How Much Health Insurance Do I Need In My 40s
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Beyond evaluating insurance policies from a quality standpoint, you may also need to think through out-of-pocket costs that fit your budget and the cost of the health care services you normally receive. For example, if you regularly see a therapist, behavioral health coverage will be an important factor in your health insurance plan. On the other hand, if you have children and now have family members you need to cover, family coverage will be an important part of the type of plan and coverage you select.
How much health insurance do you really need in your 40s? While the answer to that question can vary from person to person, here is a helpful guide to use as you evaluate your health insurance company and health benefits.
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Tips for a personal audit
As you reflect on how much health insurance you need in your 40s, it’s a good idea to complete an audit of your personal situation. This can help you ensure that you’re getting the proper coverage and that you’re only paying for coverage that has real value for you and your family. Here are a few things to consider as you consider what your needs are versus what your wants are when it comes to insurance coverage.
What is your current health like?
The first place to start when auditing your health insurance is to take a look at what your current health is like. Do you have any existing medical conditions that require specific treatment, prescriptions, or visits to a specialist? What is your family medical history like? Is anyone in your family someone who has a pre-existing condition or diagnosis that requires extra medical attention? Knowing the answers to these questions can help you assess your risk and need for insurance in the first place.
What can you afford?
Hopefully, by the time you enter your 40s, you have a budget. If so, answering what you can afford should be a relatively straightforward part of your audit. However, an equally important question to ask yourself is what your risk tolerance is. If you’re relatively confident that you won’t have any major need for insurance in the next few years, you may not feel the need to purchase more expensive coverage. On the other hand, if you’re less risk averse, the peace of mind that comes from having a more comprehensive (albeit more expensive) health insurance policy may be worth squeezing your budget.
It’s also worth noting that having worse insurance could cost you a lot more money later down the line. Regular preventative care is one of the most beneficial aspects of having affordable health insurance since catching problems before they become more serious can save you a lot of money in the long run. As such, it's not a bad idea if you can find a way to make room in your budget for a slightly more expensive but ultimately more helpful form of health insurance.
What does the future hold?
More and more people are starting families in their late 30s or early 40s. As such, you may want to consider getting health insurance that covers the costs associated with pregnancy or childbirth or has better benefits for your dependents. Career changes may also need to be viewed through the lens of what your existing health insurance offers versus what your new position could give you from an insurance perspective.
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Types of health insurance
There are a few different types of health insurance you may come across while you’re exploring your options. Here are some of the most common coverage types to consider in your 40s.
HMOs
An HMO, also known as a health maintenance organization, has a few pros and cons to consider. One of the benefits of getting insurance through an HMO is that you may have a higher amount of your healthcare costs covered while using an HMO. This also means that out-of-pocket costs are typically less expensive than through a different insurance option. This means your copayments are generally lower and more predictable.
One of the drawbacks of an HMO is that a lot of emphasis is placed on your primary care provider and the specialists they refer you to. If you cannot get a referral to a specific specialist or physician, you’ll pay much more for using an out-of-network provider.
PPOs
A PPO, also known as a Preferred Provider Organization, is similar to an HMO but more flexible regarding your options as a patient. Not only can you choose from a variety of primary care physicians, but you can also choose from a wide range of specialists. This ensures that you’ll be more likely to get the care you want from the doctors you want since you won’t need a referral to go.
While a PPO has a network of in-service providers, you can still see an out-of-network provider, although you’ll likely pay higher premiums on out-of-network medical care. If you value autonomy and want to play a major role in healthcare, a PPO is much better than an HMO. The one drawback of a PPO is that it’s more of a high-deductible health plan.
Employer-sponsored health insurance
For many Americans, health insurance coverage is provided by their employer. Insurance through your company has many benefits since it can often qualify you for lower premiums and a better deductible. You may also qualify for broader coverage and additional perks like vision or dental insurance at much lower monthly premiums.
One drawback of getting your insurance through your employer is that if you want to make certain changes to your insurance plan, you’ll need to wait until an open enrollment period. Typically, these come around once a year; however, some qualifying life events, such as having a child or getting married, allow you to change your coverage.
Shopping the Health Insurance Marketplace
Another place you may want to buy health insurance coverage is the Health Insurance Marketplace. Established as part of the Affordable Care Act, this website allows you to shop for and compare different types of health insurance coverage for individuals and families. If you don’t have insurance through your job or don’t qualify for insurance through your employer, this is a great way to shop around for coverage that meets your needs and a health insurance premium that meets your budget.
If you value transparency, the Health Insurance Marketplace is also a major win since you can see all the details about your benefits and coverage. Many of the programs through the ACA Marketplace also offer subsidies and cost-saving reductions to help make coverage more affordable. You may also qualify for the premium tax credit to help reduce your premium costs, assuming you’re enrolled in a plan through the Marketplace and meet certain income and eligibility requirements.
While navigating the Marketplace isn’t as convenient as other online shopping experiences, its commitment to transparency and choice is a benefit. Individuals without access to technology or who don’t speak English as their first language may struggle to use the platform, but despite its dense nature, it is still a useful tool for many.
Ultimately, if you’re in your 40s and need to beef up your coverage, the ACA Marketplace is a great way to compare your existing coverage with what else is out there.
Medicare
Generally speaking, in your 40s, you won’t qualify for Medicare, a federal health insurance program from the government. Medicare is typically offered to Americans aged 65 or older, although younger individuals with disabilities may also qualify for Medicare. If this is you and you’re in your 40s, you may decide to enroll in Medicare.
Medicare is separated into a few different categories of coverage. They are:
- Part A Medicare, which is insurance for hospital stays, including hospice care
- Part B Medicare, which is medical insurance that handles preventive services and visits to the doctor
- Part C Medicare Advantage is coverage offered by private insurers that typically combines Part A and Part B Medicare, prescription coverage, and, in some cases, vision or dental coverage.
- Part D Medicare, which is prescription drug coverage through Medicare-approved private insurers
If you want peace of mind that you have coverage for whatever medical services you need in your 40s, Medicare is a solid option, assuming you qualify as someone who isn’t 65. A disadvantage of Medicare is that some of the cost-sharing reductions are difficult to get since your deductible, coinsurance, and copayments can still be rather high for outpatient services.
Medicaid
Medicaid is similar to Medicare in some ways, as it is a governmental program for health insurance, thanks to states and the federal government. Unlike Medicare, which is aimed at those who are older than 65 or qualify for it as someone on disability, Medicaid is aimed at families as well as low-income people. You’ll need to meet your state’s income requirements to get this coverage.
As far as coverage goes, Medicaid offers many comprehensive care — including long-term care, preventive care, and mental health services. There’s even broader coverage in some states thanks to the Affordable Care Act (ACA). The only issue is that in some states, Medicaid may have more limited coverage than private insurers.
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Costs
When calculating the cost of health insurance, there are a few different factors to consider. For example, suppose you’re a single individual getting insurance through your employer. In that case, you will likely have a different monthly premium than a family with multiple dependents getting insurance through the ACA Marketplace.
In 2021, a survey by the Kaiser Family Foundation determined that the average premium for single coverage was about $7,470 a year when insured by your employer. Of course, the size and geographic region of the employer can make that number go up or down; however, as an average cost, that isn’t a bad ballpark estimate.
Getting insurance through the ACA Marketplace also varies widely depending on your situation and the coverage you choose. However, there is some data about the average cost, thanks to research by the Department of Health and Human Services and the Centers for Medicare & Medicaid Services. In 2021, they discovered that the average monthly premium for a benchmark plan was $452, which is about $5,424 a year.
Pros and cons
So, what are the benefits and drawbacks of increasing your health insurance in your 40s? Here are a few things to keep in mind as you decide whether or not adjusting your health insurance makes sense.
Pros
- Financial protection. It may seem strange to think about paying more for additional health insurance coverage as a form of financial protection, but saving money on costly medical expenses and prescriptions by having comprehensive health insurance can be an incredibly wise financial move in your 40s.
- More preventive services. Many robust health insurance plans also come with more preventive testing and services. From checkups to vaccinations and screenings, these are the sort of benefits from a health insurer that can majorly impact your wellness as you enter your 40s and beyond.
- Peace of mind. As you enter your 40s, you may be more worried about chronic illnesses or injuries. Knowing that you have health insurance coverage that’s comprehensive enough to address whatever comes your way can give you valuable peace of mind. Especially if you’re married and have children, knowing that your health is taken care of can give you a lot of comfort as you look ahead to the next few decades of your life.
Cons
- Higher premiums. More comprehensive health coverage, unsurprisingly, also comes with a higher monthly premium. While certain subsidies or tax rebates can sometimes offset this, those benefits often come at the end of the year, so the month-to-month impact of higher premiums may still take a bite out of your budget. Of course, in the long run, having access to more appropriate healthcare coverage could save you tens of thousands of dollars as you age.
- You may end up getting too much insurance. If you aren’t intentional about the coverage you need, you may wind up overpaying for insurance. While there are some things, you may want to prioritize as you enter your 40s, such as important screenings and vaccinations in your coverage, other features of some comprehensive insurance programs may be less important to you at this stage of life. For example, if you don’t require medication through a specialty pharmacy, certain prescription coverage may be less important.
- Potential for more limited network options. Another drawback to more comprehensive health insurance policies is that they may have more limited network options. While this won’t limit the coverage you receive, it may limit your ability to choose who provides you with specific medical services. If you’re a relatively healthy individual in your 40s, this might not be too much of a problem. However, if you like to have more autonomy in your healthcare and routinely see a specialist beyond your primary care physician for annual checkups, this could be a drawback.
The bottom line
Turning 40 is a major milestone and a great time to reflect on where you’re at in life. While many think of this from a career or goal-setting stance, it’s just as important to consider your financial situation, including health insurance. Health insurance can be a complex subject, but with the right information, you can make a decision that sets you up for success in this decade and beyond.
As you evaluate your insurance needs, think through your family medical history and any existing health conditions you may have. Beyond this, it’s important to consider how many people you need to cover and whether they need specific coverage. For example, if you’ve been diagnosed with a condition requiring costly medication from a specialty pharmacy, prescription insurance becomes something you value much more highly.
Ultimately, figuring out how much health insurance you need in your 40s involves taking stock of where you’re at and where you see your life going. While nobody can predict the future, you can get greater peace of mind about what kind of insurance coverage you need by walking through your options and a few reasonable scenarios.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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