How to Avoid Overpaying for Health Insurance

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Contributor, Benzinga
February 18, 2022

Are you overpaying for your health insurance? Most people probably are. But you can make your health insurance more affordable by shopping around for the right health insurance plan for you. You’d be surprised how much money you can save when taking a second look at what you're really paying for when it comes to health insurance. Price comparisons and adjusting the benefits of your policy could make all the difference when it comes to cost.

Why Are Health Insurance Premiums So High?

Why are health insurance premiums so high? When compared to the cost of inflation, the price for health insurance is through the roof. So what makes it so expensive in the first place? Rasons health insurance cost so much include:

The High Cost of Medical Care

The high cost of medical care makes up 90% of spending when it comes to healthcare. Medical-care costs include expenditures for the chronically ill or those with long-term conditions. New procedures as well as prescription medications and technologies mean medical costs are always on the rise.

The Affordable Care Act of 2010 brought millions of new Americans to health insurance rolls, and this has caused rates to rise. Insurance costs, while based partially on your individual condition, are spread among the population to help absorb the cost. The healthy help keep costs down for the sick, the young for the old.

The five biggest factors contributing to the high cost of insurance include:

  • Growing population
  • Bigger population of seniors
  • Increased cases of diseases
  • Greater access to medical care
  • Service price and intensity

Your Plan is Premium-Expense Weighted

What this means is that you bought health insurance that’s weighted more toward the expense of your premiums. What’s the reason for this? Health insurance plans that are premium-weighted often mean less out-of-pocket expenses for you — lower deductibles, coinsurance and copays. The plans with the highest premiums are typically platinum plans and are for people who plan on using them a lot. If you’re healthy and don’t foresee using your health insurance that much, then a platinum plan probably isn’t for you, and it’s what is making your premiums so high.

Your Lifestyle Choices Are Unhealthy

Unhealthy lifestyle choices include things like stress-related activities such as your job or consumption issues like overeating and excessive drinking. Most of the time, however, they’re talking about smoking. Health insurance premiums for smokers can be as much as 50% higher. Smoking affects almost every organ in your body and can lead to:

  • Cancer
  • Diabetes
  • Lung disease
  • Heart disease
  • Strokes

Smoking increases your risk for eye diseases, tuberculosis and a weakened immune system. Smoking always leads to higher premiums, and even if you stop smoking, it can take up to five years for your insurance company to reduce your rate.

You’re Getting Old

It’s going to happen to everyone one day: getting old. The older you get, the more expensive your health insurance premiums become. Premiums can be as much as three times higher for older people. Besides, you’re more prone to using your health insurance when you're older; it only stands to reason that your premiums will be higher.

Where You Live

You could pay higher premiums depending on where you live. Health insurance costs more in some states than it does in others. While the average cost for health insurance tops $712 per month in West Virginia, it’s only $292 in Minnesota. The national average for Obamacare is $443 per month before tax credits. In 43 states, the cost actually fell in 2021. 

Key points:

  1. Health insurance costs have been rising faster than the rate of inflation for decades. While becoming more out of reach for many consumers, there appears to be no end in sight.
  2. Healthcare costs in the U.S. were expected to surpass $4 trillion by the year 2020.
  3. Aging of the baby-boomer generation has lead to an increase in medical services

Comparison Shop

Just like buying groceries or clothes, shopping around for the best price is always a good idea — even with health insurance. You can go through an agent, do it site by site or visit a quote comparison website like Policygenius and let it do the shopping for you. While limited on the number of companies they represent, quote comparison sites often find the best choices for you and save you money.

Use Your Health Insurance Wisely

Every cough and sore throat does not require a visit to the doctor. It may sound crazy but there are people who go to the doctor — or even worse, the emergency room — every time they feel even the slightest bit under the weather. This costs money, even if you only have to use your copay.

Going to the emergency room is expensive. If you really do need immediate medical care, consider visiting an urgent care center instead of a hospital emergency room. It’s a lot cheaper, and chances are, you’ll be seen immediately. Emergency room visits can take hours, and there’s no guarantee you’ll get better care.

How to Save Money on Prescriptions

Prescription medication isn’t always free — even if you have health insurance. Prescription medication plans have limits, and they don’t cover everything. When using your prescription medication plan, there is often a copay involved. Ways to save money on prescriptions include:

Opting for a 90-Day Supply

Because there is often a copay involved with your prescription medication plan, opting for a 90-day supply of pills can often save you three times the money over a 30-day supply. How does this translate into real dollars? Imagine having five different prescriptions at 30-day supplies with a copay of $35. That’s $175 per month, or $2,100 per year. Now, do the same math, but use the 90-day supply model instead. The same five prescription medications now cost just $58 per month, or $700 per year. That’s a difference of $1,400 per year. That’s real savings.

Choose the Generic Brand

The manufacturer initially has the exclusive rights to prescription medications. After that time period expires, the patent is fair game. That’s where generics come in. Generic brands are cheaper than the real thing and often just as good. How much cheaper? According to the Food and Drug Administration (FDA), generic drugs can be as much as 85% lower than their brand-name counterparts. Considering how expensive some prescription medications can be, that’s huge savings.

Pick a Pharmacy in Your Network

Just like going to the doctor, choosing a pharmacy in your health insurance plan’s network saves you money. Preferred cost-share pharmacies often provide discounts for members and in-network customers. 

Remember, not all medications are covered by your prescription medication plan. In these cases, it makes good financial sense to use discount medication services like GoodRx and SingleCare. Discount services can save you as much as 80% off your medication costs and do not count toward policy maximums.

Compare Health Insurance

If you feel like you're overpaying for your health insurance, there’s no time like the present to start shopping around. Perhaps your rates are too high because you bought the wrong policy; maybe you’re paying for benefits you don't need. Check out these great insurance plans Benzinga’s health insurance experts have put together.

  • Blue Cross Blue Shield Health Insurance
    Best For:
    Nationwide coverage
    securely through Blue Cross Blue Shield Health Insurance's website
  • Sidecar Health Access Plan
    Best For:
    No enrollment period health insurance
    securely through Sidecar Health Access Plan's website

    Plans referred to above are excepted benefit fixed indemnity insurance products marketed and administered by Sidecar Health Insurance Solutions, LLC and underwritten by Sirius America Insurance Company or United States Fire Insurance Company, depending on the state. As an excepted benefit plan, it does not provide comprehensive/major medical expenses coverage, minimum essential coverage, or essential health benefits. You cannot receive a subsidy (premium tax credit and/or cost-sharing reduction) under the ACA in connection with your purchase of such an excepted benefit fixed indemnity insurance plan. Also, the termination or loss of this policy does not entitle you to a special enrollment period to purchase a health benefit plan that qualifies as minimum essential coverage outside of an open enrollment period. Coverage and plan options may vary or may not be available in all states.

  • Kaiser Permanente Health Insurance
    Best For:
    Access to Kaiser medical specialists

How To Beat The High Cost Of Health Insurance

When it comes to beating the high cost of health insurance, knowledge is king. Information is everything, and Benzinga has a vast array of articles and educational tools to help you become more informed. By using all the great information Benzinga has gathered for you, it’s a virtual certainty you will learn how to manage your health insurance premiums.

Frequently Asked Questions

Q

Is $500 per month a lot for health insurance?

A

It depends on where you live, your situation and what plan you have. For example, if you’re 40 years old and on a silver plan, the average cost nationally per monthly premium is $541. The cost goes up or down depending upon where you live. 

 

The cheapest insurance in the nation is in Georgia where monthly premiums average $309. In contrast, if you live in West Virginia you may pay as much as $831. If you’re on Medicare, the cost for Part B is $170 per month. Medicaid is free. 

 

Is $500 per month a lot for health insurance? If you have private insurance, it’s actually right there around the national average.

Q

What is a good amount to pay for health insurance?

A

It depends on a number of factors. Family plans are more expensive than individual plans, older people pay more than younger, and unhealthy people pay the most. Generally speaking, however, the average premium for a family of four averages around $21,000 per year. For an employer-sponsored plan, the business picks up 73% of the tab.

 

A 27-year-old nonsmoking male living in Wyoming may expect to pay $648 in monthly premiums, while that same person might pay just $273 in New Hampshire. Getting a good price depends on many factors, including age, location, health and whether you are paying the whole bill or your employer is kicking in for part of it.

About Philip Loyd, Licensed Insurance Agent

Loyd has written for Forbes.com, Red News Real Estate, Therapist.com, IRA.com, McGraw Hill, TheStreet.com, WikiHow, GOBankingRates.com, S.R. Education, Society of Petroleum Engineers and BioTech Fortunes. He is a licensed insurance agent and financial advisor with both his series 6 and 7 certifications.