How to Avoid Increases in Health Insurance Premiums
Health Insurance premiums are one of the things nobody likes to pay. Imagine if you had to pay double for the same health care benefits. It seems like a major crime and stab in the back. Yet, it is very common and often happens to people who cannot afford it.
How does this happen to you?
We’ve come up with some answers that we have learned over the 30+ years of working in the health insurance industry, and we want to share them with you.
Let’s start from the beginning. Through the years up until the end of 2013 (before Obamacare becomes fully implemented), individual health insurance plans have been underwritten. This means when you enroll into a health insurance policy today, it first must go through a system of underwriting before it can be approved and issued. This process involves asking questions regarding to your health records so the carrier can assess the risk of insuring you. The questions that are asked allow them to figure out your monthly premium charge. If you are in good health, the savings to your premiums can be upwards of 35%. This effect of savings on claims because of good health wears off over a period of two to three years. So the premium must be increased each year for that effect. This means that for every year you have the same health insurance policy, your premiums will increase because you have gotten a year older.
Age = increase in medical expenses.
So, premiums on underwritten individual health plans tend to go up on average 20% or more every year.
However, there is a solution!
When your premiums are due to increase, enroll in a new health care plan. By doing so, this will put you back in underwriting, which will result in two-thirds of that premium increase going away. Often times the competitive juggling against each other of various insurance carriers can result in keeping your premiums the same, or even reducing them in a given year.
This is where we come in. It is very important that you have an experienced broker who has access to the best plans and rates to get the best deal for you each year. The type of broker who can quote you a new health insurance policy that will give you great benefits at a low cost.
Now this has been the situation for every year in the past, but today it is significantly more important to understand how to get around premium increases.
What will my premiums look like with Obamacare?
When Obamacare goes into full implementation on January 1st 2014, the average individual health insurance premium will increase between 25% to 116%, according to an article written in the Huffington Post.
First of all that underwriting discount we mentioned before, it’s going away. So that adds 35% or more onto your premium. Secondly, there a way richer benefits in Obamacare plans than in normal individual health plans—things like very high mental health benefits, maternity for all insureds, unlimited rehab, low deductibles, lower co-pays, and co-pays that count toward out of pocket maximums, and on and on. This will eliminate all the ways premiums have been reduced by discouraging over usage such as going to the ER when not needed. This increases both the cost and the utilization resulting in much higher premiums. Lastly, young adults will see a huge difference in monthly premiums. Under current plans, young adults typically pay 1/6th of the premium of an older person because of lower usage and general good health. Under Obamacare, young adults monthly premiums are reduced to only 1/3 of older individual premium costs. In effect, young adults can see their premiums doubling in the beginning of next year.
We have yet another solution!
A number of insurance carriers have unraveled an Obamacare loophole that, in cooperation with the various state departments of insurance, allow health insurance policies purchased now through December 31, 2013 to remain issued and not be subject to Obamacare penalties until 1-1-2015. This means the increased Obamacare premium cost of 25% to 116% are held off for an entire year for those who purchase a plan now. That is a savings of $1,000 to $10,000 for YOU. Yes, you! In addition some carriers have instituted rate holds until 1-1-2015. This means an additional savings of 25% or more.
If you are paying for dependents on your group health plan, there another area where substantial savings can be reaped this year. There is often a cost shifting to the dependent premium by the group. That coupled with the underwriting savings if your dependents are healthy can work out to thousands of dollars in premium savings for you between now and January 1st 2015. Please contact us. You will be so glad you did.
If you are unsure of what step to take next with your health insurance, it’s okay! That is why there are health insurance professionals out there to help you. America’s Health Insurance offers free reviews and quotes. We work closely with the top health insurance carriers in the nation, so we are up-to-date on all of the insurance products available. We will be able to guide you into an insurance product that fits exactly to what you need.
Now over to you. Do you have any stories on how you were able to save yourself money on your premiums?