What does it mean to be underinsured?

If someone is underinsured, they have health insurance, but it does not meet their healthcare needs, making the costs of care a financial burden.

There is no universal definition for being underinsured, but the following is often used to quantify this scenario.

  • Someone’s out-of-pocket costs are more than 10% of their household income.
  • The deductible is at least 5% of their income.

The number of people considered to be underinsured has increased with the growth of high-deductible health plans.

Sometimes, supplemental plans can help provide additional coverage, but they can also come at an extra cost. Supplemental plans may include coverage for:

  • Dental
  • Vision
  • Accident
  • Hospital or fixed indemnity
  • Long-term care
  • Disability

It’s also important to note that those who are underinsured still have the right to appeal decisions made by their health insurance company refusing to pay a claim.

How can being underinsured affect healthcare?

Since underinsured people pay higher healthcare costs, they may choose to delay medical treatment. In some cases, this delay in treatment may allow a healthcare condition to increase in severity, then increasing the costs associated with treating or managing it and potentially impacting its prognosis.

The costs associated with being underinsured can also cause increased stress regarding paying medical bills and may increase the risk of entering medical debt.