Five Ways to Save Money on Health Insurance

You are not alone when the health insurance renewal arrives and you are faced with another increase in premiums. Many people don't take the time to look at alternatives or are afraid to make a change in fear of losing benefits or reducing coverages. Unfortunately, they may be paying in the form of higher premiums for not making the effort to explore other options. The following are five suggestions that may save you a sizable amount of money when reviewing your health insurance.

• Don't Pay for Benefits That You Typically Won't Use - Get involved with your health insurance plan and find out what benefit options are available. Try to match the plan benefits with your most likely needs. If you are healthy and visit the doctor once a year for a physical exam don't look at plans that provide doctor's office co-pays. Most plans cover annual preventive benefits at 100%. If you need to see the doctor for an illness or injury, you are entitled to the contracted rate your insurance carrier has negotiated with the doctor. The contracted rate in many cases is not much higher than a co-payment benefit that you are paying additional premium to have. Don't use prescriptions? Look at plans that offer deductibles before the prescription benefit applies. Also consider higher deductibles and self insure the minor expenses.
• Explore Individual Coverage for Spouse and Children - The common way that most families are insured is through an employer sponsored group health insurance plan. The employer pays a good portion of the employee cost as a benefit to attract and retain good employees. The dependent cost for spouse and children is paid by the employee through payroll deduction. This coverage for dependents is typically 30%-50% higher than a personal individual plan because of state mandated benefits for group coverage. Comparing premiums and benefits for your dependents with quality individual insurance carriers can make a huge difference in the amount of take home pay.
• Compare Worst Case Scenario - Let's face it, health insurance was never intended to cover minor scrapes and hang nails. The main purpose should be to avoid the unforeseen major expense that can result in medical bankruptcy. When looking at comparing your current coverage to alternates look at worst case scenario. Start by making a side by side cost comparison of each plan. List the monthly premium first and multiple it by 12 months. Next, assume a catastrophic medical problem and list plan maximum deductible and out-of-pocket expenses. Add this to the annual premiums and compare the two plans. Now you can weigh the premium cost with the maximum exposure to make a more informed decision. Keep in mind that some plans continue to assess co-pays even if the maximum out-of-pocket has been reached. Others cover you at 100% after the maximums have been met. One last point on this topic...make sure to be aware of whether the deductible is a calendar year or policy year deductible. Plans with calendar year deductibles reset the deductible the first of the new year.
• Use Network Providers - Insurance carriers negotiate fees with the network providers (doctors, labs, hospitals etc.). As an insured member you are entitled to these pre-negotiated rates when using the network providers. If you choose to use a non-network doctor there is no price control and the provider can charge whatever fee they desire. Most major insurance carriers have extensive provider networks in the metropolitan areas that provide reasonable coverage areas. If you select a plan with an out of network benefit you are paying an additional premium for this benefit. If you have the option for an in network only plan it is worth the effort to consider this to save premium dollars. These plans still cover out of network care for emergencies and care when traveling out of the area.
• Explore HSA's - HSA plans (Health Savings Accounts) are a way to redirect premium payments from the insurance company to your own bank account. If the health insurance plan is an HSA compatible plan you have the option to fund an HSA savings account. These plans are IRS approved plans that allow you to deduct from your taxes the expenses you pay into the savings account. The money in this account can be used to pay for medical expenses tax-free. The medical plan is typically a high deductible plan that results in a considerable premium savings that can be redirected to your HSA bank account.

We have a great health care system in this country. The problem we have is uncontrollable healthcare costs and premiums. There is a disconnect between the provider of care and the end-user...the patient. Many Americans that have health insurance don't know the true cost and don't have many choices in picking their benefits. They are insured through their employer and the decision is made by the HR department. If each consumer shopped for health care like they shop for other goods and services they would be more likely to find a plan that maximized the benefits for the premiums they pay