How To Lower Health Insurance Premiums
How To Buy Cheaper Health Insurance
Lower Health Insurance Premiums
Health reform should mandate some really good things for those of us who need to rely on our individual major medical plans for coverage. But with some of those mandated changes, we may experience some premium increaes, especially over the short term. We all want the protections of health reform (really), but nobody wants to struggle with a huge premium increase! So what can we do to make sure we still have top quality medical coverage with lower health insurance premiums?
One Strategy To Reduce Health Insurance Costs – High Deductible Plus HSA
I am going to discuss HSA health plans, but you can also compare HSA and PPO health insurance here.
A health savings account (HSA) is a tax advantaged savings account that can be used to pay for medical costs that are not covered by the major medical coverage part of our plan. This could include anything from paying for deductibles and copays to supplements and dental care. Since the account contributions are tax deductible (within IRS limits), we already get to save money by paying less taxes. And if we do not use the money, it will roll over from year to year. When we hit Medicare age, we can withdraw the balance as part of our retirement savings
The other part of this euation is the higher deductible health plan. Since the deductible will be higher, premiums will be lower. Some health insurance companies also relax underwriting guideliness for these plans. This means that some people may get accepted who might be declined for a low deductible plan. Others might get accepted at a standard rate who would have been rated up before.
Will I Sacrifice Coverage with a High Deductible Health Plan?
Look, it does not matter if you have a $500, $1,500, or $5,000 deductible. You will stil access the same level of health care. What will change is the amount of the bill that must come out of your pocket. You can prepare for the risk of having a higher deductible plan with an HSA account. You will enjoy tax advantages AND be able to keep the money you do not use.
You have to understand why people purchase health isurance. They do it to protect themselves from a financial crisis in case they run up expensive medical bills. The strategy I outlined above can help protect your finances at a lower rate.
Keep in mind that this strategy works best for disciplined savers. If you never contribute to your HSA account, you won’t be for able to use it to pay for anything. But even if you do not contribute, you still have coverage after the deductible.
Even if you purchased a $5,000 deductible, and ended up getting billed for that whole amount with no HSA savings, your life would probably not be ruined. You just may have to hold off on buying a new car for a few years until you got that debt paid off. But if you wracked up a $75,000 or $750,000 hospital bill, and had no major medical at all, you would be struggling for years.
There are other strategies for getting lower health insurance premiums, but this one is popular and works out for many families.
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