As healthcare costs continue to rise (8.5% in 2011 and an estimated 8.5% in 2012, according to PricewaterhouseCooper’s Health Research Institute), how can you find low cost medical insurance? Since health plan premiums are a function of the underlying cost of healthcare, the cost of individual medical health insurance will continue to increase too. If you are searching for tips to secure low cost medical insurance, then please read on.
The PricewaterhouseCooper’s survey also revealed that high deductible health plans will be one factor that may lower costs. When a high deductible health plan is paired with a Health Savings Account, the financial savings can be even greater.
A popular and cost effective strategy today is to combine a high deductible health plan with a Health Savings Account and critical illness protection insurance policy. Since the premiums for critical illness protection are inexpensive, you can still save money when compared to just buying a traditional medical health insurance plan with a lower deductible. Critical illness protection insurance pays the face amount, usually between $10,000 and $25,000, in cash upon the diagnosis of a covered illness or injury. You can use the money to pay for healthcare expenses associated with meeting the deductible, living expenses, home health care or help cover your lost wages.
When many individuals, families and the self employed shop for low cost medical insurance, they usually end up making an uninformed decision and paying too much for individual medical health insurance. Why? There are many common myths that most of us believe to be true. Here is some new information that will hopefully put a fresh perspective on the subject and ensure you make the best decision:
1. High deductible health plans are too “risky” – contrary to popular belief, while the deductible is higher, your maximum out-of-pocket cost (the amount you are responsible to pay after satisfying the deductible often higher with a traditional medical health insurance plan with a lower deductible). This means in the long run your financial exposure could be greater. Always compare the maximum out-of-pocket when shopping individual medical health insurance plans. Avoid the mistake of looking solely at the medical plan’s deductible.
2. Health Saving Accounts are for the healthy – if you have health conditions, you may have an easier time qualifying for an individual medical health insurance plan with a higher deductible, but as pointed out above your out-of-pocket cost may be less. This means the health insurer will begin paying your covered healthcare expenses sooner, leaving you with more money in your wallet.
4. High deductible health plans are just for the rich – with the health plan premium for a high deductible plan often being 20% to 40% less than a traditional medical health insurance plan with a lower deductible and the maximum out-of-pocket usually less as well, this myth is simply unfounded.
5. Health Saving Accounts are too complicated – if you have a checking or savings account, then you will find a Health Savings Account (HSA) works the same way. The easiest way to manage your HSA is to keep a record of your qualified out-of-pocket healthcare expenses (see IRS Publication 502 or our HSA page for summary) that you have paid with your regular checking account. At the end of each calendar year (although you have up to April 15th of the new year to make your HSA contribution for the preceding year), write a check from your regular checking account and deposit to your HSA. Once the check clears, transfer the money back to your regular checking account. Deduct this amount as a Health Saving Account contribution on your IRS Form 1040 income tax return. Be sure not to exceed the federal HSA contribution limit. For other rules, please consul your tax advisor.
6. Preventive care is not covered under high deductible health plans or subject to the deductible – since the new healthcare law, called the affordable Care Act, was enacted, medical insurance plans are now required to cover a wide range of preventive care services at no cost to the insured. This means that you do not have to put off seeing your healthcare provider for preventive care just because you have a high deductible.
7. High deductible health plans are not popular – did you know that participation in Consumer Driven Health Plan (CDHPs), including Health Saving Accounts have now surpassed enrollment in Health Maintenance Organizations (HMOs) by 4%? As more consumers have become aware of the financial savings and other advantages, Health Saving Accounts have enjoyed continued growth over the years.
Our goal at healthinsuranceadvisory.org is to help consumers find and secure low cost medical insurance, regardless of your health status. We will work with you to identify your health insurance choices, including the new government Pre Existing Conditions Insurance Plan. We can also help you save money on an individual dental insurance plan too.