When health insurance is available to both spouses, is it wise for each to sign up for coverage?
Sometimes in two-income families both husband and wife will purchase employee-sponsored medical insurance coverage for themselves and their dependents, thinking that they have twice the coverage and therefore have gained some type of advantage. That may not be the case. Medical insurance has what is called "coordination of benefits." For example, consider a two-earner family with both spouses covered by insurance. If a child breaks his arm, only one insurance company may pay; it is wise to check with both plans. If one spouse has a good health insurance policy covering dependents through their company, our advice would be for the other spouse to save the money he or she is paying for dependent coverage.
That said, we should probably add a few general thoughts on the importance of health insurance. With little reservation, we can say that health insurance is the most important insurance policy you can have. The likelihood that you or a family member will need care is almost certain, and the cost of that care is extremely high. Even a minor outpatient surgery can result in expensive bills from many different sources. For example, the broken arm referenced above could easily cost $5,000.00. Another reason health insurance is almost a necessity is that insurers have arranged for discounts from health care providers, so that the actual cost of a procedure, after applying the contractual adjustment with the insurance carrier, is less than the cost to someone without insurance.
From a tax standpoint, too, medical insurance is an outstanding benefit. The premium that your employer pays for medical, dental and vision coverage for you and your family is not considered taxable income, so it's better than an increase in salary from a tax viewpoint. In addition, any portion of the health care insurance premium that you pay may be taken from pre-tax dollars.
Being part of a large group – your fellow employees – allows you to purchase a better medical insurance policy at cheaper rates than you could purchase on your own. With medical expenses at an all-time high, the risk of even an intermediate-term illness is too great for any individual or family to assume. Even though you may pay for a portion of your own insurance, your employer is probably doing the best job it can to provide you the best coverage at a reasonable cost. Also note that if you leave your present employer, you may be able to continue with your current insurance company for up to eighteen months (though in most cases you're responsible for the entire premium) until you find employment at another company that offers medical insurance as part of the COBRA provisions.
All to say that we're pleased to know you're taking advantage of the health care benefits offered by your employer. In light of the question you've raised, however, we want to urge you to be wise and knowledgeable in the way you avail yourself of those benefits. Stay informed. Take time to educate yourself about the details of your company's plan. Review your beneficiary choices frequently – they don't change automatically when you have another child or when other family circumstances change. And don't assume that your HR Department will take care of everything for you. As a matter of fact, the trend is toward more and more choice (and the burden of making the choice) to fall upon the employee. So be proactive.
For additional help and information on this topic, we'd encourage you to consult the resources and referrals highlighted below. Or if you have relationship concerns and challenges associated with this situation, please don't hesitate to give our Counseling department a call.
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Complete Guide to Faith-Based Family Finances
Family and Personal Finances (resource list)
Crown Financial Ministries
God's Big Idea About Finances