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December 12, 2010 | Posted By: Mark Colwell
After speaking with a former executive at a major health insurance carrier (who will remain anonymous), I learned there are real ways you can pay less for insurance coverage. I also found out that some health insurance benefits cost too much, while others provide great value based on certain health care needs.
It can take time to compare health insurance plans and look at different options but it can save you hundreds of dollars a year — maybe even more.
Remember, everyone has different health care needs — what may work for you might not work for others.
Okay, here are a few tips to find the plan with the most value at the lowest cost:
1. Increase the deductible on your plan
A deductible is the amount you’ll have to pay yearly before the plan starts covering care. But if you don’t anticipate any serious injuries or illnesses any time soon, increasing your plan’s deductible can save hundreds of dollars in premiums.
The former exec let me in on the secret that health insurance companies have a rating system that allows some people to lower their premiums by just about the entire amount of an increase in deductible.
For example, raising a deductible by $500 — say from $500 to $1,000 — reduced policyholder premiums by more than $500. You’d have to pay a total of $1,000 of your medical bills annually if you need medical care.
So unless you incur $1,000 in medical expenses every year, you’re saving money by increasing your deductible from $500 to $1,000.
2. Add a physician visit copayment with limited visits
A copayment is a fixed dollar amount that you pay to receive a medical service. In the case of physician visits, you can go to the doctor for check-ups for a low copayment — typically ranging from $15 to $40.
Without this benefit, you’d have to pay the entire cost of a doctor’s visit until you meet your health insurance plan’s deductible. After typical lab and diagnostic fees, along with the doctor’s charges, a routine visit usually can easily cost more than $100.
If you anticipate you or a covered family member will need to see a doctor a few times during the year, a physician visit copayment can save you a lot of money.
Though this benefit will add onto your monthly premiums, you can lower its cost by considering a health insurance plan that limits the number of doctor’s visits for the specified copayment. Because you only get a certain number of visits, the plan will have much lower premiums than other unlimited visit plans.
3. Choose a health insurance plan with a smaller network
Another way to lower your premiums is to choose a plan with a smaller health care provider network.
Most health insurance plans these days offer insurance coverage with a specific “network” of doctors, hospitals, specialists, and clinics.
Some types of insurance, such as PPO health plans, offer a broader range of coverage that even includes care providers who are not in the network. HMO plans, on the other hand, restrict which doctors are covered and also have lower premiums than PPOs.
Chances are you won’t need coverage for every doctor under the sun, so choosing a plan with a smaller network can reduce your monthly premiums.
4. Get re-underwritten
This is the best kept secret to lowering your insurance costs. The amount you pay for your health plan in premiums is based on a process called “underwriting.” In the underwriting process, health insurance carriers consider things such as health status and age to estimate the level of risk that you’ll need to get health care in the future.
People who are “riskier” might have one or more pre-existing health conditions, and therefore their premiums will be higher than a person with no conditions.
Makes sense right? Your plan, your health status, your premium.
But what most don’t know is that insurance carriers also base your premiums on the health of the other policyholders they insure.
Now, that doesn’t seem fair. Why do carriers do this?
Carriers put all their policyholders in what’s known in the health insurance industry as “pools.” Say for example, one carrier’s pool includes 5 different individual health insurance plans and 100 policyholders.
If 75 people in the pool become ill or injured, then the insurance company will raise premiums for all 100 policyholders. This is because the carrier must offset the costs of medical care for the 75 people. Insurers also typically raise premiums every year because the pools tend to become unhealthier over time.
But there’s an easy way to defend against this pool premium increase… switch health insurance plans.
By switching plans, chances are you’ll be “re-underwritten” in a new pool full of new applicants. New applicants are typically younger and form a healthier pool which basically guarantees you lower rates.
Try getting a cheaper health insurance plan with your carrier and also try comparing health insurance quotes from many companies.
With a new carrier, the options are almost endless. It can really pay to shop around to different insurance companies to find a great deal not offered by your current insurer. And of course, you’ll definitely be re-underwritten by a new carrier.
Also, whether you stick with your existing carrier or not, look/ask for new health insurance product lines. Insurance companies will usually start new “pools” with new health plans.
Be careful in the move to a different carrier, though. A new insurance company might smack on a 12-month waiting period before covering one or more of your pre-existing health conditions. If you stay with your current health insurance company, on the other hand, you can avoid a waiting period.
But don’t cancel your coverage with your old carrier until you are accepted into your new plan.
5. Be proactive
Thanks to our insurance informant, you now know some of the “hidden” deals that health insurance companies usually don’t advertise.
If you want an extra helping hand with all of this, don’t be afraid to get in contact with a licensed health insurance agent. Agents understand the little insurance nuances and can help you find these hidden deals.
And one more thing — don’t do your search once in a lifetime. I was told we should all be proactive with our insurance, and re-visit our plans annually.
When the health insurance executive tells us it’s safe to say, “You can almost always find a lower rate by moving to a different plan every year,” we should all believe him.
Guest contributor Mark Colwell is the Consumer Marketing Analyst at GoHealthInsurance.com, a site for finding health insurance plans and quotes. He writes for the GoHealthInsurance.com blog and guest blogs in his free time.
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