What happens when you lose your health insurance
by: david_nian
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Since the 1980s, each year between 1 and 2 million American families file personal bankruptcy. Until recently, the causes of these bankruptcies were unknown, and most people assumed credit card spending, divorce, and loss of employment to be among the major reasons. In February 2005 Harvard University released the results of its study, "Illness and injury as Contributors to Bankruptcy."
The study interviewed 1,771 Americans in bankruptcy courts and determined that about half were "medically bankrupt" - driven to bankruptcy by medical bills not covered by health insurance. Equally surprising, the study concluded:
Three-fourths of the medically bankrupt had health insurance at the beginning of their illness.
The majority of the medically bankrupt owned their own homes and had attended college.
Many people filing medical bankruptcy were middle-class workers with health insurance who were unable to pay their co-payments, deductibles, and exclusions in the employer-sponsored health insurance plan.
To protect yourself and your family, you will need to evaluate employer-sponsored health insurance and individual plans that you purchase yourself, paying particular attention to terms like annual out-of-pocket maximum (OOP max) - which means the maximum out-of-pocket expense you could incur in a given year from con insurance, deductibles, and exclusions.
Many employer health insurance plans have annual OOP maximum of tens of thousands or more. You can start to see why 75 percent of medically bankrupt middle- and upper-middle class. Americans mistakenly think their health insurance will cover them. You should make sure that your employer plan does not have an OOP max that would send you to the poorhouse if you had to pay it and how to get disability insurance to pay your salary if you cannot return to work after an illness. Employer-sponsored health insurance has some serious shortcomings:
It offers no permanent protection when you lose your job.
It offers only limited protection when you change jobs.
It exposes you to serious financial risk even if you keep your job - due to low lifetime maximum benefits, not to mention hidden co-payments, deductibles, and exclusions.
Millions of working Americans believe that the only way they can get health insurance is from their employer. Until recently, their belief was accurate. But in the past few years, a quiet revolutions has changed the health insurance options available to employees, self-employed, and small businesses:
Individual/family health insurance has become cheaper and safer than traditional employer health insurance.
Health savings accounts are now available.
Premiums for self-employed are now tax deductible.
New Health Reimbursement Arrangements (HRAs) are now available for individual/family health insurance.
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