So, you just got a notice of a premium increase from your health insurance company. You don’t want to be bothered with the hassel of switching insurance companies but you can’t afford to pay more for something your rarely use.
“How do I lower my premium and keep the same health insurance insurance company?”
Almost every week I am asked this question in one way or the other. Often people are comfortable with the insurance company they already have but have been hit with an unexpected premium rate increase.
There has been a great deal of negative press lately of accusations of unnecessary premium rate increases by the insurance companies. The reporting, however, has been a little one sided. Even before the president and congress incited the furor over health insurance premiums, most states already had laws on the books that regulated health insurance premiums.
In many states, health insurance companies have no choice but to adjust their premiums at least once a year. I know that health insurance companies are required by statute to charge premiums that are high enough to pay the medical bills that are anticipated for their members but low enough that people in the market can afford them.
In most, but not all, situations a mere tweak of your existing policy will allow your premium to remain close to what it currently is while keeping the same health insurance company with which you are satisfied.
ADJUST YOUR DEDUCTIBLE
There is a risk management concept called, “risk retention.” The concept says that the more risk you are willing to “retain” the lower the cost of insurance premium.
The most common risk retention method used with health insurance is the plan’s deductible. That is the portion of medical bills that you have agreed to pay out of your own pocket before the insurance “kicks in” and starts to pay toward your medical bills.
The most common strategy to reduce your premium but allow you to keep your current health insurance company is to increase the amount of medical bills that you agree to be responsible for before your health insurance starts to pay. In other words, raise your deductible.
For example, a person may have a plan with a $ 1000 deductible with XYZ Health Insurance Company. That means they have agreed to pay the first $ 1000 of
medical bills during the year before the health insurance company is responsible to pay anything for medical bills. About a month before their policy anniversary date they receive a letter from their insurance company saying their premium is going to increase. Because in the last year someone on the policy has been diagnosed with a medical issue that would be considered a pre-existing condition with another company, they feel like they are trapped with XYZ health insurance. They do not feel like they can pay the higher premium but are not able to find health insurance anywhere else.
Most health insurance companies will allow members who wish to hold their premiums down to agree to retain more risk. In other words, the person in this example may agree to pay the first $ 2000 of medical bills during a year rather than just $ 1000. In exchange for the higher deductible, the health insurance company will generally lower the premium back to a similar level as before.
MODIFY YOUR BENEFITS
A change in deductible is not the only way to manipulate premiums. Many health insurance plans allow people to eliminate certain coverages, such as a doctor’s office co-pay or prescription benefit. Depending on the type of health insurance plan you have and the company it is with, you may be able to get rid of some benefits you have that you do not need while keeping your current plan.
As it used to be said on the radio, “The rest of the story is…” While it is often just as easy to switch from one health insurance company to another, that is not always necessary. Speak with your health insurance agent to see what options are available. If you like your current health insurance company you may be able to keep your current health insurance company and keep your premiums affordable at the same time with just a little tweak in benefits.
If you are unable to remember who your health insurance agent is and want an agency that will help you review your policy each year and facilitate your changes and adjustments, contact us at firstname.lastname@example.org or call (832) 767-8059. If we can help you, we will. Just remember we only operate in Indiana, Michigan and Texas. Before we are able to help you, you will need to be willing to change your Agent of Record.