How do single income families afford health insurance?

February 24, 2012 12:34 PM

How do single income families afford health insurance?

Are you a single income family? How do you tackle the bear of insurance? Wife and I have been planning on her quitting her job and staying home for a bit now. We have our savings to our 'threshold' we set and even more. Then we looked into insurance costs.. Oh my.. To use my employer benefits, it would go from $42/m to $614/m. Dental is provided free of charge, so can't drop that down. We have a 2 year old so she would need insurance. I DO NOT want to compromise insurance, I am very adamant that everyone in my family is covered. I make $60k/year so we def do not qualify for any kind of help. I would feel kind of guilty if we did since having my wife stay home is a choice.

We looked at private insurance and it dosnt make sense. Example, $200/m and you get a $10k deducatable. Since we might be having another kid in ~1 year, it would be cheaper to just save that $200/m and pay in cash. We did find out a friends in-law is an insurance broker and are waiting to hear back. I want to make this work for my wife so bad, and we have cut A LOT out but this insurance is such a large expense I dont think there is anything I can do. I am 5 months into a new job and although I have taken on every extra duty I can, I am not sure it would be kosher to ask for a raise.

posted by NotSoSimple to Work & Money (26 answers total)

What kind of insurance do you have? PPO? HMO? If you have PPO, perhaps changing to HMO would reduce the cost. Obviously, this changes your coverage, but it might make the cost more manageable. ...As an alternative, that may or may not be viable, can your wife work part-time? Some companies offer insurance to PT employees.
posted by AlliKat75 at 12:38 PM on February 24, 2012

Most people I know who do this get their state's children's health insurance for the kiddos and go without for themselves, or have very narrow catastrophic coverage. I don't think they make 60k a year, though. Maybe you or your wife needs to pick up a second job for a while to set aside a year's worth of premiums? Or your wife needs to stay in her job for a few more months? IDK, man, it's a pretty eff'd-up system, unfortunately.
posted by Snarl Furillo at 12:39 PM on February 24, 2012 [1 favorite]

We are single income, and I agree, insurance costs are a bear. But not having insurance seems to be a worse option, so, here we are. We have made cuts in other budget areas (including savings & investments for the time being, since we don't need improvements in those rightrightnow but insurance is DEFINITELY needed) to ensure we are maxing out our insurance coverage.
posted by ThePinkSuperhero at 12:41 PM on February 24, 2012

I'm not sure why you're seeing such a big jump, unless you've both been on single coverage and the 2 year old has been uninsured. I have a job and my wife has a very much part time job; we're all (including our children) on my health insurance at work. Yep, it's about $600. That's typical in this day and time.

Was your wife's job providing fantastic coverage with little cost? If so, that's part of what you're giving up by her giving up that job.
posted by randomkeystrike at 12:45 PM on February 24, 2012 [1 favorite]

Response by poster: Work dosn't offer a PPO unfortunately. Also, having my wife work part time she says is 'counter productive to what the goal is'. She will if she has to, but she dosn't see the point in quitting a full time job she works ONLY to pay for benefits to get a part time job ONLY to pay for benefits. We could get Oregon Health Plan, but it costs about the same as private insurance for my kiddo alone.

We have paid off one car, cut TV, cut 401k, made some energy improvements to our house, lowered car insurance bill and refinanced the one car loan we have. No credit card debt. Only debt we have is wifes student loans, one car loan, and our house.

Good idea on the saving up.. That would be a crazy amount though. $6800 from my rough math, not including the hike in May.

Currently I only have coverage from my employer for me. My wife pays for herself and our kid. Her employer pays for all but $20 for her, we pay for our kid. So it is an awesome deal we are in benefits wise.
posted by NotSoSimple at 12:48 PM on February 24, 2012

The options boil down to these:

* You find an employer who picks up more of the insurance cost for you (though this isn't as easy to find as it used to be -- we're paying well above even that $600/month for our family insurance in metro New York, and even so our copays have become kind of staggering over the last four years.)
* Your wife keeps working at the place that (I assume) subsidizes your family insurance so well
* You find a separate new income stream to cover the additional insurance costs
* You make steep cuts to other life expenses (like moving to a smaller home, canceling cable, eating ramen every night, downgrading your car)
* You do without insurance.

It really, truly sucks, but there you have it.
posted by Andrhia at 12:48 PM on February 24, 2012 [3 favorites]

Another option, if your wife's insurance premiums are lower than yours, one option is that you stay home with the kid and she continues to work.
posted by muddgirl at 12:57 PM on February 24, 2012

Response by poster: The idea is for my wife to stay at home :) Also she makes ~$36k, I am bringing home $60k. That and I don't want to quit my job.
posted by NotSoSimple at 1:02 PM on February 24, 2012

I don't think you should come to any conclusion about the affordability of your wife staying at home until you talk to the insurance broker about all of your options. There's such variety and price-points, and the broker can help you navigate through the choices.

I would also keep in mind that insurance is not simply a prepayment of services. Sure, potentially you could save up $10k in a year to cover some of the birth costs, but what if the birth costs more than that? Or what if your wife has some separate health issue that crops up? (and so forth)

Another possibility: rather than getting a part-time job that offers health benefits, perhaps your wife could do a little work from home to offset the cost of private insurance?
posted by stowaway at 1:03 PM on February 24, 2012

Keep in kind that insurance premiums go up every year, often significantly.
posted by fshgrl at 1:10 PM on February 24, 2012

The difference in premiums is about $7000 a year. Having your wife work part-time from home to cover that difference seems very feasible.
posted by muddgirl at 1:11 PM on February 24, 2012 [1 favorite]

Well, if my math is right, it seems like your wife could work at her current job for about 3 more months to save enough to pay for 12 months of benefits for her and your child through your benefits. Which isn't great, but could be worth the reward of being able to stop working. Maybe her expenses (gas, eating lunch out, work clothing) would decrease enough as a result of being at home more, so that after 12 months your finances would be more workable?

If you get coverage for your family through your work insurance, isn't that pre-tax dollars? I'm wondering if that's going to turn out to be a better deal than her getting separate insurance.
posted by Secretariat at 1:12 PM on February 24, 2012

I know a couple of single income families. One family has insurance through the working parent's job, and the single income is high enough to cover the cost of the premiums. The rest of them are single income because daycare costs more than the non-working parent would make. In both of those cases, the kids are covered through the states where they live and the parents are uninsured.
posted by crankylex at 1:14 PM on February 24, 2012

Keep in mind that when you get insurance through work, you're paying premiums with pre-tax dollars and not post-tax dollars. What that means is that jumping from $42/month to $614/month isn't going to decrease your take-home pay by $572 dollars, but rather something like $400. (Your HR department should be able to run the exact numbers for you, because they know exactly how much they're withholding from every paycheck for state and federal taxes. But if you're making around $60k I'd guess that the "discount" you get by avoiding taxes is around 30%, maybe higher.) If I've got your tax bracket right, you'd be looking at filling a hole of about $5,000 per year in your annual budget by switching to a family plan at your work.

This is one reason why it's almost impossible to get a better deal buying coverage directly through a broker instead of work--you lose the tax benefit, so unless you can find a policy that is SERIOUSLY cheaper (and probably has much higher deductibles, benefit limitations, and so on) you're never going to be better off forgoing your employer coverage. Plus if you're paying $42 per month now for yourself, you'd also be forgoing what is likely several hundred dollars per month in premiums that your employer is kicking in on your behalf.

All of which is to say: I wouldn't hold out hope that you can find a better deal than you have now. If you really want to try this, get a better sense of exactly how much of a hit your AFTER-TAX income will take by talking to HR, then figure out whether you can cut expenses or bring in another source of income large enough to cover it.
posted by iminurmefi at 1:14 PM on February 24, 2012 [4 favorites]

Oh, and to actually answer your two questions:
I'm back in school, my husband is self-employed. We buy insurance privately. My husband has a "catastrophic" plan -- doesn't seem that catastrophic to me, he is able to get in to see a doctor without it killing us -- and myself and our newborn are on a different plan offered through a major insurer. It's costly, no question, but it's necessary. Also - the insurance plan I am on is quite comparable to my last employer-sponsored plan, except that both my premiums and deductible are lower. (I knew exactly what my employer paid in total premiums, so it's easy for me to compare.)

We're able to afford all these premiums because my husband earns decent money (a bit more than you but not a ton) and we're frugal. We're not homeowners, though, so we don't have that pressure on us.
posted by stowaway at 1:16 PM on February 24, 2012

Suggestion: why not have a 6-month trial period wherein your wife continues to work, but you live on your income alone? Save all of her income; act as though it does not exist. Then, take the $572/month (i.e., the additional amount you'll be paying in premiums after she quits her job) from your take-home pay and throw it into a separate account, set up just for this trial. See if you can live on your take-home pay, minus the $572/month for premium costs. If you can do this successfully for 6 months, then you've probably answered your own question.

Also, this confused me: she dosn't see the point in quitting a full time job she works ONLY to pay for benefits to get a part time job ONLY to pay for benefits

The point is that she'd presumably be working far fewer hours than she is now - time that she could then spend with the child(ren). By keeping part-time employment, she'd also be helping the family pay for insurance and maintain somewhat of a safety net.
posted by pecanpies at 1:21 PM on February 24, 2012 [1 favorite]

I'm self-employed and we're a single income family, too. I have a HDHP and we just had our second child last year. We were able to obtain maternity coverage when we got our policy. We pay about $380 a month for insurance and have a $10k annual deductible. Many things are covered that I didn't expect to be, like well child visits and one annual physical for my wife and I.

I do think differently about insurance, though, and tend to approach it the same way I would with any other policy. Maintenance and occasional sick visits I can handle, but should something catastrophic happen I like having the safety net.
posted by cdmwebs at 1:24 PM on February 24, 2012

We looked at private insurance and it dosnt make sense. Example, $200/m and you get a $10k deducatable. Since we might be having another kid in ~1 year, it would be cheaper to just save that $200/m and pay in cash.

No. What you do is, your wife rides out another year of work, and gives birth on her employer's health plan. She then quits and continues cover through COBRA if possible. Between now and then, you guys save up 10K and put it in the bank and forget about it. Then you start the $200 a month plan.
posted by DarlingBri at 1:26 PM on February 24, 2012 [5 favorites]

She then quits and continues cover through COBRA if possible.

You're only eligible for COBRA if you have no other options. If he can get insurance for the family at his job, they're not eligible for COBRA.
posted by ThePinkSuperhero at 2:06 PM on February 24, 2012 [1 favorite]

Many things are covered that I didn't expect to be, like well child visits and one annual physical for my wife and I.

I believe you can thank Obama for that. One the health care mandates that went into effect already is the mandate that all insurance plans allow preventative care appts. with no co-pay. Of course all our premiums went up to cover the "free" preventative care, but free sounds better than pre-paid in the campaign commercials.
posted by COD at 2:13 PM on February 24, 2012

You're only eligible for COBRA if you have no other options. If he can get insurance for the family at his job, they're not eligible for COBRA.

I thought something like that might be true. Still, I think it's a workable plan without the COBRA. The additional year of work is the stick; the second baby is the carrot. And if the NotSoSimples can make their budget work without Mrs NotSoSimple's salary, they can probably save 1/3rd of it as their health plan deductible backup over that year to make the premium costs going forward manageable in their reduced budget.

Under no circumstances would I ever opt to give birth without insurance if there were any other options. An emergency c-section ($30k) or a long stay in NICU (100K+) can severely derail a family's plans and security.
posted by DarlingBri at 2:21 PM on February 24, 2012 [2 favorites]

Just to plainly answer the questions: I'm the main wage-earner, making about what you do. We actually got married in part because my husband needed his wisdom teeth out and didn't have dental insurance where he was working then. (Still married 12 years later. No kids, however, so I can't speak to that side of it.) At my last job, it wasn't that big a deal, coverage for him wasn't that much more than for just me.

At my current job, covering him was quite spendy. ($500/mo?) It turned out to be $200/mo less to buy insurance directly from the same HMO, and I think it's a $1750/year deductible. He's a reasonably healthy man in his early 40s. I have no idea why it's so much more expensive to use coverage from work.

Not a lot of recommendations, but I did find the HealthCare.gov finder very useful.
posted by epersonae at 2:25 PM on February 24, 2012 [1 favorite]

You're only eligible for COBRA if you have no other options. If he can get insurance for the family at his job, they're not eligible for COBRA.

Actually, I'm pretty sure this only applies to the COBRA subsidy that was available for people who lost their jobs between September 2008 and May 2010. Regular COBRA, where you'd be responsible for paying the full premium, should be available so long as your wife's company is big enough (20 or more employees). Of course, it's entirely possible that the full cost of your wife's policy--which includes the "invisible" portion that your wife's employer is currently paying--may well be more expensive than what it costs to put her on your insurance.
posted by iminurmefi at 2:25 PM on February 24, 2012 [2 favorites]

I honestly feel for your situation.

That said, $614/month, including dental!!! is a huge bargain, I'm afraid. Our private family policy just jumped to $1570/mo. That's more than twice our mortgage. And we don't get dental. Obviously, we're looking at alternatives, which are scant for a couple our age. Our best bet, so far, is to "downgrade" our present policy to an HSA, which will drop our payments to just over $800/mo. With a higher deductible than we have now.

As for how we afford it...We cut a ton of stuff out of our lives. We eat as cheap as possible. No vacations. No new clothes unless it's absolutely unavoidable. Work on the house gets deferred. We coax our paid-off, high mileage cars along, hoping nothing breaks. We, basically, are a single-income family, too. What little I manage to bring-in freelancing barely registers.
posted by Thorzdad at 3:27 PM on February 24, 2012 [1 favorite]

Here's a list of advocacy groups and others in Oregon that work on various aspects of health care policy.

Children First for Oregon will be able to explain what state programs you may qualify for to get your kid covered, and if there are any maternal health programs that your wife may qualify for if you guys decide to get pregnant while she is not working. Health Care for All Oregon and the Oregon Health Action Campaign are most like the health care advocacy nonprofit I work for here in Illinois, so they should have a good all-around grasp of what's happening politically in your state now that could impact how you want to handle this now or in a year or two.

What a lot of people are missing about the passage of the federal health care law is that now each state now needs to implement it - and implementation is happening at the hands of each state's Assembly, which depending on their political makeup, may or may not have a vested interest in seeing this federal law fail. A state primarily run by Democrats will probably take a different approach to implementation than one run by Republicans. So in the instance that you are making plans for your family based on policy that could change due to the federal law, you really want to have a grasp of the political lay of the land in your state so you can think about how that might work out. Deciding to go without insurance in a state with an agenda to defund the existing safety net programs on top of trying to implement the Affordable Care Act in such a way that it crashes and burns could be a much higher risk than doing it in a state that is taking another approach.

Best of luck. Your story is one of the many, many reasons I go to work every morning.
posted by deliciae at 12:59 AM on February 25, 2012

You mentioned that you're in Oregon...if you're in Portland, you may want to consider joining the PDX Patient-Physician Cooperative. It's not insurance - it's a co-op that provides affordable health care for the uninsured.
posted by velvet winter at 10:01 AM on February 25, 2012 [1 favorite]