Dollars & Sense

Pay Now or Pay Later

Jerry (34) is an expediting straight truck owner/operator and is the sole support for wife Brenda (31) and their two children (ages 8 and 10).

As is often the case for self-employed small business people, he and his family have no health insurance.  
 
Jerry and Brenda's story is not atypical of the self-employed in the United States.  Several years ago, the couple accumulated substantial medical bills when Brenda became ill.
 
Over a two-year period, these expenses totaled over $15,000.  As Brenda says, "These bills really hurt us; it wiped out the small savings we had and if a relative had not helped us with a loan, it would have been very difficult to get ourselves out of this." 
 
The couple has been able to repay the loan, and with a program of economic self-discipline and expense cutting, Jerry and Brenda have been able to pay off the medical debt.  They say that this has shown them the value of medical and health insurance.  Brenda has since found employment that, "doesn't pay that well, but at least we have insurance and that's very important to us now." 
 
The state of health insurance coverage
The United States loses at least $65 billion to $130 billion every year because of the poorer health and earlier death experienced by the 45.8 million Americans without health insurance. (U.S. Census Bureau - August, 2005)
 
Many Americans believe that essential health care should be -- and in fact, is -- provided to those who need it, regardless of a person's financial resources or health insurance status. But the reality is that uninsured people are significantly less likely than those with insurance to receive health care deemed necessary by physicians, including preventive services and care for chronic conditions.
 
As a result, uninsured Americans are more likely to have poorer health and die prematurely than those with insurance. Being uninsured for even one year appears to diminish a person's general health.
 
Uninsured families also suffer financially. Their average annual out-of-pocket medical expenses are less (in dollars and relative to income) than those of insured families, in part because they forego routine care.
 
(Jerry, our straight truck expediter relates how, before his family secured health insurance, he sought treatment for an injured fingertip that found its way between two 55-gallon drums. 

His bill for just basic treatment and x-rays at an urgent care facility - $945.00.)
 
But for the same reason, uninsured families are at greater risk of needing very expensive care relative to their income; one out of every 4 uninsured low-income families faces medical bills that total more than 5 percent of their income.
 
On average, uninsured families pay up to 40 percent of their health care costs out-of-pocket. More than half of working age adults who report serious problems paying medical bills are or recently were uninsured; most of them borrow money from family or friends, or mortgage their homes to pay expenses. Some eventually declare bankruptcy.
 
But you need some kind of health coverage. Without it, even a relatively minor operation could ruin you financially.
 
Logic would suggest that the percentage of uninsured owner/operators and drivers in the expediting business is greater than that of the general public because of the self-employment status of the people involved.
 
Some expediting owner-operators and drivers are fortunate to enjoy coverage under a spouse's employee insurance plan, but for many in this industry of the self-employed, the high price of health and medical insurance puts coverage out of their reach.
 
Even for those who have enjoyed health insurance coverage, expenses have increased dramatically for the self-employed. Premiums have had double-digit increases in recent years with a rise of 13 percent in one year alone.
 
Although it can be expensive, there are ways for owner-operators to get at least a minimal level of health insurance or, for those who have coverage, to reduce their costs. The basic options include:
 
Major medical
Major medical insurance provides more comprehensive medical coverage than catastrophic insurance does. Not surprisingly, the premiums are also higher.
 
Typically, a major medical policy offers a range of deductibles per calendar year.  Most major medical plans specify the health providers you can see and you will pay higher percentages if non-preferred providers are used.
 
Catastrophic insurance
Catastrophic health insurance is characterized by high deductibles and low monthly premiums.  These plans typically cover only major hospital and medical expenses above a certain deductible, while you pay out-of-pocket for everything else, such as routine doctor visits and prescription drugs.
 
The majority of catastrophic health plans cover expenses for hospital stays, surgery, intensive care, diagnostic X-ray, and lab tests.
 
People who buy catastrophic health insurance tend to fall into two groups: young adults in their 20's and adults between the ages of 50 to 65. Young adults who buy this coverage are usually self-employed or do not have coverage through their employers.
 
Older adults who purchase catastrophic health are primarily concerned with financial losses associated with heart attacks, cancer, and other serious illnesses. They are generally healthy, have few or no prescription medications, and would rather pay out of pocket for office visits to save on their premiums.
 
High-deductible health insurance can be purchased as an individual plan as well as through an employer in a group plan. According to a spokesperson for Hewitt Associates, companies with 1,000 or more employees typically offer higher deductible plans. He also says that retirees who aren't yet eligible for Medicare choose these plans in order to keep premiums down.
 
If you have certain pre-existing conditions you often won't be eligible for a catastrophic health plan.  Health conditions such as AIDS, diabetes, emphysema, heart disease, multiple sclerosis, and schizophrenia, along with others, can prevent you from buying a catastrophic plan.
 
Trucking specific groups Organizations such as the Owner-Operator Independent Drivers Association (OOIDA) can offer discounted rates, although premiums are higher than a company employee would pay through his group plan.
 
"Truckers are considered a high risk to the insurance industry," says Brenda Reynolds, OOIDA's medical benefits supervisor. "It can be very difficult for the owner/operator in trucking to obtain health benefits, so many are forced to simply do without."
 
"They have the substantial cost of the monthly truck payment along with other truck expenses and often they are required to supply workers compensation or occupational accident insurance - all their expenses they have just to make a living." 
 
"Because we're a trucking organization, we understand what the independent business people in this vocation require.  There are a lot of different plans out there for people to choose from - we try to offer a plan that will fit the needs of the majority of the membership at reasonable rates".