Saving Directly on Health Insurance

From the Insurance for Dummies by Jack Hungelmann

Two ways to control costs for individual health insurance coverage exist:

• Direct: You reduce coverage and the insurance company gives you a direct premium credit.
• Indirect: You select a higher deductible when your health and self-care are exceptional but for which the insurance company has no means to lower your premiums.

Saving directly

The best way to save money on an individual policy, without cutting back on coverage, is to become ten years younger. (Don’t you wish?) Since that’s not possible, the next best way to save money on your health insurance premium is not to smoke or use tobacco. Unlike group policies, almost all individual policies differentiate smokers from nonsmokers — significantly — because the claims costs for smokers are much higher. Blue Cross of Minnesota, for example, cuts 30 to 40 percent off its standard rates if you haven’t used tobacco for three years.

You can also save by cutting out unneeded coverage ( like maternity coverage if you’re not expecting to need it), cutting back doctor choice (in other words, accepting managed care), or raising deductibles. The difference in cost, for example, between a $100 deductible and a $500 deductible with some insurers is 40 percent! As the size of your family or age increases, that 40 percent can save you a fortune — especially when you consider that you’re assuming only $400 more risk per person each year. If you’re paying $3,000 a year for just yourself, 40 percent would save you $1,200 in premiums! You’re risking a “maybe” $400 for a “for sure” $1,200. Who wouldn’t? Even if the savings were only 20 percent, that’s still a $600 savings for a $400 risk.