How to Save Money on Health Insurance
Lowering Health Insurance Costs Requires Being Aggressive and Resourceful
If you are like me, you have to buy your own health insurance. In the past six years our family has gone through five insurance providers and we've learned a few things about buying health insurance. Here are some tips to help you get a good deal on your health insurance.
Ways to Lower Your Health Insurance Costs:
- First of all, find a local health insurance broker. Using a broker will not affect the cost of your insurance at all. They get paid by the insurance company for the referral. Health insurance policies are just too complicated and hard to compare by doing the research yourself. A broker knows all of the local, regional and nationwide insurance providers and can find and compare all the policies for you. Furthermore, they will often come to your home to explain the plans and then apply for them on your behalf.
- There are two kinds of plans to compare. Preferred Provider (PPO) and Health Maintenance (HMO). PPO plans are more flexible and let you choose your providers and doctors from any network or hospital that they prefer. An HMO plan, on the other hand, is typically one network that provides all of your primary care and makes referrals outside its network for specialized care. When choosing between these plans an HMO is almost always less expensive. That's because they are able to control the costs because they own the clinics and the network. PPOs, on the other hand, negotiate prices with their providers, but cannot control the costs of the hospitals and clinics that they prefer. For our family, the last four plans have been PPOs and we have all been able to choose our doctors. However, we've switched plans almost every year because PPOs increase in price much faster (I'll get into that next).
- PPOs have a plan each year that includes all of the applicants. At the end of each year they need to adjust their prices to cover the remaining plan participants. What our family has found is that in each of the past four years, our annual renewal price has increased by at least 20%, and as high as 45%! Each time we found a new plan that was much lower than the increased price, but it is a pain to switch health insurance every year. For that reason, we've switched to using an HMO. Although finding new doctors for my wife and kids is very difficult, it will save us several hundred dollars a month, and hopefully the prices will not climb as much each year. Also, we are willing to work with their referral network in order to save us money.
- Another thing we've learned is that local providers are easier to work with than nationwide providers. Local providers offer great coverage and better customer service that can relate to us better. We had a nationwide insurer and their billing and customer service was terrible because they were not as familiar with how our local doctors and hospitals coded their bills. If you have local health insurance providers, I would recommend giving them more credibility than nationwide providers.
- Another way to lower costs is to modify your deductibles and co-insurance. If raising your deductible lowers your monthly rate, look at the monthly savings and multiply by 12. This is your annual savings. Now compare this number to the change in deductible and it can help you make the decision. For example, if raising your deductible from $500 to $1000 lowers your monthly payment by $30 it will save you $360 per year, but if you have health costs that cost the full $1000, you will have paid $500 for that $360 savings. Look at the rate modifications in this light to make your best decision. If it is unlikely that you will have many non-preventive doctor visits, take out a higher deductible. The same can be said about co-insurance. Calculate the savings of lower monthly payments against the likelihood of incurring a lot of medical expenses.
- In summary, the best way to lower your health insurance costs is to be flexible and make tradeoffs. Consider using HMOs and maybe raise your deductibles if you want a lower monthly rate. Be sure and get some help from someone that knows the industry to help you compare and find the best health insurance for you and your family.
- Also, see our page on how to save on healthcare costs.
- Find more ideas on how to how to save money.
See Also: Ways to Save and Make Money