Twentysomething: Preparing for life without health insurance
By Ryan Healy – About a month ago, my brother, Dan, was in the hospital. Originally, the doctors told him he had a small cut, and he should use some Neosporin to prevent infection. A couple of days later, they told him he had a staph infection. Staph infections are bad, but for my brother they are especially bad.
Dan was born with congenital heart disease, and any type of infection could be life-threatening. My parents hopped in the car and made the 10-hour drive from Connecticut to Columbus, OH. According to my parents, the three days in the Columbus hospital were like a bad episode of House. Nobody knew exactly what was wrong. The infectious disease doctors were in and out of his room every day.
Eventually, Dan was released from the hospital. The antibiotics killed the infection before it could spread. Regardless, the whole experience was incredibly scary for all of us. And it really made me nervous to ditch my corporate job with benefits to work at a startup with no health insurance.
But my mind was made up and sticking with my job was not an option. So the first thing I did was schedule a physical. I crossed my fingers and went into the doctors office, hoping there was nothing wrong. At first glance I was fine.
The doctor than asked if I wanted to have some blood tests done to test for HIV, hepatitis and whatever else they test. It sounded like a good idea at the time, so I strapped in and gave some blood. I regretted the decision immediately. If I tested positive for anything, private health insurance would go from expensive to completely unaffordable.
Luckily, everything turned out fine. But you know there is something wrong with the health care system when putting off being tested for a life-threatening disease for a few months is a “smart” financial option.
After the blood tests, the doctor asked if I wanted to have my cholesterol checked. Despite my mother constantly reminding me of my family’s high cholesterol, I declined for fear of an unusually high test and in turn, higher future health care costs. Finally, before leaving, I requested a tetanus shot even though I was 99 percent positive that it wasn’t necessary.
Buying fitted running shoes was next on my list. I try to run four to five times per week and my legs were beginning to bother me. It was definitely time for a new pair of shoes. But a week before you quit your job to pursue something with no immediate stream of income is not a great time to drop $100 on shoes.
After some thought, I realized that $100 now could be the only thing saving me from a stress fracture or another common running injury, which could end up saving me thousands in future uninsured medical costs.
After doing everything I could think of to prepare for life without insurance, a buddy of mine told me about a program that covers 80 percent of all medical expenses after a $500 deductible for “healthy” 23-year-old guys. It’s certainly not free, but all things considered, it’s a really good deal. (I plan to actually purchase the plan this week, so if anyone knows of a better deal, please let me know!)
Still, I’m lucky that I don’t have any preexisting medical conditions. I’m lucky I am not on any prescription drugs and I’m lucky to have tested negative for any diseases. Not everyone will be able to get such a good deal, and that’s a big problem.
My brother has full intentions of continuing his own business and starting companies for years to come, but he is going to have to take some major risks once he is off of my parents’ insurance policy.
Whether this means purchasing a catastrophic plan, borrowing money or completely going off of insurance, he will figure it out and I will help however I can. Because dropping everything to chase a dream might sound risky, but in my book, working a dead-end job for fear of not having health coverage is much riskier.
Ryan Healy’s blog is Employee Evolution.
Very Good post. This is actually a problem for a lot of grads. Some companies have a two month buffer period before you get insurance, maybe longer. So, as soon as your full-time student status ends you are off your parents insurance. Good preperation for your life without insurance…hopefully people take your advice. It could save them a lot of Benjamins.
Matt
“working a dead-end job for fear of not having health coverage is much riskier”
As a Gen X reader, all I can say is this position will change when you have a few mouths to feed.
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I agree, kids change everything. That’s why the time to give it a shot is when you’re young. Thanks for the comment.
-Ryan
As someone who just took this plunge recently…one other tip – go to the dentist, too, and schedule all your follow-up appointments before your insurance runs out. It is easier to put off dental work because it isn’t life-threatening, but that small cavity that you don’t get fixed now will turn into a $6,000 root canal in a year. It’s also likely that you’ll keep putting off dental insurance longer than health insurance because it feels less risky to be without dental insurance – further extending the time until your next visit.
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Good point. I actually did go to the dentist about a month before leaving my job. I should have mentioned that!
-Ryan
The interesting thing is that for many of us in other countries, health insurance, is treated as though it is an option, rather than something you need for day to day living. I know if ever I will be hospitalized, it will be th family coffers that will pay for it and not insurance. Don’t get me wrong, there is insurance here in the Philippines, but some people don’t really buy or use it for a variety of reasons (too expensive, unnecessary, invites bad luck etc). So in a way, I can relate. In fact, I think MOST Filipinos can relate to your fears Ryan. We get sick, and we wind up with an enormous bill we may not be able to handle. So we try to stay healthy. And pray. A lot.
Sounds like you’ve had just a taste of the joys of that system. Think about the chronically (note, not terminally) ill; diseases such as asthma, or serious allergies. They often can’t change jobs or take short career breaks because of the lead in time many have on health insurance. 3, 2 or even 1 month without health insurance is not an option for them.
Ryan:
I wish your brother good health after the scare.
Much as I am no fan of the US healthcare system, I can tell you that in the UK, our land of socialised medicine, where universal access and free-at-the-point-of-delivery is the norm, much worse can happen. Avoidable deaths in Scotland (population: 5M now) over the last 30 years have been in excess to 450,000.
In the US, you can probably sue someone; here we cannot really even sue the NHS, which will use OUR tax money to fight a case against us.
Here is some heartening reading (including comments from many parts of the ‘civilised’ world):
http://laviequotidienne.wordpress.com/2007/06/04/lessons-from-the-scottish-nhs/
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That is a really interesting point. I never thought about suing someone as a good thing, because it all too often promotes ill advised lawsuits. However, sometimes a lawsuit is necessary, and not having that option is a big problem. There must be some sort of happy medium. Thanks for the well wishes.
-Ryan
Hi Ryan,
At the end of your first paragraph I think you want to refer to staph infections, not staff infections.
http://en.wikipedia.org/wiki/Staphylococcus_aureus
Best Wishes,
Mark
Thanks for the correction.
I think it’s “staph” infection, not “staff” infection.
At my college, I’ve noticed a lot of employees elect ‘family’ coverage so their spouses can start or run their own businesses. They’re basically outsourcing their insurance costs to us.
This, because universal health care would be “inefficient.”
This is just the pfercet answer for all forum members
The worst thing about our health care system is how it encourages people to make bad decisions at bad times. My Dad went without insurance because he could not afford it, then, when he collapsed at work and was rushed to the hospital, he refused a CAT scan because they told him it would cost $1000. He drove himself home and continued to have a massive stroke. After I showed up at the hospital, from across the country, I got him the best treatment possible including a month in a rehab hospital, but the brain damage was too extensive and eventually, I had to put him in a nursing home where he died a few months later.
Ryan:
“I never thought about suing someone as a good thing, because it all too often promotes ill advised lawsuits.”
I cannot disagree, but on the whole they do serve as deterrents in some measure. If not in terms of costs in money and management time terms, then at least PR-wise, lawsuits are not a good thing for any organisation.
In the UK, I am afraid the population by and large all too literally illustrates Dave Gilmour’s telling line: “Hanging on in quiet desperation is the English way”.
Which means that issues are not addressed and become endemic in the system.
Thanks.
Ryan – you might consider electing COBRA or some coverage, as you indicated. Going uninsured is not just a risk — but it can preclude you from care for a while afterward. Nearly all group plans have a no pre-ex clause. So, if you were to have gallbladder trouble, say, and then get medical coverage you couldn’t seek care for it even after you sign on with a new plan (usually for 12 months). And, individual plans can refuse you for as long as they’d like.
A health savings account (http://en.wikipedia.org/wiki/Health_savings_account) is a good idea for young healthy people. It allows saving for medical expenses and that unused money never goes away (like medical plan premiums). Of course you would also have to have a catastrophic plan as well, but those aren’t that expensive.
So, I know of someone who owned her own business and then got into a car accident and lost everything because of the health costs. She was covered for regular doctor’s visits but not for rehab which she also needed to walk again. She had to sell her business to get the rehab.. so make sure your insurance covers random things like this.
I would say, the the most expensive insurance you can find and pay whatever premiums you must to get it. You don’t want to lose everything if something goes wrong.
Thanks for sharing this story. At the risk of sounding crass and uncaring; welcome to the real world! This is the exact reason why as we get older our priorities change. It's not that we want to – grow up' and have more responsibility, it just happens. As a twentysomething you have the ability (and great one at that) and freedom to make choices and take risks. I'm glad your doing so, but know it won't last. In a few years when you have a mortgage maybe a spouse it will get a little tougher to make these choices. A few years after that when you start a family it gets even tougher and the option to not have health insurance isn't an option anymore. But take heart, as an early Gen Xer I can tell you that desire to take risks and venture out on your own won't die. As I began planning to start my own company I've been amazed at how many of my colleagues in the same place in life are doing the same. The dream lives on, if just a bit more complex. So go forth and suck the marrow out of life!
I agree with what Kathy said. No one should even consider starting their own business without some form of health insurance. I have used a COBRA for mine and it was expensive for two people (500.00 per month) but I felt it was a necessity. I thought it was more important than a vacation, big screen TV, or cable service.
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I think you’re right, insurance is more important then everything you listed. I looked into COBRA and I think there are better deals out their for young people, but I have heard it’s a great option for people with a spouse or dependents. Thanks for the comment.
-Ryan
Take your vacations in Mexico or US cities near the border to get dental work, glasses, or prescriptions. $10-20 for cleanings or a filling, ask at your hotel for recommendations. If you can, make arrangements ahead for a medical checkup at an upscale private clinic. A 3-5 day package to PV or Cabo can be cheaper than one visit to a US dentist w/o insurance.
I’m sure someone is going to pipe in with the worst story ever about medicine in Mexico, but middle and upper class care is very affordable and just as good as the US.
I think more companies are letting parents extend their medical coverage for their kids until the mid-20s, whether or not they are in school. For example, the company I work for just increased the age to 26, and it’s not required anymore that they are a student. This will be a huge lifesaver all the recent grads like you that have parents who work at companies like this.
I think it’s interesting that making health care/health insurance more affordable, which so many people fear will HURT the economy, may actually stimulate it because more people would be willing to take entrepenurial risk.
Also interesting: 18 to 34 year olds are the largest group of uninsured in the nation. And insurance companies actually have a name for this group: The Young Invincibles. There was a great article about this recently in New York Magazine: http://nymag.com/news/features/29723/
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Thanks for the article! It’s really interesting.
Ryan;
My beef with this article is your notion that delaying tests somehow insulates you from future costs. This is untrue; although it is a popular misconception.
At this point, you either have or don’t have a number of ailments. You knowledge of whether you have them or not allows you to take action to mitigate any medical conditions. You are deluding yourself if you think that the knowledge of a condition will increase your future healthcare costs. Yes, your medical insurance premiums may be higher, but any insurer that is concerned about pre-existing conditions will make you take a physical prior to granting you insurance. Alternately, they will gladly take your money in premiums, and then deny coverage later for not disclosing your pre-existing conditions. Remember, you have a condition NOW, whether you choose to find out about or not. Keeping yourself in ignorance will allow you to truthfully check the “no known pre-existing conditions” box, but will not keep you from having your coverage yanked for actually having a pre-existing condition.
Second, as you well know, life is all about risks and rewards. If you were concerned about risk, you’d have a comfortable, if low paid, job at the county government. You can nakedly take risks, not getting yourself tested, and hope that the best will come of it. This is a bad strategy in the real world. Or you can do everything you reasonably can to hedge your risks. If you run alot, and are getting older, buying high quality running shoes on a frequent basis is a fraction of the cost of orthoscopic knee surgery, even if you have insurance. If you can’t afford new running shoes, run less or stop altogether. You will either pay now or pay later.
If you or your brother is forced to forego health insurance as a result of starting your business, you are probably not sufficiently capitalized. This further increases your risks. You should ask yourself, what other risks am I taking in this business venture that could blow up on me? You might be better served to think a little smaller or try to start something on the side rather than jump in with both feet.
-John
One more thing. Your insurance premiums are merely the expected present value of the medical costs you will incur during the time you are insured. This is a fact; insurance companies pay out ALL their collected premiums on claims. They make their money during the holding period between collection and disbursement.
Sure, you will probably not need any medical care during the next 5 years. But a certain percentage of people your age will, and if you like to bet, you can bet that you’re not one of them. The downside is that the losing side of this bet is very expensive, and will not only wipe you out, but the ensuing bankruptcy will basically cost you for the rest of your life, in increased borrowing costs.
Don’t forget that the primary reason for insurance is to pool your risk with others, so that you can average your costs with them.
-John
Great post, Ryan! I have been following your blog for the past few months and it has given me great guidance during my job search.
As a recent college grad who just completed a summer internship, I am just now embarking on my first full-time career search–while still under my parents’ roof. My mom’s insurance at her workplace promptly ceased coverage 30 days after college graduation, but I have been able to remain covered under my own plan with prescription coverage for only $142/month.
For residents of the State of Massachusetts, especially recent grads, individual insurance is now available at special rates if you sign up for it through the state-run “Commonwealth Connector” website, at http://www.mahealthconnector.org
The new program provides especially generous rates for those in the “19-26 year old” applicant pool. Best of all, the plans run on a “month-to-month” contract, which is especially helpful to job hunters. The plans are run by first-rate insurance companies, and mine has worked flawlessly for me so far.
If you are a MA resident and between jobs or self-employed, I would highly recommend checking out this option.
-Jeff
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Thanks, Jeff. I actually found a similar plan called GradMed that offers short term insurance to Penn State grads. There are definitely deals out there if you are healthy and look hard enough.
-Ryan
On Mexican healthcare, I should have said upscale clinics are affordable for Americans. Of course the vast majority of their citizens have to use the public system. However their public system is comparable to the United States’ treatment of the poor and uninsured. Something to think about.
One of the biggest problems with the US health system is that it is a deterrent to entrepreneurs.
There are problems for low-income earners as well, which is what most of the focus is on. But the deterrent to private enterprise is often overlooked and it’s a big factor.
After some thought, I realized that $100 now could be the only thing saving me from a stress fracture or another common running injury, which could end up saving me thousands in future uninsured medical costs.
*****
Rationalize much?
I guess this is the male equivalent of “I realized that the $600 Jimmy Choos were actually an investment, because they’d help me get that high-paying job I was after.” :-)
I’m a medical social worker (may have even worked at the hospital your brother was at since I worked two of them in C-bus), and having assets but not having insurance is a good way to lose EVERYTHING. Seriously, get a catastrophic policy so you’re out $5k or so instead of your entire business.
Currently I work in a trauma center and these are life-changing events for people, people our age who were just minding their own business before a twist or turn had them in the trauma ICU. Many of them don’t have insurance, and while we can give them great care in the hospital and work with them on hospital bills, rarely do people leave the hospital without other needs that may include inpatient physical rehabilitation, home health therapies, prescriptions, and for something like your brother had, IV antibiotics which are hundreds of dollars per dose PLUS the need for RN care on top of that… and I am just hitting the tip of the iceberg.
I urge everyone to get *something* – a catastrophic policy plus an pre-tax FSA is a great way to have coverage that is affordable for most people.
I actually think that Ryan’s post illustrates something else seriously wrong about health coverage in the USA: he’s buying a policy tailored to healthy 23-year-old men. Well, of course that’s cheap, and I don’t blame him for taking it, if it’s all he can afford. But, insurance is about spreading risk of individual injury over a large, diverse risk pool, not about making money for your insurance company stockholders. If Ryan were a woman, she’d discover she’d pay more, even if she were even healthier than real Ryan, since we’re relatively sure that the real Ryan, here, is not going to get pregnant. Insurance reform is about making sure that companies can’t cherry-pick healthy pigeons to pluck–sorry about the metaphor mixing–and then dump when said clients start to draw out more cash from the insurance company than the company takes in from them. Which is to say, as the pigeons get old. Because, let me assure you, you will sicken as you age, in ways you can’t imagine. But it is as certain as death. You’ll only escape the fate by dint of some instant fatal wound, a fact the insurance industry is aware of if you’re not. So, making Ryan pay more for coverage now than actuarially required by his young, narrow cohort in the expectation that the insurance company, constrained against dumping him, will have to spend it on Ryan later is the right thing. Not only is it just, but it frees Ryan not to worry about this crap anymore and get on with being productive and America to spend less GDP on administrative cost and emergency care and thus less on health care. And, it encourages the insurance company to poke Ryan into continuing his running routine and getting those tests done, because the company now views these as cost-saving measures.
There are possibly a good five different ways to achieve universal coverage at work in Western European countries. Any one of which would be an improvement here. Even the UK performs comparably to American health care overall (remember, we have 43 million Americans who aren’t covered, period. Imagine the unnecessary deaths among that group) even though it represents the worst choice, the one engineered to spend the least on medical care imaginable.
There seems to be some argument loose that the moral hazard of being insured will turn the nation into a bunch of hypochondriacs demanding MRI’s for hangnails. There’s just no evidence behind that argument. I mean, how often does Bill Gates get his prostate checked or his colon scoped? Daily? Somehow, I doubt it.
There are a great number of professional organizations and associations that offer group health insurance to their members – and the plans often overlook pre-existing conditions. Years ago I was self employed with a medical record that prevented me from obtaining coverage with the major medical insurance providers. I joined a women’s writing guild for $35 annually and joined their group medical plan for $255/month, which is CHEAP for coverage with a pre-existing condition. So, the moral of this post is: search high and low for any associations you may join that offer group health coverage.
Good luck and good health to you and your brother!
Helene
My wife just had an ache in her stomach. She had 6k worth of tests done to find out that it was nothing. She payed 1k after company insurance. US health care system is broken.
It is unfortunate that we have this system (in the USA) where health insurance is so predominantly tied to employment. It doesn’t work that way with car insurance or homeowners insurance, even though almost everyone has those things. Why should you lose your health insurance just because you lose your job?
Some time after the Great Depression, the government put caps on the amount of money companies could pay people for wages. So in order to compete for the best employees, companies started offering to pay for health insurance, and now we are stuck in this mess we are in. Thanks Uncle Sam.
The same bunch of gumps who brought us disasters like Social Security have also directly contributed to the screwiness of the health care system, so please remember this when you hear people call for government-run health care.
The idea that government-runned health insurance would be a disaster (too bureaucratic, too much paperwork) is really not a good argument. Today’s system (in the U.S.) already has too much bureaucracy and paperwork. Just ask anyone who has ever had to fight a claim. Currently three people in my department are fighting their insurers for various denied claims. Health insurance companies do everything in their power to make things complicated and deny legitimate claims.
I have a congenital heart condition too…. and I had full benefits at a job that drove me crazy, drove up my blood pressure, had 80-100 hour workweeks as a web developer with insane deadlines and constantly changing specs…. I had full benefits, but I believe quite strongly that I gave myself higher blood pressure for life after working there, eating all the midnight takout, no longer excercising, basically losing my healthy life…. and no longer taking care of my health due to the insanity of working there coupled with the “full health insurance” in case anything went wrong….
well, whatever goes wrong will be in the future….
Now I work for a startup and I have my own catastrophic health insurance, but I’ve come to realize that taking care of oneself is a form of low-tech, but very effective “health insurance” and that some of the companies that offer so-called great insurance do so because they burn out people
Go for it. I have left the working world, and I don’t have health insurance. I do, however, have 1.25 mil bucks, thanks to saving saving saving over my lifetime.
Many of the things that people have “warned” you about aren’t inevitabilities, as I’m sure you know: i.e. marriage, kids, mortgage. People often get themselves boxed in & cannot think out of the box. A hospital ER won’t deny you care & you can pay them a little at a time, interest-free.
Thank you for sharing the information with us. The health insurance is considered as the most important insurance for the people as well as car and other insurance. In every country, there are many insurance companies that could be selected by the clients. We should compare the benefits and choose the most suitable one for ourselves.
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Having health insurance is more important than many people realize. Generally speaking, both people with and without coverage take health insurance for granted. Do yourself a favor and make sure that you never fall into this level of thinking. No matter who you are, it is very important that you always have some sort of health insurance coverage.
It’s impossible to have a correct life and to not be affected by any risk. This insurance can help you in difficult moments.
Well, i must say that…even if we’re having accidents, we are not 100% sure that insurances will help us, as they tend to me real as..oles when it comes to paying back.
The problem is like this: insurance is perhaps a good thing. Though, most probably, whenever we have an accident, there is one thing in the contract that stops us from getting our mony. Sad but true.
I’d rather put some money in a bank rather than pay the insurance guys. Not only they can be real a…oles sometime, but most of the times they will try to trick you out.