What can I do if my private health insurance premium increases?

A recent article on About.com explained that rising medical care costs make it likely that insurance premiums will continue to go up each year. If your premiums go up, the first thing you should do is check to see if there are any cheaper options available from your health insurance provider. Sometimes you can save money by changing to an HMO or even a high deductible health insurance plan.

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The great advantage of not having health insurance through your employer is that you don’t need to wait for open enrollment periods- you can go online or start making phone calls about insurance whenever you want to. There are even some handy comparison websites that will help you to look at different insurance companies and rates to decide which is right for you.

Save Money on Private Health Insurance

How can I save money on private health insurance?   Besides shopping around, you can save money on private health insurance by reducing key risk factors. An article published online in Prevalent and Reproductive Health Matters suggests that stopping smoking can lower your health insurance premiums significantly. Some insurers might also give you a premium reduction for not drinking, for joining a weight management program, or even give incentives for reaching certain health goals.

If your current health insurance provider doesn’t have any cheaper options for you, you can always change health insurance companies.

Another trick to save money on private medical health insurance is to go with paperless statements- sometimes an insurer will pass their savings on to you. A flexible spending account can take some of the sting out of expensive deductibles and copayments too, although you don’t really save any money with it. You just pay in a different way and get the money tax free. If you have a high deductible health insurance plan, a medical savings account will also help you to set aside extra money for deductibles and copays.

Tax Deductions and Private Health Insurance Premiums

Are private health insurance premiums tax deductible?   In most cases, private health insurance premiums are paid with “after tax” dollars, so they are tax deductible. These premiums are, however, subject to the 7.5 percent rule, meaning that you can only take a deduction for the amount of your private health insurance premiums and other qualified medical expenses that is in excess of 7.5 percent of your income. By contrast, most employers who offer group health insurance deduct the premiums before tax, so that the premiums are not tax deductible.

Alternatives to Private Health Insurance

What are the alternatives to private health insurance?   If you are employed, the obvious alternative to private health insurance is to go with an employer sponsored plan, which is usually much cheaper because of group rates and the employer paying a portion of the premiums. If that is not an option, you might still be able to get a group rate by getting insurance through a professional organization or other large group you may belong to.

Of course, if you are over 65, you can enroll in the government’s Medicare plan as an alternative to private health insurance.

Some experts advise low income families to see if they qualify for the state run Medicaid programs, and moderate income families with children to check into the Children’s Health Insurance Plans (CHIPS) for their state. In some cases, CHIPS might also cover pregnancy care as well. Both types of plans can offer cheap or even free health insurance, depending on the rules of the particular state.

Health Insurance Requirement

Am I required to have health insurance?  You are not required by law to have health insurance, or at least not yet. The Affordable Care Act includes an individual mandate which will basically require all but the poorest Americans to have health insurance or else pay a fine. That portion of the Affordable Care Act does not take effect until 2014.

While some view it as unfair or even socialist for a government to require its citizens to have health insurance, it is not unprecedented. Everyone is required to pay for Medicare insurance, even though they are not required to use it when they turn 65. In the context of the Affordable Care Act, the individual mandate goes hand in hand with the abolition of preexisting conditions so that people will not be able to just go without health insurance until they get sick.

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