Health insurance may be the single greatest investment you make in your own well being. Although health insurance is a great investment, it is most certainly a large out of pocket expense. We’ll evaluate ways to lower your costs below.
Higher Deductibles and HSAs
One of the fastest growing methods for reducing total health insurance costs is a combination of high deductible health insurance and a health savings account. High deductible health insurance is inexpensive, since it pays for only the most unlikely events and typically costs less than one hundred dollars per month.
Health savings accounts, a relatively new financial product, allow workers to save money pre-tax for future health needs. The money in the health savings account can be used to pay for any number of things, from prescriptions to over the counter medications, doctor visits, and more. This pre-tax savings vehicle allows people the opportunity to pick a lower quality, but lower priced, health insurance policy and put the difference in premiums in a health savings account. The savings in the health savings account can then pay for all of the inexpensive medical needs, while the high deductible insurance is kept on reserve for emergencies and expensive operations.
It’s no secret that health insurance through the workplace is not only naturally cheaper thanks to the benefits of group plans, but most employers also subsidize the premiums. The average employed person pays on average less than $60 per month for benefits, while those who seek out private insurance pay over $200 per month on average.
This stark contrast is why a number of retirees and previously self-employed people are heading back into the workforce. Many companies now provide basic health insurance plans for as little as a few dollars per month for those who work more than 32 hours per week. Before leaving one job to pursue another, make sure your employment is guaranteed at another company before dropping your previous job. Cobra temporary insurance is as expensive as any other private plan.
While it isn’t the easiest decision to make, having at least one person in a family employed with benefits can make a huge dent in your health care costs. Shopping for individual insurance is expensive, tiresome, and creates quite the sticker shock when the first bills come due.
Shop Within Your Employer
Most employers now offer different levels of insurance to their employees. These levels are usually divided by co-payments, deductibles, and premiums, but are also divided by individual, spouse and family plans.
Depending on your family, and your current employment, it may be more advantageous to have the wife and kids on one plan, and the husband on the other. This kind of “insurance arbitrage” helps to divide risks among groups, making sure that the poor health of one person (the husband in this case) does not affect rates given to the other family members.
Engage in a Healthy Lifestyle
Your medical history is so critically important to your monthly premium that without good health, you’ll always have high premiums. Luckily, you can work around your history and provide for a better future. Eating right and avoiding excessive indulgences like tobacco and alcohol are easy cost savers, and will also bring the fringe benefit of a better quality of life.
As a side note, your lifestyle and choices are most likely to add or subtract from your monthly premiums in the private and individual insurance markets. Employers and group plans do not have such benefits since the risk profile of each person is pooled to create a flat group rate. However, know that smoking will also bring higher premiums, since it is attributed to so many cancers and diseases, both of which are very expensive to treat.
The fact of the matter is that health insurance is never inexpensive, but there are ways to reduce costs. Regardless of the price, it is a valuable asset that everyone should own, and a great investment not only in your health, but your financial health as well. Treat health insurance as you would any major insurance; shop around, compare, and don’t be afraid to negotiate to get the best deal!