Key takeaways:
Being uninsured means not having health insurance. Being underinsured means having health insurance that doesn’t give you access to affordable healthcare.
Excluding premiums, people who are underinsured generally have out-of-pocket healthcare costs equal to 10% or more of their household income and/or an annual individual or family deductible equal to 5% or more of household income.
Being uninsured or underinsured can cause people to skip or delay medical care, which can lead to more serious conditions and significant medical debt.
There are ways to get free or low-cost services and medications that can help people who are uninsured or underinsured access affordable care.
When it comes to health insurance, it’s easy to know if you’re uninsured: You either have coverage, or you don’t. But determining whether you’re underinsured is trickier. Being underinsured means you have a health insurance plan, but your high deductible or out-of-pocket costs make accessing healthcare unaffordable for you or your family.
Below, we break down what counts as being underinsured and the financial risks involved. We also discuss options you may want to consider if you are without insurance or have unaffordable coverage.
What does underinsured mean?
In general, being underinsured means that your insurance plan is not adequate for your healthcare needs and poses a financial burden for you or your family. There isn’t a universal definition, but the Commonwealth Fund defines being underinsured as one of the following:
Your out-of-pocket healthcare costs in the last year — not counting premiums — are equal to 10% or more of your household income. The threshold drops to 5% if you’re living under 200% of the federal poverty level (FPL). In 2025, this means having a household income of less than $65,000 for a family of four — except in Hawaii or Alaska, where it’s less than $81,000.
Your annual individual or family deductible — the amount you have to pay before your health insurance starts cost-sharing for covered services — is equal to at least 5% of your household income.
The growth of high-deductible health plans, which come with low premiums but high costs when you access care, has played a role in the challenge of underinsurance.
It’s important to shop around for health insurance, so you can find a plan that fits your budget and still meets your needs. Underinsurance can lead to financial toxicity, which is when economic hardship caused by medical bills negatively impacts your health.
If you’re uninsured, what types of financial risks are you taking on?
If you’re uninsured, you’ll likely pay more for healthcare and prescription medications than someone with health insurance that helps defray out-of-pocket costs. Being unable to pay medical debt can lead to collection calls and bankruptcy. But skipping or delaying medical care can make health conditions worse and more costly to treat.
When the Affordable Care Act (ACA) was signed into law in 2010, nearly 1 in 5 people in the U.S. — or 17.8% — didn’t have health insurance. By the time the ACA was fully implemented in 2014 with the individual mandate and Medicaid expansions, the uninsured rate had dropped to less than 14%. Since 2022, the uninsured rate has been less than 10%.
While the individual mandate is no longer in effect, some states have health insurance mandates with financial penalties. Residents of California, Massachusetts, New Jersey, Rhode Island, and Washington, D.C., are required to have health insurance or face a penalty — unless they have an exemption.
Where can I find free or low-cost health insurance?
If you do not have access to your own job-based plan, your free or low-cost insurance options may include:
ACA marketplace plans, which can cost less if you qualify for premium subsidies (also known as premium tax credits)
Medicaid
Coverage through the Children’s Health Insurance Program (CHIP), which is for children whose families earn too much to qualify for traditional Medicaid but can’t afford to buy health insurance
A high-deductible health plan, because of the low premiums
Medicare with Extra Help, which is a Part D prescription medication coverage subsidy for people with low incomes
Medicare special needs plans, which are Medicare Advantage plans for people who have certain conditions and meet other requirements
A parent’s plan, if you qualify
A partner’s plan
Keeping your medications if you lose Medicaid: Asking your prescriber for additional refills, switching to generics, and using GoodRx discounts can help you save on medications if you lose Medicaid.
Affording your prescriptions: You may be able to reduce prescription medication costs by filling greater quantities and exploring patient assistance programs or manufacturer savings programs.
Health insurance options for young adults: Up to age 26 — and older in some states — you may qualify to join or remain on a parent’s health insurance plan.
Where to find free or low-cost healthcare
Here are some types of facilities and organizations that may offer free or low-cost healthcare near you:
Federally qualified health centers (FQHCs), also known as community health centers, which you can find using this search tool
Safety-net hospitals and clinics
Hospitals that offer income-based indigent and charity care
Patient assistance programs also help people get prescription medications for free or at discounted prices.
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If you’re underinsured, can you appeal coverage decisions?
Yes, if your health insurance company refuses to pay a claim, you have the right to appeal the decision. You may need to know how to write an appeal letter to effectively make your case.
If you end up with medical debt, you can take steps to protect yourself like asking for a discount and setting up a payment plan. Taking action with your creditor can help prevent the debt from going to collections.
The bottom line
Being underinsured or uninsured can cause you to delay or skip needed healthcare — and may lead to medical debt. It’s important to understand your coverage options, especially if you do not have access to a plan through your employer. If you cannot get health insurance, you can seek out facilities that provide free and low-cost healthcare near you, including federally qualified health centers and free and charitable clinics.
Why trust our experts?
References
Abend, C. (2024). What do individual healthcare mandates look like in your state? Equifax.
America’s Essential Hospitals. (n.d.). Our members.
Centers for Medicare & Medicaid Services. (2024). Health coverage options for the uninsured.
Collins, S. R., et al. (2024). The state of health insurance coverage in the U.S.: Findings from the Commonwealth Fund 2024 biennial health insurance survey. Commonwealth Fund.
HealthCare.gov. (n.d.). Federal poverty level (FPL). Centers for Medicare & Medicaid Services.
HRSA Data Warehouse. (n.d.). Find a health center. U.S. Department of Health and Human Services.
National Association of Community Health Centers. (n.d.). What is a community health center?
National Association of Free & Charitable Clinics. (n.d.). Find a clinic.
Office of the Assistant Secretary for Planning and Evaluation. (n.d.). Poverty Guidelines. U.S. Department of Health and Human Services.
Rural Health Information Hub. (2025). Rural health clinics (RHCs).
Tolbert, J., et al. (2024). Key facts about the uninsured population. KFF.
