Health Insurance, Another Look

While listening to a recent podcast, I learned that?medical bills are reported to be the number one cause of U.S. bankruptcies.??One study claimed that 62.1% of bankruptcies were caused by inability to pay medical bills.??A more recent study found that 20% of those interviewed had been contacted by collection agencies, while 9% stated that they had declared personal bankruptcy due to medical expenses.??These variations in interpretation are concerning, however, we can be sure that many people are impacted by debts accumulated to pay medical bills and may need to file for bankruptcy.

As we noted in an earlier article, life insurance, takes care your family in the event of your death.??What about you???Who takes care of you if you get sick???Who pays for your treatment should you be diagnosed with cancer???What happens if you can no longer work due to an accident or a debilitating illness like Parkinson’s disease, dementia or heaven forbid,?amyotrophic lateral sclerosis (ALS).??As we live longer due to advances in medicine, despite good lifestyle choices, the possibility of succumbing to a major illness exists.

This is where medical, disability and long-term care insurance kicks in. This week I will focus again on medical or health insurance.

MEDICAL/HEALTH INSURANCE

Health or medical insurance provides coverage for expenses incurred as a result of sickness, injury, routine medical bills, disability, or accidental death and dismemberment.

Health insurance can be an expensive proposition and finding the right plan for you and your family could be quite complicated.??However, this is probably the most critical kind of insurance you will need since not having the right medical insurance could lead to financial distress as a result of illness or an accident.??I know of a hard working couple with a thriving business who lost their business and home due to a car accident in which both were critically injured.??They were unable to work, the business suffered, they used their savings to pay for the medical bills and could not service the mortgage on their home.

QUALITY MEDICAL CARE IS NOT FREE!

The point to note here is that quality medical care is not free.??One trip to the emergency room could put you and your family in debt for a long time.??Also, without health insurance you are less likely to see your doctor for that all important annual check-up.??As a result, diagnosis of a serious medical condition like a tumour, blockage of arteries, or cancer may be detected late and therefore your treatment may be more expensive and less effective.

As Suze Orman notes in her book, “The Road to Wealth”,?“not having health insurance means that you could be deprived of the care you need and deserve—and still find yourself hundreds of thousands of dollars in debt.??No matter what your age or state of health, protecting yourself with adequate medical insurance is an act of self-respect.”

The best way to obtain health insurance is through a group plan.??If this is not possible you will have to buy a private health insurance plan.??Let’s look at both.

GROUP HEALTH INSURANCE

Group Insurance health plans provide coverage to a group of members, usually comprised of company employees or members of an organization.??The cost of group health insurance is usually much lower than individual plans because the risk is spread across a larger number of people.??Simply put, this type of insurance is cheaper and more affordable than individual plans available on the market because there are more people who buy into the plan.

Group health insurance plans are purchased by companies and organizations, and then offered to their members or employees.??Plans can only be purchased by groups, which means individuals cannot purchase coverage through these plans.??Plans usually require at least 70% participation to be valid.??Once the organization chooses a plan, and many insurance companies in Trinbago offer different plans, group members can choose to accept or decline coverage.??Insured parties may also have the option of taking basic coverage or advanced insurance coverage with add-ons.??The premiums are split between the organization and its members based on the plan.??Health insurance coverage may also be extended to the immediate family and/or other dependents of group members for an extra cost.

NATIONAL ‘HEALTH INSURANCE’

We in Trinidad and Tobago also have national ‘health insurance’ since health care is provided free of charge to all citizens and there are specialised programs under the Ministry of Health’s?Chronic Disease Assistance Programme (CDAP) ?and?National Oncology Programme (NOP) ?for the care and treatment of chronic diseases and cancer.

The CDAP?provides citizens with free prescription drugs and other pharmaceutical items to combat health conditions including diabetes, asthma, cardiac diseases, arthritis, glaucoma, depression, high blood pressure, enlarged prostate, epilepsy, Parkinson’s disease and thyroid diseases.??There are over 250 pharmacies throughout the country that provide medications through the CDAP program.

The NOP’s main focus is on treatment, education, awareness, prevention, screening and early diagnosis, and supportive care and pain management when treatment is no longer an option.??All citizens of Trinidad and Tobago are entitled to cancer care and treatment free of charge.??Please note that you must be referred by a doctor before you can access treatment for cancer.??Cancer treatment and care is available at the Port of Spain General Hospital, San Fernando General Hospital, Eric Williams Medical Sciences Complex and National Radiotherapy Centre.

PRIVATE HEALTH INSURANCE

If you don't have health coverage through your job or do not want to rely on the care offered by public institutions, you may need to buy private health insurance.??Private health insurance as opposed to Group Health Insurance may be required if you are self-employed, a part-time employee, an entrepreneur, or retired.??If you find yourself in one of these situations, don't go without coverage for even a day.??Accidents happen, Murphy is always lurking in the shadows and you cannot predict when he will step into the light.??No one expects to get hit by a car while going for a walk, fall down the stairs when carrying the laundry or slip off the path while hiking, as has happened to me.??But these things happen, and they can be expensive without health insurance.

MAJOR MEDICAL HEALTH INSURANCE

Major medical health insurance is an important type of insurance that provides coverage for costly medical expenses such as hospitalization, surgery, and other treatments related to serious illnesses and injuries.??You should have a major medical plan to:

• help protect you from the financial burden of high medical bills in case of a serious illness or injury
• access necessary medical care when you need it.

Even if you are young and healthy, unexpected health events can happen to anyone. Major medical insurance can provide coverage for unforeseen accidents or illnesses, giving you and your family financial protection when you need it most.

Have a disciplined week as you work to build your financial freedom.??If you find this advice helpful, please share with your friends and colleagues.??As usual, I look forward to your questions and comments.??Be safe.??Take good care, and if you can, help someone in need.

Cheers, Nigel

Nigel Romano, Partner, Moore Trinidad & Tobago, Chartered Accountants