5 Steps To Save Money On Health Insurance
We all know that sinking feeling that comes when we read the email our HR Director sends about the health insurance premiums increasing again this year. Whether working for small and large businesses, this (CNBC study) found 72.1% of americans are offered health coverage through their employer. We feel the rising costs where it hurts most: in our paychecks and ultimately our wallets, but why is it that we are the ones feeling it? Our elected officials- based on our political opinion- are either fighting a losing battle to restore our much needed coverage in a more cost effective manner or are tearing to shreds the very fabric of the loose clothing that is our health insurance coverage. Before the Affordable Care Act (ACA), the trend started to move the burden of cost from the insurance carrier to the employer and the employee. After the ACA, that move has been more swift and sudden. While in the eyes of many this is seen as lamentable, it is worth noting that new opportunities to save some serious money have arisen because of the ACA, allowing employees to lower their premiums if they are willing to do their homework and comprehend what benefits are being offered.
Whichever way you cut it though, one thing is becoming very clear very quick: the responsibility lies on you to see what options exist and decide which options are best for you and your family. The Milliman Medical Index released in May 2017 found that employees now pay close to 43% of all of their healthcare costs, with the average cost of healthcare per that same index close to $27,000. This means families now pay an average of $10,000 per year just on health insurance. The days of blindly picking the most robust plan available can have severe consequences for your bottom line. So what can be done about this, you may ask. Here are five quick steps you can take to help you save money if you are considering combating the continuous rise in health insurance costs:
Step 1: Figure out what medical needs you have
Let’s start with what we know about ourselves. Take note of the following questions, as this will provide a framework which will help answer questions down the road.
- Would you consider yourself a healthy individual?
- Do you take prescriptions on a regular basis?
- Are you consistently going to see a physician or specialist for a medical issue?
- Do you get your checkup every year?
- Are you single, married, do you have children?
- Do your dependents (spouse, children if you have them) have any underlying issues that might make it necessary to cover emergency room visits (I’m looking at you, 12 year old self that found new ways to break a bone seemingly every month)?
All of this should go into account when considering what kind of medical coverage you should get. If you are a healthy individual, couple, or family, you stand the chance of saving hundreds, if not thousands per year on your health insurance. One savvy author for this millennial finance help website actually walks through the entire thought process considering what his potential costs would be in his current plan or if he were to switch into something new. He explains how he came to each decision he made in the course of choosing his health plan. It’s worth mentioning, though, the stipulation that each person’s situation is different, how healthy they are and what insurance benefits, if any are being offered them inside and outside of work.
Step 2: Figure out what medical insurance and non-insurance plans are available
Now that you have an idea about how healthy you and your family are, here are some questions to consider in dealing with the healthcare choices that you are looking at:
- How many health insurance options are presented at your work?
- Do they offer PPO (preferred provider network), HMO (health maintenance organization), or any other 3 letter cocktail of medical insurance?
- Are any of them higher deductible plans that could save you money if you are healthy?
- Does your employer offer Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), or Health Reimbursement Accounts (HRA) and if yes, do they offer any contributions into those plans?
These are all important questions to ask, but the most important questions (for now) are these:
- Could you realistically define those to your spouse?
- Do you really understand what copays, deductibles, maximum-out-of-pocket, and coinsurance are or does it take you going back to the benefit handbook to remember?
A Harvard survey found that 95% of people thought they were adequately educated on those terms, when in reality only 14% of us answered the 4 question quiz correctly. Many people do not adequately understand the type of insurance coverage they have aldready, let alone what else exists out there. This is where you have to take charge. Utilize websites that have all the definitions of those confusing characters. Healthcare.gov Glossary is a good resource to start.
It doesn’t stop there. Are you eligible for subsidies through the government’s health exchange (Obamacare)? Are you aware of nonprofit health sharing organizations that allow you to join for a fraction of the cost of traditional health insurance? Check this article out to see a few of the groups that exist in that space. Be aware of the differences in those groups versus traditional medical coverage in areas like how to utilize HSA, FSA, and HRA dollars, and seek counsel before joining one to make sure you don’t limit your benefits.
Step 3. Assess what supplemental coverage you are offered by your employer
Do you know that supplemental coverage like accident, cancer, and critical illness plans are offered as a way to lower spending on your health plan by supplementing your out of pocket costs? These plans are intended to pay you directly so that if something like an illness does happen, it can help with not only the medical bills but other indirect costs like travel, room and board near hospitals, etc. A high deductible plan, coupled with a well managed accident and illness plan, can cost less than traditional medical insurance and can help to fill in the gaps that are created by those higher deductibles. Another valuable tool that is often overlooked is that these plans can offer wellness benefits, meaning if you get a checkup, get your blood pressure read, or other preventive measure completed, the benefit may reimburse you or pay you a cash benefit for being a responsible consumer of healthcare. These attachments to plans are called “riders” and, as will be mentioned in the next point, are created by insurance companies because they know that those who utilize those wellness benefits are less apt to have accidents and illnesses that may have been preventable. Imagine you’re being able to lower the cost of your health care coverage by doing the things you should already be doing!
In addition to these supplemental benefits, the growing trend in the workforce is for employers to invest more time in their employees by offering wellness programs, be it yoga classes after work or by helping you plan for the future by sponsoring a 5k for their employees. You can ask your employer about any current offerings like this at your work and, if they don’t offer anything, you could be the one to start a movement towards wellness which could help lower your premiums (and everyone else’s)! One municipality took it even further and created an entire project devoted to managing chronic and preventive illnesses, which in turn not only boosted the moral of the municipality’s employees, it drove down their healthcare costs so significantly some fairly robust plans are offered to their employees for less than $1 per month. Let that fact sink in.
Step 4. Get your FREE wellness checkups done and capitalize on them
Speaking of check-ups, did you know that the Affordable Care Act made it mandatory for check-up visits to be free for all participating health insurance plans? Not only can you get a check from the insurance company, you can get a free doctor office visit out of the deal, too! Assuming your employer’s medical plan is within compliance of the ACA, you are eligible for one free visit to the doctor per year for preventive visits like mammograms, colonoscopy, blood pressure, and general check-up visits.
Aside from the financial benefits of wellness checkups, it is advised that you attend a regular checkup from your doctor to help find issues that may arise before they become a major threat to your overall health. We all know people that have seemed perfectly healthy until being diagnosed with something that could have been caught earlier so until we find ways of consistent and constant vital screening and make disease checking as a part of our daily lives, it makes sense to have a routine visit to the doctor at least once per year just to make sure all the pieces of your body are working properly.
Step 5. Reevaluate plans once per year to ensure they are changing as you change
There are obvious reasons to change plans. Maybe you got married and your spouse has medical issues that you have never had to deal with before. Perhaps you were diagnosed with something you’ve never heard of and now need to take a prescription on a weekly basis. Maybe you had a major surgery last year to fix something and you are completely healthy now. Some less common reasons to evaluate, however, are events like your spouse and yourself having work-provided coverage, also known as being “double covered”. This is, a supermajority of the time, a colossal waste of money as double coverage or overlapping does not mean you get paid twice for one event (i.e. doctor visit), it just means you are paying for two health insurance plans and getting the benefit of one plan or the other. If you are genuinely concerned about your coverage, consider each spouse getting a supplemental plan like critical illness or hospital indemnity.
You’ll be given the chance to change your plan if something life-changing has happened; for example, if you get married, you are legally given a 30 day window by your employer to add insurance coverage for yourself or your spouse or the both of you. This is called a “Qualifying Life Event”, or “QLE”. There are a number of reasons you could experience a QLE, like your spouse losing health coverage, having a child, getting a divorce, etc. Similarly, a Qualifying Event or QE allows you to add coverage based on something like getting promoted from part time to full time work. It is best to consult with your HR supervisor to better understand what options are available at what time. Most companies also offer an open enrollment period during which you can make any changes you want to your benefit offerings. Again, your HR supervisor should have information on that period, as it tends to differ from company to company.
But what if I’m not offered benefits through my company?
If you are not offered benefits through your company, you are not alone. Millions of Americans either work for companies that cannot justify the added expense of bringing on health insurance, work for themselves and cannot afford individual plans, or do not qualify for the benefits that their work may offer. The healthcare exchange is a good place to start to see if you can afford the insurance offered through a carrier in your state. If you have trouble affording it, you can either request an exemption through Healthcare.gov’s website or forgo the government’s plans altogether and look for a non-profit cost sharing group like was mentioned earlier. There are also new technologies like telemedicine (Teladoc and MeMD are two of the larger companies in this space). Telemedicine essentially gives you the ability to either video conference or teleconference with a doctor to get a diagnosis and in many cases a prescription written for you. A known statistic in this area of medicine and care is that 70% of all doctors office visits can be handled over the phone. Many benefit companies will offer a membership card that includes this and other benefits like prescription discounts, bill saving options, and wellness programs that aim at keeping the holder of that card nimble and efficient with their time and resources. Free tools like GoodRx have given us more access to understand the savings potential in our prescription coverage as well. It may mean digging a bit deeper and having to become creative, but even those unable to get traditional health insurance can find ways to be compliant and get covered.
Sum It All Up
If you haven’t seen the writing on the wall to become a more well informed consumer of healthcare before, no doubt you’re taking notice now. The only reasonable alternative to letting your health insurance premiums continue to skyrocket is to begin educating yourself to what exists in the marketplace. You will find there are opportunities in both traditional and alternative plans.
The burden of responsibility for health coverage has shifted from the insurance company to the employer and ultimately to the consumer. This can be as much an opportunity for you as it is a burden, and the quicker you realize this reality, the quicker you can change your focus on health insurance and the quicker you will be able to save some serious dollars.