How Do You Budget For Increasing Health Insurance Costs?

Even before the Affordable Care Act was implemented in 2010, health insurance premiums have been increasing at a faster rate than earned income. Individuals and families are feeling the pressure of inflating medical costs as healthcare becomes our country’s largest federal expenditure.

Blue Cross Blue Shield of Alabama recently notified their customers in the state that they will be experiencing a premium increase of 28% on individual plans and 13.8% for small businesses. In 2015, the average health insurance premium in Alabama increased by 8.4%, and for 2016, premiums will increase again by an average of 12.6% (including subsidies).

You can reduce your monthly premiums by choosing a plan that has higher deductibles and co-pays, but it can be more advantageous to be an informed and prepared consumer. Knowing that health insurance related costs are going to continue to climb, here are a few tips to take more control of your options:

1. Stay healthy!
The best way to keep your costs low is to live a healthy lifestyle. This won’t necessarily reduce your monthly premium significantly, but tobacco use for example will cost you 10%-25% more per month in premiums. Exercising and eating right is the best way to limit doctor visits. Many employers offer a health and nutrition program you can participate in to help make and track your healthy choices. If you have not already looked into this or participated in this type of program, do it! If you are self-employed or work for a small firm, the internet is a good, cost efficient place to help plan a weekly routine for exercise and dieting.

2. Do your homework and plan ahead
Costs incurred for the same procedure can vary greatly, so don’t assume that higher quality of care automatically equates to a higher cost. You can get high quality care for a lower price. Healthcare Bluebook is free and can be a great resource. Here, you can enter a specific procedure and your zip code to obtain the reasonable amount you should expect to pay for a particular medical service.  If you are considering a particular procedure, run this search, then speak with your doctor about what they would charge and compare to the range from this online resource.

Hospitals can cost you much more than a doctor visit. Utilize urgent care centers for non-life threatening situations like a cold or a sprained wrist.

3. Use your emergency fund or other savings vehicle
Tapping into your emergency fund for medical costs can help you budget for certain medical expenses. Setting aside money that can be earmarked for unexpected medical expenses can be a lifesaver. Rather than going into debt because of a medical situation that arises, the use of savings can provide you with some peace of mind.

Consider a health savings account. This is an efficient way to build up savings for an emergency room visit or elective surgeries, and this account will stay with you if you ever change employers.

Click here to see our blog post from last week on emergency funds

4. Prevention
Don’t let a high deductible or co-pay stop you from preventative care. A serious illness will be more costly if it has time to take hold instead of being handled early on. You can save money by planning ahead for routine exams, talking to your doctor or by calling your health insurance carrier's hotline.

Costs should not keep you and your family from getting the quality care you deserve and need to stay healthy. It is important to know the details of your available coverage options and plan for the expected and unexpected. We know that premiums are going to continue to increase, so be responsible, take care of yourself and plan ahead!

-Justin Ladden-