Saving Money on Your Health Insurance

Hard times mean hard choices. Whenever the economy has a downturn, people inevitably start looking for ways to save their money. Health insurance is no different. As with anything, there are right ways to go about it and wrong ways. The term, “penny wise and pound foolish” certainly applies. You get what you pay for. Let’s look at some ways you can maximize your savings and minimize your exposure.

Different stages of life and different family situations require different solutions.

Take the student. Most insurance plans allow students to continue on their parents’ health plans until age 24. This only applies to full-time students with a certain number of credit hours. More and more students are going to school part-time and working. Many people—from single mothers to people wanting a career-change—are attending school long after the “traditional” college years right after high school. For those people, parents’ policies don’t apply. Most college campuses have health plans utilizing on-site clinics that can be accessed for a small premium. The problem with these plans is that they typically don’t cover major illnesses and usually have very low benefit maximums such as $25,000 a year benefit. The solution is to purchase a high-deductible ($5000 or more) catastrophic plan in addition to the school plan. Combined with an accidental injury rider, it will cover you in catastrophic instances. The accidental injury rider can usually be added very cheaply and will pay a first-dollar benefit (meaning the insurance company will pay the bill first, up to a certain dollar amount). Most importantly, it will get you access to care. While a clinic may be able to give you a prescription for your wrenched knee, if you need surgery, you won’t be able to get it if you don’t have the money upfront. A high-deductible plan gives you that access. Most providers will take your insurance card and run it through the system to get the appropriate discounts and will bill you long after the surgery is completed. My $25,000 knee surgery was knocked down to $2,000, on which I made payments.

Don’t confuse these "catastrophic" plans with "discount plans." Discount plans give you the same discounts as catastrophic plans but with one important exception. Discount plans don’t pay for anything. With catastrophic plans, you have a cap on what you can pay in a year. If you think a $5,000 deductible is high, a discount plan’s deductible is unlimited.

If you don’t attend school, you still can take advantage of this concept. More and more we are seeing an increase in a type of service called “retail or convenient care clinics.”  Relatively new to the industry (the first one was established in 2000), the clinics are similar to the ones on a college campus. Usually staffed by nurses or physicians-assistants, they will treat colds, flu, and minor problems. Instead of college campuses, they set up shop in or around major retailers such as WalMart and the like. Located in virtually every state, current estimates place the number of these types of centers at several thousand by the end of this year. Because they are so new, quality of care can be subjective. A good place to start is to make sure your facility follows the Convenient Care Association (formed in August of 2006) principles.

Families, on the other hand, face their own set of challenges. Every state now has state- and federal-funded child insurance programs called SCHIPS, although there is a question as to whether they will continue. It is income-based with more generous limits than Medicaid, which is designed for people at or near the poverty level. If you don’t qualify for a SCHIP plan for your kids, that means you probably are working in a higher-paying job and have access to group health insurance through your employer. While the premiums may be affordable for you, they typically are very expensive for your dependents. One way to save money is to take the kids (if their healthy) off of the group plan and put them on much less (usually) individual plans.

Seniors on Medicare have their own particular challenges. Many options exist. The most cost saving by far are Medicare Advantage plans. Offered by different insurance companies, they usually can be had for no or little cost other than what you pay for your Part B premium. Not all of them cover prescriptions so it’s important to check. You can purchase separate prescription coverage if needed.

This time of year is especially important for Medicare beneficiaries. You can only change plans from November 15th to December 31st. A word of advice—don’t wait for an agent to call you. Recent changes from Medicare are preventing agents from calling you, requiring you to reach out to them. Be prepared for some surprises. Medicare now requires that agents record the conversations in most instances.

People shouldn’t have to choose between keeping themselves healthy or their pocketbook. Options exist if you know where to look and what’s available.

Until next time, stay healthy!