Saturday, November 23, 2013

How To Save on Health Insurance if You Reach...

aIf you’re reaching your health insurance out-of-pocket maximum every year, you may have opportunities to save money. When you have a chronic medical condition or high healthcare expenses, it can be hard to save money on healthcare. Coinsurance expenses can be prohibitive if you’re on an expensive medication, require frequent infusions, or need recurring costly treatments. But, your high healthcare expenses are the key to two savings opportunities.First, you may be able to save on your out-of-pocket expenses like copays, coinsurance, and deductibles. Second, you may be able to save on health insurance premiums. These savings techniques only work for people who expect to reach their plan’s out-of-pocket maximum each year.Choose a health plan with a lower out-of-pocket limitOnce you’ve paid enough out-of-pocket healthcare expenses to meet your yearly out-of-pocket maximum, most health insurance companies will pay 100% of your covered expenses for the rest of the year. The only thing you continue to pay is your monthly health insurance premium.Therefore, if you choose a health plan with a lower out-of-pocket maximum than you’re currently paying, you save money. When you’re calculating the potential savings, make sure that the savings you’ve won haven't been eaten up by higher premiums.Your best bet to find a plan with a lower out-of-pocket maximum but premiums similar to your current plan is to look at plans with higher than average deductible and coinsurance. Since most people never reach the out-of-pocket maximum, the higher the deductible and coinsurance, the less the health insurance company has to pay for healthcare services. This allows the health insurance company to charge a lower premium.Since you know you’ll be paying the full amount of the out-of-pocket limit each year, the higher deductible and coinsurance don't increase your yearly costs. In fact, since you're choosing a plan with a lower out-of-pocket maximum, your yearly costs will go down. However, the higher deductible and coinsurance will impact when you'll pay your out-of-pocket expenses, shifting those expenses toward the beginning of the plan-year. You’ll reach the out-of-pocket maximum earlier in the year because it's lower so it's easier to reach, and because your deductible and coinsurance are higher causing you to pay more upfront to reap the yearly savings.Choose a health plan with the same out-of-pocket maximum but a lower premiumAnother way to save is to shop for a health insurance plan that offers the same out-of-pocket limit as your current plan, but a lower monthly premium. While you’ll still have the same yearly out-of-pocket healthcare expenses, you’ll save money each month on the cost of the premium.Once again, you’ll have the best luck finding a plan that meets these criteria if you look at plans with higher deductible and coinsurance than your current plan. Although you’ll need to have money available in the first few months of the year to meet your new deductible and coinsurance expenses, you’ll have wiggle room in your budget since you’ll be paying less each month in premiums.Caveat EmptorMake sure you fully understand the benefits of the plan you’re considering switching to. While most health plans cover 100% of your healthcare costs after you’ve met your out-of-pocket limit, some still require you pay copays to see the doctor, or coinsurance for drugs. You need to nail down these specifics before you switch plans. For example, it will cost you dearly if you switch to a plan with a lower out-of-pocket maximum, only to discover the plan requires you to pay 20% coinsurance on your expensive prescription even after you’ve met your out-of-pocket maximum. Worse yet would be to discover that your new plan doesn’t include your expensive prescription drug in its formulary, or doesn’t cover your costly treatment. You would have to switch drugs or treatments, or pay the entire cost out-of-pocket. Because your healthcare costs are so high, it’s crucial that you thoroughly investigate a new health plan’s benefit coverage before you switch.The Affordable Care Act requires all health plans sold through health insurance exchanges to cover 100% of eligible out-of-pocket expenses after you’ve met your yearly out-of-pocket maximum. But, most plans aren’t required to comply with that before January 1, 2014, some large plans don’t have to comply until January 1, 2015, and grandfathered plans may not have to comply at all.The Affordable Care Act also created a health insurance subsidy to help decrease the out-of-pocket maximum for eligible people with low incomes. Learn more about this in, "How the Subsidy to Reduce Your Out-Of-Pocket Maximum Works." Before you switch plansRead “Out-Of-Pocket Maximum—How It Works and Why to Beware” to ensure you understand the caveats before you make any changes to your health plan.Make sure you’ll have enough money available early in the plan-year to pay the potentially higher initial costs like deductible and coinsurance, before you meet the new out-of-pocket limit and start reaping the savings. Consider a Flexible Spending Account.Make sure the health plan you’re considering will accept your prior insurance as creditable coverage so you don’t run into a preexisting condition exclusion if you change plans before those exclusions are eliminated in January 2014.If sticking with your current physician is important to you, make sure he or she is in-network with the health plan you’re considering.

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