It turns out that even if you have health insurance, your financial security isn't guaranteed.
A new survey from the Kaiser Family Foundation (KFF) and the New York Times found that 20 percent of working-aged Americans who have health insurance report having problems paying off their medical bills. That number rises to 53 percent for Americans without health insurance.
A big part of the problem is reduced insurance plan benefits -- consumers are generally paying more in copays, with higher deductibles, than they ever have before. So if you're unlucky enough to get into an accident or fall ill, you may get buried in medical bills that you can't afford to pay off.
The Effects of Medical Debt
As part of the survey, KFF looked at how medical debt can affect everyday life. The results they found are sobering.
Among insured Americans with medical debt problems, 63 percent reported that they used up all or most of their savings, 42 percent reported taking an extra job or increasing work hours, 38 percent have gone into additional credit card debt. An alarming 35 percent of respondents with medical bill problems reported an inability to pay for fundamentals such as food, heat and housing expenses.
Medical debt can affect your credit too. As of late 2014, more than 43 million Americans had overdue medical debt on their credit reports, and more than half of all overdue debt on Americans' credit reports was medical debt.
What's clear is that medical debt can affect Americans from all sorts of backgrounds and place a strain on their entire lives.
Tips for Americans with Health Insurance
Since so many people fall into medical debt over unexpected illnesses or accidents, getting prepared might seem impossible. You can't exactly guard against the unknown, but if you have health insurance, you can take some precautions to try to keep yourself financially secure.
- Choose your plan carefully. Since the passage of the Affordable Care Act - and even before -healthcare plans with low deductibles and inexpensive copays have become less and less common. Health insurance premiums have increased by 203 percent since 1999, faster than both inflation and earnings. So, for example, if you choose a "bronze" Obamacare plan, this typically has a lower premium than the other "metal" plans (silver, gold and platinum) but also has the highest deductibles and out-of-pocket costs. This could result in much bigger bills down the road, so you'll want to consider the full range of possibilities before making a decision that balances current-day savings with future risk.
- Pick the right providers. According to the New York Times/KFF study, among insured Americans who reported having trouble with medical debt, 32 percent said that they got care from an out-of-network provider (69 percent of that group said they were unaware the provider was out-of-network when they received the care). Making sure that your healthcare providers are not only a good fit for you personally but are also covered by your insurance plan is crucial. You can do this by calling your provider and asking whether they are in-network.
- Plan for an emergency. If this new data teaches us anything, it's that even acting responsibly can't always save us from a bad break. Emergency savings can be the one thing that rescue you from a cycle of debt, collections and mounting interest payments, so it makes sense to establish an emergency fund that you can have on hand if something goes wrong. It can also be helpful to take into account your co-pays and deductibles when deciding how much to set aside - for example, if your annual deductible is $3,000, an emergency savings fund of $1,000 won't be enough.
- Be proactive about your health. Kaiser notes that a lot of Americans who have come under stress from medical expenses responded by going to the doctor's office less often. 62 percent postponed dental care, 43 percent skipped tests or treatments and 41 percent haven't filled a prescription. However, if possible, it makes sense to be proactive about your health. Exercising regularly, eating healthy foods and taking other preventative measures may keep you healthier and help keep future costs down.
What about the uninsured?
Around 13 percent of Americans are still uninsured. The fact that many of them would also having trouble paying their medical bills is probably not too surprising. Kaiser notes that most uninsured Americans come from low-income families, with over 48 percent of uninsured adults reporting that health insurance was too expensive for them.
Also, many uninsured Americans remain confused about how the Affordable Care Act works - for example, a May 2015 survey from the Commonwealth Fund found that 53 percent of uninsured adults were unaware of expanded Medicaid eligibility in some states. Others think the healthcare requirement doesn't apply to them or would simply rather pay the government penalty than pay for health insurance.
Basic tips like building an emergency fund and being proactive about your health are just as important to the uninsured as they are to those with insurance. These things are obviously more difficult, though, for Americans who are living paycheck to paycheck, so budgeting out your expenses and making your health a priority becomes even more important.
Since the passage of the Affordable Care Act, more Americans are insured than ever before. Still, medical debt remains a huge problem, even for people with health insurance coverage. Being vigilant about your finances and your health is a great first step, but if possible, you might want to save up some emergency funds in case something unexpected happens.
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