Health Insurance Optimization: How to Cut Your Premiums by Half or More

According to a 2020 study by the Kaiser Family Foundation, the average annual health insurance premium for an individual is around $7,500, and for a family is $21,340. Even with employers covering an average of 73% of these costs, health insurance premiums represent a significant cost for any American household.

So, if you have been looking at ways to reduce your monthly premium without affecting your coverage’s efficiency, you are certainly not the only one. Here are just a few strategies to slash your health insurance costs while safeguarding your peace of mind.

Health Insurance Optimization

The Factors Affecting Your Health Insurance Cost

Before diving into the tips to save on your health insurance, it’s important to understand what factors can drive up your insurance premiums.

Most insurance providers will adjust your premiums based on:

  • Age – premiums rise gradually as you age, and the sharpest increase happens after age 50.
  • State and county of residence – premiums adapt to the area’s cost of living and competition among health insurance providers
  • Type of plan and number of beneficiaries – your premium will reflect how comprehensive your cover is and how many members of the family it covers
  • Your lifestyle – factors like tobacco use can drive your premium up by $300 a month in some states.

Compare Plans and Shop Around

Insurance policies are consumer products and, just like in the case of other purchases, you can get the best value for money by shopping around and comparing different options.

Resources like a comprehensive Health Information Platform and mobile applications can help you compare the features, benefits, and costs of each policy online.

Buy Your Insurance Policy Early On

You are young and in good health, should you wait to buy health insurance? The simple answer is no: you should buy it as soon as possible!

Insurance providers take into consideration your health, age, and medical history when calculating your premium, and being a policyholder for over a year can grant you exclusive benefits including:

  • No-claim bonuses
  • Coverage for existing conditions
  • Lower premiums
  • Comprehensive coverage

When shopping for an insurance policy at an early age, you can also benefit from lower chances of being rejected, and the ability to find an insurer that truly works for you, without restrictions.

To lower your monthly premium even further, you might consider catastrophic insurance. These high-deductible policies are suitable for young citizens under 30 years of age, and protect you from the health and financial risks of a catastrophic accident or illness.

Reduce Premiums Through Higher Deductibles

Increasing the deductibles of your insurance plan – or the out-of-pocket expenses you’ll face when you need medical care – will reduce your monthly premiums.

This strategy is particularly suitable for policyholders in good health with low chances of having to file a medical claim because of an illness or disease.

Generally, the higher your deductibles are, the lower the premium will be. However, if you don’t qualify for public coverage (i.e.: Medicaid), you don’t have employer-sponsored insurance, and your income is not above 250% of the federal poverty level, you might be eligible for cost-sharing reductions.

These “discounts” or “extra savings” allow you to reduce upfront expenses like deductibles, co-insurance, co-payments, and the maximum out-of-pocket fees you will have to pay when needing medical care.

Save Money With Premium Tax Credits

Advance premium tax credits are an efficient strategy to lower your monthly premium if you have purchased your coverage through the Marketplace. Policyholders who qualify can control how much of the tax credit to apply to their health insurance premium each month.

It used to be challenging for policyholders to qualify for this kind of financial assistance. However, the 2021 American Rescue Plan ensured that everyone who is ineligible for public health insurance, unable to obtain insurance through their employer, or within 400% of the federal poverty line can now access the credit.

Adjust Your Cover Level and Optional Benefits

Health insurance policies are important companions that can protect you and your whole family. But this doesn’t mean that your policy should be static. Indeed, your insurance and healthcare needs might change over time, and your insurance policy should reflect these changes.

Open enrollment – which usually happens in the fall – makes for the perfect time to review your coverage, streamline your policies (if you hold more than one), and switch to a plan that better suits your financial and health needs – i.e.: a policy with a lower premium, higher deductible, or more extensive coverage.

Make sure to take your opportunity to review your policy each year!