How to Buy Health Insurance Without Paying Too Much

By Art Forrest

The recent (and ongoing) health care debate has illustrated how expensive health care is, regardless of whether it?s financed by insurance premiums, higher taxes by the government, or cash out of your pocket. It?s important, then, for both individuals and small & large businesses to choose the most appropriate and cost effective coverage for their needs. Here are a few general comments and things to think about?

Health INSURANCE vs. Health Care FINANCING

How to Buy Health Insurance Without Paying Too Much
How to Buy Health Insurance Without Paying Too Much

Most health insurance plans are health care ?financing,? NOT health care ?insurance.? Insurance is, by definition, the pooling of risk for an unexpected financial loss–like your house catching fire or a tree falling on your car during a tornado, or, health-wise, having heart surgery for $145,000.

Question: does your auto insurance pay for oil changes, new tires, or that brake job? Of course not! Those are routine maintenance items that you pay for on your own! What if your auto insurance offered to cover them ? think your premium would go up?

The same is true with health insurance: the more comprehensive the coverage, the more expensive it is. As you consider health insurance, ask yourself a few questions:

1. How ?much? health care to you generally use? Don?t buy a Lexus if all you need is a used Toyota.

2. What?s your real risk? Big, expensive stuff (like hospital stays & surgery)? Most folks could find a way to finance $5-10k if they had to, but how about $50,000+? That?s what health insurance is for ? catastrophic protection.

3. Work with a broker. While it?s okay to shop online ?on your own,? most folks are better off dealing w/ a broker who specializes in health insurance. Find a broker near you by visiting The National Association of Health Underwriters, the professional association for brokers (full disclosure: like me) who specialize in health insurance. A broker will be able to present you with a wide range of plans and options designed to give you the best, most cost-effective coverage.

4. Don?t be discouraged if you don?t think you can get coverage. If you find it hard to get coverage, especially due to current or recent medical history, remember that there are a LOT of different plans & companies around. Frankly, there are very few people who find themselves completely out of luck. Again, deal w/ a competent broker who has a ?vested interest? in helping you (remember: if you?re not happy, he doesn?t get paid!).

5. Stick with the ?brand name? companies. This stuff is too important to ?play around? with and, sadly, there are a bunch of plans around that are not very good.

While you?re waiting for healthcare reform to take effect?

While there are certainly a lot of things that could/should be changed about our current health care & health insurance system, getting mad at your insurance company because of high prices is rather like being mad at the waiter because the food at the restaurant is too expensive.

Your premium cost reflects (1) the cost of health care (doctors, hospitals, drugs, & lots of gov?t regulations), (2) how much health care ?financing? you want or expect (i.e., routine care benefits like doctor visits and prescription co-pays, etc.), and (3) your specific ?situation? (age, sex, dependents, location, and your health. Remember, with auto insurance, if you have a bunch of tickets or accidents, you?re gonna? pay more for your auto insurance).

Regardless what you think of the health insurance industry, health care is very expensive in this country. In closing, here are some tips to help you control the cost:

  1. Finding a good broker (see above).
  2. Buy a plan with a big deductible (think ?insurance,? not ?financing?).
  3. Consider supplementing that big deductible plan with critical illness and accident coverage (73% of claims over $10,000 are due to either accident or the ?big things??-heart attack, stroke, cancer, etc.).
  4. Take better care of yourself; eat right, exercise, be smart about it.

(In addition, please see the updated 20 Part-time Jobs With Health Insurance post for the most current list of employers who offer health coverage for their part-time staff.)

Art Forrest is owner and founder of A.C Forrest insurance group, a family-run business that focuses on the needs of individuals and small businesses. With offices in suburban Atlanta and in Greenville, SC, AC Forrest serves clients in the Southeast, and maintains a referral network throughout the United States. For more information in regard to the content of this post, or for any other insurance matters, feel free to contact him via email.

( Photo courtesy of leoncillo sabino )

8 Responses to How to Buy Health Insurance Without Paying Too Much

  1. Most health insurance plans are health care ?financing,? NOT health care ?insurance.?

    If we could just get people to understand this one concept, we wouldn’t have to go through ObamaCare and you would likely find that medical costs would stop skyrocketing. The major reason medical costs go up is the “third party pay” system. Nobody “thinks” they’re paying for their medical care because somebody else (right now the insurance company, in a few years the government) writes the check to pay the bill. We all want the best treatment, even if we can’t afford it … but wait, we can afford it because “it’s covered.”

    The only thing I would have changed in this post is the phrase “while you’re waiting for healthcare reform to take effect.” ObamaCare is (a) not reform and (b) nothing people should hope EVER takes effect. It fixes nothing and just makes things worse.

    Today’s health care system (and ObamaCare just substitutes evil government for evil insurance companies) is HEALTH CARE FINANCING where somebody else pays the bill. And yet that is an impossible situation to last for very long.

  2. Good points, John. We talk about “health insurance”, but what we mostly mean is health benefit packages, with all the bells and whistles–then we complain about the overall price of the package. We’re solidly focused on having doctor visits, prescriptions and routine tests covered as a metric for “good insurance”, when the real focus needs to be on cost effective coverage that takes care of the big and truly unexpected costs.

    On the page break, ?while you?re waiting for healthcare reform to take effect.?–Art didn’t write that, I did. I put it in to break up the text a bit, but maybe what I added missed the mark. However it does seem as though an as yet unknown health “reform”–what ever that will utlimately look like–is slowly making it’s way through the system.

  3. Thanks for laying out all of this helpful information for us! I especially liked the part about not buying a Lexus if all you need is a used Toyota. I just created my own health care guide for the younger set of Americans, feel free to check it out!

  4. I recently went to buy insurance and found it to be 30% higher than I paid just over 6 months ago. I’m from Texas and my rates have always stayed within the payment of the previous 6 months by at least 3-5%. I have had no tickets or accidents, so why would my rates increase?

  5. I always make sure that my family gets Health Insurance from very reputable companies. health insurance is very important these days.`.`

  6. I’ve read that some insurance companies are now not taking new applications into their existing insureds pools after the healthcare reforms. It will be interesting to see what premiums look like in another year.

  7. Art: I run a small manufacturing business and we recently sat down with are health insurance agent and learned that as a result of the Obama Care program being implemented in 2014 that are health insurance premiums were going up 30% this year alone.

    If this continues it’s going to force people with no other choice than to join the government program which would be a great catastrophe.

    I also agree going with a slimmed down policy with a higher deductible can save families a lot of money but you also need to consider the different kinds of situations families face.

    For example, a younger family with a couple of kids might tend to go to the doctor a bit more as it is in my case and as a result may want to have a doctors copay to help cut cost down.

    While on the other hand someone who doesn’t go to the doctor but once a year may be able to get by with a high deductible plan tied to an HSA account.

    The reality is it all depends on the person and the situation and in the next few years prices are going to go higher and families are going to have to make some choices.

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