts, and trust me, the bottom line looks a lot better if you're insured.

1. Consider your and your family’s personal medical needs and history.

The first thing you need to do is calculate general medical expenses per person in your family. Then calculate regular medical expenses that are personal to you and your family. Write all of these down for the whole family, pricing them as if you were not insured. This will require some creativity and estimating, since it's almost impossible to know healthcare costs ahead of time (wooo!). Uninsured patients typically face higher charges than insured patients (due to insurance companies negotiating discounts), but sometimes doctors will discount for patients who pay out-of-pocket, so it just depends. 

Annual/Regular medical expenses

You’re going to have some expenses every year. Out-of-pocket basic appointments run $100-200 in my experience (but it’s dificult to estimate because, again, healthcare is a mess), so use that as your baseline expenses calculations. Generally everyone should see a primary care physician once per year and women should also see their OB/Gyn (they will often double as a primary care physician, but you may have trouble if you need vaccinations for traveling, etc. I’m testing that out later this summer so I’ll try to update!). You should also get an eye exam, which eye insurance will cover inexpensively (usually $4-20/month for annual optometrist exams and glasses/contacts stipends). You should definitely see a dermatologist for an annual appointment – and this is one of my soapboxes. Melanoma can be hard to spot. Seriously, I know a girl who had melanoma once and did her 6-month appointments, only to die because of a spot they didn’t find on her head that metastasized to her liver. You CANNOT see your own body everywhere and dermatologists know what to look for. This is super, super important. Add annual dermatologist visits to your list. Early action usually makes melanoma very treatable. 

Children will need vaccinations and various examinations each year. Those will be $200-300 per child, per visit if I had to guess - maybe more. They will also need eye exams, which will run the same $100-200 as an adult exam. 

Personal Regular Medical Expenses

If you have additional annual medical expenses, calculate those next. For example, I have eye problems that have resulted in 3 surgical procedures over the course of only few years, and will have to have cataract surgery and probably a couple of follow-up surgeries in the next several years. Because of this issue, I have 1-2 appointments with my retina specialist (which were in the $200 range when I paid out-of-pocket and includes an eye scan) in addition to my annual ophthalmologist appointment. I don't see optometrists under my eye insurance because my eye issues are too complicated and require a surgical exam during my normal appointment. I also see a therapist weekly.

You may have diabetes or have a child with scoliosis, or rheumatoid arthritis, or high blood pressure, or any number of other things. Those conditions unfortunately require regular maintenance for which people in perfect health will not have to budget.  Having eye problems as a mid-20s woman that are normally reserved for men over 65 really opened my eyes (heh) to the privilege of good health. Nothing makes you grateful for modern medicine like the risk of going blind in your 20s.

We’ll use my costs as an example:

Ms. C&CG Annual Medical Costs (Including Regular, Personal Expenses)

• Annual/OB/Gyn Exam: $200
• Eye Exam: $200 (I see an ophthalmologist, not an optometrist)
• Contacts $150
• Dermatologist: $150
• Retina Specialist ($200x2): $400
• Therapy ($150 x 50): $7.500 (!!!!)
• Birth Control ($175x12): $2100
• Other medicines ($100x12): $1200
• Total:  $11,750

$11,750 is what my health expenses would cost me, at minimum, without insurance.

2. Calculate your ACA Penalty

Now let’s add the ACA fee. Not having health insurance is hella expensive. If you’re considering going without insurance, calculate the cost of your estimated penalty & consider that amount as a “subsidy” to whatever health insurance plan you choose. It’s a sunk cost, period. Might as well get something for it.

The ACA fee is (A) $695 per adult, $347.50 per child, up to $2.085 per household, or (B) 2.5% of yearly household income over the annual tax filing requirement, which was $10,400 for an individual and $20,800 for married filing jointly. Here is a link to the ACA's guidelines on the penalty.

My last year’s income was about $150,000 (I’m not going to be super-specific on my income yet, sry buds), so let’s calculate my fee:

Ms. C&CG Hypothetical ACA Penalty

• $150,000- 10,400 = $139,600
• $139,600 x 2.5% = $3.490
• $3,490 > $695.
• ACA Penalty: $3.490

Now, let’s calculate for some other common incomes:

• $100,000 ($89,600 * .025) = $2,015 (Single)   $2,085 Family of 4
• $60,000 ($49,600* .025) = $1.240

My total expected health costs if I was uninsured come to a grand total of:

$15,240

Y'all, that is so much money! I'm obviously a higher-than-average healthcare user, but even just with the penalty and basic appointments, I would need a large chunk of change each year to cover my costs. So, once you’ve calculated all of your own expected costs, let’s look at semi-expected costs!

3. Calculate Potential complications of conditions you have

It is conceivable at any given follow-up appointment that my eye doctor will find a new complication and I will need another surgery. Thus, I consider the cost of potentially needing a surgery, not just my twice-annual eye appointments, in my insurance planning. If you have heart disease or diabetes or if your child has severe allergies, it is likely or highly possible that you will incur some expenses outside your minimum, regular medical expenses (or that your Epi-pen will expire and WE ALL KNOW HOW EXPENSIVE THOSE ARE. Thanks, Martin Skreli….). You definitely need to consider these, especially as it relates to your deductible amount.

So, Ms. C&CG potential expenses include:

• Eye Surgery: ~$10,000 (my actual surgeries were around this much for my insurance company. Out of pocket cost for my second eye surgery would have actually been $20,000 compared to the in-network rate I got. So this is probably a lowball, tbh)
• Laser Retinal Repair: ~$3,000 (I made that up, but I’m sure it’s not cheap)
• Follow-up appointments, meds: ~$2,000 (I also made this
• Total Potential, but predictable expenses: $20,000

If you have children, flu/cold/etc. expenses should be included here.

4. Estimate Emergencies/Unexpected Costs

This can be anything from a muscle tear or infection to a major wreck or cancer.

Last year, I had an unexpected ENT visit, complete with hearing test. I also had several irregular dermatologist visits because of a minor, yet annoying skin issue. These would have totaled around $1,500 out-of-pocket, and that doesn’t include the hearing test. I have no idea how much that would have cost, but I can imagine it would be expensive. (For example, Tread Lightly, Retire Early experienced sudden-onset deafness in her 20s!). One year I had an MRI and blood tests for some fun things that would have costs thousands without insurance (y’all, I swear I am generally healthy...my family is blessed not to have terminal diseases really; we just have all the chronic aches and pains that make our long lives miserable. I’M JOKING. We mostly aren’t miserable at all.)

Ms. C&CG Emergencies/Unexpected Costs Estimate:

$1,500

If you have even one unexpected medical incident per year or you avoid going to the doctor for fear of the cost or lack of coverage, you need to just go ahead and assume you’re going to have some kind of unexpected medical cost. If you’re calculating for yourself, budget something here. Seriously, your body is like a car. It will one day need fixing of some kind and not planning for that cost and then being shocked, SHOCKED! something goes wrong is just bad risk analysis. 

5. Add all your cost estimates to get your "uninsured" cost of healthcare.

Ms. C&CG

• Regular, Annual Medical Expenses: $11,750
• ACA Penalty: 3,490
• Potential, Predictable Expenses: $20,000
• Emergencies/Unexpected: $1,500
• Total Healthcare Costs if Uninsured: $36,740 

That's right, if I were uninsured, I could be on the hook for $36,740 - and that doesn't even include a terrible disaster or diagnosis! Ouch.

Alright, we’ve worked through all of the annual medical costs for me. I am certainly on the higher end of medical expenses for my age bracket, but I know there are plenty of people with significant conditions they either are treating or aren’t treating because they don’t feel like they can afford medical care. If you’re working along with me, add up all of the numbers we’ve calculated so far to get your total annual cost of healthcare if you were uninsured. This number will help you see the value of insurance relative to lack of insurance. In many cases, it’s not actually that much less expensive not to have insurance, even if you don’t have any medical expenses other than your annual exams, simply because you’d be paying the penalty. As I mentioned previously, the amount of the penalty is a sunk cost in your budget whether you have health insurance or not, so you might as well put it toward insurance.

My sunk cost would be $3,490. That’s almost $300/month toward a health insurance plan of my choice! My total uninsured health costs would be $36,740, so basically I need to come in under that number to make health insurance worth it to me. Obviously, I do not have $36,740 extra to spend, so I’d have to sacrifice certain health maintenance appointments (including therapy) without my insurance, which would super suck, or incur potentially $10,000 or more in medical bills.

In the next post, I'll cover basic types of health insurance plans, as well as the health savings accounts for which you may qualify, depending on your health insurance choice. It's a web of information, but breaking it into steps will hopefully help you navigate a complicated, but important, aspect of your financial wellbeing.

Have any of you gone without health insurance for any period of time? What did it cost you? 

This is the fourth installment in my health and wellbeing series. Here's the first post if you'd like to start at the beginning (which I recommend!): Saving for the Future & Repaying Debt Shouldn't Cost You Your Present Health & Wellbeing: A Series