How to Save Money on Health Insurance

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Do you want to know how to save money on health insurance? We’re lucky in Canada that a lot of our health expenses are covered through provincial government plans. But bills for dental care, vision, prescription drugs, physiotherapy and more are not, which is why many Canadians purchase supplemental health and dental insurance. Health benefits are also widely recognized as a great employee benefit. With health care expenses rising, having a plan for unexpected health expenses is important. If you’re on your own for insurance, getting the best value is a priority. Luckily there are ways you can save money on health insurance.

Buy when you’re healthy

Initially, this may seem counterintuitive, but it could save you a lot in the long run. Insurance rates are set based on an assessment of risk. Insurance companies charge more and/or limit coverage for applicants who due to health history may pose higher risk of incurring health expenses. Think of it like car insurance – rates are higher after you’ve had an accident. If you wait to apply for health insurance until you have health issues and ‘need’ it, you will have limited plan options at higher cost, likely excluding a large portion of your existing health bills.

Look at the details

Knowing how to save money on health insurance is easy when you get to know the details. Sticker price (or monthly premium) is important but it’s not the only consideration when choosing insurance. In addition to what a plan covers (drugs, dental, hospital, travel, vision), it’s important to look at coverage maximums, limits, and deductibles. Take the example below. Two plans might have similar rates, but a low per visit limit could leave you paying more out of pocket.

To make up that cost, PLAN B would have to be more than $20 cheaper per month, assuming that’s the only coverage limitation. As well as per visit limits, watch out for low combined maximums and low lifetime maximums (even with high annual maximums you could reach your lifetime limit).

Consider rate stability

Don’t be afraid to ask if plan rates have gone up recently or will go up in the future, including any age related increases. Most insurance companies assess rates annually and may raise rates if claims are higher than expected. It’s also common to start raising your rates every 5 years after you reach age 45. You have a right to know what to expect and if you’re uncomfortable with the amount of any potential increases, compare carefully.

Shop around

As a conscious consumer, sometimes you have to do a little comparison shopping. Check out alumni or professional associations, that may offer membership benefits or discounts. In other industries buying direct can save you money. But often the big-name companies don’t provide the best value. When it comes to insurance, if you want help comparing, you’ll want to deal with a broker rather than an agent tied to only one company. Choose an advisor who specializes in the type of insurance you’re looking for, rather than a generalist who insures your home, your pet and everything else. Insurance advisors don’t charge fees. So, advice and plan comparisons should always be free of charge.

Write it off

If you’re self-employed your health insurance is tax deductible. This means your actual net cost is lower than your quoted monthly premium. For example, using Ontario tax rates, if you earn $51,000 your top dollar tax rate is 30%. If your plan premium is $116 per month, your real cost is $82 per month. At higher income levels and tax rates, the net cost could go down by almost 50%.

While there is no magic formula to how to save money on health insurance, but affordable insurance options do exist. Finding the right plan for your needs and budget is possible and the risk of being uninsured could cost you much more in the long run. Health Plus Insurance plans were designed by small business owners for freelancers and small businesses. They provide better coverage for a fraction of the price the big guys charge. As full-service brokers, Health Plus advisors can provide comparisons of multiple plan options from multiple providers so you can be confident you have the best plan for you.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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