The right coverage can help reduce the burden of care and safeguard your financial assets
With the cost of health insurance skyrocketing, every consumer should be aware of these simple methods, and consider them as an option for reducing their monthly premiums.
Increasing Your Deductible
Your deductible is the amount you pay before you insurance kicks in. Many consumers are afraid of a plan with a high deductible because they think they’re buying inferior coverage. This is simply not the case and you can find similar plans with a range of deductible options.
To decide if a high deductible plan makes sense for you, there are other factors to consider such as your personal cash flow and financial situation, whether or not you’ve met your deductible in prior years, and if you expect any expensive medical care in the coming year. Check out “Is a high deductible plan right for me?” for more information.
Don’t Miss Out on Subsidies
If you pay for your own health insurance, you may be eligible for some help from the Federal Government. Advanced premium tax credits are offered to help reduce the cost of health insurance for low income individuals.
To see if you qualify, you should start with your most recent year’s adjusted gross income (AGI) from your personal tax return, and estimate any changes for the coming year. Take into account pay raises, new jobs, and changes in income from self-employment to figure a “ballpark estimate” of your income. Here’s a helpful tool from healthcare.gov that can help you determine your eligibility.
Choosing an HMO
A health maintenance organization (HMO) is a type of health insurance plan that utilizes managed care and a select network of physicians. You must choose a primary care physician (PCP) and request a referral from them to see a specialist. Quite often, consumers will balk at the idea of an HMO without even exploring whether or not their doctors are part of the HMO network.
If your doctors are part of the network, or if you’re not fussy about choosing a doctor, an HMO plan can make sense and substantially reduce your premiums. Just be aware of the fact that if you decide to change doctors, they are less likely to be part of the network than other types of plans such as a PPO plan.
Health Savings Accounts (HSAs)
If you have a high deductible health plan, you can contribute to a Health Savings Account, often referred to as an HSA. Any contributions you make will count as an above the line deduction, and effectively reduce your taxable income. Those contributions can accumulate interest on a tax-deferred basis, and can be withdrawn tax free as long as they are for qualified healthcare expenses.
Although an HSA will not directly reduce your premiums, look at the big picture and consider the tax benefits you’ll receive from contributions. To learn more about the benefits of HSAs, check out our post,“An Easy Guide to Health Savings Accounts”.