Step 58: Health Insurance

As we continue our mission to financial independence, we also continue our journey along the different types of insurance, which is an essential part of our financial planning. Step 58 focusses on health insurance and what to think about when contracting a health insurance policy.

Why Health Insurance

Depending on where you live, health care can be very if not extremely expensive, and whilst in some countries having a health insurance is a legal requirement, in other countries this isn’t compulsory, meaning that if you haven’t got medical insurance, you might not be able to pay for even basic or emergency treatment without getting yourself into great debt. A health insurance ensures you have access to the medical care you and your family need without afterwards being presented with high bills to pay.

Types of health insurance 

The types of health insurance you have access to can vary tremendously from one country to the next, but there are three common routes to health insurance:

• State healthcare – if you live and work in a country that offers state healthcare, you likely pay social security contributions of which part will be assigned to health care provisions. This means you usually have access to the public healthcare system, which is usually free although medication might not be provided free of charge or at a reduced fee. Not all treatments might be offered by the public healthcare system, so you might still need to “go private” if the type of treatment you need isn’t included.
• Health Insurance through your employer – your company might offer a health insurance that you can register for. In some cases this type of insurance offers a healthcare savings account to which you might be able to contribute to with pre-tax money. Like with pensions your employer might match or add a certain percentage to your health insurance if you have contracted the insurance through them.
• Private Insurance – Insurance contracted for you and / or your family through an insurance company that you organize yourself. In this case you will be able to choose more specifically which insurance company to go for and what to get to insured for, as many companies offer different types of policies against different premiums.

Characteristics of health insurance

What should you think about when comparing health insurance options? Different insurance companies and policies include different types of treatment and health care. Below some points to look out for:

• High deductible vs low deductible plan. If you have a low deductible plan your health care costs will be covered completely or you might be responsible for a very low first initial contribution. These plans are generally very expensive, as opposed to a high deductible plan, in which you have a relatively high amount of any medical bill that you pay first before your insurance takes over and pays the rest.
• What is the maximum and minimum yearly contribution that you have as a deductible?
• How is the deductible counted? Is it one big deductible, can you total all of your family members on it, do certain expenses not count towards it?
• Is there a family plan to get cheaper rates for your partner and / or children?
• Is there a certain percentage of doctor visits that will be covered and do you pay any extra visits yourself?
• What types of illnesses, treatments and surgery are included in the insurance. Think about:
  • Basic emergency and non-emergency treatment
  • Surgery
  • Mental healthcare
  • Dentist
  • Physiotherapy
  • Emergency treatment abroad
  • Alternative medical treatment
  • Opticians costs
• Are you able to choose your doctor or hospital or does the insurance only have contracts with some medical care providers?
• Are medications included? Are there any types that aren’t included or are only partially included?
• What about treatments that aren’t medically necessary? (Think about plastical surgery, eye laser treatment).
• What about maternity services, both pre- and post-natal?

Step 58 – Health Insurance – in detail:

Now let’s apply all of the above points to your medical insurance whether you already have one or are ready to contract one:

• If you already have a health insurance, find your actual policy with a list of all the services that are and the ones that aren’t included, find the yearly fees as well as the cancellation policy.
• Shop around and find or request quotes for different insurance policies from different companies. Even if you already have a health insurance, it is worth not only checking whether it is all still up to date, but also whether you might be able to get the same coverage somewhere cheaper or with a better service.
• Go through the checklist above, marking which are absolutely essential for you to have in your health insurance. Check the various quotes for whether these services are included and what the fine print is or how much extra it would be on top of the yearly fee to include the treatment in the policy.
• Check customer satisfaction via the website or on specific customer feedback websites. When it comes to your health insurance, you want to be with a company that deals with claims and questions quickly, efficiently and satisfactory.
• When you’re ready to contract or change a current insurance you have, make sure to do so this week. Don’t leave this one pending to you as you can only come to regret it.
• Add a reminded to your calendar to check your insurance again in a year’s time to ensure it is still up to date.

Having a decent health insurance is tremendously important to make sure that you’ll be able to get the necessary treatment when needed and making sure that you can actually afford it. It is worth checking your policy at least once a year, to confirm that you are still adequately insured and to readjust in case your situation has changed.

Read more about my 100 steps mission to financial independence or simply decide to take control today and join us on our step-by-step quest on how to make your finances work for you, starting with step 1.