Choosing Better Medical Insurance

Are You On A Budget? Private And Employer-Sponsored Health Insurance FAQs

Can you afford non-employer sponsored health insurance if you're on a budget? Before you skip this valuable policy, take a look at what you need to know about health insurance and the related costs.

Who Will Pay for Your Insurance?

Unlike employer-sponsored coverage, an individual private plan requires the insurance holder to pay all the premiums themselves. Even though employers offer insurance to qualifying employees, most companies won't pay 100 percent of the costs. Instead, the employer assumes some or a percentage of the financial responsibility. This lowers premium prices for the employee insurance holder.

According to the Kaiser Family Foundation's (KFF) Employer Health Benefits Survey, in 2020, workers contributed an average of 17 percent of the premium costs for individual policies and 27 percent for family plans.

Is Employer-Sponsored Insurance Less Expensive?

If an employer covers part of the premium price, does this mean individual self-pay insurance is more expensive? Some individual insurance plans do cost more than employer-sponsored options—and some employer-sponsored plans cost more than individual private coverage.

The plan's premium amount depends on several factors. These include individual versus family enrollment, location, tobacco use, the plan category, and deductibles or out-of-pocket expenses. This makes it possible for some private plans to cost less per month than employer-sponsored coverage.

How Can You Reduce Your Insurance Costs?

Before you try to lower your premium price, think about the big picture. Even though monthly premiums may seem like the bulk of the charges, you may also have deductibles to meet or co-insurance/co-payments to make. Along with these out-of-pocket expenses, you may also have out-of-network doctors, pharmacies, or other related costs to pay.

If you want to only decrease your premium, choose a higher deductible plan. But if you want to lower overall healthcare costs, you'll need to compare the premium to your expected medical expenses. Insurance policyholders who have high medical needs or a chronic condition may benefit financially from a lower deductible policy. You may pay more for your monthly premium — but you could have significantly lower out-of-pocket costs.

Health savings accounts (also known as HSAs) can also help you to lower overall healthcare costs. These special accounts allow you to save for and pay medical expenses in a tax-free or tax-deductible way.

Before you choose a new plan, discuss the options with your insurer or an agent. An insurance expert can help you to compare premiums, deductibles, co-pays, and other costs that can impact how much you pay monthly, yearly, or per illness/injury.