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Tips for Health Insurance Cost Cutting
Nobody has to tell you that your health insurance premiums have gone through the roof. Your wallet or pocketbook is already feeling the strain. Recent studies confirm the skyrocketing costs. In 2008, premiums for employer-sponsored health insurance rose to an average of $12,680 annually for family coverage ($1,057 per month) and $4,704 ($392 per month) for individual coverage. The cost of family health insurance has now eclipsed the gross earnings of a full-time minimum wage worker and continues to push the price tag of health coverage beyond the reach of the average American worker.
However, there are several ways you can cut costs. Some, like increasing the amount you already pay out of your own pocket in order to lower your premiums, are more painful than others. However, it’s clear that both you and your employees must make some sacrifices and become more educated consumers of health care if you want to stem the tide. Here are the top 10 ways you can reduce your health care costs.
1. Raise Your Deductible, Copays, or Coinsurance.
The higher you set your plan’s deductible, copays, or coinsurance, the lower your premium payments will be. Be careful, though, that you don’t put your out-of-pocket expenses beyond your reach, or your employees’. Make sure your plan limits out-of-pocket expenses and you understand what that threshold is before signing any policy.
2. Take Advantage of Tax Breaks.
Consider pairing a high-deductible health plan (HDHP) with a health savings account (HSA). HSAs are designed to lower health care expenses through the HDHP while providing tax-advantaged savings to the consumer. The HDHP provides the necessary insurance coverage while the HSA gives you and your employees the means to fund these costs on a pretax basis. Both you and your employees can contribute to HSAs, and, unlike some other tax-advantaged plans, the funds in the account are not forfeited if they are not used during the plan year. Savings can be “rolled over” and they are completely portable, meaning your employees own their accounts, giving them increased incentive to use the funds wisely.
Offer a flexible spending account (FSA) which will allow you and your employees to set aside pretax dollars through payroll deduction to pay for eligible medical expenses. Set aside only funds you know you will use, since you lose any money that you don't spend by the end of the year. Dental and vision care count as reimbursable medical expenses under an FSA, so don't forget to save your receipts for these services.
If you’re a self-employed business owner, utilize a health reimbursement arrangement (HRA). An HRA allows you the opportunity to deduct medical expenses if your spouse works part-time or full-time in your business. Deductible medical expenses include premium costs, co-pays, prescription drugs and much more.
3. Search for Free or Low-Cost Services.
Does your local pharmacy offer free blood pressure checks? Does your Town Hall organize flu clinics every fall? Does your local high school offer classes in nutrition, dieting, or exercise? These are all valuable free or low-cost programs that can help you cut costs and avoid trips to the doctor.
4. Get Healthy.
It’s a no brainer: quit smoking, exercise more, and lose weight. These will reduce your health care costs. In a nation where the rise in obesity rates is alarming, a recent RAND Corporation study showed the annual average health care costs for moderately obese people were about 20 to 30 percent higher than health care costs for normal weight people. A body mass index over 40 doubles those health care expenditures.
5. Get Informed.
Ignorance is not bliss when it comes to health insurance, it’s financial Russian roulette. Know your health insurance plan's rules and then follow them. If you don’t, your insurer can deny your claims and you may wind up getting stuck with the bill. Always double-check whether the benefits, services, or providers you need are covered under your plan before you receive treatment. Do this by calling your plan's member services department. Make sure you follow through by obtaining any necessary pre-authorizations or by scheduling treatment with a doctor within your insurer's network of providers.
6. Practice Self Care.
Many minor ailments and illnesses can be cared for at home without a trip to the doctor’s office. If you need more information, visit a reliable Web site like the Mayo Clinic at www.mayoclinic.com or call your insurer’s 24-hour nurseline. If the situation worsens, then call your physician. Improve your knowledge of minor illnesses so you better understand when you should visit your physician and when you can take care of an ailment or illness at home.
7. Plan Ahead.
If a health crisis crops up in the middle of the night, do you know which hospitals in your area are affiliated with your health plan? If you don’t, then you may wind up paying from your own pocket for emergency services. Make sure you have this information posted near your telephone, along with any emergency phone numbers.
Additionally, find out if any of your family's doctors' offices are open on nights or weekends, their hours, and the copays for an after-hours visit. Although an after-hours visit may cost you more than a visit during regular business hours, it is still cheaper than a trip to the emergency room. An emergency room visit can cost you a $50 to $100 copay.
8. Cut Pharmacy Costs
Most health plans now have a three-tiered copay system for prescription drugs. The top tier usually consists of brand name drugs which cost the most. The middle tier consists of drugs your health insurer considers to be “cost effective.” The cheapest tier includes generic drugs. You can significantly lower your pharmacy cost by asking your doctor to only prescribe you drugs in the bottom two tiers.
Ask your doctor about the possibility of splitting your pills. For example, if you take 50 mg of a particular medication per day, you can ask your doctor to prescribe the 100 mg tablets and then you split them. NOTE: You must consult with your doctor about the safety of this practice. Some medications require exact dosing, therefore splitting some pills can be dangerous.
Finally, make sure you need the drug in the first place. The pharmaceutical industry spent approximately $5.3 billion in 2003 on promotional activities directed toward physicians and distributed another $16.4 billion worth of free samples that same year, according to IMS, a health industry research firm. Ask your doctor what the medicine is for, what are the benefits versus the risks, and whether there is a non-drug alternative. If your physician dismisses your concerns, you need to find another doctor who will honestly address them.
9. Avoid unnecessary medical tests.
Press your physician or specialist about the necessity of medical tests. Nine out of 10 doctors admit that they practice some form of “defensive medicine” (including ordering unnecessary tests) to head off malpractice lawsuits, according to a survey of 824 Pennsylvania physicians that was published in the Journal of the American Medical Association. More than half of the emergency physicians, orthopedic surgeons, and neurosurgeons surveyed said they have ordered unnecessary imaging procedures, such as CT scan, MRI, or X-ray that they didn’t believe was absolutely necessary.
10. Find a Subsidy
If you or a family member is in a low-income situation, uninsured, or disabled, you or they may qualify for low-cost health insurance through a state or federal program such as Medicaid or Medicare. One program that is highly popular, but still underused is the State Children’s Health Insurance Program, or SCHIP. Families who earn too much to qualify for Medicaid may still qualify for SCHIP, even if the parents are working. Each state has different eligibility rules, but most uninsured children under the age of 19, whose families earn up to $34,100 a year (for a family of four) are eligible. For little or no cost, SCHIP covers doctor visits, immunizations, hospitalizations, and emergency room visits. Please see the Insure Kids Now Web site at www.insurekidsnow.gov.