Health insurance is expensive in the U.S. On average, Americans spend about $12,000 per person each year, according to a report from the Peterson-KFF Health System Tracker.
Between 2019 and 2020, per capita health spending jumped 10% in the U.S., the same report concluded. Translation: Health insurance isn’t getting cheaper. In fact, it costs more every year.
“As the direct cost of health care goes up, so will the cost of insurance,” says Cindi Gatton. She’s vice president of Healthcare Advisory at Caribou, a company that helps people navigate the complexities of health care. “But without health insurance, individuals face the risk of having to pay those high costs entirely themselves.”
Many people can’t do that, especially if an unexpected health condition arises, Gatton says. That’s partly why it’s so important to have health insurance. Luckily, there are ways you can secure coverage for you and your family — and stay within your budget.
(If you’re also trying to spend less on medications, we’ve got you covered. Download our free mobile app to find coupons that can save you money on prescriptions.)
Find a balance between premium and deductible
A deductible is the amount you pay for health care services before your insurance plan starts to pay. Health care plans have different deductible options. Choosing the one that’s right for you is your first step to saving money.
- A high-deductible plan means your monthly premium will be lower, but you’ll have to pay more medical costs upfront before your insurance kicks in to pay its share.
- A low-deductible plan has a higher monthly premium. However, the total amount you’ll pay out of pocket before your insurance starts paying is lower than a high-deductible plan.
- A zero-deductible plan doesn’t require you to meet any minimum before your insurance starts covering the full cost of your health care services. These typically come with the highest monthly premiums.
You’ll want to consider your family’s finances and your health needs when selecting a deductible. If you can afford to pay a higher monthly premium, a zero- or low-deductible plan can save you money on unexpected medical events, such as emergency surgery.
Pick the PPO plan, when you can
When choosing your health insurance plan, you’ll likely have a choice of either an HMO (health maintenance organization) or a PPO (preferred provider organization). There are a few key differences between these options:
- HMO: This plan usually limits coverage to doctors who work for or contract with the plan. People with HMO plans also need referrals from their primary care physician (PCP) to visit a specialist, such as a dermatologist or an allergist.
- PPO: This type of health plan contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. With a PPO plan, you pay less if you use providers in the plan’s network, but you can also see doctors outside your network. And unlike an HMO, you can typically see a specialist without a referral from your PCP.
“Going out of network can cost you a whole lot more than you think,” says Noor Ali, MD. Dr. Ali is a health insurance adviser at Affordable Health Insurance. “Staying in network allows you to take advantage of big in-network discounts, which then reduces your out-of-pocket responsibility.”
Use your HSA …
An HSA (health savings account) is a tax-free health account that is available only to people with certain high-deductible health plans. You pay no taxes on contributions into this account or on withdrawals for qualified medical expenses, such as prescriptions. And the money in your HSA can be invested and grow tax-free. Contributions can come from you and your employer.
Unfortunately, many Americans don’t use their HSAs. According to a 2020 JAMA Network Open study, 1 in 3 eligible people don’t use these valuable savings accounts. And among those who did, more than half of the people hadn’t put any money into it in the past year. That means they’re missing out on potentially thousands of dollars in annual tax savings.
… or use your FSA
An FSA (flexible spending account) is similar to an HSA. But it’s available to people with all types of health plans, not just high-deductible ones. Both you and your employer can make contributions to this tax-free account. That allows you to save faster for a big medical event, such as surgery. But unlike an HSA, the money in an FSA must be spent before the end of the year. (Here are 8 creative ways to use the money in your FSA before its gone.)
Use pharmacy discount plans
It’s easy to assume you can get the best prices on medications by going through your insurance, but that’s not always the case. A 2019 study published in the Journal of American Pharmacists Association found that medication discount cards saved an average of $17.80 per prescription.
“Sometimes running your recurring medication through insurance is more costly than using prescription pharmacy coupons,” Dr. Ali says. “Always do a quick check and comparison and do whatever is less out of pocket for you.”
The Optum Perks discount card can help you save up to 80% on medications, and it’s totally free to use. Learn how to take advantage of our prescription savings program.
