Strategy: Health Insurance Cost Saving Tips

ByJames Hutchens

It seems that for most years you can expect to see an increase in your health insurance premiums. The problem is that for most you, the monthly costs of your coverage is increasing faster than your paycheck!

We will explore some helpful hints that may help you save some money each month while working within the current system and taking advantage of other benefits to improve your position and hopefully, put some extra money into your pocket.

1. General Overview

The fundamental rule of insurance math is that you cannot keep your exact same plan and coverage level while forcing the premium to stay at previous years’ lower rates. OPM calculates premiums based on medical inflation, plan utilization, and carrier risk pools. Therefore, to avoid the higher out-of-pocket premium costs, a shift in strategy is required. 

The Strategy: Pivot to Equivalent Coverage with Premium Subsidies

Because keeping the exact same plan will result in paying the scheduled rate increases, your best strategy to keep your actual level of coverage the same while reducing your net cost involves three structural pivots:

  • Pivot 1: Exploiting the 75% Government Contribution Cap
    • The Rule: By law, the federal government pays up to 75% of the total cost of an FEHB plan, capped at a maximum dollar amount determined annually.
    • The Strategy: High-cost plans (like many nationwide “High” options) often exceed the government’s maximum contribution limit, meaning the employee absorbs 100% of the overflow cost. Switching to a highly rated “Standard” or Consumer-Driven plan where the government’s share still hits the full 75% mark allows you to maintain robust coverage while lowering your personal premium share.
  • Pivot 2: The Dual-Federal “Self Only” Split
    • The Rule: For married federal couples with no children, the combined cost of two separate “Self Only” plans is frequently cheaper than one “Self Plus One” plan for the exact same level of medical benefits.
    • The Strategy: If you are currently paying a high “Self Plus One” rate, check the math on dividing into two “Self Only” plans during the next Open Season to see if it immediately lowers your premium while keeping the coverage identical.
  • Pivot 3: Offsetting Net Costs via High-Deductible Plans (HDHPs) and HSAs
    • The Rule: High-Deductible Health Plans have significantly lower monthly premiums. To compensate for the higher deductible, the plan legally “passes through” a portion of your premium directly into a Health Savings Account (HSA) for you.
    • The Strategy: If you switch to an HDHP, the money the plan deposits into your HSA effectively acts as a subsidy. When you subtract that HSA deposit from your annual premium, your true net cost for healthcare drops drastically, even though your access to comprehensive care remains intact. 

2. Key If/Then Overview

To assist your logical planners in making low-friction selections:

  • IF you are unwilling to change insurance carriers but need to lower your costs, THEN dropping from a “High” option to a “Standard” or “Basic” option with the same carrier is the standard path to keep the same doctor network while reducing your premium.
  • IF you are generally healthy and want to maximize every dollar, THEN moving to an HDHP and utilizing the premium “pass-through” into an HSA is the most mathematically sound way to avoid paying higher fixed premiums. 

3. Standard Operating Procedure (Next Steps Checklist)

  1. Pull the Brochures: Download the official OPM brochures for your current plan and its “Standard” or “Value” equivalent.
  2. Calculate the HSA Net Cost: If looking at an HDHP, take the annual premium and subtract the plan’s HSA “pass-through” contribution to find your true net cost.
  3. Audit the Network: Before making any change to avoid higher rates, use the new plan’s online directory to verify that your must-have doctors are still labeled “In-Network”.