Prepare to Be Uninsured - Tool Kit for Going Without Health Insurance

Image of a tool kit.
If you're uninsured, you need a tool kit to help you mitigate the risks of being without health insurance. image ©Jeffrey Coolidge/Getty Images

Being uninsured impacts both your finances and your health. You can’t eliminate all of the risks associated with being uninsured, but you can decrease some of them and you can plan to manage others. This toolkit will help you prepare to be uninsured.

The Affordable Care Act’s individual mandate requires that Americans have health insurance or pay a penalty tax when they file their federal income taxes. You can’t be put in jail for not paying the penalty, and the IRS can’t put a lien on your property to collect it. It can, however, withhold the penalty from your tax refund. And if you aren't owed a refund and don't pay the penalty when you file your tax return, the penalty debt will follow you from one year to the next, and the IRS will withhold it from the first refund you're owed.

The Tax Cuts and Jobs Act, enacted in late 2017, eliminates the individual mandate penalty after the end of 2018. So people who are uninsured in 2018 will still be on the hook for the penalty when they file taxes in early 2019. But there will no longer be a penalty for people who are uninsured in 2019 and beyond, unless they're in a state that has its own individual mandate and penalty.

So for the time being, if you’re uninsured, you need to either budget for the penalty tax, be prepared to go head-to-head with the IRS if you don’t pay it, or get an exemption from the individual mandate’s penalty.

Get an exemption

Several things will qualify you for a health insurance exemption, allowing you to avoid the penalty even though you go without health insurance. Learn who’s eligible, what types of things will qualify you, and how to apply in “Can You Get a Health Insurance Exemption?

Budget for emergencies 

When you go without health insurance, you have nothing but your own resources to rely on for your medical expenses. If you can manage an emergency savings fund, it will be very helpful if you get seriously ill or injured. But, even if you can’t put aside a large emergency fund, you’ll still weather unexpected financial emergencies better if you strategize and prepare yourself in advance. Learn more from Miriam Caldwell, our Expert on Money in Your Twenties in, “Planning for Financial Emergencies.”

Plan for getting health care 

You will get sick. You will have injuries. Strategize in advance for dealing with these things.

Find out where your closest Community Health Center or free clinic is, and learn how to use it. Learn where your closest urgent care center is so you’re not stuck using an emergency room if a problem comes up on a weekend. Budget for and use community low-cost resources to get yearly mammograms, pap smears, flu shots, and even a colonoscopy when you turn 50. This stuff could save your life or prevent financial disaster; take it seriously and make it a priority.

Learn how to negotiate health care bills 

Since you’re going to be paying medical bills out-of-pocket, you should negotiate discount rates whenever possible. Ask about discounts for paying cash in advance if you’re able to or about setting up a payment plan if the bill is large.

If you need the services of a hospital, be aware that most hospitals have a rack rate, a lower self-pay rate, and an even lower charity rate. You’ll have to ask what the charity rate is and how to qualify for it since many hospitals won’t volunteer the information. Even if you don’t qualify for it, knowing what the charity rate is will help you negotiate more effectively since you’ll know the bottom line.

Consider alternatives to health insurance

Alternatives include options like a medical discount plan or a health care sharing ministry. Discount Medical Plan Organizations provide pre-negotiated discounts to their members for a monthly fee. They’re an option if you’re uncomfortable negotiating your own self-pay discount. If you’re good at negotiating, you might negotiate a better deal yourself than the DMPO could negotiate.

Health care sharing ministries are religion-based groups of people that assist each other in paying medical bills. This is not free health care. You’re expected to help other members pay their medical bills just as they will help you pay yours. As an added benefit, your membership in a qualified health care sharing ministry qualifies you for an exemption from the ACA's individual mandate. 

You can also consider a short-term health insurance policy. Technically, these are not considered real health insurance (so you still have to pay the ACA's individual mandate penalty if you rely on a short-term policy). But they're certainly better than nothing, and as long as you're healthy enough to qualify for the coverage, they'll provide you with reasonable protection against unexpected medical expenses.

Develop healthy lifestyle habits 

Your lifestyle choices either mitigate or accentuate the risks you take when you go without health insurance. If you’d like to decrease those risks, then be extra careful with your lifestyle choices. Drink alcohol only in moderation. Don’t smoke. Don’t use recreational drugs. Eat a healthy diet. Maintain a healthy weight. Get exercise.

Don’t blow-off preventive care just because you’re uninsured. For example, you can still do your monthly breast self-exam (even if you're a man) or testicular self-exam and get a flu shot at your local pharmacy or community clinic. How To Get Low-Cost Vaccines for Uninsured Adults.

Make a health care advanced directive 

Consider this scenario: you’re uninsured. You don’t have a ton of money in savings. Something horrible happens to you. You have an accident; you have a stroke; maybe you have Lou Gehrig’s disease. Whatever the cause, you’re not able to take care of yourself and you can’t even communicate.

Now, the person who most loves you comes into the picture. Maybe it’s your partner, a parent, an adult child, or a sibling. He or she has to deal with your tragedy and try to get you the health care that you need even though you don’t have sufficient resources to pay for it and you don’t have health insurance. She may face financial ruin herself through trying to care for you.

She has to make very difficult decisions, life and death decisions, about your care.  She’s likely to carry the emotional effects of having to make those decisions for the rest of her life. 

Take some of the decision-making burdens off of her shoulders by making an Advanced Directive for Health Care, talking about it with her, and making sure she knows where it’s kept. Trisha Torrey, our Expert on Patient Empowerment will show you how to accomplish this.

Make a plan for getting health insurance in the future

There may be a time in your life when health insurance simply isn't in the cards, for whatever reason. But you should aim to make your uninsured period as short as possible. Nobody stays healthy forever, and the sooner you have health coverage, the sooner you'll have the peace of mind that comes with knowing that you're covered.

If your employer offers coverage, you should have access to an annual open enrollment period during which you can sign up. And there's an annual open enrollment period for individual market coverage (the kind you buy yourself, rather than getting from an employer) each fall, from November 1 to December 15.

If your income doesn't exceed 400 percent of the poverty level (that's $48,240 for a single person in 2018, and $98,400 for a family of four) and you shop for a plan in your state's exchange,you may be eligible for subsidies that will pay a portion of your premiums. In some cases, there are $0 premium plans available, so it's worth your time to check and see what's available.