Ways To Save With A Health Insurance Plan When Working For Yourself
Posted on: 13 July 2020
Health insurance is a necessary cost, but there are ways to mitigate this expense and make it affordable. If you need a health insurance plan and work for yourself, here's how to save on a plan.
Step 1: Select an HDHP
High-deductible health plans were created in 2004 to address increasing health plan premium costs, and these plans have become increasingly popular over the last 16 years. In 2016, 29 percent of the United States workforce was covered through one of these plans.
By selecting an HDHP, you will save substantially on your premiums. Exactly how much you save will depend on your specific situation, including the coverage included in your plan and how many people are in your family, but this will be the most affordable type of plan.
As a trade-off for lower premiums, you will be accepting a health plan that offers a more basic level of coverage. Specifically, you might have to pay a substantial portion yourself before the plan will cover claims. These plans have deductibles of at least $1,350 for individuals and $2,700 for families.
There are ceilings on how much you'll have to pay yourself, however, and you can use strategies to minimize the actual amount that you personally pay for healthcare. The maximums in 2020 were $6,750 and $13,500 for individuals and families when in-network coverage was used.
Step 2: Set Up an HSA
Aside from their lower premiums, the other advantage of HDHPs is the ability to pair these plans with a health savings accounts. HSAs can only be opened if you have an HDHP; other health insurance plans can't be combined with these accounts.
A health savings account is a bank account into which you deposit pre-tax dollars. As long as the money in the account is used for medical expenses, you won't have to pay federal or state income taxes on those funds.
This will save you at least 10 percent in federal taxes if you're in the lowest income tax bracket, and you could save 37 percent in federal taxes plus your state's taxes if you're a high-income earner.
Additionally, the money in a health savings account can be invested and rolled over from one year to the next. If you don't need the money right now, you can let it grow in the account until you do have a qualifying medical expense. The account can grow for decades if you don't have any ailments.
For more information, speak with a health insurance plan provider.
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