Keeping Your Health Insurance Premiums Low
September 29, 2005
Health Savings Accounts offer tax deductions for medical expenses, and the opportunity to set up additional retirement accounts. But regardless of any other positive benefit of Health Savings Accounts, lower premiums are the primary reason that thousands of Americans have chosen Health Savings Accounts as the best way to protect their family's health and assets. So this month, I'd like to talk about some key suggestions on how to keep your premiums low.
1. Choose an HSA-qualified plan for lower rate increases.
Average group health insurance premiums rose by 9.6% last year and rose over 10% for each of the previous six years. Individual plans went up even more. Yet I expect most HSA plans to experience much lower rate increases. A very large study was recently published showing that rate increases over the past year for consumer-driven plans such as HSA plans was only 3.4%. Blue Cross of Minnesota has reported that its HSA customers spent 8% less than their traditional insurance clients. Humana has reported claims' costs of 4.9% for consumer-driven plans, versus a 19.2% increase in claims for other plans. In fact, average HSA premiums for individuals have actually dropped 19.5% during 2005.
The reason these plans will have lower rate increases is that people who have HSA-qualifying high-deductible health plans are likely to pay closer attention to costs, and take better care of their health. For instance, an HSA owner offered a statin drug to lower her cholesterol may be more likely to request a generic version, or ask her doctor if inexpensive nutritional supplements such as niacin or fish oil may be a solution. These actions save the insurance company money and should result in lower rate increases.
2. Raise your deductible as your HSA account grows.
When you fund your account you build up a financial "cushion" which allows you to raise your deductible as your account grows. Every time you raise your deductible, your premium should go down.
By the way, don't forget that every time you fund your account you get an instant tax-deduction. When you offset the tax savings against your premiums, you'll find your net cost for an HSA plan can be very low.
The maximum allowable contribution goes up every year with the rise of the Consumer Price Index. Final numbers are not out yet, but in 2006 we expect the individual contribution limit to go up to $2,700, and the family limit to be $5,450. So each year you can deposit greater amounts into your HSA and continue to raise your deductible, if you choose.
3. Stay healthy, so you can switch plans.
All health insurance plans have rate increases, and weve even seen premiums jump on some HSA plans. If a rate increase happens to you, you can switch to a different insurance company but only if you pass their underwriting requirements. If chronic disease develops, you may be stuck with your current plan, and its accompanying rate increases, for eternity. Or at least it may seem that long
If you pay attention to the pharmaceutical commercials, you learn lifestyle really has nothing to do with disease, and it is natural and healthy to be on many medications for the rest of your life, which will then solve your health problems.
If you pay attention to the science, you know the truth is quite different. It appears lifestyle is probably 95% of the picture, and we know the occurrence of degenerative disease can be dramatically reduced and even prevented.
Fortunately, Ive found many of our customers are interested in wellness, and disease prevention. After all, theyre paying for their own doctor visits if they do get sick. I also believe it is because HSA owners are forward thinking people, and like to plan for their future both financial and physical. You can improve your odds of excellent health with just a few key habits:
very high quantities of fresh vegetables and fruits.
Shoot for 35% of your calories. This will lower your
risk for diabetes, high blood pressure, heart disease, cancer,
your intake of sugar and starchy carbohydrates like bread
and pasta. The majority of health problems in the
U.S. are related to metabolic diseases that involve insulin
- Exercise and lift weights. Exercise guru Jack La Lanne just turned 92 on September 26, and he says if you have muscles you never feel old.
4. Compare your plan to other available plans at least once a year, or whenever you get a rate increase.
Often-times people keep their plan much longer than they should, and end up paying much more than they should. If your rates go up, you should compare your plan to others that are available, just to make sure you are getting the best value possible. You can compare a wide variety of plans at http://www.hsaforamerica.com/instant-quote.htm. If you have your coverage through HSA for America, we will do our Comprehensive Policy Review every year or any time you get a rate increase, in which we analyze your plan against other available plans and give you our recommendations.
If you do not have an HSA currently, you can find out how to choose a plan and sign up on our How to page. If you would like our assistance in choosing and signing up for a plan, you must submit an HSA Consultation application. Because each consultation is a personal one-on-one conversation about your individual needs, and because we are so busy handling new online enrollments, we can only accept a limited number of consultation requests each week. We will thoroughly review your application, and if we feel like we can help you we will send you an email to confirm your appointment. To apply for an appointment you may call us at 800-913-0172, or fill out our online consultation application.
If you'd like our assistance, please give us a call at 866-749- 2039 and we'll be happy to help.
To your health and wealth!
P.S. Next month Minimizing Your Prescription Drug Costs.