Risks of forgoing health insurance?

January 18, 2008 6:14 AM

Risks of forgoing health insurance when one has limited assets?

I am in my final semester of graduate school. Students at my school are supposed to purchase the school's health insurance for $1,000/semester. The coverage is poor--extremely limited coverage with high copays. So far I have paid for coverage but haven't used it once. I am also lucky enough to meet the income requirements for state-sponsored (free) health care. (In my state you are eligible for this care even if you already have insurance.) I have to see the doctors at a specific hospital and so far the care has been excellent.

My tuition bills are already huge and I'm eager to cut corners wherever possible. I don't have any assets other than retirement savings in a Roth IRA from before I went back to school. Since the (bad) school coverage is so expensive, and I have (great) coverage that is free, I am considering forgoing the paid coverage. Technically, however, the state wants people with free care to purchase insurance (although they are able to retain the free care…go figure?!).

What are the risks of not purchasing the school health insurance? For example, I'm not sure what would happen if I were to suffer a serious injury and be brought to a hospital other than the one where I receive my care or worse, out of state (the risk is low since I don’t go out of state often). If something like this happened I would be protected by the fact that I have no real assets that could be seized to pay for medical bills, right? Or am I missing something?

Although it might be ethically “wrong” to not purchase the insurance my state wants residents to, both education and health care are insanely expensive and I’m just trying my best to get by without owing hundreds of thousands of dollars in the end. I also paid my fair share of taxes when I was working so I don't feel too bad about having free coverage now while my income is so low. Thank you.

posted by anonymous to grab bag (11 comments total)

Your question is confusing. Do you or do you not get state Medical Assistance? If you do, the answer to your question is largely predicated on what that coverage offers. It sounds alternately as if you have insurance and so would not be forgoing anything by not purchasing the school insurance, or that you don't and would. The answer lies in information we don't have: what does your current state coverage cover and what are its terms.

Three other points to consider:
1) Some schools in some states require proof of health insurance. If you forgo the school insurance, a school in one of those states might not let you matriculate or continue in classes.

2) Some states provide additional assistance to patients with catastrophic medical bills who do not otherwise have coverage and who qualify by income, etc. Without knowing what state you're in, it's not possible to help you figure that out.
posted by OmieWise at 6:27 AM on January 18

Oh, and, finally, the formula for risk here has to include your likelihood of getting sick. You alternately don't use your school insurance, and must see doctors at a specific hospital. I have no idea what that means. You need to evaluate the chances that you will be seriously ill, and the chances that you will be injured during the course of your normal activities, and whatever else, and make a decision based on that.

This question is a mess.
posted by OmieWise at 6:29 AM on January 18 [1 favorite]

It could lead to your death. Let's say you find out you have cancer. It is not purely an old person's disease. If you have no insurance you will likely receive substandard care, and of course then it will be too late to purchase coverage. If you are not sure what to do, watch "Sicko." I particularly recommend the scene about the fingers. Even with coverage you get screwed in our health care system, but without it you are toast if anything goes wrong.
posted by caddis at 6:44 AM on January 18

For example, I'm not sure what would happen if I were to suffer a serious injury and be brought to a hospital other than the one where I receive my care or worse, out of state (the risk is low since I don’t go out of state often). If something like this happened I would be protected by the fact that I have no real assets that could be seized to pay for medical bills, right? Or am I missing something?

This will depend on whoever your insurer is. The only answer anyone here can give you is "maybe" and it's a big freaking maybe. The big bad scenarios are

- what if you get cancer or some bad bad chronic disease when you are under state-sponsored care and then either move to a state without subsidized care or go over the income requirements. You may find it very difficult to get insurance at any sort of reasonable rate. This will probably be a problem whether or not you go on school insurance but speaks to your "can they take my assets?" question.
- what if you did get taken to another hospital and then you found out that you have a 10K deductible? 1K for insurance is going to look paltry.
- Triple-check the part about being eligible for state care even if you already have insurance. That sounds off to me, as someone who has been covered in multiple states by low-income insurance for the better part of 15 years.
- when you say "supposed" to pay for student insurance what does that mean exactly? Are you going to get in trouble for not paying for it? This may be their way of minimizing some sort of risk on their end [and/or making sure students who receive care on-campus are covered to do that] so some of this depends on whether this is an optional charge or not.

In short, you are going to have to make this decision based on whatever your state-sponsored health care covers (is it catastrophic only? what is the deductible like? what does it NOT cover?) and based on your school insurance. The wording of your question makes it seem like you've pretty much made up your mind about it (whenever someone puts "wrong" in quotes that's sort of a tip off) and without specifics, no one here can help you. Your best bet is to think out a few scenarios and calling both insurers and asking them specifically

"I have low-income coverage for this state and want to not buy school coverage. If I were taken to a hospital in another state what would my financial responsibility be?" If this is all above-board and you truly are allowed to not get school insurance, your current insurerer should be able to give you general outlines of what they do and do not cover and you don't have to play wacky guessing games. I understand the problem of having a really tight budget and worrying about pissing money away on health care seems like a luxury, but you should evaluate some actual scenarios and their effects on you, not just wonder aloud whether you've already paid enough for your education and in taxes. Cancer doesn't care what you've paid in taxes.
posted by jessamyn at 7:01 AM on January 18

-- Call your state health insurance program and ask them questions about the extent of your coverage, dire circumstances, etc.

-- Try to find a more affordable plan than your grad program offers, maybe through your undergraduate school's alumni health insurance program.
posted by junkbox at 7:39 AM on January 18 [1 favorite]

As the above have said, there's quite a bit of missing information. When considering something like medical insurance, you want to consider the absolute, worst-case scenario. While tremendously unlikely (I was completely uninsured for two years with no problem), if things go bad and you're uninsured, they go *really* bad. If you're severely ill/injured, your family is going to have to not only deal with your serious condition, but figuring out how to pay for it.

Technically, however, the state wants people with free care to purchase insurance (although they are able to retain the free care…go figure?!)

You need to determine what happens if you don't do that the state "wants." If something very bad occurs, you don't want the state to bill you for receiving care at an unapproved hospital. Hell, the ambulance ride alone can cost around $1k if you're paying out of pocket.

Unpaid medical bills can easily bring about true financial ruin. This is the kind of thing that can haunt you for decades, even if you declare bankruptcy.

If you're in your final semester, that means you should have a "real job" with a more substantial income than a grad student's meager stipend soon. If I were you, I'd just borrow the $1k needed to cover the insurance. If you have to, hit up some family members for a few hundred bucks each. One thousand seems like a lot now, but it's a pittance compared to what you'll be looking at if just about anything happens and your insurance isn't paying for it.
posted by Nelsormensch at 7:44 AM on January 18

Are you sure that your school requires you to buy insurance from them, or do they just want proof that you are covered by someone? The latter was the case both times I was in grad school -- the school's crappy policy was available so you could be covered by *something* if necessary, but more power to you if you had access to something better.

That doesn't help you in sussing out whether the free care is adequate for your needs, but at least it might remove the threat of trouble from the school.

OTOH, $1k more added to a loan burden that's already really large might be negligible. Not to sound fatalistic, but if you're already owing $50k, for example, owing $51k isn't that much more of a thing. You're pretty much screwed either way ...
posted by mccxxiii at 8:10 AM on January 18

You could, if you school only requires "proof of insurance", get catastrophic insurance. This is a high deductible type of insurance (so you have to reach some arbitrary high number, mine was $15,000 for my whole family of three, before they cover anything, but they cover everything after that). It was cheap for me, since I am in a low-risk category. It was only 60 bucks a month, but it made sure that if something *very* bad happened, I would not be forced into debt for the rest of my life because of it.

If you do go this route, make sure you get a plan that allows you to use any hospital (or at least most hospitals). For your peace of mind, it's worth it. You are taking a risk, but not a *huge* risk.
posted by nursegracer at 9:11 AM on January 18

Here's the only thing you need to think about: do you want to play Russian Roulette with your life? As far as I'm concerned, the list of needs is as follows: Shelter, Food, Vehicle, Insurance. Everything else is secondary. The plain and simple fact is that inevitably something WILL happen. Just beacuse you haven't used your insurance yet doesn't mean you won't need to.

Think of it this way, when you stub your toe, did you EXPECT it to happen? Not a chance. Was there anything you could have done to avoid it? Not really -- you can try and be more careful, but eventually you're going to get careless.

Same goes for illnesses and catastrophic accidents. Does anyone ever EXPECT them to happen? No. Is there anything you can do to avoid them? Perhaps, but eventually it's going to catch up to you.

As others have mentioned, you can alleviate your over-time payments, but if/when an issue arises, suddenly you're going to have a HUGE bill to pay all at once.

Basically: cut corners somewhere else :)
posted by PandemicSoul at 9:25 AM on January 18

this is the best article I have ever read that accurately presented why people don't get insurance, and what can happen to you - even if you are young, in fantastic health, and never get sick.

my boyfriend used to work with a bankruptcy attorney. most of the people who walked through their door were there because of catastrophic medical bills. it can destroy your life, your credit, and your ability to provide for the future. i know how it feels to look at your education bills and feel as though you will never crawl out from under them. but imagine how you would feel if you had medical debt on top of it.

i don't know what state you are in, but there are some states that realize that young people may not be getting benefits these days, but may not qualify for other low-income insurance groups:


http://www.tonikhealth.com/

it's only available in CA, CT, CO, NH & GA at the moment (although that may have changed since I last looked at it).

Finally, again, not knowing the state: I had NY state-sponsored health insurance which was not free, but significantly cheaper than anything else (like by 100%). there were other programs that you didn't have to pay for but I didn't meet that. You would need, very carefully, to verify what your state's obligations are. In my case, I didn't push the envelope because while I was temporarily down on my luck I wasn't destitute. As someone else pointed out, one more year of adding $1k to debt is a drop in the bucket.
posted by micawber at 9:38 AM on January 18 [1 favorite]

Tonik may be a good option -- just to clarify, though, it's not a state-sponsored program. It's from Unicare/Wellpoint. They're also marketing individual insurance under the brand name Sound in Texas and Illinois.

www.soundhealth.com
posted by kebnabi at 11:40 AM on January 18