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OnlineNavigator in 2016

For more than 30 years I’ve addressed consumer finance questions related to health insurance planning. It started as an effort to market my young financial planning practice in a local newspaper back in 1983 and is now an online social media activity through the trademark OnlineNavigator. I’ve lost count of how many thousands of consumer questions were addressed over this span. Most of this lifelong work has been uncompensated although I am paid for marketing through Freedom Benefits and occasionally for an article or presentation. Obviously the issues that affect Americans have changed over time. Yet it is clear that dealing with our national health care crisis continues to be a huge challenge to the people who contact me for advice. Lately the consumer questions tend to highlight the shortcomings of the Affordable Care Act. The real consumer question posted below is representative of the type of issue that I am asked about most often now in 2016.

Consumer’s question in early 2016:

“Hello. My name is xxxxxxxxxx. I was looking for health insurance for about 150 per month. I made 45000 last year, but I got laid off and I make significantly less now. I cannot afford the cheapest quote I was given at Healthcare.gov”

OnlineNavigator response:

Thanks for contacting OnlineNavigator service. Health insurance planning issues like yours are a common challenge for millions of Americans and this service is designed to give the most practical advice in an otherwise difficult and sometimes unmanageable situation.

As an immediate measure, some people who cannot afford qualified health insurance in the short-term opt for less expensive non-qualified insurance that costs less and covers less. For example, an emergency medical insurance plan cover only limited dollar coverage in an emergency room but might be quite affordable at around $20 per month. See the range of options available where you live by going to FreedomBenefits.net and selecting your state. My strong belief is that some coverage is better than no coverage even if this is not a complete solution.  In a period of personal financial crisis, it is important to focus on making sure that you don’t find yourself feeling “locked out” of the health care system in the event that you need care unexpectedly.

Pay special attention to limited benefit “short term medical insurance” that is specifically designed for people who are laid off and face a financial crisis as you describe. Another policy that has played a large role it “core health insurance”. Both of these are non-qualified plans that no not meet the standards commonly described as “Obamacare”. It makes sense to consider that health insurance is priced in direct proportion to the benefits that are paid out. There is no better example of “you get what you pay for” so a plan that costs only $150 per month as you suggest will not cover all of your potential medical expenses. All an individual can do is to match policies that are more likely to meet specific individual needs and that fall within an allotted budget.

For the longer term, however, all Americans need to consider that health care expenses will consume an average of 18% of your total household income. A myriad of laws are being phased in that are designed to make sure that everyone pays what government considers a “fair share”. That means that for a household with total annual income of $50,000 then the amount to be budgeted for health care is $675 per month. That is why your budget of $150 doesn’t come close to being adequate. The reality is that few people can afford this now and so that is why we have premium tax credits – at least for now. But even with the tax credits applied, as you indicated, millions of Americans cannot afford the premiums without major change to their lifestyle. For that reason consumer finance advisers like me work with individuals facing the shocking realization that they can’t continue to afford the basics of American life: rent, a car payment, a cable bill and health care. There is no doubt the out-of-control spiraling cost of health care is the #1 issue affecting your (and everyone else’s) future financial security. Eventually, over the long-term, as each of us pays more toward health care we will spend proportionally less on housing and other expenses.

Finally, you may also want to consider the ways to avoid a tax penalty during the period when you may be without qualified health insurance. That’s a different topic than what you asked and it won’t come up until you file your income tax return more than a year from now but see the OnlineNavigator article at http://www.onlinenavigator.org/Understanding-the-shared-responsibility-payment.html to consider this issue further. In your case it will likely take some work to avoid a tax penalty that would be $695 or more.

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