Accidents Will Happen
Are you a gambler? You'd better be if you don't have health insurance--and odds are, you don't. About one in every seven Americans goes without medical coverage, but the percentage of insureds takes a real fall in any survey of 19- to 39-year-olds who figure "Hey, I'm healthy, so why shell out cash that could go into more fun pursuits or building a business?"
Listen up: Just a minor tumble can put you face to face with ugly medical bills. Break a bone in your foot in a freak jogging mishap, and get ready to write out a four-figure check to cover doctor's visits, X-rays and treatment. Bad things happen to healthy people; that's why you need insurance.
Besides, it's cheap. That's right: An Internet search for rates for a 30-year-old male in Los Angeles County--one of the more expensive locales in the nation--found plenty of good policies for less than $100 per month. A 30-year-old female in L.A. will pay even less, probably around $75 monthly. And here's the kicker: Since you're self-employed, 45 percent of the cost of medical insurance is deductible from federal taxes, and that percentage is increasing each year until it hits 100 percent in 2007.
With Uncle Sam picking up part of the tab, it's just plain smart to spring for medical insurance. Need more convincing? Keep reading for a list of bookmarks that make for a primer on health insurance--why you need it, what to buy and where to get it.
Health care is an alphabet soup--HMOs, PPOs, POSes and more. A starting point in any shopping expedition is mastering the basics, and here's where to start:
- "Guide to Health Insurance": In 15 pages from the Health Insurance Association of America, you're walked through the health-care maze. Maybe the prose isn't the liveliest, but this is essential reading.
- "Tips for Buying Individual Health Coverage": This is short, sweet advice from Insure.com, which bills itself as the insurance news network. While you're at this site, check here for a peek at average health insurance costs.
- "What Health Coverage Is Right For You?": The folks at the Mayo Clinic do a nice job of providing a thorough but simple guide to picking a health plan.
- Want your info on paper? Get the scoop about health insurance in a book: Martin Gottlieb's The Confused Consumer's Guide to Choosing a Health Care Plan (Hyperion, $12.95, 800-759-0190).
The cool bit is that nowadays, there's no need to sit in a broker's stuffy office to buy health insurance. Just fire up a computer and do your shopping on the Web. A big plus: The Web makes comparison shopping easy. Answer a few questions (age, where you live, etc.) and inside a couple minutes you'll likely get quotes from a half-dozen or more providers. Where to shop?
Found a policy you like? Don't buy without visiting Standard & Poor's, where you'll find ratings of insurers' financial strength. A rating less than "A" (AAA is the top grade) may be a reason to check out another provider.
Upping The Ante
One way to cut monthly premiums is to go for a high deductible--say, $2,000. Where do you come up with that kind of cash if disaster strikes? Set up a Medical Savings Account (MSA), which allows you to make tax-deductible contributions to fund this kitty that can be used only to pay medical bills. (Pull out money for other reasons before age 59 and a half, and you'll get hit with tax penalties.) If you don't tap into your MSA, the money rolls over for use the next year. There are more wrinkles--anything involving tax-advantaged contributions is guaranteed complex--so read the details here
Robert McGarvey admits he pays (perhaps a bit begrudgingly, but always on time) $200 a month for a health policy through a writers' group.