7 Ways to Save on Health Insurance
Health insurance costs are creeping ever higher. The Kaiser Family Foundation reports that average premiums will rise 5.1 percent in 2016 for the lowest-cost marketplace silver plans available to a 40-year-old nonsmoker earning $30,000 a year in 14 major cities. The increase will be lower for people with tax credits, but could still represent a significant jump in the monthly bill.
While there aren't as many clear discounts for health insurance as there are for auto and renters insurance, there are ways to save. Here are seven tactics that can lower health insurance costs.
Increase the deductible. Health insurance premiums correspond to the plan's deductible; that is, the total amount you must pay for care before insurance kicks in. Increasing the deductible can be risky -- in a serious emergency the amount due can climb quickly, leaving you on the hook for hefty out-of-pocket expenses. Still, this might be a reasonable choice if you're not concerned about the cost of routine care (which counts towards the deductible) and have funds set aside to cover a major illness or emergencies.
Choose an insurer with phone-in consultation. For someone who is generally healthy, a plan with a high deductible and a phone-in service might be a good option, says Eric O'Brien, president of Mosaic Employee Benefits, a multistate independent broker. Teladoc, for example, lets plan participants call or video chat with a doctor at any time for diagnoses of minor ailments and prescriptions. In some instances this is cheaper than visiting a doctor or emergency room. Consultation costs vary by telehealth provider but typically settle around $35. The fee may be lower for people with a monthly or annual subscription.
Pick a narrow-network plan. Save on premiums by choosing an insurance provider that maintains a skinny, or narrow, network in the region. In other words, the insurer may be a large, even national, company but includes only one or two medical centers in its local network. Premiums may be lower than plans with more in-network hospitals and physicians. If you want to stick with your primary care physician, first check to make sure he or she is in the narrow network before opting in.
Adjust income to be eligible for tax credits. People who buy health insurance through the government marketplaces may be eligible for tax credits depending on their "modified adjusted gross income" and family size. The lower the income, the more credits are available. You can decrease adjusted income by increasing tax deductions. One of the easiest ways to do this is by contributing to a retirement plan -- either a 401(k) or 403(b) plan through an employer or a traditional Individual Retirement Arrangement on your own.
Quit smoking. Using tobacco (cigarettes, cigars, snuff -- or just plain chewing it) for anyone who buys health insurance. Marketplace plans may charge tobacco users up to 50 percent more than nonusers. Quitting comes with other financial benefits, as well. In addition to not paying for the tobacco products, premiums for life, renters, and homeowners insurance may be lower for nonsmokers.
Look beyond the exchanges. Instead of limiting your search to HealthCare.gov or state-run marketplaces, try direct shopping with insurers or compare options on a private exchange, such as eHealthInsurance or GoHealth. Prices may not be lower for identical plans, but you might find a plan that isn't listed on the government exchange and fits your budget better. An added benefit is follow-up convenience: If there are any administrative or billing problems, they can be resolved directly with the insurer rather than having to work through the marketplace.
Consider a nonprofit health care co-op. An alternative to mainstream health insurance plans is one of the health cooperatives created when the Affordable Care Act passed. Health co-ops are nonprofit insurance organizations governed and owned by their members. A 2013 report by consultants McKinsey & Company found that in 22 states with a health care co-op, the co-ops offered the cheapest insurance plans. Some co-ops are struggling to stay open given lower than expected enrollment rates, but in some places they are a money-saving alternative.