Not too long ago, a friend was expressing his concern about the costs of health care insurance for his family. My friend was covered by an employer-provided policy, but his wife and two daughters were added to the insurance at his own expense. My friend and his wife are young, in their late twenties, and both they and their kids were in excellent health. So imagine my surprise (shock, really) when he told me his monthly premium was over $800. No wonder he was troubled!

the costs of healthcare can be high

I had to drill down into the situation to fully understand why his costs were so high. I’m actually a few years older, with a wife and two kids and my monthly premiums are around $118. Here’s what I learned; my friend and his family were over insured.

I know this is hard to believe…can you really ever have too much health insurance? Yes! Or more accurately, you can have too much of the wrong kind of insurance. Let me explain.

Most of us expect our insurance to completely cover our office visits; dental, vision, and health. Insurance companies are in business to make money. Don’t hate them for turning a profit; otherwise they couldn’t be in business. We don’t buy home owners insurance to cover the costs of painting and lawn care, do we? Our car insurance doesn’t fill up our tanks, does it? So, why pay extra in health insurance every month to save money on doctor’s visits a couple times a year?

Well, you might think seeing the doctor is just too expensive. Let’s compare. A regular visit to the pediatrician costs $85. Let’s assume my two kids each go three times—or six total visits a year. My wife’s annual doctor visit is around $200. I never go to the doctor, but if I did it’d cost around $100.

What about other costs? Our semi-annual dental cleaning is $100 a person. My wife’s vision care costs nearly $200 and her contacts are $140 for a year’s supply. Add all that up, and it comes to $1,550. Yikes! That’s on top of our monthly premium. The grand total for our health care and insurance is $2966 a year.

Let’s compare that to my poor friend from above. Assuming he doesn’t have co-pays (unlikely) and every bill is 100% covered (again, unlikely), his annual cost just for insurance totals $9600! Even after paying for so many out-of-pocket expenses, I still save $6634 more than my friend.

So, how do I get health insurance so cheap? Here’s how:

1. Buy high deductible, low premium insurance
   High deductible plans don’t cover routine care; it’s only there for emergencies. That’s why their more affordable. But really, aren’t emergencies the reason for having insurance?  Shop online and compare prices and coverage.  Be aware of the rules and restrictions of each policy before you buy. Then get only the insurance you need and put your savings in the bank.
2. Keep the deductible amount in savings
   I’ll admit, our deductible is high; $7,500 a person or $15,000 a family. That’s probably higher than you’re willing to risk. But this means that I’m saving more than $6,600 a year; that’s money I’m keeping and not paying the insurance company. I’ll have that deductible saved up in a little more than a year.

   Do your research, find a plan that only covers emergency care, and then take your savings and put them in the bank.  This plan doesn’t work if you can’t afford to pay the deductible.

3. Pay cash for your health, dental, and vision visits and expenses
   Many offices will give you some sort of discount if you pay with cash or check, since it saves them the credit card fee or the lower reimbursement they’d get from the insurance company. Ask them. If they don’t, shop around. There are lots of doctors around. It might hurt to pay $100 for your next health exam, but it’s better than paying an extra $100 every month to the insurance company!