By Marilyn Katz
If you are self employed, own a small business, or do not get health insurance through your job for any reason, you probably have to shop for your own individual or family health insurance plan. Since you are not a health insurance professional this job can be very frustrating and confusing. Before, you just selected the health plan that your employer had set up for you, but now you have dozens of options.
You may also be shocked by the price if you have just left a group health plan. That is not because individual health insurance costs more. Actually, because the health insurance company can choose who they will cover in many cases, and adjust premiums in other cases, individual plans may cost much less.
It is just that companies usually pay a substantial portion of the premium for their employees and ther families. When you purchase an individual or family medical plan, you are seeing the entire bill. Many employees are really not aware of how much of the bill their employer covers. Keep in mind that most people who do not get coverage through an employer can deduct some, or all, of their premiums. So if a family health plan costs $450 a month, and a family is in a 30% tax bracket, the real cost will only be $315.
Some families may have to adjust their expectations and change the way they think about medical coverage when they switch from a group plan to an individual or family plan. They need to think about this coverage more like they think about other forms of insurance. For instance, car insurance does not cover gasoline or every oil change! If the premium is too high, maybe a health insurance plan does not need to cover every doctor’s office visit and minor prescriptions.
In fact, health plans that do not provide a doctor’s office visit may be 25% cheaper, and that can shave off hundreds of dollars a year from premiums. That money can pay for quite a few doctor’s office visits, plus leave some money left over to save. Changing from a $1,000 deductible to a $5,000 will probably save even more. Again, it would be better to pay less ever month and work towards providing an emergency savings plan.
Many families look at health savings accounts that work with certain higher deductible medical plans. These accounts earn interest, are tax deductible, within limits, and can be used for many different medical expenses. In fact, the money can pay for many costs that are not covered by most health plans like dental care, health supplements, and vision care. Plus, you never loose the money because unspent money stays in the account. Then, at retirement age (Medicare Age), the money can be withdrawn with no tax penalty.
Most families can find affordable coverage, but it may not be the type of coverage they enjoyed at work. It is important to look at all the available health plans in your area, compare them, and find health insurance that fits into your needs and budget!
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