Last week, CNN Money reported that health insurance premiums have risen over 13 percent in the last two years. Yet, even more jaw dropping is the fact that insurance premiums have increased by 97 percent in the past decade. This secondary form of inflation is cutting an ever-increasing chunk out of my family's monthly surplus. Two years ago, we paid $974.16 per month for full coverage insurance. Last year, our premiums totaled $1,100.80 per month; paying for full medical, dental and vision insurance. When I looked at the totality of our premiums, I realized we were paying $13,209.60 per year -- the cost of a small compact car. Even though my family is on par with the national average when it comes to healthcare premiums, I would prefer to earn an above average grade on my spending. To curb our ever-increasing health care costs, we took five preventative measures.
No. 1: Diet and Exercise
One of the reasons for the increasing cost of healthcare (even with group policies) is the fact that more people are taking poor care of themselves, but still living longer. The majority of our nation does not exercise enough, they smoke, and many maintain poor diets. To take care of my own house first, I subscribed to an old philosophy: "An ounce of prevention is worth a pound of cure". My family and I eat right, exercise, do not drink too much alcohol, and don't smoke. As a family, we also made a commitment to go in for annual physicals to catch small things before they get out of control and become a costly medical expense.
No. 2: Increasing My Deductible
Our healthcare deductible used to be $500. I learned that, like auto insurance, low health insurance deductibles result in higher premiums. To combat expensive premiums, my spouse and I upped our annual deductible to $2,000. What we now save in premiums, we save and invest elsewhere, successfully curbing the cost of the deductible, by keeping the funds in reserve.
No. 3: Changing My Co-Insurance Ratio
Co-insurance ratios are what you pay once you have met your deductible. For example, if your rate is 80/20, you pay 20 percent of the bill and the insurance company covers the remaining 80 percent. We cut our co-insurance to 70/30 and lowered our premiums even further.
No. 4: Using an HSA (Health Savings Account)
We paired our high deductible plan with a health savings account. Each payday, $208 is deducted in our pre-tax dollars, putting $2,500 in our HSA each year. What we do not use rolls over to the next year -- with interest. For us, that is a win/win.
No. 5: One Family, One Plan
Instead of having dual health plans, one from my spouse's employer and a supplemental plan I could buy (I am self-employed), we went with my husband's lower cost group health insurance plan. This also saved us some money.
We Saved $4,800 a Year
The minor changes we made to our healthcare plan saved us $400 per month in premiums, or $4,800 per year. Today, our bank and investment accounts just as healthy as we are; while at the same time giving us the financial flexibility and resources to pay for medical emergencies while earning money on our excess, instead of overpaying for a group policy.
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