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How to Deal with the Rising Cost of Health Insurance
Healthy or not, you’re going to pay more for health care next year. Learn more so you can save more.
Checked health insurance rates lately? Whether you’re starting with a new employer or just researching new plans for open enrollment, you’re in for a shock. Health insurance rates continue to rise, but by making a few smart decisions before next year’s open enrollment period you can ease the impact on your bank account.
As of 2016, in some states insurers are seeking 20% to 40% increases in premium rates through public exchanges. Likewise, those who acquire insurance through their employer can expect to pay a greater share of their own costs. Families can spend over $24,600 on health care this year, including premiums and copays, according to the 2015 Milliman Medical Index.
Manage the impact on your wallet, and learn how to minimize your costs with the following:
Take the time to understand
Going through health insurance plan documents can be a daunting task, but it’s not a frivolous one. By carefully reading through your policy or plan options you can come away truly understanding your options, costs, and savings. “Now more than ever, you really have to understand your plan’s out-of-pocket costs – the deductible, copayments and formulary constraints,” says Gerry McCarthy, president of TransUnion Healthcare.
Understanding your policy includes understanding common healthcare insurance terms including:
- Premiums – the monthly price you pay to have health insurance coverage
- Deductible – the amount you pay out of pocket toward your medical bills before your insurer steps in.
- Out-of-pocket maximum – the maximum amount you’ll pay before your insurance will step in and begin to cover expenses.
- Copay – a fixed amount you pay for a variety of services. The rate varies depending on whether the bill is for a doctor visit, visit with a specialist or for prescription drugs.
- Coinsurance – your portion of service charges based on a percentage, not fixed rate
- Formulary – full list of prescription drugs your plan guarantees coverage, including partial coverage
Comparing insurance rates is similar to attempting to balance a teeter-totter. On the one hand, you want lower monthly payments. On the other hand, you don’t want to spend a lot on out-of-pocket costs. Traditionally, monthly insurance rates are higher when out-of-pocket costs are lower – and vice versa.
Choosing the right plan involves looking at your monthly expenses, available funds and budget. By analyzing these numbers and your health, you can determine what type of coverage/plan is right for you and your family.
“Achieving a balance between affordability and risk can be tricky, but you can evaluate your need for medical care to determine your risk,” says Martine Brousse, a medical billing advocate and founder of AdviMed Inc.
Find out if you qualify for subsidies, or tax discounts. On government exchanges, like healthcare.gov, you can compare prices with discounts included, in addition to deductibles, co-pays and coinsurance. On insurancebestprices.com you can compare health insurance rates for free from the nation’s top insurers.
“Add up the cost of 12 monthly premiums, then add the amount of the yearly deductible and out-of-pocket maximum for each policy,” Brousse says.
The most important question to ask yourself is whether you’d rather pay slightly more each month, or more when it comes time to see your doctor. If you get insurance through your employer, Brousse suggests going with the plan with the lowest deductible, especially if the premium is also low.