6 Ways to Lower Your Health Insurance Premiums

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6 Ways to Lower Your Health Insurance Premiums

If you can’t afford health insurance, try these six ways to lower your health insurance premiums and save money on health insurance.
Stop Smoking.

If you’re a smoker, quit. It’s the single biggest thing you can do to save money on health insurance. Health insurance premiums on health insurance exchanges can be up to 50% higher for smokers than for non-smokers, even if you’ve never been diagnosed with a smoking-related illness. Not sure you can quit? Try getting medical help with it. Most health plans cover smoking cessation programs and medications that help you quit smoking.

If you’re a citizen or legal resident of the USA without affordable employer-based health insurance, you can apply for a government subsidy to lower your health insurance premiums. Called the Premium Tax Credit, this subsidy pays part of the monthly cost of your health insurance premiums. Since you’re only paying a portion of the monthly premium, you save money on health insurance. Eligibility depends on your income, but even many middle-income people will qualify.

How Does the Health Insurance Subsidy Work?
Choose a More Restrictive Health Plan.

The more restrictive your health plan is, the lower its premiums tend to be. What’s a restrictive plan? The more rules a plan has about how you're allowed to get your health care and who provides it, the more restrictive it is. For example, HMOs are more restrictive than PPOs because HMOs won’t pay for out-of-network care, while PPOs will  That’s a big part of why HMOs cost less than PPOs.

HMO, PPO, EPO & POS—What’s the Difference & Which Is Best?

If you’re comparing two health plans of the same type, for example, two HMOs, the plan with the narrower provider network will tend to have lower premiums. Narrow-network plans save money by restricting your choice to just the few physicians or facilities that offer the lowest rates. Since the plan is able to save money this way, it’s able to pass that savings along to you in the form of lower health insurance premiums.
Choose a Plan With Higher Cost-Sharing.

As a general rule, the higher a health plan’s cost-sharing requirements are, the lower that plan’s premiums will be. Choosing a plan with a higher deductible, coinsurance rates, or copays will usually lower your health insurance premiums.

How do you find plans with higher cost-sharing? If you’re shopping on your state’s health insurance exchange, look for plans in the lower metal-tiers. For example, shop among the bronze and silver plans rather than the gold and platinum plans.

Bronze, Silver, Gold & Platinum–Understanding Health Plan Values

If you’re under 30 or have a hardship exemption, you might qualify to buy a catastrophic plan. Catastrophic plans tend to have the lowest premiums, but also offer the lowest level of coverage when you get sick. They require extremely high deductibles.

As another cost-saving measure, consider pairing a High Deductible Health Plan with a Health Savings Account. If you buy a qualified HDHP, you’re eligible to open an HSA that will allow you to squirrel away money for health care expenses. Money you contribute to your HSA is tax deductible. The money in your HSA grows tax-deferred like the money in your IRA or 401(k), and you don’t have to pay taxes on it when you take it out to pay for medical expenses like your deductible and copays.  While your HSA won’t lower your health insurance premiums, it will help you save money on income taxes.
Consider Relocating.

Health insurance companies in the United States aren’t allowed to charge you more due to your sex or your pre-existing conditions. However, they can vary their premiums based on where you live. For example, a health plan in California is probably going to cost more than a similar plan in Arkansas. But, you may not have to move across the country to find lower health insurance premiums. In some areas, moving just a few miles across the county line will make a difference.

For many, moving may not be practical. For some, the cost of moving might wipe out any savings on the cost of health insurance premiums. However, if you live in an expensive area of the United States, by moving to a lower-cost area, even if it’s just a county away or just across the state line, you could save money on health insurance.
Weigh Spousal & Family Plan Options if Someone in Your Family Has Job-Based Insurance.

If you’re married and your spouse has health insurance through his or her job, check out the cost of adding coverage for yourself onto your spouse’s plan. Sometimes this is a better deal than buying an individual plan; sometimes it’s not.

If you’re under 26 years old, check out the cost of adding coverage for yourself onto a parent’s plan. Once again, sometimes this costs less, but not always. Since you’re less than 30, you’ll also be eligible for a catastrophic plan on your state’s health insurance exchange. Although these plans usually cost less, they also offer less coverage and have very high deductibles.

Frequently, buying a family plan is less expensive than buying an individual plan for each member of the household. However, employers offer all sorts of combinations now, so make sure to compare all of your options and costs. For example, some employers offer one rate for employee coverage, another rate for employee-and-spouse coverage, a third rate for employee-and-child coverage, and a fourth rate for entire-family coverage. To find the lowest overall premium cost, you need to compare the cost of each of these four options, along with the cost of individual coverage for those left out of each employer option. For example, maybe it’s cheapest option for your family is for your wife to cover herself and the kids on her work plan, and you to buy an individual plan on your state’s health insurance exchange.

When you're weighing these various combinations of work-based versus individual health insurance, keep an eye on your cost-sharing expenses with the various options. Deductibles are usually your single largest cost-sharing expense, so weigh the deductible of each plan carefully. It won't help your financial situation if you save $600 on your family's yearly health insurance premiums, but end up paying $4,000 more in deductibles that year.

Deductibles work differently for family plans than they do for individual plans, and the family deductible in a High Deductible Health Plan works differently than the family deductible in other types of family plans.

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