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When it comes dealing with an economic downturn, any amount of money you can save matters.
You can shop around for health insurance quotes just as you would for better car insurance rates or low life insurance quotes. Fortunately, lower premiums don't mean shoddy health insurance plans.
"There are a variety of affordable health insurance options available today that also offer quality coverage," says Ellen Laden, a spokesperson for Golden Rule Insurance Co., a subsidiary of UnitedHealth Group. "Consumers believe that if they get a lower-cost plan they will have to worry about getting quality coverage and that is absolutely not the case. Make sure you find coverage that meets your family's unique health care and budget needs. If the plan doesn't meet both of these needs, it's not going to save you money and it may cost you more in the long run."
Here are ways to get the most for your health insurance dollar.
Staying healthy goes a long way toward controlling health insurance costs. If you're buying a private-market plan, you'll be charged based on your health, such as weight, cholesterol, blood pressure and other health conditions.
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Conditions that can result in higher health insurance premiums |
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Obesity
High blood pressure
Diabetes
History of heart attack or stroke
Heart disease
Cancer
HIV/AIDS
Multiple sclerosis
Coronary or artery disease
Addiction
Severe seasonal allergies
Skin cancer
Asthma
Hay fever
Source: National Coalition on Health Care
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The uninsured provide a good snapshot of what happens when routine medical care is overlooked or delayed. An October 2007 report by the National Coalition on Health Care points out the uninsured receive less preventive care and thus are diagnosed at more advanced disease stages. Once diagnosed, they tend to receive less care and suffer higher mortality rates than insured individuals.
Many insurance plans cover 100 percent of wellness care for routine checkups, immunizations and diagnostic tests.
You've heard all the reasons why you should quit smoking, but it's also bad for your health insurance premium.
"If you use tobacco, quit — smokeless or any other type," says Laden. "This can result in savings in your health insurance after a period of time, generally a year depending on the insurance company. The reduction is significant, so it's definitely something to consider."
Health insurers may pay for nicotine-replacement programs. At renewal time, having quit can amount to substantial savings.
Whether you are enrolled in a group or individual plan, the more you pay out of pocket, the less you will have to pay in premiums. You may want to think of your insurance as a safety net for major health disasters rather than a payer of all routine medical costs.
According to the National Association of Insurance Commissioners, the lower your deductible, the more likely you will make a claim with the health insurance company. Health insurance companies compensate for this by increasing the premium on low-deductible plans. In order to get more bang for your buck, set your deductible at $1,000 or higher.
If you like this strategy, consider a Consumer-Driven Health Plan (CDHP) or a High-Deductible Health Plan (HDHP). These plans have high deductibles. For more, see the basics of consumer-driven health plans.
Employers could also offer a HDHP option at open-enrollment time.
Your co-insurance ratio is how much you will pay after you have met your deductible.
A common ratio is 80/20. This means that after you pay your deductible toward health care expenses, your insurer pays 80 percent of the bill and you pay 20 percent. Changing this ratio so you pay more will mean a lower health insurance premium. Just as with raising your deductible, you have to weigh the costs versus risks.
Often high-deductible plans are paired with a health savings account. Pre-tax contributions are tax-free and can be rolled into your plan each year. Employers and their employees may contribute to this account. Until you meet your deductible, you pay health care expenses from your Health Savings Account.
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Most group health insurance programs offer discounts for health club memberships. If you're shopping for an individual plan, ask your agent if the plan offers incentives for gym memberships, completing a smoking-cessation program or alternative-wellness programs such as yoga.
Did you know you can collect reward points from insurers such as CIGNA, Blue Cross Blue Shield and others? For example, CIGNA's group health plan customers can choose to offer reward points to employees. You build up points through health-related activities such as completing a health assessment or biometric screening, reaching milestones in any of CIGNA's eight disease management programs (such as programs for diabetes, heart disease and depression) or graduating from a lifestyle-management program such as CIGNA's quit-smoking program. Points are redeemable for gift cards, merchandise and other rewards.
Plus, some credit card companies are offering health care points where customers can charge purchases related to health and wellness. You then earn reward points that can be used for fitness clubs, fitness equipment, diet plans and other perks.
Health-expense tax deductions could also make a financial difference for you. You can deduct medical expenses from your taxes if they exceed 7.5 percent of your adjusted gross income. Expenses that can be deducted include dental work, medical tourism, laser vision surgery, drug treatment and others. For more, see IRS publication 502.
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"HSA plans can help you save on both your health care needs and your taxes," says Laden. "Our customers typically save 50 percent on HSA-plan premiums when you compare them to more traditional plans."
Compare your anticipated health expenses with potential savings. The young and healthy could fare well with an HDHP paired with an HSA. HSAcenter.com, a site from Golden Rule, provides a calculator for comparing a traditional health care plan with an HSA to estimate cost savings.
For more on health care savings accounts, read Health care account comparisons: FSA, HRA and MSA.
These plans offer limited insurance coverage with a high deductible, typically $1,000 for an individual and $2,000 for a family. Premiums are low because the insurance is intended for medical emergencies. It does not pay for regular doctor visits but will cover major hospital and medical expenses including hospital stays, X-rays and surgery. For more, read The basics of catastrophic health insurance.
Abandon dangerous hobbies and recreational activities such as skydiving, mountain climbing or NASCAR. Anything that poses a significant injury risk will super-charge your insurance premiums.
If the doctor you like is already in-network and the lab he works with is also in-network, an HMO can be as adequate as a PPO and offer lower premiums.
No matter what plan type you have, "make sure you do business with an insurance company that has a strong national network," advises Laden. "Networks provide substantial savings on health care because they are purchased in bulk and can save you a tremendous amount of money." She notes that Golden Rule's network discounts save customers 30 to 40 percent.
If both you and your spouse have group health insurance plans available through work, calculate which one will cover both your needs at the lowest cost.
| For some people, group rates might not offer the best value. |
For some people, group rates might not offer the best value. "If you are fairly young and healthy, you could pay far less in premiums for a private health insurance policy rather than a group plan," says Robert Zirkelbach of America's Health Insurance Plans, a health insurer trade group.
You may be missing out on savings simply because you've stuck with the same plan year after year while your situation has changed.
"You should periodically reassess your insurance needs," suggests Laden. "Things you should think about include: Do you have children that go to the doctor often? Do you take a lot of prescription drugs? Are tax breaks important to you? Are you willing to assume the cost of routine health in exchange for much lower premiums?"
If you buy a group health plan through work, you may think you're stuck with whatever is offered every year.
But employees, especially those in smaller companies, can take charge of their coverage options. There may be numerous "optional" benefits tacked on to your group health plan that are causing your group rate to skyrocket. If you and your co-workers agree that some coverages are unnecessary (for instance, infertility treatment, mental health treatment and even dental), ask your employer drop them at renewal time.
Having a good credit history may help lower your health insurance rates if you are purchasing an individual plan, depending on the company.
"There are individual health insurers that use credit scores to raise premiums or deny applicant candidates, but it's not that common," says Paul Stephens, Director of Policy and Advocacy for the nonprofit consumer advocacy group Privacy Rights Clearinghouse in San Diego. "According to the Fair Credit Reporting Act, it is permissible for an insurer to pull your credit report, as long as they have a good reason to do it."
Zirkelbach advises that you consider your future health care concerns when you buy a policy, so the coverage will be there when you need it. This includes whether the plan requires referrals from primary care physicians for specialists.
| "People rarely go into medical bankruptcy when they have health insurance." |
"Never go without health insurance coverage," says Laden. "I can't emphasize this enough. This is never a good idea. In times of economic strife, I understand where it can be tempting, but it you were in an accident, injured or are struck with a major illness, the cost of medical care can wipe you out financially. People rarely go into medical bankruptcy when they have health insurance; they do go into bankruptcy when they are not covered and have to go to the hospital."
For strategies on other ways to save, read 13 ways to cut your health care costs.
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