With all the recent talk about health care policy reform, it’s no surprise that many Americans feel the strain that their health insurance premiums put on their wallets. Many families struggle month to month trying to cover the costs of skyrocketing health insurance that many choose to roll the dice and have no insurance coverage. Studies show that approximately 18 percent of the U.S. population (over 46 million Americans) under the age of 65, simply have no coverage at all. If you are one with no coverage or are looking for a way to find a cheaper health insurance solution, here are three ways to lower your health insurance premiums.
Three Ways to Lower Your Health Insurance Premiums
1. Raise Your Deductible
One quick and easy way to lower your health insurance premium is to raise your deductible. One study showed that by raising the deductible from $2500 to $5000, the premium decreased by 25% (35-40% in some areas in the country). You don’t necessarily have to double your deductible to see a significant change. Even lower increases can make a significant difference. If you raise to $1150 or $2300 for a family policy, you can open a Health Savings Account (HSA) which lets you contribute tax deductible money and you can use tax free money for medical expenses in any year. This can help you stretch your money that much further.
Let’s look at an example of increasing your deductible. For a family of 3 living in major metropolitan area:
| Deductible | Premium | Annual Cost |
|---|---|---|
| $500 | $484/mo | $5,808 |
| $5000 | $247/mo | $2,964 |
Obviously, you can see the instant savings. By opting for a higher deductible, that’s an annual savings of $2,844 per year. But what happens if you have to go to the hospital, does the high deductible plans really work? If you look at the overall picture and you and your family are generally in good health, the HDHP plan could make sense. Keep in mind that many of these policies will allow you to have 1 to 2 preventative visits a year. Be sure to check with your health plan provider to make sure.
Using my own family as an example, we currently pay $244 per month for a high deductible plan that covers the three of us and we each have a $1500 deductible. Compare that to a $300 deductible and our monthly premium would jump 56% to $382 per month. Wow! Annually, we save about $1,656 by using this method which we contribute to a HSA.
2. Shop Till You Drop
When looking for cheaper health insurance options, be sure to check several providers to make sure your getting the best deal that fits your family’s needs. eHealthinsurance.com is one of the top leaders of online health insurance issuers. They were one of the first company’s to sell health insurance policies online. EHealthInsurance has developed partnerships with more than 180 health insurance companies, including the big boys of: Aetna, Blue Cross and Humana, Blue Shield, AARP, Coventry Health, and Kaiser Permanente. Here’s some info from their website:
eHealth, Inc. is the parent company of eHealthInsurance Services Inc., the leading online source of health insurance for individuals, families and small businesses. eHealthInsurance presents complex health insurance information in an objective, user-friendly format, enabling the research, analysis, comparison and purchase of health insurance products that best meet consumers’ needs.
Licensed to market and sell health insurance in all 50 states and the District of Columbia, eHealthInsurance has developed partnerships with more than 180 health insurance companies, offering more than 10,000 health insurance products online. The company’s technology platform is able to communicate electronically with insurance carrier partners, which enables a simpler, more streamlined health insurance application process. This technical connection with the back-office processes of health insurance companies can facilitate rapid approval of applications and real-time communication between carrier and consumer throughout the process.
3. Have Separate Coverage For the Family
During open enrollment this fall you may notice a few changes in your health care coverage as it pertains to the rest of your family. One trend that is expected is to see a decrease in the subsidy that is allowed to pay for the family’s coverage in employer health plans. With the sudden spike in cost, it could make sense to keep only yourself on your policy and your employer and put your spouse and kids on their own policy. I have many married friends that are both employed and have adopted this strategy. I wish I had some more specific numbers to share on the savings, but it obviously made sense because they are doing it. When you open enrollment period rolls around, don’t take it for granted. This may be an easy opportunity to save your family thousands of dollars in insurance premiums for the year.
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Jeff Rose, CFP is the owner of Good Financial Cents, a Financial Planning and Investment Blog by a Certified Financial Planner with a goal of helping you make "Cents" of your investments.
Article copyrighted by Jeff Rose. Content published with author's permission.
