What Is “Underinsured”?

The term “underinsured” refers to people who have health insurance coverage but can’t afford to seek care because the out-of-pocket costs are too high. The official definition is based on household income; whether a plan is affordable depends on each person’s financial situation.

Consider this example. A family has an insurance plan with a low monthly premium but a high deductible. With some plans, whenever one of the covered family members needs to see a care provider or get prescription medication, the family could have to pay the full cost. This continues until the deductible is met. This could mean that the family has to pay hundreds of dollars out of pocket every time they need care.

This is fine for those who are able to cover the out-of-pocket costs themselves. But those who can’t afford these expenses may choose to skip care when they need it, which means their insurance plans aren’t working for them.

If this is you, you are not alone. In a 2022 survey, researchers found that 23% of working-age adults were underinsured – with coverage that made actually using the insurance too expensive.¹

What You Can Do if You’re Currently Underinsured

If your current health insurance isn’t the right financial fit, you have a few options. If it’s not currently open enrollment (the period during which you can sign up for a new healthcare plan), you can:

• Look for free or low-cost healthcare options in your area. Depending on your location, you may have access to:
  • Free clinics, often run by volunteers. Search for a free clinic near youExternal Link.
  • Federally qualified healthcare centers, such as community health centers and clinics, which charge for services based on income. Search for one near youExternal Link.
  • Rural health clinics, which may also charge based on income. Use the Health Resources & Services Administration’s search toolExternal Link to find rural clinics near you. (Add RURAL to the “Site Category” column and click the funnel icon. Then put your state’s two-digit abbreviation in the “State” column and click the funnel icon. You can continue filtering by county as well.)
• Set aside a little bit of money as often as possible. If you are currently contributing to a flexible spending account (FSA) or health savings account (HSA), you can use this money to pay certain medical expenses. However, if you are not able to contribute to an FSA or HSA, then it’s wise to save on your own, if you can. Try to set aside a small amount from every paycheck or whenever you have the opportunity. Put this money in a separate account, if possible, so you have something available to help with copays and other out-of-pocket medical expenses as they arise.
• Check if you qualify for a special enrollment period (SEP), so you can change plans. If you experience certain life changes, you may be able to qualify for an SEP, which will enable you to choose a different insurance plan. If you qualify to change your coverage, you may want to consider plans with slightly higher premiums but lower out-of-pocket costs, so you can actually afford to use your health insurance. Plans in the silver metal level, which qualify for subsidies, may be your best option for balancing monthly premiums with out-of-pocket costs.
• Consider secondary health insurance, but only if it can help you save. Secondary health insurance, sometimes referred to as supplemental insurance, may help with some expenses that your current plan doesn’t cover. Secondary plans are available from some private insurers. However, adding secondary health insurance will mean another monthly premium and likely a second deductible. So you’ll want to understand the costs and benefits to figure out if a secondary plan would actually save you money.

Choose a New Plan During Open Enrollment

When it’s time for open enrollment, look for coverage that will work better for you and your covered family members. Focus on plans that require less out of your pocket when you get care. The monthly premiums will likely be higher, but the trade-off will be health insurance that actually works for you.

If you get insurance coverage from the Health Insurance Marketplace, remember that plans in the silver metal level are eligible for subsidies. If you qualify, you can lower your monthly premium, which may help you choose a plan with more affordable out-of-pocket costs.

When you shop on the Health Insurance Marketplace, keep an eye out for plans noted as “Easy Pricing.” These plans provide some coverage for services even before you reach the deductible. For example, with some “easy pricing” plans, you may only have to pay a copayment for certain services, such as:

• Doctor and specialist visits
• Urgent care
• Prescription medications

In addition, with all Marketplace plans, many preventive care services are covered at no cost to you.

Questions About Being Underinsured