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Small Business Employee Benefits and HR Blog

7 Health Insurance Hacks

If you're like most people, your health insurance costs a lot more than you'd like.  Here are seven things you can do to save a ton of money:health insurance hacks

Get your healthy dependents off your group plan

Many employers pay for a significant amount of their employee's premiums, but they don't cover the dependents.  If your spouse and/or kids are healthy, chances are good that you can get them individual insurance for much less than it costs to cover them with your group plan.

Ask your employer for a Section 125 Plan

If you already have an individual policy, there may be a way to pay for it tax-free.  Employers can offer their employees a Section 125 Plan to pay for individual insurance before taxes and it's completely free for the company.  In many states, employers are actually required to provide a 125 plan to anyone that asks.  One simple question could save you up to 40% on the cost of your premium, so it's probably worth talking about it with your HR person.

Get a real HSA

A lot of people think that they have an HSA just because they have a high deductible on their insurance.  High-deductible plans are not HSAs.  An HSA is an actual bank account that lets you save money to help pay for medical expenses tax-free.  If you've got a high-deductible plan, set up a real HSA so that you don't have to pay taxes on any of your out-of-pocket expenses.

Find the best agent out there

If you're like me, you buy everything you can online to save money.  With individual health insurance, carriers are legally required to charge the same price regardless of how the policy was purchased, so you might as well go out and get some help from a professional.  Every insurance agent in your state offers the exact same prices you can find online, so don't be afraid of getting help.

Ask your agent what their commission is

In most states, insurance agents are required to tell you what commissions they make on different policies.  As I mentioned above, these commissions don't result in you paying more, but an agent might be motivated to sell you a policy that pays higher commissions.  If you know what they make off each policy, it will be easy to tell if they're just trying to sell you the policy that will make them the most money.

Skip COBRA

Conventional wisdom says that if you lose your job, you should go on COBRA right away.  If you're healthy, you can almost certainly find an individual policy that offers better coverage for way less money.  COBRA is meant to be a last resort, so only use it if you can't get real insurance.

Don't elect COBRA until you need it

Even if you can't find any other insurance options and need to use COBRA, you don't need to actually pay for it until you get sick.  You have 60 days before you have to elect into COBRA and another 45 days after that before you have to pay.  Once you elect, you receive retroactive coverage (Note: you must also make retroactive payments).  So basically, don't elect until 60 days after you left the company, and don't ever pay unless you actually get sick and need the coverage (or if 105 days passes and you still don't have real insurance).  With this loophole, you can be covered by COBRA for 105 days after losing your job without ever paying a dime.

Hopefully you find these tricks helpful.  I realize that these are all pretty vague, so feel free to post specific questions in the comments if you're having trouble figuring out how to implement one of these tips.  We'll write follow-ups for each one explaining them in more detail.

The Comprehensive Guide to the Small Business HRA

Photo Credit: Flickr Lincolnian (Brian)

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