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7 Tips for Saving Money on Health Insurance

Source: Photo: lusi
Source: Photo: lusi

Health insurance is one of those necessary evils in life. It isn’t mandated by law, like for auto, but any major health issue — or even three or four minor issues added together — can result in total financial devastation without some degree of coverage. Unfortunately, health insurance premiums continue to rise, making it difficult to obtain affordable coverage. Here are 7 tips that will help you reduce your health insurance costs.

Tip 1: Call your health insurance company

When you first get your premium increase notice, call your health insurance company. They have people who can help you find other plans that you are eligible for. These plans may have different coverage, and different terms, so pay close attention. I did this last month, and found a plan with a lower premium. I had to pay $10 more on my office visit co-pay, and accept a $200 deductible for prescriptions, but the savings in the premium more than offset those costs. Be careful, though. Make sure you understand the plan before you sign on. Sometimes a much lower premium masks a plan that has such a high deductible that you pay your expenses out of pocket and still have to pay the premium. In the long-term that can cost much, much more.

Tip 2: Comparison shop

Do a little recon. Check online for other plans. I found my plan from resource center. This site compares plans available in your area, and lets you see the benefits and costs, side by side. Realize that your employer’s plan may not be the best. Even if you don’t go through your employer, it is possible to find a group health insurance rate, as an individual or family. Now a days, it is easy to check for the best quotes on the internet as more and more insurance companies using the internet to court and educate customers.

Tip 3: Look for incentives

Some employers offer incentives for healthy lifestyles. For that matter, so do some insurance companies (but not many). Check with your human resources department to see whether your employer will kick in extra toward your premiums if you are certified as a non-smoker, or if you make regular use of gym facilities or have a gym membership. Find out the enrollment requirements so that you receive proper certification in time to take advantage of it.

Tip 4: Raise your deductible

Raise your deductible to get a lower premium. The more you pay out of pocket, the less insurance companies will charge you. This works especially well if your plan has a co-pay for routine office visits. This means that you do not have to worry about paying your deductible unless something major happens. Be careful if you have a 20/80 plan or a 30/70 plan. In these plans, you generally pay out of pocket until your deductible is met, then you pay a percentage (20% or 30%) of your costs after that point. In some cases, especially if you use health care services frequently, the lower premium does not make up for your increased responsibility to pay.

Tip 5: Evaluate your coverage

Check your coverage. Do you still need maternity coverage? Do you foresee an instance when you will need alternative treatments, such as acupuncture? If you have coverage that you don’t need, talk to your health insurance company about dropping it. Fewer benefits mean lower premiums. Also, consider your health. If you take reasonably good care of yourself, you may only need the most basic coverage available. Also, find out whether or not generic prescriptions are preferred on your plan. Generics can reduce your health care costs.

Tip 6: Consider your life stage

If you are young and healthy, only making visits once or twice a year for routine check-ups, it may be cheaper to use a PPO type of plan. Cost savings on the premiums can offset higher co-pays for doctor’s visits. A PPO plan also provides more flexibility in choosing providers as you are not tied to a primary care physician and you have the ability to self-refer to a specialist if needed. As you age, especially when you have children, you might consider enrolling in a HMO type plan. While HMOs have had a bad reputation in the past, there are programs now that are easier to deal with and even desirable.

Tip 7: Consider alternatives to health insurance

You can also consider alternatives to health insurance. These can either work in place of health insurance, or work in a complementary manner with your health insurance. Drop your prescription coverage and sign up for a prescription drug plan. You can also get a high deductible insurance plan, and open a Health Savings Account to help cover expenses. This way you are covered, but you can use pre-tax dollars to pay some of your expenses. Also, HSAs can be used to cover dental and optical expenses. Check for limitations, rates and possible fees with different HSA providers. Finally, there are health care co-ops that can help you pay for costs. These co-ops are not insurance. Instead, you pay a monthly fee, and then the co-op helps you pay a portion of your health care expenses.

Before you make any decision, though, it is a good idea to compare costs, and carefully evaluate your lifestyle and your past health care history. You want to make sure that you get the proper health insurance coverage for your needs.

6 Responses to 7 Tips for Saving Money on Health Insurance

  1. I would also make sure you know what your Out-of-Pocket Max is. That will be the most you spend in one year on medical bills, your Stop-Loss. Very important to know how much is coming out of your pocket in the worst case scenario.

  2. This is a great post for me. With my first job out college, I did not even pay attention to the details of my health insurance plan. I heard Blue Cross was good so I got Blue Cross. I ended up getting Bronchitis. I just felt awful. I called the local hospital that took Blue Cross to schedule an appointment and they said it would take 30 days for me to see a doctor. I felt like I was dying at the time so I just had to go the ER at the hospital. I ended up getting a 1300 medical bill for bronchitis. If I had read the details of my plan and not going on what I heard was good, I am sure I would not have this bill that still needed to be paid. I could have just gone to Kaiser. I guess you live and you learn.

  3. I also like the high deductible option for its tax benefits. Many high deductible health plans are Health Savings Account compatible (HSAs) meaning you can fund tax deferred money to a savings account to use on eligible medical expenses.

    For those of you who need that broken down a bit lol.

    Basically what an HSA will do for you (if you fund it for a few years) is leave you with the money right on hand pay a hospital bill if an unexpected accident occurs. If the out-of-pocket maximum on your current policy is $4000 and you’ve funded your HSA to $5000 and then turn around and break an arm which costs you $4324… 1) you pay $4000 total out of your HSA 2) The insurance company now kicks in with coverage of $324 since you have hit your out-of-pocket maximum for the year 3) You are covered at 100 % for the rest of that year because you have satisfied the out-of-pocket max. with the insurance company 4) You have saved a bit of money in the process from tax benefits because your HSA account is able to save money on a tax free basis!

    If you would like more on HSA 101 please visit us!

    Great post. Thank You!


  4. Jeremy, I love what you wrote. I had not considered this idea. Unfortunately your comment arrived a day late, we were past the annual enrollment deadline.

    It is not just a little bit of money. If you are able to increase your deductible by say, $1000, and get the HSA to pay for this, you may save (assuming 30% marginal tax rate) $300 per year with just this maneuver, not to mention your health insurance premiums will go down as well.

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