How to reduce your health insurance monthly payment

I was talking to my neighbor today about how he can reduce his monthly health insurance costs. He runs his own small business and has himself, his wife and two young children that are currently on a $10 copay health insurance plan from the largest insurer in our area. He wanted to know how to get his monthly payment down to improve his cash-flow for himself and his business.

My first thought was to encourage him to increase his deductible. Increasing the deductible means that for significant medical needs you'll need to pay more up-front before the health insurance benefits kick in. So moving a deductible from $1,000 or $2,500 per year for his family to $10,000 would probably reduce his monthly payment significantly. I forgot to mention the coinsurance, which is a split between what you pay and what the insurer pays that essentially increases your deductible: you must calculate how much more you'll pay before full health insurance benefits kick in. We also spoke about the need to ensure that if there were any major medical events that happened on his policy, that re-underwriting might mean that they'd pay more for insurance due to the insurance company's guidelines that might include higher rates for anything major.

Since he didn't have any major medical conditions, we spoke about the possibility of an HSA qualified plan - a High Deductible Health Plan that has been approved for a Health Savings Account (HSA), the type of plan that my family has. While we didn't touch on the  HSA, we did discuss how moving from a copay plan to one like this makes financial sense if you don't visit the doctor frequently. When we eliminated our copayment our doctor visit cost went from around $10 to around $55 per visit. But overall we save money since having the copay and not visiting the doctor costs us - for doctors visits that we are not making. With the wellness visit for each year included, we get much of our annual health expense paid for wellness. I pointed out that we had a few things on those visits that were not covered, but with the network discount we paid only a few dollars for these additional items and we felt that it is a good value.

I reinforced the need to go with a quality insurer - and encouraged him to use the process in my book to find his best deal. He mentioned that he was paying $700 a month, and I told him we got it down to around $300 a month. Plus I admitted how little I originally knew and how we were paying $1200 a month before I set out to learn and share the secrets of buying and keeping good health insurance. I mentioned that there are dangers in buying health insurance, and that I wanted to make sure he didn't get ripped off like I had.

WIth a basket of freshly picked figs in hand, I turned to leave and said hello to another neighbor who happened to be walking by at the same time. After reading my book, and with very few questions, this other family was able to move from a questionable plan to a quality insurer and save on their monthly premiums at the same time - a story which should be told on another occasion.