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How to save money on your health insurance
Health insurance cost are, unfortunately, high. It can be more frustrating when you spend a significant amount of money each month and never need to you the provided services.
Maybe you have decided that lowering your monthly premium is your goal for the coming year; whats the best way to do that? What options do you have and what can you do individually to be charged less by the insurance companies?
The ACA changed how insurance companies are able to adjust your premiums and limited the factors that they can take into consideration. There are still a variety of things though that can affect how much you pay each month.
Age
In general, young people pay less than older people. Premiums for older individuals can be up to 3x higher than for younger people.
Location
Where you live impacts the cost of plan. Specifically, state rules and regulations, market competition, and the cost of living in your location all cause your premiums to go up and down.
Insurance Company
Different companies charge different amounts. Taking the time to compare multiple plans from multiple companies is one of the best things you can do to save money.
Tobacco Use
This is the one health question you will be asked on the Marketplace when applying for a plan. In some states, smokers are charged more for the base plan’s cost. In other states, non-smokers can pay up to 50% lower rates than smokers.
Plan Category
Every plan that is sold through the Marketplace is given a metal tier- Bronze, Silver, Gold, and Platinum. Bronze plans have the lowest monthly premiums but also require you to pay more when you use services. Platinum plans cost the most each month, but have the lowest out-of-pocket cost when you need care.
How to save on health insurance
There are a few ways to save on health insurance cost. These are a couple of suggestions that may reduce your premiums.
Use Advanced Premium Tax Credits
The APTC allows you take a portion of the tax credit you receive from the Marketplace and use it to pay for your health insurance, effectively lowering your monthly premiums. The amount saved is related to your income and household size.
According to KFF, in 2023, the average monthly APTC was $523, up from $508 in 2022.
Itemize your tax deductions
When filing your taxes each year, you are able to deduct a your family health insurance medical expenses, including premiums. There are a few rules to this, such as a threshold amount before deductions can be taken, but total savings can be substantial if you spent a lot on medical bills in a year.
Choose a higher dedudctible
A plan with a higher deductible will also have a lower monthly premium. Think the savings are small? Consider this- A 28 year old female living in Indianapolis, IN can buy a Gold Plan from the marketplace for $589/month. This pan has a $1,000 deductible and a $7,500 out-of-pocket max.
The same person can purchase a Bronze Plan for $259/month. This plan has a $5,500 deductible and a $9,450 out-of-pocket max.
Is one better than the other for this person? That depends. If you’re healthy and your main want is to lower your monthly premium because you wont need to see the doctor often, the Bronze Plan looks to be the way to go.
Get an HSA
A health savings account can be used to help saving money for certain health expenses. You can only get a HSA if you purchases a High Deductible Health Plan. Even though you are not able to use the money in your HSA for the premiums, you can use it for the deductibles and other cost-shares.
Shop around
The cost of insurance can differ based on the insurance company, so looking at multiple policies can be helpful. Additionally, make sure to review your policy every year during open enrollment incase your priorities and needs have changed.
Not usually. Health insurance is usually a take-it-or-leave-it, especially in the individual and family market.
Are HDHPs worth it?
These plans can be good. ‘High Deductible’ includes plans over $1,600 for individuals and $3,200 for families. Most plans have deductibles over this amount, and the benefits of an HSA cannot be understated.
Why does health insurance cost so much?
There are a multitude of reasons, but mainly, the cost of medical care is increasing. Medical inflation, an aging population that requires more care, and technological advances that cost more money are big factors.
Administrative cost, overhead, and profit margins also pay a part in the cost, but the ACA capped how much companies could charge to inflate these areas.
Takeaway
Health insurance gets expensive, and there really isn’t a clear cur way around this. But that doesn’t mean there are not things you can do to lower your monthly cost.
If you have questions on how to do this or any other questions, feel free to give us a call so that we can talk.
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