The health team at your local facility does an excellent job of repairing the damage. Soon, you’re back home recuperating. But there’s an additional shock to the system yet to come – that happens when you receive the bill from the hospital.
While bills for hospital treatment are high (and in-hospital care is even higher), you’re confident that your insurance will cover a good portion of the costs. Confident, that is, until you make a phone call and discover that your health insurance lapsed just before your accident.
That, of course, is the very definition of a disaster.
Despite the best precautions of the massive insurance and medical system, new government regulations that mandate that everyone carry health insurance, and constant warnings from friends, family and acquaintances about the need for such insurance, there are still people who find themselves caught in the gap between insurance and no insurance.
Some of it is simple negligence on the part of the individual. They may have been distracted by work and their personal lives, and didn’t notice the bill piling up on the counter. Or they may be waiting for a check to arrive that will pay the fees, but forget to pay it when the ship comes in.
Sometimes the mistake can be the result of human errs. Insurance companies and human resource departments are manned by people (really, they are!), and people make mistakes. If the proper paperwork wasn’t filed, you may have fallen through the cracks and wound up without insurance for a time.
HEALTHCARE CAN BE COSTLY
The consequences of such a lapse can be grim. Everyone knows that any hospital procedure is going to be costly. But you may be shocked at just how costly.
Did you know that health care expenditures in the U.S. accounted for more than 17 percent of the Gross Domestic Product (GDP), according to a study by the Healthcare Cost and Utilization Project? Worse, although only seven percent of the civilian, non-institutionalized population had an in-patient hospital stay, the costs associated with those stays accounted for 29 percent of all health-care expenses?
That’s a huge number. And it can vary depending on where you are hospitalized in the U.S., because different states have vastly different prices for treatments.
The Centers for Medicare and Medicaid Services has compiled data on the average hospital charges for the 100 most common diagnosis and treatments for every hospital in the country treating Medicare patients. As of 2012, the top five states with the highest average aggregate rankings (meaning they have the most expensive medical costs) are California, New Jersey, Nevada, Florida and Pennsylvania.
That means if you are uninsured and in a bad accident in California, you may find yourself in an unsurmountable hole if you are uninsured.
MORE PEOPLE ARE NOW INSURED
Of course, no one can predict when an accident will happen, and the trend line on who has insurance shows that more people now have it than ever before.
The U.S. Census Bureau reports that in 2011, more young adults gained coverage from a provision of the Affordable Care Act (popularly called “Obamacare”) that allowed them to stay on their parents policies until age 26. The law passed on March 23, 2010. For those between 26 and 64, the statistics on the number of uninsured was flat.
(Keep in mind that these statistics were compiled before 2014, when most of the major provisions of Obamacare kicked in. So many more people are now likely covered).
THEY WANT YOU TO HAVE INSURANCE
Fortunately, there are healthcare insurance protections in place. And even if you are switching jobs, you are covered during the transition period.
A law called COBRA is largely responsible for the continuing coverage. COBRA is an acronym that stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, a law passed by Congress that mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment.
COBRA allows you to keep your existing health insurance within an 18-month period of leaving your job. The downside is COBRA typically has higher premiums than group insurance.
You will typically lose insurance coverage by the end of the month when you leave a job where you are enrolled in a group plan. That means you have to immediately get on COBRA, or find individual health insurance you can afford.
While you are insured, any conditions you receive treatment for are covered, and future policies also cover that. Every state has different policies regarding lapsed insurance. When in doubt, check with your government agency, and make sure you obtain advice in writing regarding your health insurance coverage. Taking advice over the phone is always bad policy without backup.
The Affordable Care Act (ACA) opened up health insurance to many. However, there are now tax penalties if you don’t have health insurance. Even if you had health insurance for the majority of the year, you may be assessed penalties if it lapses for more than two months.
The exact penalty will be based on your income and number of dependents. Under the act, insurance companies are limited from denying coverage to individuals with preexisting conditions. That means that even people with lapsed policies should be able to purchase health insurance individually from the state-funded health insurance exchanges.
Again, different states have different policies, and some states are working to exempt themselves from Obamacare. Be cautious when determining your situation.
HOW DO I GET INSURANCE?
There are several ways to become insured. The first is to sign up for a group plan through your employer, but many unions or guilds also offer plans. These are usually cheaper than individual plans, because the purchaser gets a discount for the number of policies. This is the majority of policies in the U.S. An individual plan can be purchased by you directly from an insurance company, but the discounts for scale are lost. There are also state insurance exchanges in many territories that will help you navigate your options.
If your insurance lapses, don’t panic. The system is designed to make it easier for you to find and obtain health care coverage than ever before. Just don’t wait until disaster strikes before looking into health insurance. You’ll sleep better at night knowing that you and your family are covered.