Yes, you can save money on health insurance! There are many ways to be insured while not having to pay a fortune out of pocket. Speaking of misfortune, bankruptcy and debt are products of exponential health care costs, which makes the the leading causes. As a matter of fact, there are numbers that represent insured people and those who have trouble paying their bills. For example, statistics show that 15% of adults report at least one person in their household has medical debt and may not be paid within the year (Witters, 2021). Along with the 15% of adults, most of them report that they need money to pay a medical bill for $500 (Witters, 2021).
Therefore, when it comes to paying for health insurance, the economy can be a black hole, but let us look on the bright side first! In this article, you will find some beneficial ways to help you save money on health insurance!
The first way to save on health insurance is to see if your workplace offers it. According to Dave Ramsey, employer-based insurance covered 55.4% of the population in the United States (Ramsey, 2021). In case you were wondering, there are about 350 million people currently living in the United States and 194 million people are covered with health insurance by sharing the cost with their employer. Moreover, here are the benefits of using your employer when it comes to health insurance (2021):
- Premium costs are shared between you and your employer
- Pretax or tax savings are made possible from your premium payments
- Options and the insurance company are picked by your employer
Moreover, did you know if you are self-employed, you can purchase an individual plan and afford it? An insurance broker can help you find the best fitting plan for your health. The difference between a broker and an agent is the number of companies each representative works for. Agents work for a single health insurance company, while brokers work for several (Health Care, n.d.). Therefore, brokers must be licensed according to their state as well as required to sign agreements for selling health insurance (Health Care, n.d.). Needless to say, it is in their best interest to find you a great insurance plan! Here are some benefits for getting to choose an individual plan (Ramsey, 2021):
- You get to choose the plan and the insurance company
- Changing jobs will not cause you to lose insurance
- The plan you choose can allow you to see the doctors you want
Various Health Insurance Plans
There are two different ways to categorize health insurance plans- Employer Sponsored Health Plans and Healthcare Insurance Marketplace Plans (2021). Our first category is broken down into three main networks known as managed care plans:
- Preferred Provider Organizations (PPOs)
- Health Maintenance Organizations (HMOs)
- Point-of-Service Plans (POS)
Each network has its own providers where they agree to lower the cost for an exchange, which is getting the access to the network plan members.
Now, let’s take a look at what each plan provides.
HDHPs and HSA
A High Deductible Health Plan (HDHP) offers a higher deductible when compared to traditional health insurance plans. In short, you will pay less in premiums, but you will pay more health care costs before the insurance starts paying. In 2022, a HDHP will be at least $1,400 for an individual and $2,800 for a family according to the IRS (2021). On average, an annual premium for single coverage is $6,890 and $20,359 for family coverage (2021).
A Health Savings Account (HSA) is a savings account dedicated to health care costs. One of the best benefits for this savings account is it’s tax free, but what’s the catch? In order to secure an HSA, you need to have a HDHP. Here are some advantages for using an HSA:
- You can pay tax free contributions
- Save on monthly HDHP premiums
- Investing your funds into an HSA will become tax free over time
- Tax free withdrawals can be made on some medical expenses
The greatest benefit by far is having an HSA account with pretax money that is used to pay health care costs and a copay before you have to pay a deductible. Wow! They don’t call it a savings account for nothing! Therefore, you will have options such as tax free contributions and withdrawals for health care costs, not to mention, a tax deduction in your favor that can add up to $3,500 for singles and $7,000 for married couples (2021).
Network Plans Continued
Health Maintenance Organizations (HMOs)
With HMOs, you have access to physicians, hospitals, and clinics in its network, which means your health care costs are only covered by insurance if you stay in the network of providers. In order to obtain this plan, you have to live or work in a certain area provided by the service. Average annual premium costs for single coverage is $7,284 and $20,809 for families (2021).
Point of Service (POS)
This is a plan specific to choosing a primary care physician and even specialists. The greatest advantage for this plan is you receiving care from a physician out of the network, but with a higher cost out of pocket. Average annual premium costs for single coverage is $7,485 and $20,472 for families (2021).
Preferred Providers Organizations (PPOs)
With this plan, you will pay less when you choose a network of providers, but if you choose an out of network physician, the cost will be higher. Average annual premium costs for single coverage is $7,880 and $22,248 for families (2021).
Let’s review for a second. If you decide to choose one of these network plans, then the greatest advantage to using these plans are sharing the costs with your employer. That’s right. If you decided to pay health insurance through your employer and these plans are an option, you will save money over time!
One Last Thought
Health insurance costs can fit into your annual salary comfortably by making good decisions with money. In this article, you have several options to digest. A thought to consider is to stay within the your health insurance plan’s network (2021).The providers agree to lower fees on these services for you to access to.
Let’s say you felt strongly about choosing an out of network care. If you have an HMO plan, you might be paying the entire cost out of pocket (2021). If you have a PPO or POS plan, your overall costs will not be discounted causing the amount you owe to be higher (2021).
Finally, a health insurance broker and agent can help you find the best plan! Remember, the insurance broker and agent can help you by (2021):
- reviewing and comparing your health care plan options
- explaining deductibles and copays that affect your overall costs
- helping you see obstacles like balance billing (costs from out of network care that have the right to bill you for their services)
Regardless of the stories on unfavorable health insurance costs, you can save money!
Health Care. (n.d.). Agent and Broker (Health Insurance) – HealthCare.gov Glossary. HealthCare.Gov. Retrieved September 21, 2021, from https://www.healthcare.gov/glossary/agent/
Ramsey, D. (2021, September 21). How to Save Money on Health Insurance. Ramsey Solutions. https://www.ramseysolutions.com/insurance/how-to-save-money-on-health-insurance
Witters, B. D. (2021, August 13). 50% in U.S. Fear Bankruptcy Due to Major Health Event. Gallup.Com. https://news.gallup.com/poll/317948/fear-bankruptcy-due-major-health-event.aspx