5 Ways to Save on Your Health Insurance Premium
In the U.S., healthcare costs have skyrocketed over time--from $147 per person annually in 1960 to $11,172 per person in 2018.
There are many reasons why this happened. The rising cost of drugs, rising salaries in the medical field, the U.S. defensive medicine practice to avoid lawsuits. But either way, for the average person, the result is the same: trying to make healthcare affordable.
Health insurance takes the edge off, but being able to afford your premium is half the battle. Here's a closer look at premiums, ways to save on your health premium, and where you can find plans that fit your budget.
What are Health Insurance Premiums?
Your insurance premium is the amount you pay for your insurance each month. However, you also have to pay additional costs related to your healthcare, including:
When you buy insurance as an individual through the market, you pay premiums monthly. If you get insurance through your employer, you typically pay for your insurance via payroll deductions.
Deductibles and Co-Pay
When you seek medical care, you have to pay additional out-of-pocket costs, namely your deductible and co-pay.
Your insurance deductible is the amount you have to pay on an insurance claim before your insurance kicks in and covers the rest. It's often stated as a dollar amount, though it may be stated as a percentage. You have to pay your deductible up front before your insurance picks up the rest of the bill. Think of it as your part of the deal.
Your co-pay is the amount you pay for covered medical services. For example, your insurance plan may state that your co-pay for GP visits is $20. Co-pays are typically charged after a deductible has already been met.
So, how does all of this fit together?
As a rule, the higher your deductible, the lower your premiums. However, higher deductibles also mean you'll pay out-of-pocket until the deductible is met, so if something goes wrong, you're going to have to empty your emergency fund.
Ways to Save on Your Health Premium
A lot factors into what you pay for your premiums. The deductible, for example, will often change the cost of your premium, but it's a consideration of what you can afford to pay upfront.
One of the simplest ways to cut your premium costs is to find a high-deductible plan with a health savings account (HSA), typically a plan with a deductible over $1,250 for individuals or $2,700 for families. Keep in mind, however, that you have to pay high deductibles out of pocket up front. A $6,000 deductible would get you low premiums, but the deductible is impossible to meet unless you had a major health event, like a car crash or major surgery.
With that in mind, don't rely solely on high-deductible plans. Here are a few more ways to save on your health premium (without paying crazy money for your health insurance plan upfront).
Look Into Subsidies and Tax Credits
If you purchase health insurance as an individual through the marketplace, you may be able to qualify for a premium tax credit based on your income level. You can apply some or all of the tax credit to your insurance premiums, and Marketplace sends your tax credit straight to the insurance company. The net result: lower monthly payments.
Of course, the premium tax credit is just one of several subsidies offered under the Affordable Care Act, though it is the most common one. Under ACA, families earning 100% to 400% of the Federal Poverty Level without access to Medicaid or employer-based health coverage qualify for the tax credit.
However, the American Rescue Act changed the rules (at least through 2022). Under that law, any families earning above that income level do not have to pay more than 8.5% of their income for the benchmark plan.
Buy a Family Floater Plan
A family floater health insurance plan is a plan that extends coverage to the whole family rather than just an individual. This means that if you're buying health insurance for more than one person, you can lump it together under the same insurance umbrella--which is great news because it lowers your premium.
This is an ideal option for parents who need insurance coverage for their kids, though you can also use it for yourself and your spouse if your spouse does not have their own insurance.
Take Advantage of HSAs
Another good way to save on your health insurance premiums is to take advantage of HSAs. It's like personal savings account with one difference: it's used exclusively for healthcare expenses. Employers often contribute to them, but the account is yours, and you keep it even if you change jobs.
These accounts are used in tandem with high-deductible plans, so if you take that avenue, it's a good idea to also budget for an HSA.
Stay in Network
Last but not least, whenever you seek healthcare, try to stay in-network. On the insurance marketplace, you'll find multiple types of plans with corresponding provider networks. Some common ones include:
- Exclusive Provider Organization (EPO)
- Health Maintenance Organization (HMO)
- Point of Service (POS)
- Preferred Provider Organization (PPO)
Treatment of out-of-network care varies between plans, but the gist is the same: you pay more if you get healthcare outside of your insurance network and pay less if you get healthcare in your network. An HMO, for example, won't cover out-of-network care except in an emergency.
Compare Health Plans to Find the Perfect Fit
Once you know ways to save on your health premium, it's a lot easier to shop for insurance plans with confidence.
At HealthPlans.com, we make it easy to view quotes from multiple insurance carriers to ensure you choose the best plan for your situation. All you have to do is enter your information. We'll take care of the rest.
Sound good? Then click here to start looking for the health coverage you need.