I had a recent fortunate chain of events which sparked this post. My bank said my card number was compromised at some retailer so they sent me a new card. My Kaiser Permanente health insurance couldn’t charge me $274 for my monthly premiums so they sent me this pleasant letter threatening to cancel my health insurance if I didn’t update my credit card.
I first asked myself, do I need this health insurance? No.
Am I getting a good enough deal that’s worth it enough to keep it? No.
Am I exposing myself to major risk by not having health insurance? Maybe.
Health Insurance – Health care
If anything, I am not looking for health insurance but health care.
Specifically, I want to make sure that I am protected against any health disasters. And even this last matter is worth discussing in more detail.
If I get hit by a car and die then that’s that. I’m DNR so that’s not an issue. If you come across Dr. Mo laying on the ground in his own feces please do not attempt to resuscitate and definitely help yourself to that bottle of Cazadores in his hand!
If I get cancer I’m not about to go through chemo and radiation just to live the rest of my life out in misery. I’d be reaching for that bottle of tequila again with some street morphine.
If I get into a really bad car accident and get physically fucked then I’d be cool with some trauma surgeon going to town on me but any subsequent surgical needs would not be handled in the US. I’d limp my way to Thailand or Mexico and get care there – cash out of pocket.
At $274/month I am hurting my chances of having enough money to handle my health care needs. It’s illogical for such a large portion of my money to go towards health insurance in the US which delivers very little quality health care.
Without health insurance I have to worry about is the ACA tax penalty. This has morphed it into a mandatory tax and no longer a health insurance requirement.
Health Insurance in Another Country
As of March 2018 I have health insurance in Spain so I don’t need health insurance in the US. However, in order for this to be accepted by the IRS I would need to reside overseas for at least 330 days in 12 consecutive months.
That likely won’t be a very good option for me because I am not sure if I’ll be spending that entire time overseas or if I need to come back to deal with some stuff stateside.
That said, I am paying $70/month for public as well private health insurance coverage in Spain. I am also getting optical as well as dental care there.
Who Could Pay for my Health Insurance?
Is there a way to offload the cost of health insurance onto an employer?
I am working with 3 different companies so I should ask them. And sure enough, my community college faculty job was happy to offer me coverage.
Great! Problem solved.
Another advantage of having your own business or working independently is that you can write off your health insurance premiums.
Whatever income you earn as an independent contractor or business owner can be used directly to pay for your health insurance premiums in a 1:1 ratio.
This is a sensitive topic in the personal finance community. Some states will qualify you for Medicaid if your AGI income is low enough. Others will also take into account your assets.
Before the ACA if a wealthy person with a low adjusted gross income adopted Medicaid then they were shysters. But after the healthcare subsidies played into the math when shopping for health insurance on the exchange, it was suddenly okay to purchase health insurance at a lower price.
Health disasters which need to be addressed immediately are rare and what most would consider a need for an ER visit is often an Urgent Care matter.
If you live close to a neighboring country such as Mexico or have easy access then that’s where I would suggest you purchase your healthcare.
This gets more involved because you might need your health insurance through that country as well unless you pay cash. With a long-term visa and overseas health insurance a person could save a lot of money on health care needs.
Paying the Tax Penalty
The idea of not having health insurance was at first a bit of a shock. It was important to resolve the health insurance versus health care debate in my head which made the rest of the decisions easier.
I began to research the tax penalty for not having health insurance. I can go without health insurance for up to 3 months without having to pay a tax penalty. This is referred to as the “gap in coverage” exemption.
My health insurance tax penalty would only be $869 for the entire year because I already had 2 month of coverage and I would be forgiven for 3 months of coverage because of the gap-in-coverage exemption.
The question that might come up is “Wouldn’t you rather pay that money to get health insurance instead of paying it towards a tax penalty?”
That’s why the penalty was designed in such a way to be close to what you’d pay for the cheapest health insurance plan. In my case I would have to pay $1,918 for those 7 months in order to have health insurance.
This mandatory health insurance requirement is likely going away in 2019 which still leaves the open question of how to protect against health catastrophe.
Up until a few years ago one could purchase catastrophic health insurance for <$100/month.
The US health insurance marketplace has been through a lot of changes and I suspect that no company will offer anything even close to that $100-mark even for the most anemic of coverages.
Fortunately you will be able to make use of travel insurance plans which will cover you for catastrophes and are often far cheaper. You could get a plan which covers you for health and dental emergencies in the US for around $1,000/year.