Whether you have health insurance coverage through your employer or buy health insurance on your own, the enrollment season is nearing for both employees and individuals on the marketplace, and it will soon be time to make financial decisions that will affect your lifestyle and budget. Should you go with a higher deductible to save money each month? Should you enroll in a supplemental health insurance plan to avoid costly, unexpected medical bills? Or do you re-enroll in your existing plan, hoping you can continue to afford it? The options vary.
Many individuals dread the enrollment process. It is tedious. It is full of complex language that is hard to comprehend. And it is an expensive proposition. The Urban Institute found that employees pay an average of $516 a month after their health insurance is subsidized by their employer, and individuals who buy their own health care plan, which is not subsidized, pay an average of $464 each month for their premium. That is more than $5,500-$6,100 each year for securing the privilege to have insurance coverage. From there the responsibility of a medical deductible can start at $1,000 and go well beyond $13,000 before the insurance carrier has to begin paying for health care expenses.
Those are big numbers and a lot of cash consumers have to pay out of their own wallets.
However, as you look ahead to signing up for a health insurance plan for 2017, there are many factors you need to take into consideration above and beyond price to help your family stay covered. There are also ways to save on your out-of-pocket health care expenses. Here are a few:
Get Educated About Supplemental Health Insurance
Supplemental health insurance is a great way to provide extra protection for major medical bills you aren’t expecting. From a child’s broken arm due to a bicycle accident to a cancer diagnosis, sudden medical bills can catch you off guard and drain an emergency savings account quickly. Supplemental insurance from HealthValues offers bundled benefits that include accident insurance, critical illness insurance, a daily hospital benefit, accidental death benefits and disability income due to an accident. Starting at $1 a day, supplemental health insurance can cover most if not all of your medical deductible, letting you focus on getting better instead of worrying about paying high health care bills.
Look at Your Budget and Subsidy Options
Individuals: If you purchase your own health insurance and make between 100%-400% of the federal poverty guidelines, you could be eligible for a tax subsidy to lower the price of your monthly insurance cost. It will depend on your total household income for the year. However, you can only receive a subsidy if you purchase a health care plan on your state marketplace or through the federal exchange, HealthCare.gov. Private insurance plans are exempt from receiving subsidy dollars. Yet approximately 85% of Americans who purchased a plan through the federal marketplace received some type of subsidy relief, so it’s worth checking into to see if you qualify.
Employees: High deductible health plans are the new normal. You have probably noticed your employer has been raising the medical deductible on your insurance plan year after year. Employers have a choice: raise rates or increase deductibles to keep monthly costs at a minimum. Many opt for raising medical deductibles rather than gouging their employee’s pocketbook, so it’s smart to plan for it in 2017. While rate increases for employees are lower than individual market rates, they are still trending higher than inflation (premiums have risen 20% since 2011). This is where supplemental insurance – or “insurance for your insurance” – can help cover the gaps you have in coverage.
Assume Your Health Insurance Costs are Going up by 13%-25% Next Year in the Individual Marketplace
While rates on employer plans have more modest increase percentages (approximately 3% in 2016) the individual marketplace has seen steep inclines. In 2016 the national average rate increase on marketplace plans was around 6%, and the increase for 2017 it has jumped to 22% nationally on average for health care coverage. To track your state’s insurance rate increases, check out Charles Gaba’s detailed reports at acasignups.net. If your monthly health insurance premium is going to rise dramatically in 2017, look for similar options with other insurance carriers that might not have raised their rates as much. Keep an open mind to changing doctors if you need to switch networks for a lower cost plan.
Consider Your Family’s Health and Your Deductible
Upping your medical deductible amount can help lower your costs, but be advised that your out-of-pocket responsibility also increases while trying to save money. Be honest about your family’s health care utilization and potential needs before jumping ship to a higher deductible health plan. If a member of your family sees a doctor or specialist for regular care, paying more each month for a lower deductible can actually save money. Do the math between the two options and see where your out-of-pocket lands financially.
Don’t Automatically Re-Enroll in Your Existing Health Care Plan
It can be tempting to sign up for the same plan and not hassle with re-shopping for health insurance. But this can be a costly mistake. According to a HealthCare.com white paper from 2014, more than 85% of the health care plans on the federal marketplace have at least one identical plan, potentially from another insurance carrier, that costs less. The analysis showed on average, an individual can save over $700 a year by switching to another plan that offers the same deductible, copays and coinsurance. It pays to shop.
Utilize a Health Savings Account
Many high deductible health insurance plans for individuals and families are “HSA qualified.” That means a health savings account (HSA) can be used to pay for any medical expense including: monthly insurance premiums, doctor office visits, Urgent Care and even band-aids. Check with your local bank or browse interest rates at HSA Rates that offers a high-yield return. Note that contribution limits for 2017 are $3,400 for individuals and $6,750 for families. Persons over the age of 55 can contribute up to $1,000 more each year as a “catch-up.” In order to participate a qualifying minimum high deductible for individuals is $1,300, and $2,600 for families.