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How to Deal With the High Costs of Health Insurance, By: Rajesh Jyotishi

October 2003
How to Deal With the High Costs of Health Insurance, By: Rajesh Jyotishi

If you are like most people who pay for their own health insurance, you have probably noticed that the rates continue to rise on an annual basis. Many individuals and employers have received rate increases from 10% to 50% this year.���Many times I have heard a client say that we haven't even used our insurance. Why are the rates going up and what can we do about it?

There are many reasons why health insurance rates go up. It doesn't necessarily have to do with your own personal utilization of your plan. Rates for insurance are based on medical inflation (which currently is about 8-10% per year), your age, gender, your industry, demographics, claims history, utilization, as well as the benefits you currently have.

For people who are healthy and insurable, you have many choices to reduce the costs of your health insurance. You can opt for higher deductibles, lesser benefits or switch insurance companies to find lower rates.���For individuals with health problems, it is far more difficult based on your health conditions. Many people are basically stuck with their benefits and rates.

Employers with group plans should shop for better rates and benefits on an annual basis. Many times the insurance companies go thru bad spells when their utilization and claims experience requires them to increase rates.���So once a very competitive company now becomes a very expensive company to be with. Employers can also have their employee's share some of the costs related to their insurance.���With the recent economic downturn, and increased rates, many companies have increased the employee contribution requirements.

Small business owners with only a few employees are turning to individual health plans opposed to group. On an individual plan, each employee has the flexibility to choose their own plan and benefits and can take their coverage with them if they should leave their jobs.���The rates on individual plans are often lower than group plans for small businesses because on a group plan, the insurance companies have to take individuals with serious pre-existing conditions who have had previous continuous coverage, whereas on an individual plan, they can decline a person, exclude certain conditions or charge extra premium based on the condition.���For the additional risks the insurance companies have to take, they often charge extra based on the health conditions of the group.

The healthcare costs continue to rise with new medications and procedures coming in on a daily basis. It is helpful to work with a knowledgeable agents and brokers to help you reduce your insurance expenses and still maintaining adequate coverage. Many people who go directly to insurance companies or thru the internet may be depriving themselves of professional expertise. Most of the time, the rates you pay to an agent or to an insurance company are the same, but an agent may also provide additional services for your benefit needs and make recommendations based upon your needs.


Moneywise is hosted by Rajesh Jyotishi with Shalin Financial Services, Inc. A Registered Investment Advisor. For questions, he can be reached at (770) 451-1932, or email at

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