Gather Little by Little

With increasing budget restraints, I have been struggling with health insurance premiums just like many others in the current economic situation. However, being in the business, I am considering some options to lower my rates while making sure I still have the best coverage when I need it.

Although it is more difficult, it is still possible to find affordable health insurance, you just have to know what to look for! As you probably know, your rates for individual health insurance will depend upon many factors. We need to examine these to determine what we can control.

Health Insurance Rates Are Set By:

• Your Zip Code. Yes, where you live will affect your premiums. Insurers look at the cost of medical services in your city, town, or rural area, and then set base rates accordingly.
• Your Age. Many insurers will group people by age, or by age band. For instance, the base rates for a 30-34 year old will be lower than those for a 50-54 yea old. In the US, we middle aged people, between 50 and 64 (Medicare Age), can really struggle with health insurance premiums.
• Your Health Habits. Overweight people, generally have higher premiums than others, the same goes for smokers compared to non-smokers. These factors greatly increase the chances of an expensive doctor’s bill down the road and thus raises the insurance company’s risk of insuring you.
• Health Conditions. Even controlled health problems, like high blood pressure, may cause insurers to increase rates over  people who have never been diagnosed with those health conditions.
• Type of Plan. If you buy a PPO, where the insurer can encourage you to use their cost-saving network, your rates may be lower than if you buy a policy where you can get their best coverage with any medical provider.
• Deductible and Copays. You know that, given the same plan, a $500 yearly deductible major medical plan will cost a lot more than a $2,500 yearly deductible policy! Likewise, a plan with a $10 doctor’s office visit copay will cost more than a plan with a $40 copay, or of course, a plan that does not offer a copay.
• Yearly Maximums. Be careful of this, but some policies set a yearly maximum on some, or all, medical services that is fairly low. For instance, outpatient services may be set at $10,000 a year. I would caution against using this tactic to lower premiums though. It may be fine if you only need to use your insurance to cover a minor ER visit, but awful if a family member needs outpatient chemotherapy for cancer! And that’s why you really buy health insurance, for large expenses, isn’t it?

What Can You Do To Lower Health Insurance Premiums?

Consider an H.S.A Major Medical Plan.

Health Savings Account plans have many benefits, and they work out well for some people. You buy a higher deductible major medical plan, which should be cheaper. The plan works with a tax advantaged savings account that can be used to pay for many medical services that are not covered, or that cost less than the higher deductible amount.

These plans tend to work well for people who are disciplined savers, and who appreciate the ability to deduct their contributions to the savings plan. However, people who cannot make a consistent contribution to to the savings plan, probably won’t be satisfied with them.

Advantages of an H.S.A

• Higher deductibles usually mean easier underwriting and lower premium.
• Tax advantaged savings accounts can cover deductibles and pay for non major medical services like dental and vision.
• Savings balances roll over if they are not used every year.
• Some savings accounts pay competitive interest rates on the balance.
• The savings account balance can be withdrawn at retirement (Medicare Age).
• Even if the covered person has to pay more towards the deductible, they should still get the benefit of some policy’s negotiated prices. This is an advantage over not having coverage at all.

Disadvantages of an H.S.A

If no money gets contributed to the savings account, a covered person would have a higher deductible to pay before the insurance company will cover medical services! In these cases, a traditional PPO or HMO may be a better option.

What if a Health Savings Account Medical Plan Won’t Work Out?

If you don’t think this type of plan will be a good option for your family, you may consider a couple of options for lowering your traditional health insurance premiums.

• Can you do without a doctor’s office copay? This may sound like heresy, but those copays can add 25% to your premiums and may not save you that much money. If the negotiated fee for a network doctor is only $100, and you do not see a doctor that often, you might consider dropping this benefit.
• Can you raise your yearly deductible? The premium difference between a $500 deductible and a $2,000 deductible should save you hundreds of dollars every year. Of course, it would be a good idea to set aside some of your savings in case you do need to pay a deductible.

Shop Around For Affordable Health Insurance

Insurance companies strive to remain competitive in the marketplace, and they introduce new plans all of the time. You may be able to find a more affordable major medical policy from another insurer. This can be done by talking with local agencies, or more simply online, and then comparing coverage with cost to make an educated decision.

If you are shopping around for a new policy’, do not cancel your old policy, though, until you are sure that your new plan has accepted you, and you have a policy in your hand!

This guest post was written by one of the founders of 247QuoteUs.com , Barbara Waltz. 247QuoteUs is a resource blog and insurance quote comparison guide.

Photo by: Lisa Brewster