The cost of health insurance premiums and the amount of health expenditures in the U.S. have been on the rise for the last several decades, and experts say it’s going to continue to climb.
According to an online survey conducted by Bankrate, nearly a third of Americans in 2020 avoided getting medical care because they were worried about the cost.
However, despite this trend, there are several, simple ways you can combat expensive medical costs and make your health insurance more affordable.
In this article, you’ll find seven money-saving tips on how to lower your health insurance costs to help fit your budget.
1. Put your healthy dependents on an individual plan
Many employers pay for a significant amount of their employees’ premiums, but they don't cover their employees’ dependents. If your spouse and/or kids are healthy, you’ll likely be able to get them individual insurance for much less than it costs to cover them with your group plan.
According to a study conducted by eHealth, the national average annual health insurance premium for a plan purchased through the Affordable Care Act’s marketplace in 2020 was $5,472 for an individual and $13,824 for a family.
By comparison, the Kaiser Family Foundation finds that the national average health insurance premium for group health policies in 2020 was $7,470 for an individual and $21,342 for a family.Learn more about how individual coverage differs from group insurance here
2. 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, also known as a “cafeteria plan,” to pay for individual insurance before taxes.
It’s completely free for the employer, so it never hurts to ask. In fact, some states actually require employers to provide a section 125 plan to anyone that asks, so it’s your legal right.
Common examples of section 125 plans include:
- Premium only plans (POPs)
- Flexible spending accounts (FSAs)
- Health savings accounts (HSAs)
Check out our comparison chart to understand your options
3. Contribute to a health savings account (HSA)
Even if your employer doesn’t offer an HSA, you can still open one on your own. You’ll be able to make current-year contributions to it as long as you’re covered by an HSA-qualified plan.
An HSA is a bank account that you put money into to cover your medical expenses tax-free. This is especially helpful if you have a high-deductible plan that requires you to pay a large amount out of pocket before your insurance will cover anything.
Learn more about the pros and cons of HSAs here
4. Work with an insurance agent
It may seem counterintuitive to seek professional help when you’re trying to save money, but in the case of shopping for individual health insurance, an agent’s services won’t cost you anything. That’s because insurance agents are paid by commission for signing up new policy holders, not from direct charges or fees from their clients.
With individual health insurance, carriers are legally required to charge the same price regardless of how the policy was purchased, which means a plan will never cost more because you chose to buy with an agent.
What’s more, licensed insurance agents know the market better than anyone. They can help you navigate all of your options and match you with an affordable plan you may not have been able to find on your own.
5. See if you qualify for a premium tax credit
Premium tax credits, also known as health insurance subsidies, are available to help lower-income Americans buy affordable individual or family health insurance coverage through the health insurance marketplaces created by the Affordable Care Act.
New rules put in place through the American Rescue Plan have made it so more Americans can qualify for premium tax credits than ever before—not to mention the discounts you can receive have gone up.
No matter your income, any American who purchases health insurance under the federal exchanges or state-run markets will pay no more than 8.5% of their household income through the end of 2022.
Estimate your premium tax credits and health insurance costs here
6. Get cost-free coverage if you lost your job due to COVID-19
If the pandemic caused you to lose your job—and in turn, your employer-sponsored health benefits—the Consolidated Omnibus Budget Reconciliation Act (COBRA) can help you get continued health coverage through your employer.
COBRA is what allows certain employees, retirees, spouses, former spouses, and dependent children the right to temporarily continue their employer-sponsored health benefits that otherwise might end.
Circumstances that allow you to get continued coverage under COBRA include:
- Voluntary or involuntary job loss
- Reduction in hours
- Transition between jobs
- Death of a loved one
Normally, in order to participate in COBRA, an employee must pay the full cost of the premium or benefit. However, the American Rescue Plan made some changes that are specifically for those who lost their employer-sponsored coverage because of COVID-19 (not those that voluntarily left their jobs).
If you were laid off, furloughed, or had a reduction in hours because of COVID-19, you’re eligible to receive a 100% subsidy on your health insurance premium, allowing you to stay on your employer’s insurance plan, cost-free, through the end of September 2021.
Explore more unemployment resources made possible by the American Rescue Plan
7. Take advantage of your employer’s HRA
If your employer offers a health reimbursement arrangement (HRA), then you have access to an extra money-saving benefit to get your health insurance premiums and other medical costs reimbursed 100% tax-free.
Unlike an HSA or an FSA, you don’t have to contribute your own money to use this benefit. Your employer simply sets a monthly allowance that you’re allowed to use on qualifying medical expenses, and then you submit those purchases for reimbursement.
Never used an HRA before? Learn more about how they work
Nobody should feel forced to avoid getting the care they need because health insurance is too expensive. Putting in the effort to stay informed about the options available to you, either through your employer or your own efforts, is a smart way to find the most affordable care for your and your family.
This article was originally published on August 5, 2009. It was last updated March 26, 2021.