One of the biggest concerns right now in America is health care. This affects your personal finances on a variety of levels. And some people are increasingly finding that they are on their own for health insurance.
Whether the business that they work for no longer offers health insurance, or whether they compared their group and individual health care options and think they can do better on their own, many people are looking for individual health insurance plans.
Things to Look at When Shopping for Individual Health Insurance:
The first thing to do is educate yourself. Be sure to review your health insurance options during open enrollment or any time you have a qualifying life event. Many employers are also changing their coverage options.
Plans are becoming more expensive, and some companies are no longer covering spouses if they have health insurance coverage through their employer. This makes saves the employer money, but makes it more expensive for the employees to buy more than one policy. Some employees are also finding that their health insurance premiums have increased so much through their employer that they are better off looking for health insurance coverage on their own.
If you are recently unemployed, be sure to consider COBRA health care coverage. COBRA will be the same coverage you had with your previous employer. However, it will most likely not be subsidized. So the premiums and copays will likely be more expensive than you previously paid.
You can also look into plans on the Affordable Care Act Exchanges. When doing so, be sure to consider the following:
Annual Deductibles – Individual & Family
If you are looking to save money on your health insurance, look for a plan with a higher deductible. If your health is generally good, you can save money by increasing the amount you pay out of pocket. To prepare for this, though, it is important that you establish some sort of an emergency fund so that you can pay your deductible should something happen.
Health insurance company reputation
No matter what company you choose, there will be unhappy customers. But you can look at companies that provide better coverage. If you want serious savings, you can consider an HMO. There are HMOs out there that offer very good care and excellent plans. However, you should be aware that some treatment options will not be available under an HMO.
Choosing your health care provider
Before you choose your plan, make sure that your health care provider is covered. There are plans that allow you to use out of network providers, but it may cost more. If you want to save some money, though, choose a plan that is strictly in-network. It’s especially important to pay attention to your health care network since the Affordable Care Act began. Networks are shifting at a greater rate than ever before. We had to change our health care coverage 7 times in 7 years to keep our preferred practitioners. So keep this in mind when you look for your next health insurance plan.
Health insurance premiums
Health insurance premiums are steadily increasing, so it is important to consider how much your proposed health insurance plan will cost. One of the bests ways to find lower health insurance rates is to shop around. You can get free health insurance rate quotes on this site, or through a third party provider such as eHealthInsurance.com.
Consider a High-Deductible Plan Plus a Health Savings Account
If you choose a Qualified High Deductible Health Plan, you can put pre-tax money, up to the annual HSA contribution limit, in a special savings account called a Health Savings Account. You can only open a Health Savings Account if you have a high-deductible health care plan.
HSA contributions are tax exempt in the year they are made and the savings grow tax free. HSA withdrawals are tax-free if used for medical expenses, otherwise you may be subjected to taxes and early withdrawal penalties. That said, there is no requirement to use your funds in the year you make the contribution. So you can let your HSA savings carry over year to year and let your savings grow tax-free until they are used for medical expenses. This is a great strategy to use if you can afford to pay your medical expenses out of pocket each year, allowing your HSA account to grow until you really need the money.
Advanced HSA Strategy: You can invest your HSA funds and let the money compound over time. You can make withdrawals in retirement age without paying any early withdrawal penalties. When used this way, the HSA becomes like a Traditional IRA – you receive a tax break when you make the contributions, and pay taxes when you make withdrawals. Again, this is an advanced strategy, and I recommend reading up on the rules.
Health Insurance for the Self-Employed
When you are self-employed, it can be a daunting task to find health insurance. Individual coverage is often more expensive than group coverage because you have less leverage. There are, however, places you can go to to get individual health care. There are co-ops (these aren’t insurance plans, but they can offer services at a reduced cost). Additionally, Health Insurance Resource Center can help you find self-employed health insurance information, and eHealthInsurance.com can help you find individual health insurance at a reasonable cost.
If you do pay for individual health insurance, you can deduct a portion of the cost on your taxes. This has been very helpful to me and my freelancing business. It is just one way to help offset the cost.
Alternatives to Health Insurance
In addition to co-ops, there are other options. Many pharmacies now offer discount prescription card programs. Additionally, some service providers have started offering a cash discount. Call around to see which professionals in your area will give you break if you pay immediately with cash. In some cases it can be as much as a 20% to 30% discount. You can even use a Health Savings Account for your health needs, if you have very few of them.
If you know that you will need the help, and you can’t afford insurance, check with Medicaid and Medicare to see if you qualify. Additionally, many states offer insurance programs to help the uninsured that don’t quite qualify for federal help. These programs are widely available for children — something to keep in mind if you have kids.
Paying for health care can be frustrating. However, there are ways to reduce your costs and resources you can use.