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Ten easy ways to save money on health insurance

Stick to these simple strategies to make your health insurance dollars go further.

by Tony Novak, CPA, MBA, MT, NAHU certified consumer driven health care consultant 9/29/2011

Who says that shopping for health insurance through an online insurance exchange has to be complicated? Here are ten very simple strategies that can combine to allow most people to get some basic health insurance for a price that is only a fraction of the prevailing market cost. The strategies are deliberately kept short, simplified and directly to the point; perfect for your busy schedule!
  1. Buy less insurance. It sounds over-simplistic, but we simply don't need to insure against every possible medical possibility. Some coverage are simply not needed . Consider, for example, that every man pays for the cost of OB/gyn care in a "unisex" rated plans. Saving money can be as simple as finding a policy that does not include coverage above what you need.
  2. Switch often to save money or improve coverage. Choosing insurance isn't the same as choosing a spouse: you can change as often as you wish to suit your changing desires. It's OK to choose a minimal coverage if money is tight. If, in the future, you find you don't like the level of coverage, switch to a more expensive plan. The important thing is to have some insurance rather than be completely uninsured. Having even a basic and limited insurance entitles you to "get through the door" when you need to see a medical provider and eliminates the need for a long waiting period before pre-existing conditions are covered. The Nike slogan might apply best - just do it; don’t worry so much about making it perfect.
  3. Think short term. Short term medical insurance policies run from one month to 12 months. They are priced about 1/3 less than other policies because of the short duration. In most states coverage can be extended by enrolling in a brand new policy when the first expires. The best feature is that they do provide the policyholder with a Certificate of Creditable Coverage to enable takeover of pre-existing conditions on the next group policy or employee health plan.
  4. Separate family members. It no longer makes sense to cover everyone in the family on the same health insurance policy. This is especially true if one member has health problems and another is healthy. Shop for each individual coverage separately.
  5. Move. Maybe you are lucky enough to have a second home or another temporary address. It makes sense to be aware of the insurance options that may be available "across the river" or other possible locations. A Lambertvillle New Jersey man, for example, would likely save more than $5000 per year if he lived over the walking bridge in New Hope, Pennsylvania. It's enough to justify looking for a new apartment! The point is to recognize that health insurance is controlled by state law and local markets and the price differences between different locations are substantial.
  6. Buy coverage while travelling. Policies not available in your home state may be available while staying at a temporary residence. This is a primary strategy of individual in "difficult" insurance states like New Jersey, New York, Washington, Maine and Vermont. These policies, when issued in another state or country, provide valid coverage even after you return to your original residence.
  7. Use your employer, even when buying individual insurance. Most states allow individuals to pay for health through pre-tax deductions from salary, thus saving almost 40% in combined wage and income taxes. Employers should be ready to offer this option through a flexible benefit plan if requested by employees; the employer can also save on wage taxes and worker's compensation costs.
  8. Use discount plans in place of some insurance. Most individuals are better off financially using a prescription discount plan than a prescription insurance plan. After accounting for the premium cost and the out-of-pocket co-payments, the discount plan is usually a better deal in terms of net cost. The same is true of dental discount plans vs. dental insurance.
  9. Use a Health Savings Account to cover out-of-pocket costs. Think of the HSA as a machine that stretches your health care money by 40% (as compared to after-tax dollars).
  10. Know the low cost leaders. Some insurance companies have a reputation for being the low cost health plans in each geographic market. Make sure that you know who they are where you live.
Freedom Benefits understands that making these decisions is easier when you have access to reliable straight-forward advice on the options available. That's why we make professional OnlineAdviser service available in all 50 states and DC to answer questions about any aspect of your health insurance considerations. First look over the options listed in the state where you live then fire off a request to OnlineAdviser for explanation of any issues that are not clarified in the online health insurance materials.

Tony Novak, authorAbout the author - This Web page and related content is written and periodically updated by consumer finance writer Tony Novak. Comments, questions, feedback and updates are welcome to help keep content relevant and up-to-date. Contact the author directly by e-mail, on Twitter or through the contact information included on his Web site.

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This web site is independently owned and managed by Tony Novak operating under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator". Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide uncompensated advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the other commercial companies listed on this site. Information is from sources believed to be reliable but cannot be guaranteed.