Underinsurance

Hey, it happens to the best of us. You break your arm, and find out you’re underinsured. Gulp.

Underinsurance exists when a person has less health insurance than they need to cover a claim. If you’re on a really cheap insurance plan, saving money now by paying lower premiums, there’s a good chance you’re underinsured. It could be that the deductibles are really high...so high that you can’t even get your insurance company to pay out anything, because you can’t even afford the deductible. Even if you can afford the deductible, maybe you can’t afford the remaining out-of-pocket expenses. Or it could be that your health insurance plan only covers you if you break your right arm, not your left arm. Okay, so most health insurance plans don’t do that...but you catch our drift: it covers so little in such a specific way that actually getting a payout from a claim would be...rare.

There are three main types of underinsurance. First: economical underinsurance. That’s just when you can’t afford the healthcare you need, be it premiums, copays, or deductibles. This means the person’s income just isn’t enough to keep up with their healthcare needs.

Second: attitudinal insurance. This is more subjective, but in general, it refers to when you’d like to have coverage for something, but don’t, or you find your healthcare policy inadequate for your healthcare needs.

Third, we’ve got structural underinsurance. Structural underinsurance compares your plan to a “standard” plan for comparison. Rather than looking at the person’s income or healthcare needs, structural underinsurance uses a benchmark and the general healthcare policy market to determine whether or not someone is underinsured.