(Note: This post was originally published on the Thriveal blog).
Look, let’s get this out of the way now. Health insurance does not provide the most gripping reading material, but it is one of those things that you have to deal with. Whatever your take on the ongoing debate in Washington, we have to work within the system we have now, and the problem with that system is that it is REALLY expensive. With rising costs and a down economy, most small business owners are looking for ways to take care of their team without killing their budget. Maybe you’re one of them. Let me offer a few suggestions. Not all of these will work in every situation, but perhaps a couple of them will help you.
1. Raise your deductible. More than two out of three people don’t hit $1,000 per year towards their deductible. In other words, most people are over-insured. Of course, one out of one people will at some point reach their deductible because, well, stuff happens. That’s why you need good major medical coverage. But why not raise your deductible, lower the premium, and put some of the savings aside for the year your number comes up? That leads us very nicely to my second suggestion…
2. Consider a Health Savings Account (HSA). An HSA allows you to save money with a triple tax advantage: the money is tax free going in, grows tax free, and is tax free as long as you use it for qualified medical expenses (and the IRS has a pretty broad definition of medical expenses). So the HSA will take your healthcare dollars farther. Because I’m not a CPA, I’ll not counsel you further on the tax benefits of an HSA. But do note – in order to open an HSA you must first have a qualified high deductible health insurance plan. The idea here is simple, you get major medical (catastrophic) coverage above the deductible, and you pay for everything before the deductible (though you benefit from provider discounts). You get a lower premium, and put the savings into your HSA to pay your portion. There’s much more that can be said about the HSA approach – but we’ll leave it here for now.
3. Kick your Copay Habit. This solution could really be categorized as 2a as copay addiction is the single biggest reason given for not taking an HSA-qualified health plan. Do you have health insurance or health-care financing? Health insurance exists to protect you from catastrophic medical expenses (like a $25k appendectomy or $150k bypass – real numbers). But the average health insurance plan includes a bunch of front-end goodies (like the office visit copay) that consumers have come to expect. But often you wind up paying a significantly higher premium for the ability to save $50 (give or take) the couple times a year you go to the doctor. Let me put it this way: Does your auto insurance pay for oil changes and new tires? Then why do we expect our health insurance to pay for routine maintenance? Kick your copay to the curb and put some of your premium savings aside to pay for the doc.
4. Consider Individual Health Insurance. Most people assume they need to get on a group plan to get a better deal. In most cases, quite the opposite is true. Because there are fewer mandates and, yes, more underwriting, individual policies are almost always less expensive. They also remove the one-size-fits-all nature of a group policy, allowing each person to choose the coverage they want. The individual policy is also portable – a big plus in uncertain times. The underwriting issues are the key, though, and the result is that this option might not work for some people. But if it works, you could save a lot of money.
Like most things, the health insurance solution that fits you best is determined by your specific needs, situation, and budget. It’s not thrilling stuff, but it might be worth your time to kick it around. We’d love to help you do that – just contact us for a free insurance consultation where we’ll take a look at your current plan and offer some suggestions on how you can save money.