The Affordable Health Care Act affects family finances, but explaining that to curious nieces and nephews can be complicated. Here Ballooning Nest Eggs contributor Helen Jonsen explains how to provide simple answers to what can be complicated questions:

You might think big concepts such as “affordable health care” and “constitutionality” wouldn’t weigh heavily on little people. But kids are sponges and they absorb all sorts of media headlines—often worrying about what they don’t fully understand.

Below are a few questions that you as a Savvy Auntie might be faced with, and suggestions for how to go about answering them.

What is health insurance?

Before you get sick, you buy what is called insurance. You pay a company that collects a big pool of money from lots of people to help pay your doctor’s bills for check ups, medical tests and hospital stays. Insurance is a way of preparing for the what-ifs in life: What if you break your arm? What if your sister needs an operation? Since not everyone gets sick at the same time, the pool of money from everyone covers the costs of those who need it without the sick person having to pay the full cost of that bill.

Still too complicated? Try this analogy: We’ll call it The First Aid Kit example. You and your friends are going on a hike. Sometimes, when you are in the woods someone gets a cut or a scrape and may need to use a first aid kit. But, you have no idea which one of you will get hurt. Instead of everyone carrying their own stuff, you all chip in a dollar to buy what you need—Band-Aids, first aid cream and bug spray. You now have a box of 100 sticky bandages that each of you chipped in for. Not everyone will need something from the kit but you’ll have it ready for those who do.

How are families insured?

America has two kinds of health insurance: Public, where families who don’t have much money and the elderly are covered; and Private, in which companies or individuals buy insurance coverage. A lot of insurance is part of someone’s job benefits. You pay for it out of your paycheck. It’s the most affordable insurance you can have for your family. Other families buy insurance directly from big companies. This can be very expensive. Because it costs so much money, some people can’t afford insurance and don’t buy it. They hope nothing will go wrong. In that case, if they get sick or hurt they either go into debt, can’t get the help they need or they have to depend on the government for help. That can make the cost of health care more expensive for everyone.

What is the Affordable Health Care Act?

On March 23, 2010, the Affordable Care Act became law. The hope was this would help everyone have health insurance. There are a bunch of rules that would make it easier for families and people to pay for insurance so that they wouldn’t have to take a risk and hope they don’t get sick. Many of the changes will take place over time and won’t really happen until 2014. (For a complete timeline of those changes click here at healthcare.gov).

Can everyone get insurance?

Before the Affordable Health Care Act, every state had its own laws allowing insurance companies to decide who could be insured. Here’s an example: Mom or dad were working for a company and used their insurance plan. One of the kids in the family had asthma. But mom lost her job with “Company A” and got a new one at “Company B.” In some states,“Company B’s” insurance might not cover a “pre-existing condition”–meaning a person who was already sick could not get insurance money to pay their bills. So the child with asthma would be left out of the plan. That can cost a family a lot of money because they are already paying for insurance, plus they have to pay for the doctor bills for their child who has to get medicine and extra doctor visits to take care of the asthma.

But isn’t that what insurance is for?

Yes, and that’s why under the Affordable Health Care Act insurance companies can no longer do that.

How does insurance affect family finances?

Each month, a family needs to pay a certain amount for insurance and set aside money for what else health care might cost that month. They may consider how many kids are in their family or how often they may get sick with strep throat or something else. That will cost money, even though the family has insurance. It may help pay for the doctors and x-rays but mom or dad will have to pay what is called a co-pay right then and there. For an emergency room visit it can be as much as $100. Now, $100 is not much when the x-rays and all may cost as much as $1,000, but it’s still $100. That might mean the family can’t afford to throw a birthday party for one of their children that month or they have to cut back on the groceries they buy.

Do More:

Big ideas like these playing on your nieces’ or nephews’ mind may require a don’t-worry hug,  but these conversations can open all sorts of doors for on-going learning together. Answering these questions can lead to further questions and discussion. Should the government/hospitals be required to cover everyone who comes to an emergency room, even if that person doesn’t have insurance coverage? Do you think it’s fair for the government to require adults to buy health insurance, even if they don’t think they’ll ever need the insurance? Your niece or nephew will appreciate you taking the time to discuss these things with them, rather than dismissing their inquiries as something that is too difficult for them to understand.

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