Ninety percent of Americans had some healthcare insurance in 2019. But many are underinsured, with insufficient insurance that doesn't cover the full cost of treatment, prescriptions, or preventative care.
What does it mean to be underinsured? If your out-of-pocket costs exceed 10 percent of income (or 5 percent when income is less than around $115 a week), that is considered underinsured. And a lot of Americans fall into this category. Research shows that over 82 million of us are uninsured or underinsured, and, as healthcare premiums rise, this number is growing.
It's essential to understand the consequences of being underinsured and some solutions that expand your health insurance coverage, save costs, and provide peace of mind.
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The number of people underinsured in the United States is growing. While the Affordable Care Act (ACA) aimed to address gaps in healthcare coverage by providing Medicaid and marketplace subsidies to low-income individuals, the problem of "underinsurance" is as prevalent as ever.
We assume that most underinsured Americans come from low-income households, but this is not always the case. Because of spiraling healthcare premiums in recent years — sometimes increasing more than wages — and more limited coverage options, the underinsurance problem also affects the middle classes.
Limited availability to public coverage in some areas has exacerbated the problem, and the current pandemic (and subsequent economic fallout) has placed a tremendous financial burden on many American families.
The term "underinsurance" is defined as:
"Underinsurance refers to an insufficient insurance policy. Although a good insurance policy won't prevent life's calamities, it should make the financial consequences easier to bear. Underinsurance, however, can leave the enrollee liable for a large financial expense if a serious event occurs."
Learn more about the high cost of healthcare in the United States.
People lack the right amount of health insurance for various reasons. Typically, it's because of finances — full-coverage health insurance is unaffordable, so people take out more modest coverage. But there are other reasons. Some people don't qualify for financial help under the ACA. (Medicaid, for example.) Others don't qualify for certain types of marketplace coverage. These people might "settle" for lower-cost, less comprehensive insurance.
Others are unaware that they lack the right amount of coverage — until it's too late. This is a bigger problem than you think. With so many providers out there, one might assume they all provide a decent level of coverage. However, that isn't always the case. Some Americans face medical bills of tens of thousands of dollars because they (wrongly) presumed their providers would cover the treatment.
According to research, someone is more likely to be underinsured because of their race, age, location, and income level.
Let's look at the location:
Fifty-four percent of adults in Texas are uninsured/underinsured.
Fifty-three percent of adults in Florida are uninsured/underinsured.
Forty-three percent of adults in New York are uninsured/underinsured.
Forty-two percent of adults in California are uninsured/underinsured.
Underinsurance brings a multitude of problems for Americans. Ultimately, underinsured people have to pay more significant out-of-pocket expenses for the healthcare they receive, so they end up paying more than those with full healthcare coverage. Many can't afford to pay these costs, so receive medical bills. It's a vicious cycle: many underinsured Americans can't afford to pay for more expensive insurance premiums but have more medical debt because of unpaid bills.
Forty-one percent of Americans have problems paying medical bills or have medical debts, while 43 percent have not filled a prescription because the cost is too high. This means many people don't receive the treatment they require because they can't afford it.
Not being able to afford insurance has a psychological impact too. Many people believe all Americans should have access to the right healthcare insurance.
"People who are 'underinsured' have high health plan deductibles and out-of-pocket medical expenses relative to their income and are more likely to struggle to pay medical bills or to skip care because of cost," says The Commonwealth Fund.
You could be eligible for government assistance programs and not realize it. Subsidized health insurance like Medicaid could provide you with better coverage than you have now, and it could work out cheaper. Of course, Medicaid won't cover everything (personal care, home care, etc.), but you can supplement it with additional affordable coverage from a reputable provider.
You might pay for the same old health insurance without knowing what it even covers. Review your current policies and discover whether you have the right amount of coverage for you and your family.
There are loads of different healthcare insurance providers on the market, and many offer affordable policies that suit you. Use a website like PolicyScout, where you can compare insurance in one place. This way, you won't waste time searching the internet.
Check out our Guide to Choosing a Health Insurance Policy to learn more.
It's challenging to know what you're entitled to with healthcare coverage. Many policies come with lengthy terms, which complicates matters even more. If you are unsure whether you are eligible for a particular service or treatment, contact your provider.
We always hear about uninsured Americans, but what about the millions of people who don't have the right amount of insurance? They are often just as likely to pay more for healthcare or end up with medical debts. Underinsurance happens for various reasons, but there are solutions to overcome this problem.
Are you underinsured? Or think you might be? It could be time for a healthcare insurance check-up. Review your current policies and take out affordable coverage that provides you with peace of mind. Click here to start!