Many people in America obtain health insurance through their employers, or their spouse's employer. However, the number of people who have access to coverage in this way are shrinking, due both to layoffs and cutbacks in benefits. As major corporations and small businesses try to find ways to survive an economic downturn, and workers lose both jobs and benefits, the need to save on health insurance has perhaps never been greater. Fortunately, the news isn't all bad. As insurance companies compete for business among individual policyholders, a couple important cost-saving measures have been introduced that can allow individuals or families to purchase their own coverage while keeping it affordable.
One of the simplest ways to find lower premiums is to choose a higher deductible. Usually, the higher the deductible, the lower the cost of the monthly premium. The reason is simple; with a higher deductible, the chance of the insurance company paying out for claims is reduced, therefore reducing the company's risk and requiring less money upfront in the form of a premium. Beyond simply choosing a higher deductible on a traditional plan (also referred to as an 80/20 plan), an increasingly popular option is what's known as a "high deductible" health plan. These plans usually have much higher deductibles, even up to $10,000, but the premiums are substantially reduced, sometimes by more than fifty percent. The insured is then eligible to save for health care costs using a health savings account, which offers tax-free deposits and expenditures.
The key to responsible use of a high-deductible/health savings account plan is to be sure to fully fund the account. Many people will skip funding the account in order to keep the money in their checking or personal savings; however, if a major claim is needed, they will be required to pay most of the costs out of pocket. Once the account is funded, if the funds aren't completely depleted in a given year, then the contribution amount can be reduced the following year. It's vital to at least keep enough money in the account to cover the deductibles and out of pocket maximums, which are sometimes one and the same.