It is easy to put off those yearly physicals and to tough it out through the winter without getting your flu vaccine, simply because you want to save the money. Health care is not cheap; there is no way around it. Many Americans turn down their health insurance offered by their employer to keep that extra money on their bi-weekly paychecks, but they do this at a very high risk. Getting treatment for any range of sicknesses or injuries can quickly cost you thousands of dollars out of pocket, and because these sorts of things are unpredictable and always seem to come at a bad time it is difficult to be sure that you will have the money available to pay for the care you need. Thankfully, there is now affordable health insurance available.
Health insurance is meant to protect you against these sorts of out-of-the-blue incidents as well as allow you to have your yearly physicals and vaccines. But health insurance is not cheap either. According to Statistic Brain and the Kaiser Family Foundation, the average cost of Healthcare in the United States is $5,615 for single coverage and $15,745 for family coverage. The average annual deductible is $1,120 for single coverage and $2,075 for family coverage. The average cost for an employee to enroll in a company’s health insurance plan is $1,225 for single coverage and $4,316 for family coverage.
The average annual health care spending per capita has seen a steady increase since 1910 when it was only $380. It nearly tripled by 1980 reaching $1,110. Since then it has more or less doubles every decade, before reaching an average of $8,402 in 2010.
The Affordable Care Act’s effort to lower health insurance costs
Doubling every decade is not a trend that the United States wanted to see continue, which is a major reason why President Obama signed the Affordable Care Act, in an attempt to lower the cost of health insurance, making it more accessible to the American people.
According to a blog done by the Washington Post, which highlights 11 facts about the Affordable Care Act, by 2022 coverage will be extended to 33 million Americans that would otherwise be uninsured. The government provides subsidies based on your annual income and number of dependents. The Affordable Care Act will attempt to increase the number of Americans who have health insurance coverage in a number of ways including:
- Families that make less than 133 percent of the poverty line ($29,000 for a family of four) will be covered through Medicaid. Families between 133 percent and 400 percent of the poverty line ($88,000 for a family of four) will get tax credits on a downhill scale to help pay for private health insurance coverage.
- Families that make less than 400 percent of the poverty line will have premiums capped. The example used in the Washington Post Article uses the examples of families between the 150 and 200 percent poverty line, who will not have to pay more than 6.3 percent of their income on their health insurance premiums. Families between 300 and 500 percent will not have to pay more than 9.5 percent of their income on health insurance premiums.
It is important to understand how the Affordable Care Act works to provide low-cost and affordable health insurance coverage, because when it gets into full effect, families that are able to afford coverage (defined as a insurance policy that costs less than eight percent of their annual income), but choose to not utilize it will have to pay either $695 or 2.5 percent of their annual income regardless. The United States is making an effort to make health care more affordable, but it does come at a cost, which is why families that do not take advantage of it will have to pay regardless.
Not only does the Affordable Care Act make health care more affordable to those who otherwise would not be able to afford it, it also does a number of things to lower the cost of health insurance for existing policyholders. It creates a Health Insurance Marketplace, which simplifies the process to find an individual or family health insurance policy. You simply fill out a form, answering a few health related questions and the marketplace will give you a list of all the health insurance options in your area.
Insurance companies are also now required to cover people with pre-existing health conditions, which would otherwise be seen as red flags in the screening process. This will go into effect in 2014, and will also disallow insurance companies from being able to charge women more for their health insurance than men. The Affordable Care act will also hold insurance companies accountable on rate increases, limiting the premium increases that previously have drastically increased over time.
How your employer may lower the health insurance costs for you
In theory the Affordable Care Act will make health care more affordable and more accessible to more Americans, but there are also things that you can benefit from that may be provided through your employer to lower the health insurance premiums that you face monthly. The Wall Street Journal highlights a few ways that your employer may use to lower their health insurance offerings.
The first thing that a company can do to lower their healthcare coverage is to look for a plan that has a high-deductible that also has a health savings account, known more commonly as a HSA. What this does is it helps keep spending in check. The HAS can be used to allow individuals with higher deductible health insurance plans to use employee pretax money to pay for any uncovered medical costs and carry over any unused funds from year to year. Employers often have high deductible health insurance plans with HRAs to offer as part of their employee benefits package. What happens is the employer sets aside money to reimburse to employees’ deductibles or any qualified out-of-pocket medical expenses up to a predetermined amount.
Small companies may also purchase cooperative. The Wall Street Journal article uses the example of a cooperative for New York City Businesses, which offers members a choice of 35 different health insurance plans. The insurance itself is not discounted, but members get extras, such as dental benefits that they would otherwise not be eligible for and would have to pay for on their own to get.
Companies may also have wellness programs, offering employees free gym memberships or providing healthy snacks in the break room. These types of programs can lower the company’s cost for insurance because it creates more health awareness among the employees and encourages them to take better care of themselves.
Your employer may also offer a flexible spending debit card that provides pre-taxed dollars to pay for medical expenses that are not covered by health insurance. This can be used for co-pays, over the counter medications and other not covered health expenses.
What can you do on your own to cut health insurance costs?
The business side of health insurance may or may not be helpful to you. It is great to understand some of the different things that your employer may offer with your health insurance coverage, but there are also things that you can look for on your own to lower those health insurance premiums.
Fox Business’ article titled “5 Easy Ways to Reduce Your Health-Care Costs” published in July of 2013 highlights some of these things you can do to make your health insurance more affordable. The five way include:
- Being selective when choosing providers: This is something that you can do with the help of your local independent insurance agent. Your local independent insurance agent will have a good idea of what the health insurance market looks like in your area, helping you find the coverage you need. You can also look to reduce the number of trips you need to take to the emergency room when it comes to non-threatening illnesses and injuries. The Fox News article points to retail clinics, which have grown in popularity over the last few years, to provide basic medical treatments at a cheaper cost.
- Managing your deductible: Having a high deductible is a good way to save on your monthly health insurance premiums. It is important to understand that doing so will also add some additional out-of-pocket costs to you. You have to fulfill your deductible before qualifying for the insurance to kick in. Experts will recommend that people with high deductibles manage their health care accordingly. If they plan their treatments in the same year, they will not get hit with the deductible the next year when they need to get something done. Getting all of your care done before the deductible resets is a way to maximize that deductible. The only issue is that medical care is not always as predictable as a routine physical or checkup; there are instances when you may need to go see the doctor because of an injury or illness. With a high deductible, your premiums will be lower, but you may be left to pay out of pocket in the case of some random healthcare needs.
- If you do have an HSA Account use it: It is common place for people to not use their health savings for fear that they might spend more money than is necessary or lose money at the end of the year. Money in the HAS can be used to pay for co-insurance and co-pays at doctor visits. All of these things can be a tax write off and can save you a lot of money.
- Ask questions: If you are diagnosed with an illness that needs specific treatment it is important to ask questions, not just accept what the doctor says. Ask for ways to reduce the cost of treatment or if there are any alternative options that may save you money.
- Try to stay healthy: This is the most obvious way to lower the cost of your health care. The healthier you are the more likely you are to be able to go long stretches without ever having a need to visit a doctor. This is obviously easier said than done because it is easy to catch the flu that has infiltrated your office or that your child brought home from school. But if you do regular preventive screenings, take medication properly and maintain a healthy lifestyle you can limit this risk.
Health Insurance is expensive, but there are currently a lot of efforts to limit the continued increase in cost. Health insurance is more often than not the cheaper option than having to pay for all your medical needs directly out of pocket. Health Insurance is meant to give you the piece of mind, knowing that your family can get the care they need when they need it. There are many options for people to utilize when they are shopping for an affordable health insurance policy. To better understand these options, consumers should reach out to their local independent insurance providers. They will be able to answer any questions they may have on existing polices or help guide you in selecting a policy to get you the health coverage you need.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.