Monday, January 21. 2008
Affordable health insurance is getting harder to find so now, more than ever, you need to take time to think smarter. Small companies are also bearing the brunt of double digit increases for the last four years. It has simply unaffordable for small companies to even partially subsidize employees' medical plans, especially for dependents as well. So what affordable options are there for individuals and small companies? The truth is there are options available, but you have to investigate.
Unexpected medical expenses are the most commonly quoted reason for filing bankruptcy so medical cover is absolutely essential. Employers, if they offer medical cover, offer only one plan and mostly they do not cover the whole premium. In fact individual health insurance has become less expensive because it is possible to purchase benefits to suit individuals rather than having to pay for benefits that apply to the 'average' individual in the group. For example an individual and his dependents may not require maternity benefits, which have been added to the group plan. Therefore tailoring a plan is always the more affordable option.
Small group health plans have become prohibitively expensive because the risk is greater and cannot be averaged out as it can in large corporations with many members. Also small companies are usually specialized with more mature, experienced staff and therefore their average insurance age is riskier and more expensive. For instance a small company may pay a monthly contribution of $70 for an employee of twenty or so, but a skilled person is usually in their forties or fifties and then the monthly contribution rises to $500. Again it becomes more affordable to tailor individual health plans.
Many small companies and individuals are now opting for HSAs (health savings accounts), which are tax-sheltered bank accounts for qualified medical expenses. Usually HSAs must be linked to a hospital insurance, which makes this plan less risky for insurance companies and therefore more affordable. Employers and employees make their own arrangements around these to pay all or some of the contributions. This way account holders can use tax deferred funds to pay for visits to the doctor, drugs and even pharmacy expenses.
HSAs are becoming increasingly popular because they use pre-tax dollars for expenses that can't be avoided whereas ordinary savings accounts harbor monies earning interest from post tax earnings. If the money in the medical savings account is not required for expenses related to health it can be saved untaxed and earning interest therefore making HSAs not only more affordable but advantageous. Insurance covering hospital expenses will give peace of mind regarding the really big money worries related to health.
Some insurance companies have realized the need to become flexible and therefore maximally competitive and they offer a variety of alternative plans tailored to suit individual needs. What has become clear is that more affordable health insurance has become available to individuals who become responsible for the health insurance needs of themselves and their families. Once you have done your own research it becomes a simple matter to approach your employer and negotiate an affordable health plan.
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