What Happens If You Don't Have Health Insurance? (2024)

More than 92% of the U.S. population has health insurance, which can keep your medical bills more manageable. But there were still 26 million Americans (8% of the U.S. population) who didn’t have health insurance in 2022, according to the most recent data from the U.S. Census.

What Are the Consequences of Having No Health Insurance?

Not having health insurance can lead to large debt, affect your health if you delay care and may even hurt you at tax time, depending on your state.

Here are aspects of being uninsured that you should understand.

Medical debt

Medical debt is any balance or amount owed after receiving medical services or goods, according to Shannon P. Miller, a partner at national financial services law firm Maurice Wutscher in Philadelphia. “In a broad sense of the term, this would include amounts owed that are not past due, as well as amounts that haven’t been paid and have become delinquent and sent to collections,” he says.

If you don’t have health insurance, you’re at much greater risk of accumulating medical bills that you may not be able to pay. In a worst-case scenario, you could be sued and have your wages garnished. You might even be forced into bankruptcy.

The Commonwealth Fund’s 2023 Health Care Affordability Survey found that 38% of people surveyed said they delayed or skipped needed healthcare or prescription drugs because they couldn’t afford it. Medical debt is the major reason with 34% pointing to that as the reason they avoided care.

Having health insurance didn’t prevent medical debt, with about one-third of those with an employer-sponsored health plan or Affordable Care Act marketplace plan saying they had medical or dental care debt, according to The Commonwealth Fund.

More than eight out of 10 adults with medical or dental debt reported at least $500 in debt and 22% said they had at least $5,000 in debt. Over half of the debt came from hospital care and 37% from doctor visits.

How Can You Tackle Medical Debt?

• Understanding your health insurance policy. Take time to review your health insurance plan carefully. You should know exactly what it covers and what it doesn’t. If you’re unsure, reach out to your provider.
• Setting up a payment plan.Bills can still be sent to collections even if you’re making payments. If you partially pay or make regular payments but go past the due date, the remaining amount of your bill could be sent to a collections agency. Talk to your provider if you can’t afford all of what’s due. They may be willing to set up a payment plan.
• Negotiating a lower price: Don’t hesitate to negotiate with the health care provider for a lower amount. Explain if you’re unable to afford the full cost and ask what they typically charge insurance companies or what Medicare covers.
• Avoiding credit cards: While it might be tempting to put your medical debt on your credit cards, doing so can do more harm than good if you cannot afford to pay your credit card bill in full. Certain credit cards may come with much higher interest rates and easily increase the total amount of your debt.
• Considering credit counseling: Credit counseling agencies are nonprofits that can help with your medical debt. You may use the National Foundation for Credit Counseling to find a reputable agency.

Tax Penalties

The Affordable Care Act initially required that nearly all Americans have health insurance or get hit with a tax penalty. Congress later eliminated the federal penalty, but some states have their own health insurance mandates.

States with individual mandates include:

• California
• District of Columbia
• Massachusetts
• New Jersey
• Rhode Island
• Vermont

The tax penalty for not having health insurance varies by state:

• California charges as much as $850 per adult and $425 per dependent with an annual max of $2,550.
• Massachusetts penalizes based on income with fees of between $288 and $2,196 per year.
  New Jersey charges at least $695.
• Rhode Island has a penalty of 2.5% of your annual household income or $695 per person and an additional $347.50 per child under 18, whatever is greater.
• Vermont requires residents to have health insurance, but there’s no penalty if you don’t have coverage.
• Washington, D.C. charges 2.5% of household income or $695 per person and $347.50 for a child under 18, whichever is greater.

Medical Devices

Some people need special medical devices to treat health conditions. For example, if you have sleep apnea, you might need a continuous positive airway pressure (CPAP) machine to help you breathe at night.

There are an estimated 2 million medical devices available to treat health conditions. In some cases, these devices are implanted into the patient’s body. About 10% of Americans will use an implanted device at some point during their lives, according to the American Medical Association.

You will have to pay for these devices yourself if you don’t have health insurance. Health insurance may cover many types of medical devices, though newer technologies may not be covered.

Health insurance companies typically follow the lead of Medicare in deciding whether to cover these devices, and Medicare is usually conservative with new devices and therapies.

Medical Care Costs

If you have health insurance, you probably have found yourself grumbling about all the costs you pay, including premiums, deductibles, copays and coinsurance. These costs are a bargain compared to what you might pay without insurance.

Most people who are uninsured don’t receive their care for free or even at a lesser charge, according to the Kaiser Family Foundation (KFF). In fact, just 27% of the uninsured receive such price breaks. To make matters worse, hospitals often charge uninsured patients two to four times more than what health insurers and public programs typically pay for hospital services, KFF says. Without health insurance, you could be on the hook for thousands of dollars in medical bills. Your bills could be so substantial as to be financially ruinous.

Beware of Surprise Medical Bills:
A surprise medical bill is a charge that you didn’t expect. These charges are often related to out-of-network charges or a service that the health plan won’t cover.

Health insurance companies typically fully or partially cover in-network visits to providers or health care facilities. But sometimes, you may get an unexpected bill, even though you sought care from an in-network provider. This might happen if you visit an in-network provider or facility, but an out-of-network physician or specialist working in that in-network facility treats you at some point in the process.

Medications

The average American spends more than $1,000 a year on prescription drugs, according to the Congressional Budget Office. A health insurance plan typically helps cover the cost of medications.

Medications listed on your health insurance plan’s formulary, which is the insurer’s approved list, will be less expensive for you.

That doesn’t mean you should assume health insurance will always lower your medication costs. For starters, you often owe a copay, deductible or coinsurance cost when getting these drugs. There are also situations when a prescription drug may cost less without health insurance.

Why Do People Go Uninsured?

People often don’t have health insurance because they think they can’t afford it. That’s the most common reason people don’t have health insurance, according to the KFF.

A KFF survey found that the top reasons people don’t purchase health insurance are:

• Coverage not affordable: 64%
• Not eligible for coverage: 28%
• Do not want or need: 26%
• Signing up was too difficult or confusing: 22%
• Cannot find a plan that meets needs: 19%
• Lost job: 5%

Available Health Insurance Options After Losing Coverage

There are multiple avenues to get health insurance if you lose coverage.

• COBRA health insurance: If you lose employment and the health insurance tied to it, you typically can extend your workplace-based coverage through COBRA. That’s an expensive option since your former employer likely won’t help pay for care anymore, but it does mean you get to keep your workplace coverage temporarily.
• Directly from a health insurance company: You could purchase an individual health insurance plan directly from a health insurance company. But those plans don’t qualify for subsidies like plans on the health insurance marketplace do.
• Health insurance marketplace: You could purchase a plan on the Affordable Care Act health insurance marketplace. An ACA plan generally costs more than an employer-sponsored group health insurance plan unless you qualify for subsidies that reduce the cost of ACA plans.
• From a spouse’s health plan: Another option if you’re married is to try to get on your spouse’s plan. Employer-sponsored health insurance is typically more affordable than getting an individual health plan yourself, though adding you to your spouse’s plan may increase premiums.
• Medicaid: Medicaid is another possibility if you qualify. Medicaid offers low-cost, comprehensive coverage to low-income Americans. State income requirements differ, so you want to check the rules for your specific state.

When Can You Get Health Insurance?

You can generally choose or change health insurance during open enrollment. The open enrollment period varies by the type of health insurance.

The ACA marketplace generally starts on Nov. 1 and ends on Jan. 15 in most states. Some states that have their own marketplace have longer open enrollment periods.

Employers are how most pre-retirement Americans get health insurance coverage. Businesses have their own open enrollment period, so check with the employer for the specific open enrollment period.

Another option is a special enrollment period if you face a qualifying life event. Qualifying events include getting married, having a child, getting divorced or moving to a new state. You may be eligible for a special enrollment period to choose a new health insurance plan in those cases.

How to Appeal a Health Insurance Denial

Health insurance companies have a process if your insurance claim gets denied. This process includes an internal review appeal and an external review process if necessary.

An internal review appeal is a request for your insurer to review and reconsider its decision to deny coverage for your claim. You have a right to file an internal appeal. By doing so, you are asking your insurer to conduct a fair and complete review of its decision.

If your insurance company still denies the claim, you can pursue an external review appeal. An independent third party performs this. It’s called “external” because your insurer will no longer have the final decision over whether or not to pay for a claim.

What Happens If You Don’t Have Health Insurance Frequently Asked Questions

Sources

• Health Insurance Coverage in the United States: 2022, U.S. Census, accessed 1/4/2024.
• 2023 Health Care Affordability Survey, The Commonwealth Fund, accessed 1/4/2024.
• The California Health Insurance Penalty: 2023 Update, Health for California, accessed 1/4/2024.
• NJ Shared Responsibility Payment, NJ.gov, Accessed 1/4/2024.
• Do I have to have health insurance?, Vermont Health Connect, accessed 1/4/2024.
• Do You Know Your Health Insurance Rights?, D.C. Department of Insurance, Securities and Banking, accessed 1/4/2024.
• Individual Mandate Penalties for Tax Year 2023, Mass.gov, accessed 1/4/2024.
• RI Health Insurance Mandate, HealthSource RI, accessed 1/4/2024.
• Medical devices, World Health Organization, accessed 1/5/2024.
• Why implantable medical devices are a big test for regulators, American Medical Association, accessed 1/5/2024.
• The Uninsured and the ACA, Kaiser Family Foundation, accessed 1/5/2024.
• Prescription Drugs: Spending, Use and Prices, Congressional Budget Office, accessed 1/5/2024.
• Key Facts about the Uninsured Population, Kaiser Family Foundation, accessed 1/5/2024.
• Why bother with insurance?, HealthCare.gov, accessed 1/5/2024.
• Understanding Required Financial Assistance in Medical Care, Consumer Financial Protection Bureau, accessed 1/5/2024.