Top 7 Health Insurance Myths

Common Misconceptions About Health Insurance In the United States

woman handing doctor health insurance card
There are lots of misconceptions about health insurance in the USA. PhotoAlto/Frederic Cirou/PhotoAlto Agency RF Collections/Getty Images

I Can’t Get Health Insurance Because I Have a Pre-Existing Condition.

The Affordable Care Act put an end to the once common problem of being turned down for health insurance because of a pre-existing condition. Now, you can’t be turned down for major-medical coverage because of a pre-existing condition. You can’t be charged higher insurance premiums because of a pre-existing condition, either.  You can, however, be charged higher premiums if you smoke.

While there are still a few rare instances where a pre-existing condition will cause you health insurance problems, for the most part worrying about getting coverage for a pre-existing condition is a thing of the past.

Health Insurance Will Be Too Expensive Because I’m Old.

The Affordable Care Act changed this once common problem, also. While insurers are allowed to charge higher premiums based on age, there’s a limit to how much higher the premiums can be. Now, a health plan’s premiums for older folks can’t be more than three times greater than the premiums for the health plan’s younger members.

I Won’t Be Able to Afford Health Insurance.

If you’re shocked at how expensive health insurance is and think you’ll never be able to find room in your budget for it, think again. The federal government subsidizes health insurance now; it gives you money to help pay for health insurance.  You don’t have to be poor to qualify, either.

Subsidies are available for middle class folks as well as those with low incomes.

In fact, even if you’re wealthy you might still be able to get a government subsidy to decrease your health insurance premiums because subsidies are based on income, not assets.  In other words, your subsidy eligibility isn’t based on what you have; it’s based on what you earn.

If you have a million dollars sitting in the bank and live in a Beverly Hills mansion, you might still qualify for a health insurance subsidy if your yearly income is modest.

How Does the Health Insurance Subsidy Work?

8 Things to Know About the Health Insurance Subsidy.

If I Don’t Have Health Insurance, I Have to Pay a Penalty Tax.

While it’s true that you’re at risk for having to pay a penalty tax if you’re an American and don’t have health insurance, there are lots of loopholes. The Affordable Care Act mandated that Americans who chose to remain uninsured would be penalized by having to make a shared responsibility payment when they filed their federal income tax.

However, the same law provides some people an exemption from the penalty payment. If you qualify for an exemption, you don’t have to pay the penalty even though you don’t have health insurance.  

Examples of these exemption loopholes include if health insurance would have cost more than 8% of your household income, getting a shut-off notice from a utility, and unexpected expenses due to caring for an elderly relative.

How To Get a Hardship Exemption From Health Insurance.

Can You Get a Health Insurance Exemption?

How To Apply for a Health Insurance Exemption.

Health Insurance Will Pay All of My Health Care Expenses.

Health insurance will not pay all of your health care expenses. Even though you have health insurance, you may still pay a substantial amount out of your own pocket each year for health care expenses. Most health plans include cost-sharing clauses making you responsible for paying things like a deductible, copays, and coinsurance.

In addition to these expenses, you’ll pay 100% of the cost of care that isn’t a covered benefit of your health insurance policy. While the Affordable Care Act says health insurance must provide coverage for the 10 essential health benefits, your health plan doesn’t have to provide coverage for health care services that aren't essential health benefits.

Even if you’re getting health care that’s a covered benefit, your health plan still might not pay if you don’t follow the plan’s rules about how you get the care. For example, if your HMO requires you to use an in-network provider and you go to a doctor that’s out-of-network, your HMO likely won’t pay. If your PPO requires you to get pre-authorization before having an MRI and you don’t get it, your PPO likely won’t pay for the MRI.

If My Doctor Says I Need Something, My Health Insurer Will Pay for It.

Gone are the days when a doctor could write a prescription saying you needed a spa-tub to treat your low back pain and your health insurance would pay for it. Now, health insurers will only pay for things they deem to be medically necessary—and your health insurer doesn’t always agree with your doctor about what’s medically necessary and what isn’t.

Even if your insurer agrees that you need something, it might not cover exactly what the doctor ordered. Take, for example, your health plan’s drug formulary. If the drug your physician prescribed isn’t on your health plan’s drug formulary, your insurer probably won’t pay for it. Instead, your doctor will get a message from your pharmacy saying something to the effect of, “You prescribed ABC medication for Mr. Smith, but it isn’t on his health plan’s formulary. However, XYZ medication is. Would you like us to substitute XYZ for ABC?”

Health Insurance Doesn’t Pay for Elective Surgery.

This is just not true. The vast majority of surgeries paid for by health insurance are elective surgeries.

The confusion happens because people confuse the concept of “elective” with the concept of “not medically necessary." Elective surgery is surgery that doesn’t have to be done right away, as opposed to emergency surgery, which must be done right now to save your life or limb.

For example, if your orthopedic doctor decides that you need your arthritic hip replaced and schedules the surgery for next month, you’re having an elective hip replacement. You actually need the hip replacement for your body to function properly, so it’s also medically necessary. If your insurer agrees with your surgeon, it will cover your elective hip replacement.

By contrast, things like face lifts and liposuction are also elective, but they’re not medically necessary. If you have a face lift for cosmetic reasons, your health insurance is unlikely to pay for it because it’s not medically necessary. On the other hand, if you have elective facial surgery to correct burn-related scarring that’s making it difficult for you to close your left eye, your insurer is likely to pay for it because the surgery is necessary for your body to function properly.

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