Can You Lower Your Individual Health Insurance Costs?
Can You Lower Your Individual Health Insurance Costs?
Everyone is searching for ways to save money in these difficult economic times. None of these efforts is more intense than with health insurance.
Consider this example: an employee that has been advised that his premium for dependent coverage will be increasing to more than $1,000 per month! After absorbing this bad news, he looks for some way to lower that cost. After significant research, he discovers that he can get individual coverage for his wife and two children for $350 per month. But should he make the change?
The answer is not always clear cut. If he can obtain “similar” coverage without pre-existing conditions, a comparable network, and the insurer is a highly rated carrier with a stable history, the answer is probably yes. The key is whether or not a person can find truly similar coverage and still achieve cost savings.
Historically, true group plans tend to offer more generous benefits than individual plans. For instance, certain benefits (such as maternity) may only be available through group plans in certain states. Prescription drugs may be covered without spending limits. Also, in general, group plans offer guaranteed issue coverage for all employees regardless of health status. Insurers offering individual coverage can decline to issue coverage entirely or exclude coverage for certain conditions indefinitely for any applicant.
Below are some questions to ask yourself before purchasing an individual health policy to replace group coverage for you and/or your dependents:
- Will you or your spouse need maternity benefits in either the near or distant future?
- Have you carefully compared premiums? Remember that most premiums for dependent coverage under a group plan are paid pre-tax. Individual policies you purchase on your own will be paid post-tax, unless you are able to deduct healthcare premiums as a miscellaneous expense.
- What are the overall limits of coverage for the individual policy you are considering?
- With the new plan, are your doctors and hospitals in network?
- Have you researched the insurance company’s track record for raising rates each year?
- How will the application for insurance be underwritten?
- Are you willing to make the trade-off of accepting a plan with less comprehensive coverage for a lower rate?
If you are currently enrolled in a group health insurance plan, it’s entirely possible that you may not be able to find a better bargain. Be aware that even if you switch to an individual plan, your premiums more than likely will still increase annually, and possibly even more so than under a group plan.
Remember that it is critical to understand what you are buying with any insurance purchase. At any rate, if you do decide to purchase an individual policy, DO NOT drop your current coverage until you are approved and have thoroughly reviewed your new policy.
