How to Lower Your Health Insurance Rates

These days, everyone's mind is on their wallets, and we welcome any chance to save some money. At the same time, we all know that it's important not to skimp out of basic health insurance coverage.

The cost of healthcare around the world is rising rapidly and without insurance, a single emergency room visit can easily wipe out your life savings. On the flip side, health insurance costs are rising as well and can eat up a big chunk of your monthly budget.

That said, there are still ways for most people to get the health insurance they need and still have money left over for emergency savings and retirement planning. Let's look at some of the ways you can lower your health insurance rates so you can set aside a little extra money for yourself.

We'll start by considering the standard policy coverage tweaks that you can discuss with your agent or broker. These adjustments could result in some significant savings over time.

Read: Medical Concierge and Insurance Broker: What's the Difference?

1. Buy Early

A lot of factors go into calculating your health insurance premiums. For health insurance, a big one is your age at the time you purchase the policy. One of the best ways to secure a lower premium is to buy health insurance as early as you can while you’re still young. The best rates are typically reserved for those under 25 years old because your changes of health issues and complications rise drastically as you age.

Many insurance companies will also offer a "claims free discount" for policyholders who have not filed a claim in the previous years, something that you are more likely to qualify for at a younger age.

Getting coverage at a young age is also desirable because your chances of rejection are low and you will be able to secure the broadest, most comprehensive coverage available to you. You are also likely to have fewer pre-existing conditions, which would be excluded from your policy.

Of course, there is a bit of a catch here. Buying a policy while you are still young will likely secure you a lower premium, but some of those savings will be offset by the simple fact that you will be paying premiums from an earlier age. While your monthly rate will be lower, you might end up paying more over your lifetime than you would if you purchased coverage later on.

Still, going without health insurance, even while you're young, is a risky gamble and any money you might save by starting your policy later in life might be greatly offset by having to pay out of pocket for various medical expenses – including a lifetime of expenses for pre-existing conditions.

Read: The Perfect Age to Get Life Insurance

2. Increase Your Deductible

The deductible is the amount you will pay out of pocket on a loss before the insurance claim is processed and paid out by an insurer. If you have a $100 deductible on your policy and you file a $300 claim, you will have to pay the first $100 of that claim before your coverage kicks in and your insurer foots the remaining $200 bill.

Increasing your deductible is one way to lower your rates. With a higher deductible, there will be more medical expenses where it simply doesn't make any sense to file a claim. If a visit to your doctor's office costs $89 but your deductible is set at $100, you'll simply have to pay the entire expense yourself.

Decreasing the amount paid and the number of claims made means the insurance company saves money, which they pass on to you in the form of lower premiums.

3. Tighten Your Coverage

Getting less coverage is the simplest, but also the least desirable way to reduce your rates. For example, you can lower your reimbursement rate for prescription drugs (say from 70% to 60%), do without supplemental healthcare expense or preventative dental care coverage, remove private hospital room coverage, or eliminate emergency travel medical coverage from your policy.

All of these will net you a lower premium, but will leave you with less protection. If you choose to save money by reducing your coverage, think long and hard about what you need. For example, if you don’t travel out of state often, you might consider removing blanket travel coverage from your health insurance policy and get standalone policies for individual trips.

Overall, tightening your coverage isn’t recommended because there are other ways to save money on health insurance.

Read: 5 Ways New Technology Will Change the Way You Buy Insurance

4. Use Wearable Devices to Save

We live in interesting times. Technology has drastically changed the way we live, and it is quickly changing the way insurance companies do business.

One development that is of particular interest to the health insurance industry is wearable technology. These are small electronic devices that people wear on their bodies, as accessories or even as implants, and use to track various aspects of their body's performance. They've quickly become commonplace and it's not unusual to see people wearing them around their wrist to measure their step count, heart rate, and the number of calories they burned throughout the day.

Wearables are a great way to keep tabs on your fitness goals, but they're also a great way for your insurer to keep tabs on your health. Auto insurers have been using telematic devices in cars to track their policyholders' driving habits and offer safe drivers discounts based on their driving speed, distance, and the time of day they typically hit the road. Likewise, health insurers can use the data acquired from your fitness tracker to offer reduced rates and insurance perks to policyholders who display some healthy habits.

And it’s not just wearables – our phones and other smart devices now come jam packed with sensors that can pick up data about our health. Nowadays, our smart phone cameras can track changes in skin pigmentation, our mattresses can track how well we sleep, and everyone can go online and purchase devices to measure things like brain activity, blood pressure, and even ECG in real time! Tests that used to require multiple days of work in a laboratory setting can now be done in minutes on a devices connected to your smartphone via Bluetooth.

Read: Wearable Tech and Insurance: Current and Coming Trends

As this type of health tech becomes more widespread, and users become more comfortable with them, insurance companies could eventually track a lot of biometric data. If your step count gets you a lower premium, you might be able to get an even lower rate once your insurer can get data on your blood sugar levels, nutrient intake, and metabolic rate.

Various companies have already taken steps to make this happen. The health insurance company Oscar has partnered with the wearable developer Misfits to distribute devices to their customers and offer insurance rates based on how much time they spend walking. The Paris-based insurer AXA offered $100 off the insurance policy of any insured whose fitness tracker showed them walking over 7,000 steps each day over the course of a month.

These tracking technologies also offer an additional, indirect way to save money. By taking steps – literally and figuratively – to lower your premium by developing healthier habits, you will reduce the likelihood of illness. You will save money on insurance and on overall healthcare costs because you’re less likely to get sick and miss work or pay out of pocket expenses like deductibles. And let's not forget all the other, non-financial benefits that come from being fitter and healthier.

Privacy & Security Issues

In this day and age, privacy is a big concern for regulators and ordinary citizens. Most people are still uncomfortable with sharing a 24/7 stream of personal data and while the potential savings are a welcome benefit, many people rightly worry about how their personal data might be used by insurers and big tech companies. There are concerns about how this information is used and what happens if the insurance company is hacked and your data is leaked.

These are thorny issues without any clear answers at the moment, but it’s fair to say that while those who share their data should receive discounts, it would be unethical to penalize those that simply don’t want to disclose their personal data with higher premiums.

Health Incentive Programs

Building upon the success of device-based health monitoring programs, many insurers are also offering incentive programs to encourage their enrolees to live healthier lifestyles. For example, Manulife Financial launched their Vitality program offering rewards to members for healthy living.

The program provides personalized weekly goals that improve your health step by step offering rewards along the way to keep you motivated. These healthy actions can be as simple as eating well, exercising, completing health assessments, or staying up to date with their vaccinations. With programs like this, the healthier you get, the more money you save – and as an added bonus, they can be a lot less intrusive.

Conclusion

If your health insurance is eating up a little too much of your budget, try one of these options to help you manage the costs. Whether you speak to your agent about modifying your policy or you take up the challenge of improving your rate by improving your health, you can enjoy a little extra money in your bank account each month.