The Artists' Guide to Health Insurance How Much Is Too Much

In shopping for insurance, the ultimate goal is to get a plan that: 1) you can afford and 2) offers you coverage against catastrophic debt.

You may be tempted to stick to a comprehensive plan with an extremely high premium thinking that a more affordable plan with a seemingly high out of pocket maximum (say, $5000) and higher or no copays is worthless. You think, "I can't afford $5000. But I also can't afford the plan that covers everything. Why get insurance at all?" But in reality, comprehensive plans that pay for everything can be so expensive that it actually costs more to keep up with the monthly payments than it would to buy a more affordable plan and pay a little more out of pocket when you go to the doctor.

Let's put the math in context. Let's say that you found an insurance plan that cost $900 per month in premium, but that allowed you to go to the doctor for just a $10 copay. The total out-of-pocket maximum is $20,000. Scenario A: you go to the doctor three times over the course of the year for routine check-ups and a couple of small problems. Your health costs in that year would be $10,800 (the premium) + $30 (your total copays) for a total of $10,830 in expenses. Scenario B: you still go to the doctor three times, but you also have a hospital stay that costs $150,000. Now your total costs are $10,800 + $30 + $20,000 (your out-of-pocket maximum) for a total of $30,830.

Contrast that with a plan that cost $300 per month but that had a $5000 deductible and you had to pay in full up front at the time you saw your doctor. No copays. Your total cost for the year would be $3600 (the premium) + $300 ($100 each time you visited your doctor) for a total of $3900 in health care expenses. For the hospital scenario, you would owe only $5000 (your out of pocket maximum) for a total of $8900. That seems like a more reasonable number, no?

Of course, not all plans are right for everyone, but it pays to spend some time figuring out what you actually want and where you are willing to spend that money before jumping into something that looks like a brilliant plan but that may be a much poorer value than you thought.

Okay, I have just the right amount of coverage and feel great about it. Off to the doctor! Finding Dr. Right

This was great timing, because I already have an emergency! What do to? Dealing with Emergencies

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