No one enjoys dealing with health insurance. It’s complicated, confusing, and now, potentially a subject of conflict with your neighbors or relatives depending how you feel about things politically.
Like it or not, though, it’s an essential part of life as a successful, independent adult. That doesn’t mean it has to be an expensive part of your life.
While it’s a necessary cost, you can get proactive and take a few steps to find a reasonably-priced policy that also provides the coverage you and your family need.
Skipping Insurance Is Not the Cheap Alternative
Let’s just address this upfront: going with no insurance is not a way to save money on this cost. Paying for health care costs when you need care without insurance can drain your bank account of tens of thousands of dollars — or more.
Plus, under the Affordable Care Act, going without health insurance coverage means dealing with a tax penalty. (There are some exceptions to the rule.)
The penalty is a flat-fee that’s adjusted for inflation each year. In 2017, the fee for skipping coverage was 2.5 percent of your household’s adjusted gross income.
So if no insurance is not an option, what is when it comes to cheap health insurance?
Know Exactly What You Need
The best way to get cheap health insurance is to avoid paying for what you don’t need. If you’re young, healthy, and don’t often see a doctor beyond annual checkups, you could get away with minimal coverage.
And depending on your needs, you may not want to pay for additional policies like dental and vision. Paying for those visits out of pocket when you need to go could be cheaper than purchasing insurance that includes plans for these providers.
Obviously, you need to be honest with yourself here. Don’t skip on coverage that you are likely to use. It’s cheaper to be insured for what you need rather than to risk it and go without.
Evaluate and Compare Your Options
Once you understand what you need to cover, look for policies that provide just enough coverage (but not so much that you’re paying for something you’re unlikely to use).
If you choose to work with an agent, make sure they’re an independent broker and not associated with a single company. You can also ask your financial planner for references if you don’t know where to start.
Seek Out High Deductible Health Plans
Deliberately looking for high deductibles might sound counter-intuitive. We’re on the hunt for cheap health insurance after all, right?
Yes, and a high deductible health plan (HDHP) can actually cost you less out of pocket than health insurance with lower deductibles.
Again, if you’re young, healthy, and rarely need health care outside of annual exams or don’t anticipate any major changes to your health in the next year, this strategy could help you save because high deductible plans come with lower monthly premiums.
In addition, having an HDHP allows you to access health savings accounts, which are really powerful saving and investing tools. You can contribute money to HSAs to use for medical expenses, which can help you manage that high deductible.
You can invest the money in certain funds in your HSA, too, which gives you a chance to put those savings to work for you.
Even better? Money you contribute to the account is tax-deductible and you don’t have to pay taxes on investment gains or what you withdraw from the account as long as you spend the money on qualified healthcare costs.
Here’s the catch with HDHPs: the deductible can be overwhelming if you don’t keep that cash on hand in the event of emergencies. So if you choose to get a high-deductible health plan to enjoy lower monthly premiums, ensure you keep the amount of your full deductible in your emergency fund should you ever need to pay it.
Take Advantage of Open Enrollment Periods
By knowing what you need, evaluating your options and shopping around for the policy with the lowest cost that still gives you the coverage you want, and making use of options like HDHPs, you can secure an affordable healthcare plan for yourself or your family.
But as you’ve probably noticed, things in this area of life change frequently. Whether it’s because new concerns about your health crop up throughout the year, family plans change, or national politics causes a disruption to your existing coverage, you can’t assume your existing plan will be the best plan for you next year.
Know when your open enrollment period is, and plan ahead each year.
Put a task in your calendar to review your coverage on an annual basis and chat with your fee-only financial advisor if you need help sorting through the options and determining which plan is best for your overall financial and physical health.