Wednesday, January 23, 2013

The Value of Health Insurance

I've always had health insurance as an adult, even in times where I did not use it much.  In my younger days, I would go for a year or more without seeing a doctor, to the extent that my family doctor had assumed I was no longer a patient.  However, when I first started working, there were no health insurance premiums, only an out-of-pocket maximum before my insurance would take over. In my last year of working, the cost was about 0.8% of my salary.

As a retiree, I pay a seven times more for our family health insurance, approximately 12% of our annual expenses.  Even so, I haven't considered forgoing health insurance because I believe it is one of the important insurances I need to have.

Recently, I had several medical procedures, including surgery, which demonstrated the value of our health insurance.   One of the diagnostic procedures, prior to surgery, was billed as a cost slightly greater than the insurance premium for the entire year.   The bill was discounted about 50% and the balance was paid by our health care insurance.  My cost was less that $200   I still haven't received the bill for the surgery yet, but I expect it will be about double the cost of the diagnostic procedure.  Again my cost will probably be in the $200 range.

If I didn't have insurance, the medical cost would likely have been over 50% of our annual living expenses.   Therefore, I am very glad to have a health care insurance, even though we don't use it much in a typical year.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, health care or insurance advice. Please consult a professional advisor.

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