Uninsured vs. Underinsured
What is the difference between uninsured vs. underinsured? I think the term “uninsured” is pretty obvious, either you have coverage, or you don't; but being insured poorly (underinsured) can cause you or your family a lot of stress and financial hardships, which in return turns people to be uninsured.
Being underinsured means that your policy doesn't cover as much as you might need or have thought. Your plan may have a high deductible that you have to meet before the plan provides any coverage or out-of-pocket expenses that leaves you questioning why you got health insurance to begin with. In general, being underinsured means that your coverage is inadequate for your needs, so the costs of care become a financially overwhelming. A majority of the time this encourages people to avoid the doctor altogether, not only when they're sick but also just for yearly preventative check-ups, which can cause much larger medical problems in the future.
There isn’t a universal definition for being underinsured. But the Commonwealth Fund defines it as one of the following:
Your out-of-pocket healthcare costs in the last year — not counting premiums — represent 10% or more of your household income.
Your deductible — the amount you have to pay before your health insurance starts paying your covered medical costs — is at least 5% of your income.
“It’s really about people’s benefits,” said Sara Collins, Vice President of health care coverage and access at the Commonwealth Fund, a New York-based nonprofit private foundation that supports independent research. “The Affordable Care Act went a long way in making benefits more affordable. But a lot of people still have high-cost medical care, whether they get it through the marketplace, or through their employer.”
To put it simply: lower premiums are typically linked to higher deductibles and/or out-of-pocket expenses. Higher premiums are typically linked to lower deductibles and/or out-of-pocket expenses.
$0 deductibles are starting to flood the health industry, but you have to read the fine print. Often, a $0 deductible may mean higher out-of-pocket costs, which isn't saving money at all.
There is a catch to every plan, every option, and every premium. The best way to know if you or your family is being taken care of properly is to get in touch with a health insurance expert that can navigate through the catches with you and explain them.