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10 ways to spend less on health insurance

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Health insurance is expensive, but there are ways to get a better deal. We’ll walk you through some of the best cost-saving tricks. 

Emily Shiffer

By Emily Shiffer

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

Supplement your major medical insurance 

It might seem backward to add coverage to your insurance plan to spend less. But supplementing your main insurance policy could actually save you money in the long run. 

“Many people trying to save money on insurance fall into the mindset of getting the minimal coverage possible to save on premiums,” says Kevin Lindmier. He’s a licensed insurance agent with HealthMarkets Insurance Agency.  

While this will save you money month to month, it won’t help if you encounter an unexpected medical event, such as a car accident. 

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“In many cases, adding accident coverage, hospital coverage, critical illness coverage, etc., for just a little more in premium every month can help tremendously to stem out-of-pocket costs,” Lindmier says. 

Recommended reading: 6 health insurance benefits you might not know about.

Take advantage of government subsidies 

You might qualify for government-subsidized health insurance programs, such as Medicaid and the Children’s Health Insurance Program. This is even more likely if your household income qualifies below certain percentages of the federal poverty level. 

“Check out HealthCare.gov to see if your income may qualify for a tax credit or subsidy,” Dr. Ali says. “This is a great way to get quality major medical coverage for less.” 

Go for your preventive care visits 

Most health plans must cover some preventive services, such as your annual physical. 

“Preventive care is vital to good health, and these visits are free if you have insurance,” Gatton says. “Identifying any health conditions early can be a big money saver.” 

That’s why it’s important not to skip your preventive care visits. Your doctor can identify and treat conditions before they cause complications that could land you in the emergency room (ER). 

Shop wisely for your health care needs 

Shop for health care as you would for your groceries or a new car. You have the power to search for the best deal. 

“Different providers charge different amounts for the same services and procedures,” says Lindmier. “Go get a second opinion and ask questions about the costs with each provider.” 

Prices also depend on your insurance company, your plan and whether you pay your bill in cash. 

“If you are in need of an MRI, shop around and ask if they offer a discount to pay cash,” Lindmier says. “I have heard of people paying $400 cash for an MRI, while someone else may be billed $1,500 or more through insurance for an MRI at the same location.” You may want to compare prices from freestanding MRI facilities to those at a hospital, too. 

Avoid the ER if you can 

An ER is typically the most expensive place to receive care. According to a National Nurses United report, more than 100 hospitals in the U.S. charge markups of more than 1,000% for medical procedures. These include the ones you’d undergo as an ER patient.  

“If you’re bleeding or having chest pain, the ER is the right place to go,” Gatton says. “But there are many cases where an outpatient center or an urgent care is more appropriate than an ER for care.” 

Common issues that can be handled at an urgent care facility include: 

  • Fever 
  • Abdominal pain 
  • Dehydration 
  • Sprains and strains 
  • Small cuts that might need stitches  

But if you have more serious symptoms, such as chest pain, difficulty breathing or a severe cut, head straight to the ER or call 911. (And if you’re experiencing any of these subtle heart attack symptoms, call 911 right away.) 

Following even 1 of these tips could help you spend less on health insurance and medical costs. Don’t forget to print out the free Optum Perks discount card and bring it with you to the pharmacy to save even more money. 

 

Additional sources
U.S. health spending compared to other countries: Peterson-KFF Health System Tracker 
Study on usage of HSAs among eligible adults: JAMA Network Open (2020). “Use of Health Savings Accounts Among US Adults Enrolled in High-Deductible Health Plans.” 
Report on rising hospital prices: National Nurses United (2020). “Fleecing Patients: Hospitals Charge Patients More Than Four Times the Cost of Care” 
Study on cost-saving potential of prescription discount cards: Journal of American Pharmacists Association (2019). “Drug discount cards in an era of higher prescription drug prices: A retrospective population-based study.”