Your rate for health insurance will, largely, be determined by the deductible you are willing to take. This means that you will pay more for a no deductible health insurance contract than you will pay for a larger deductible medical insurance contract.
Your price will be controlled by other insurance-related factors as well. These insurance-related issues include your location, your age, your sex and your state of health. However, the insurance-related issues you have the most control over may be the deductible you select when purchasing a medical care insurance contract.
Most of us know that when you buy a high deductible health care insurance plan, you will pay less than if you take a low deductible health care insurance contract. However, what most don’t know is that the increase in your risk is not equal to the decrease in cost.
For this reason a bigger deductible medical care insurance plan is often a much better deal when compared to a no deductible contract. Raising your risk by a dollar often results in a savings of greater than a dollar.
Chances are you can buy a medical insurance plan very similar to the one you currently pay for with a higher deductible. If that is true, it will be easy to compare your choices.
To determine if you can lower your expenses without raising your risk too much, you can use the following process. The first step is to calculate the amount you will save each year with the higher deductible contract by subtracting the annual cost of your current medical insurance policy from the annual cost of the higher deductible contract. Then determine how much additional risk will take on if you purchase the larger deductible plan. Finally deduct the potential cost-savings from amount of the potential additional risk. Call this dollar amount your “net additional risk”.
If you feel comfortable with the net additional risk the dollar figure, consider purchasing the cheaper contract. But before you do so, do the same exercise again. This time compare your current contract with a plan with an even larger deductible health care insurance contract.
Medical insurance plans that are compatible with HSAs or Health Savings Accounts are often the most cost effective options. These plans typically have higher deductibles and lower premiums. They often will pay for some preventative health expenses even if you have yet to pay your deductible.
This money-saving strategy should not only be used to lower your health care insurance prices. You should also apply the same process to lower your prices for car insurance and for your other personal insurance contracts.
Increasing your cost shares including your deductible and cutting your insurance prices is a tried and true way to getting your costs lower. However, there are two things that you should know.
The first is that it is intelligent to save the premiums that you save by cutting your premiums. Putting this money in the bank can help you in two ways. If you have medical events that are not covered by your insurance plan, some of this money can be used to cover those costs. If you do not have uninsured costs, you may have a better retirement.
The second is that a deductible is not the only cost share for health insurance. Often two contracts with the same deductible might be radically different. The other major cost shares are co-insurance and co-pays.
When comparing medical care insurance policies, it pays to look at all the insurance-related issues involved. Do not focus on the deductibles and forget about the other insurance-related things.
As the prices for insurance go higher and higher, we have to get smarter and make better choices. The steps above might help you lower your costs for insurance and enhance your financial security.
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