Should I Go Without Health Insurance?

This week, The Simple Dollar attempts to address challenging questions in personal finance by looking at both sides of the story and figuring out some of the factors you need to look at to make a decision.

Over the last few months, I’ve received many, many emails from people thinking about a career change, usually towards starting their own business. In most cases, they’re not too worried about the money aspect – they tend to be much more concerned about health insurance.

Health insurance is the 800 pound gorilla in the room for decisions like these. For some, the risk of devastating illness or injury isn’t worth it and they try to stick with their primary job while building the business on the side. Others believe in the adage of you only live once and go for the gusto. Here’s the argument for both sides.

No, Don’t Abandon Health Insurance

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Your personal health is your most valuable asset. A healthy body and mind enable you to get up in the morning and go through your tasks for the day and enjoy your life. Health insurance is your safest bet for making sure that you’ll continue to enjoy good health, by taking most of the financial burden for medical care off your shoulders.

Furthermore, if you have children or other people depending on your health and continued ability to earn money, a severe medical crisis without health insurance can utterly devastate your family. Health insurance enables an unexpected situation, like a serious illness or a car accident, to not completely transform the way of life of your family in a negative fashion.

If you value your own health and have a sense of responsibility to others, health insurance is a must. Don’t take the leap into an area without health insurance. That doesn’t mean you can’t investigate other options, like COBRA or self-insurance, but you shouldn’t take the leap into the unknown without a safety net if others are relying on you.

Yes, Go For The Gold!

When a truly great opportunity comes along in your life, one that fills you with joy and passion and drive, you should never let it pass by. Sure, there may be risks – and one of them may be a period without health insurance – but the sense of personal fulfillment and accomplishment and the possibility of great successes more than makes up for it.

First, the opportunity to do something with your life that fills you with excitement and energy is something rare and beautiful, and if there’s any way to take it without throwing away your most important responsibilities to others, you should always jump on board. A fulfilled life is a great life, and doing something that fulfills you can completely transform your life. Plus, when you let that opportunity pass, you’re bound for a great deal of regret.

Even more importantly, doing something you’re truly passionate about holds a far greater chance for success than doing the same old thing. If you take that leap, you have a chance to do something truly great with your life, something transformative. If you have that chance to do something amazing, you shouldn’t let it slip by because of a temporary lapse in health insurance.

Obviously, if you have the opportunity, use programs like COBRA and self-insurance to acquire health insurance, but don’t let a period without insurance cause you to not take the leap for your dreams. The risk of a major incident over a short period is much less than the continued pain of a great opportunity left untaken.

My Take

If you’re single, have no one relying on you, and are in reasonably good health, I say go for it. You aren’t responsible for the lives of others, only your own, and if it’s an opportunity you’re passionate about and believe in, it’s a path you should always take. If you don’t, you’ll regret it for a very long time, likely the rest of your life.

On the other hand, if you’re in poor health and have children to support, stick with the safety net. Those children depend on you, and if you were to fall into a dangerous health situation, they would suffer as well. The future of a child is not something one should play ball with – a childhood should be filled with relative safety, positive reinforcement, and opportunities for growth, not with the apocalyptic situation that a severe illness of a parent without health care would bring.

If you’re really on the fence about it, though, you should probably make the leap, provided your bases are as covered as you can make them. When a great opportunity passes you by and you make the “safe” choice, you’re often left with only one thing: a belly full of regret.

What’s your take?

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  1. Laura says:

    I’d go for the oppurtunity if you’re on your own and have no dependents. I’d also buy emergency room insurance for hospital stays. It won’t cover regular check up, but it offers some amount of protection if you need to go to the hospital.

    Great analysis Trent!

  2. CheapGirl says:

    A family friend got a job as a bus driver for a few hours a day to get insurance. Also Starbucks supposedly has good insurance for part-time workers. It can be done.

    At least if you don’t have great insurance, either have a chunk of change in the back for backup, or you can get a high deductible plan that would at least cover something catastrophic.

    Great job Trent at talking about what’s important to people of all income levels and walks of life.

  3. Kat says:

    I would go for it. Before making the leap, look into self insurance and coverage for your family. Also state coverage for your kids if need be. There are tax breaks as well for having your own.

    I would wonder though, why insurance was not being offered at the company.

  4. Rick says:

    I completely agree with Trent’s conclusion. I’m single, so if such an opportunity arose for me, I wouldn’t give it a second thought. I’d totally go for it. But having children or wife (hopefully not the former without the latter) would definitely complicate the situation.

    I think there are definitely plenty of options to insure yourself, however, so you shouldn’t necessarily just forget about health insurance completely. One friend of mine selected a high-deductible health plan where he pays for all basic necessities, but if something catastrophic happened, he won’t be stuck in a rut.

  5. Meg says:

    Um, you don’t mention the most obvious option: go for it AND buy yourSELF health insurance. I know it’s expensive, but so are surgery, debilitating injuries, and hospital stays.

  6. infix says:

    Trent: can you do an article on health insurance options for the self-employed?

    I’m in my 40’s, married, no children, no debt (even the house is paid off). I’d really like to make a jump like this and start a business of my own as well, but I do worry about the health insurance (and the dental as well – dental procedures can be quite expensive). Where I currently work the health insurance package is quite good. I suspect that the COBRA payment to cover my wife and I would be in the $800/month range (possibly even higher).

  7. George says:

    Usually the employee cost of health insurance ends up being the same as just going to your regular appointments and paying for prescriptions would be, unless you have a preexisting condition such as diabetes.

    It’s the catastrophic and longterm health insurance that most people need.

  8. r says:

    I second (or third, or whatever) the recommendation to get a high deductible plan that will cover truly catastrophic things… (having just spoken with a friend who had a 1 month gap in her coverage between jobs, during which time she got hit by a car on her bike AND got appendicitis and is now 40k in debt)….

  9. Jillian says:

    I never would have thought this was an issue. Over here (New Zealand) if you want health insurance you pretty much have to organise it yourself, unless you work for some government institution or large national company. I’ve paid for my own health insurance ever since I was 18, before which I was covered under my mother’s policy.

    My husband recently left his government research job to work for a start-up company, and he still continues with the same insurance policy he had before, the only difference being he now has to pay for it himself.

    I guess the healthcare system here is structured differently as well – I’m not sure how it works in the US, but here everyone is automatically covered for accidental or sports injuries (employers pay a levy to cover employees, but even if you’re not employed you’re still covered). Public hospital care is mostly free but the waiting lists for surgery and non-urgent treatment are so long you’re just as likely to die waiting as get treated, which is why if you can afford it you should have private health insurance!

  10. Annie says:

    I would just caution people that if you do go without health insurance and are then diagnosed with something during that time, getting health insurance at a later date will be extremely difficult (because of your pre-existing condition).

    If you are covered continously, they generally can’t deny you. So if there’s going to be a gap wihtout insurance, I would definitely look into COBRA.

    And aren’t medical bills the number one reason people file for bankruptcy? I wouldn’t chance it.

    But maybe we’ll finally end up with a universal health care system in this country and it won’t matter!

  11. Susy says:

    There are great plans out there that aren’t too awfully expensive for self-insurance. For a while my DH and I had to have our own health insurance since the church we worked for didn’t offer it. We had health insurance from Kaiser Permanente. They weren’t that expensive and we always received good quality care from them!

    Health insurance is one thing I’d never go without!

  12. guinness416 says:

    Jillian, you’re thinking of private health insurance in the Irish/UK sense … used to skip the lines for public healthcare. In the States you will not be turned down if you need urgent care, but without insurance will pay through the nose for it. You will also pay cash for preventive care. Hence entrepreneurial people killing themselves deciding whether to leave the cushty office job instead of going out and being creative and potentially employing other people.

  13. KoryO says:

    I know, ain’t my blog and I shouldn’t be so free and easy with the suggestions, but if someone is looking into doing their own thing, they might look into setting up a Health Savings Account, or HSA. You can set money up like in an IRA, and as long as you use it for health-related expenses (like premiums or treatments), it is tax free. Combine it with a high deductible plan, and you might not have to go without coverage after all.

  14. lorax says:

    There’s a moral argument here: If you don’t ensure yourself and later need medical care, guess who pays for your care? That’s right, we all do. It’s the tragedy of the commons.

    Also realize that any “free” medical care you get might be very poor quality.

    Like Annie says, purchasing further insurance after a lapse can be prohibitive (although in some states you can get prohibitive increases in premiums because you were sick, even without a lapse).

  15. w says:

    No brainer. check online and buy your own insurance [a high deductible plan] to cover you in the interim. a friend went bare- and she got hurt while riding her bike- $50k in med bills.

  16. Kim says:

    When my husband was 22 he got type 1 diabetes. It seemingly came out of nowhere. By the time he was diagnosed he was nearly dead. He was in a coma for several days and hospitalized for several days beyond that after he woke up. In a two week span he had well over a hundred thousand dollars in medical costs. Had he not had insurance, he would have been financially devastated for years to come. Not only that, but his diabetes would be a preexisting condition and not covered or covered poorly in a new insurance situation. His care costs hundreds every month. Without his insurance coverage, we would have to live in a state of poverty just to keep him alive (as we make too much money for state aid). I couldn’t imagine anyone taking such a huge gamble with their life or financial future. Even if you think nothing like that could happen to you, just remember, there are tons of uninsured drivers out there.

  17. JReed says:

    infix…My husband and I have been self employed for over 23 years. Sometimes we have relied on the National Association of Self Employed for catastrophic…(5000 deductible). Sometimes we have gone through Maine Blue Cross and Blue Shield or other insurance companies. There are HRAs and HSAs.
    We have never been uninsured. The days of walking away from medical bills are over and the uninsured actually end up owing more for services than the insured. Once you own a home, the hospital can come after the equity.
    There is no set answer for your question because each state is different. You have to get online and make some phone calls to find the right fit for you. Your local chamber of commerce can help you start your research. A COBRA isn’t always the best deal.
    One thing is for sure…I would never work a hated job just because of the insurance and I would never not be self employed because of fear of taking a leap. Life is much more interesting when you work for yourself.

  18. jeni says:

    I am self-employed and have health insurance that I just buy from Assurant Health. My plan just went up to $100 a month, but if I get some horrible disease or in a horrible accident, I’m covered. For the price, it’s pretty good insurance! Blue Cross also sells individual insurance, but it’s a bit more expensive. I had that for years, and it was ok. I wouldn’t go without insurance.

  19. Marsha says:

    Oh, Kim – your husband’s story is so sad! But it’s a good lesson to us all that bad stuff can happen out of the blue. I hope you all are doing OK.

  20. infix says:

    JReed: I’m curious about group plans for the self-employed such as the NASE group you mention. It seems to me that the self-employed could band together to get better rates than they could by themselves.

    I definitely have no intention of going without health insurance at this point. I’m just worried that the monthly premiums could end up beinq being very expensive as we go forward.

    Certainly some sort of national health care plan in the US would help this situation a lot. It could actually help make the US more competitive.

  21. 3bean says:

    I would never go without health insurance. I’m young and healthy, but even a broken bone could cost $1000’s of dollars. I would encourage such a reader to look for all options to get some sort of insurance. For example, I’m a dietitian and can buy insurance through my professional organization, the American Dietetic Association. I purchased such insurance after I graduated college and was doing a professional internship to become an RD (registered dietitian). It’s wasn’t great– it didn’t cover physicals, prescriptions, or much else… but if something catastrophic happened, I would have been covered.

    There’s a reason why medical expenses are the number one cause of bankruptcy.

  22. Elaine says:

    I am eternally grateful that I’ll never have to make that decision. Go socialism! heh.

  23. Dennis the Menace says:

    Funny this is up here. I think God is using you to speak to me : ). All kidding aside, after this semester I’m considering going from part time sales to full time sales and part time school. This was one of my main concerns. Thanks for the blog, it gave me some answers and options to consider.

  24. Cat says:

    I want to note that even if you have nobody relying on you, it is still a good idea to get insurance. I know if I was in a terrible accident and didn’t have insurance, my parents (even though I’m 28) and siblings, and even friends, would feel obligated to help with the bills. While they are not relying on me, I don’t want to have to rely on them. Not being insured puts you AND your loved ones at risk for financial ruin, even if they don’t depend on you for income. There are cheap high deductible plans out there and HSA options. Don’t go without insurance.

    @Meg, he does mention self-insurance in the post.

  25. belleandthecity says:

    You should NEVER go without health insurance, young, single and healthy or older with a family to support.

    Medical emergencies can happen quickly, such as appendicitis or getting in a car accident, and then you’ll find yourself in a huge amount of debt (think $50K or more), definitely worse than paying an expensive premium for a few months.

    If you’re going to be working for yourself and expect to buy insurance on the individual market, you may have trouble getting coverage if you have had ANY health problems in the past, however small.

    Our employer-based system doesn’t work (why should you have to be employed by a big company to get affordable coverage?), but it’s how things are done right now and medical bills can quickly put you under.

  26. kathy says:

    You can be self-employed and still have health insurance. It doesn’t have to be a “one or the other” choice. It’s easily obtainable through NASE (National Assoc. for Self Employed) or through your local Chamber of Commerce. In NY, we have Healthy New York, with insurance plans for new and small businesses. There are options.
    Self employment is a big decision, especially when you have a family depending on you. If you’re single with no dependents, then fine, take your chances, but do NOT let your children go without insurance. Kids fall and break bones, get ear infections, and pick up all kinds of illnesses, and without insurance, all of your hard earned dollars will end up paying medical bills.

  27. Eric says:

    “There’s a moral argument here: If you don’t ensure yourself and later need medical care, guess who pays for your care? That’s right, we all do. It’s the tragedy of the commons.”

    What if I don’t pay local taxes but I drive on your road? Am I immoral?

    The thing folks who want to make your argument fail to look at is the millions of ways we are all bound together. We all pay for a ton of little things which help society run. You just want to single medical insurance out and say it is more important.

    Your comment also ignores the benefit you get from my getting medical care. Say I have TB and am riding next to you or your child on the bus….do you really want me not to be getting treatment? It is in your own self interest to have all people covered because it will end up helping you stay healthy.

  28. claymeadow says:

    try your local chamber of commerce to see if they have a group plan. you may need to pay their annual fee. or go direct to an hmo for coverage, it’s expensive, i know first-hand, and don’t skimp, it’s worth it. has lot’s of dependents.

  29. garbo says:

    I second (or third) the call for at least catastrophic coverage for 20-somethings. Keep in mind that not having dependents isn’t the only consideration. If you get a life-threatening disease, your parents may bankrupt themselves to save your life. You have a responsibility to all the people you love and who love you not to create horrible situations like this either.

  30. Katie says:

    I’m self-employed, healthy, middle-aged. Fortunately my husband has an office job and good insurance. I discovered an abdominal lump which turned out to be cancer. I missed 3 months of work, which also meant 3 months of pay. Health insurance covered everything except minimal co-pays. I had some inadequate disability insurance which helped a little, but we still ended up declaring bankruptcy. Insurance is for the unexpected, try not to go without. The insurance company has paid is over a quarter of a million dollars for my care. Eeeek.

  31. Tall Bill says:

    Kim, Katie, and others above have it right on. Late in 2004 I started feeling “off” and started visiting my doctor. Food poisoning was first thought, then a round af antibotics, followed with some blood tests, etc. My family took me to the emergency room late in Jan 05. Within hours I was in my first major surgery, followed by 18 more over a 4 week period to clean up damage done by gallstone caused pancreasitis. I was in a coma durng all of this on life support & my wife was advised to pull the plug on life support at week 5. She pleaded with a team of Doctors to give me one more week of life support & I woke up the afternoon of day 7 – just down to hours from the go no go situation. I was then transfered to a rehab hospital to do some healing just to go through Kidney shutdown, 3 heat attacks (one while conscious & talking with a nurse – I passed out at seeing the paddles), back to a large Seattle hospital wherein they did an 11.5 hour reconstructive surgery, followed a week later with a skin graft to patch everything up. Four more weeks of physical therapy to relearn how to walk & out the front door of the hospital on April 28,2006 to home for twice a week visits by physical and occupational therapy. Just now I’m getting my stamina back to where I can try and keep up with the kids, etc. We still have our home as our insurance has paid out in excess of $ 1.6 mil to date & before all this started, I was active in the community, going for annual physicals & dealing with just a touch of asphma allergy related a couple of times a year. Go bare ie: without insurance & the chance of loosing everything is very real. Even with some stop gap insurance some still find backruptcy necesary – a step we were near at one point, but what bills remain show as a light at the end of the tunnel – not a train approaching! Signed: A Happy Camper just entering my 2nd 1/2 century smiling from a clean report from the doctor yesterday.

  32. lorax says:

    “What if I don’t pay local taxes but I drive on your road? Am I immoral?”

    Like most moral issues there is a gray area. But it’s not very gray in this case. Clearly, if you drive on local road and aren’t insured, you are acting immorally. You aren’t paying for the remote roads that you use, but one presumes you pay for local roads in your locale, and I can drive on those.

    Everyone is connected, but everyone has to act responsibly too.

  33. Jasmine says:

    I have been in the situation where I was without health insurance and in short, it sucked. I was always worried about maybe getting sick or breaking my leg, I’m surprised it didn’t happen because i was thinking about it too much.

    I would not recommend forgoeing health insurance by any means. If someone really is young and healthy getting coverage independently isn’t so bad. A doctors visit could easily cost thousands of dollars if something happened.

    The ‘catastrophe’ insurance plan would be my second suggestion if the first isn’t feasible.

  34. Tiffany says:

    No way! If you have a job with insurance keep it! Especially if you have children and they rely on you for insurance too. Injuries,illnesses, etc. seem to pop up out of the blue sometimes.
    My cousin and I and my 2 boys drove cross country to go to my brother’s wedding 2 yrs. ago. My cousin was driving my vehicle and decided to go to sleep while driving. I was looking out the window and looked over and the truck was going into the grass, I grabbed the steering wheel which caused her to jerk awake. She over corrected and we started to roll, mind you that we were traveling at 70-75mph! As much as I hate Blue cross and Blue Shield, I’m glad I had insurance. My auto insurance would not pay because I was missing PIP on it. So I had to use my medical insurance and then my auto insurance would pay back 100% of all my bills. I know as backwards. Anyways my bills ended up being around 70k and don’t forget that insurance has a discounted rate for medical services so I would have hated to see my bill if I had no insurance.
    Start the business on the side if possible.

  35. julie says:

    Dear Trent,
    I would never go without health care for anyone, I went from having a normal 4 year old ten years ago to a severly disabled child in a week. We though that she had the flu it was a brain tumor and the treatment was as bad as the disease. I had one bill just from the emergency room in 1998 for $34,000 and did not include the doctors, CT, the airlift to a pediatric intensive care unit or the 15 days in the ICU or the month in the hospital that followed. The day she was diagnosised she be came uninsurable with any other carrier than the one she was on and medical does not cover everything either. It is hard enough thinking our child might die let alone have to deal with money and collection agencys and not be able to get treatment because you can not pay for it.Without health insurance you might get emergency treatment but long term forget it.Peace of mind is worth the cost, and hopefully you never need it.

  36. Jeffrey says:

    NO, NO, NO. It’s NOT an either/or situation! You can have great health insurance coverage WITHOUT being on an employer-sponsored plan. I’ve been on my own insurance for over a year and I have great coverage for $145 a month. And COBRA is stupid. I’m getting the same EXACT coverage I had on COBRA and I was paying $245 a months for that! Same exact plan!

    Read this book for a complete explanation of why it’s not only doable, but it makes sense to have your own plan. The main reason is that it stays with you no matter if you switch jobs. The book also explains how health insurance REALLY works!

    http://www.amazon.com/New-Health-Insurance-Solution-Traditional/dp/0470040211/

    “The New Health Insurance Solution: How to Get Cheaper, Better Coverage Without a Traditional Employer Plan” by Paul Zane Pilzer

    Also, research plans on this website. Contact the insurance companies directly if you have specific questions.

    http://www.ehealthinsurance.com/

  37. tobias says:

    Seems as there are sooo many worries about health insurance in the US, I’m glad I live in canada. Here if you dont make very much money, youre covered without having to pay for any medical bills, if youre on social assistance, prescription drugs are free, even if you make big money, the most anyone pays here for the canadian medical plan is around $50/month.

    I couldnt imagine a system where you’re not covered at all and have to pay big $$$ just to cover your medical bills.

    some other good info on health insurance etc is here:

    http://tipconnection.com/category/health-care/
    lots of good articles on health insurance and plans

  38. Tracy says:

    Trent etal.,

    I think the equation changes dramatically as you get older. If you are over 40 and uninsured, you can risk being locked out of the insurance market for life, depending on your state. When I was young and healthy, I went uninsured for 12 years. It was cheaper to just pay out of pocket (although in retrospect, I was lucky and it would have been smart to have catastrophic insurance — I did have medical on my auto insurance, though). But if you are nearing 40, it makes a LOT of sense to get a job with insurance, COBRA-out and maintain that. Your rates will be significantly lower and as long as you stay insured, you can always stay insured.

  39. kristine says:

    Many professions that are freelance have some sort of agency through which you can access a “group” plan for less than an individual plan.

    Cheap insurance is out there, but many routinely deny claims, and make the hoops so hard to jump through, especially when sick, that you could die waiting for procedure approvals. Shady insurance companies are everywhere. Caveat emptor.

    I got a butter burn on my hand while cooking, lost the top of my hand, and had 9 days in the burn unit, a skin graft and hyberbaric treatments so I could keep all my fingers. I had coverage with a large reputable firm. But the ins. company denied the claim because their own hospital did not do the paperwork in time! Legally, I could not be held accountable (as a heavily drugged trauma patient I was not expected to make the notifying call). But that did not keep them from sending me a 60K bill, and harassing me. Only because I was saavy enough to make the right phone calls (took a year and a half to straighten out) was I no longer billed or bothered.

    And this was a GOOD insurance company!

  40. Christine says:

    I would not recommend going without health insurance even if you are single and healthy without any children depending on you. Even a case of appendicitis can set you back 60K and that can happen to anybody.

    Find an insurance broker who will work with your needs and your budget. Look for a high deductible HSA plan. Health insurance is bankruptcy protection.

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