I want to bring this chapter to a conclusion by talking about saving money on healthcare. A Harvard study recently found that illness and medical bills caused over half of the 1,458,000 personal bankruptcies in 2001. The The study estimates that medical bankruptcies affect about 2 million Americans annually. You are probably well aware of the fact that getting sick or injured in the U.S. without health insurance can leave you bankrupt. As seen by the statistics, millions of Americans have fallen victim to this, and each day, millions of Americans go about their lives without being insured. You can't blame them, since the cost of healthcare in America is ridiculous, to say the least. There are a number of basic things you can do to protect yourself from rising healthcare costs. Some of these things are common sense. For example, if you don't have health insurance, you shouldn't be engaged in any physical activity or sport where you can get hurt. You should take care of your body, and you should eat right, take plenty of vitamins, and drink water. Avoid engaging in any risky behaviors that could threaten your health.
However, in addition to this, many of the tips I will give you are those which are not common sense. If you're going to get health insurance, one of the best insurance plans you can get if you are a young person between 18 and 34 is catastrophic insurance more formerly known as High Deductible Health Plans (HDHPs). This type of insurance is great for individuals who are single. You don't have to worry about paying for regular checkups, and you are essentially paying for the event in which you face a catastrophic injury or sickness. Because this event will not occur often, you will save a tremendous amount of money on your insurance premiums. Another type of health insurance that can allow you to save money is group health insurance. This is excellent for people who are married with families. If you are currently employed with a company, you must realize that you may lose your health benefits if you're fired or laid off.
A failure to prepare for this event is a bad financial move. If you want to eventually be truly financially independent, you must be prepared just in case you lose your job and your health benefits. One act that you should become familiar with is COBRA, which stands for the Congressional Omnibus Budget Reconciliation Act. Under COBRA, an employee who has lost their job can buy their former employer's group health plan for about two years. However, you will be expected to pay the full premium each month. A person is eligible for this plan if they leave their company, and they are self employed or unemployed.
You are also eligible for Cobra if you are under the age of 23, and you have a parent that has left the company they work for. If you are divorced, and your former spouse worked at a company for at least three years, you are also eligible. In addition to COBRA, there are many trade associations that offer low cost health insurance to those who are self employed. If you are 50 years of age or older, one organization that you may want to join is called AARP. Joining this organization can make you eligible for a number of reasonably priced health insurance plans.
If you decide to use a managed healthcare plan, you must be wary of balance billing. When you use a managed healthcare plan, they may negotiate a lower cost with doctors that are members of their organization. However, the doctor may attempt to bill you so that they can make up the price difference. Balance billing can also occur when a healthcare provider is forced into bankruptcy. I should stress that balance billing is illegal in many places, and you will want to research the laws in your state. If you decide to pay for health insurance, there are a wide variety of choices. The decision will vary from one person to another, and it is largely dependent on your income levels and your health.
I am a big advocate of having some type of health insurance, however it should also be mentioned that one of the best ways to save money on health insurance is to not have it at all. Let's examine this further.
As of this writing, I personally do have health insurance but my partner does not. He is 25 years old, and for research we contacted an insurance company last year to get more information on setting up an insurance plan. To be quite honest, we were pleased with the way the insurance agent acted when he visited his residence. The agent tried to use what the "scare tactic," and attempted to pressure my partner into making a decision immediately. He asked my partner what he would do if he slipped down the stairs and broke his leg. First, as of this writing, he has never broken a limb in his body, even when he was younger and more physically active.
So, let’s put this in perspective. If he didn't break his leg when he was a child, a time in which he was much more physically active than he is now, what are the chances that he will break his leg today, when he is even less active than he was as a kid? As we continued asking the insurance agent questions, I could clearly see that the agent was becoming frustrated. It was difficult for the agent to deal with the logic. Health insurance companies make billions of dollars per year by scaring people into paying for their services. When you are considering whether or not you should get health insurance, they scare you with the high costs of "getting appendicitis" or "breaking your leg." They are quick to tell you how much you will pay if you're injured without health insurance. What they're not quick to tell you is the mathematical probability of these events actually occurring. If my partner didn't break my leg during the first 25 years of my life, the chance of it happening in the next 25 years is even lower. As far as appendicitis is concerned, it only affects a grand total of 7 percent of all Americans at some point during their lives. If you're 30 years of age or older, the chances of you getting it becomes even more rare.
While there is a chance you could get appendicitis, the chance is quite low. The insurance companies are well aware of this. They are not stupid by any means. Insurance companies spend a great deal of time dealing with numbers and statistics. At the same time, they know most people "don't" look at the actual statistics. They are masters at playing on the fears of the common man. My personal belief is that "saving money can be one of the best forms of insurance you can have." When you're saving 30 to 50% of your annual income, in just a few short years, you can be prepared for almost any medical emergency you encounter, short of a bone marrow transplant.
I want to next show you a basic mathematical example which further explains my position. Let’s say you save approximately $1000 each month. At the end of each month, you have made it your goal to have a thousand dollars more than you had at the beginning of the month. At this level of savings, you will save about $12,000 a year, a respectable yearly savings. After five years, you will have about $60,000. Now, let’s say you don't have any health insurance, but you break your arm after saving for five years. When you go to the doctor, the total cost to fix up your arm is $2,000.
After you pay the $2,000, you will have $58,000 left over. Now, let’s say you paid $100 per month for five years on health insurance, and you suddenly break your arm. At $100 per month, you would be paying $1,200 per year for your health insurance. By the time you break your arm after five years, you would have paid $6,000 total. While you will be covered when you go to the doctor to get your arm fixed, you will essentially have spent $6,000 rather than the $2,000 you would have paid by simply not having health insurance. This is a difference of $4,000, an amount that would normally take you four months to save. While this is a simplified example, it shows that you can actually pay more for health insurance than you would pay by simply saving. As you can imagine, if you pay for health insurance for 20 years, the costs can be extremely high. You are essentially paying for protection "in the event" that you are sick or injured. This day may not come soon, and when it does, your savings may be so high that it doesn't matter whether you have health insurance or not. In addition to this, there are some more tips you can use to save money on healthcare.
First, always purchase generic drugs. It has been shown that generic drugs are much cheaper than their brand name counter parts, and most are equally effective. You should also make good use of alternative health medicines and vitamins. Nature is one of the best sources you can use to help you deal with various ailments. The alternative health industry has exploded in recent years, and as the cost of healthcare continues to increase, many people will look to alternative medicines as a solution. Another trend that is becoming wildly popular is medical tourism.
Medical tourism allows people to vacation in foreign countries while receiving healthcare that is much cheaper than their country of residence. If you get sick or injured, the amount of money you can save by flying to a foreign country for care is stupendous. Two of the most popular destinations for many westerners are Mexico and India. Both have world class health facilities that rival those in the United States, and they are a fraction of what you would pay in the U.S. Below is a price comparison between healthcare operations in India versus those in the United States.
Orthopedics United States India
Knee Replacement $7,000 $4,000
Hip Replacement $6,000 $3,000
Dental United States India
Root Canal $115 per tooth $70 per tooth
Surgical Extraction $335 per tooth $200 per tooth
Eye Care United States India
Lasik Surgery $1,200 per eye $650 per eye
Glaucoma Surgery $800 per eye $450 per eye
It must be emphasized that the costs in this example are indicative. The actual costs will ultimately be made by the hospital. You must also factor in the amount that it will cost you to make a round trip flight to India. However, as you can see, the cost difference between the two countries is large, and many people may find it valuable to take a vacation and save on healthcare at the same time. I also want to note that the decision to live without health insurance is subject to certain risks. My partner chooses to live without health insurance, whereas I have an insurance plan in place. My daily activities are also a lot more risky than my partners as I engage in frequent strenuous physical activity and athletics. I'm not responsible for anything that may happen as a result of you following this advice. My overall advice would be to get some type of low cost, yet comprehensive health insurance.
Mathematically, I have demonstrated that it is possible for you to afford healthcare without paying for insurance, but each person is different, and this strategy should not be used by everyone. The decision to not get health insurance is a personal decision made by my partner and he is prepared to deal with any possible consequences that may occur due to this decision. If you choose to travel to a foreign country for healthcare, it is crucially important to take all the cost factors into consideration to ensure you get a good deal.