9 Ways U65 Individuals Can Lower Their Health Insurance Premiums

March 3, 2025

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Are health insurance premiums creating a financial strain? Individuals under 65, particularly those without employer-sponsored coverage, often face this challenge.  The complexities of the individual health insurance market, combined with rising healthcare costs, necessitate a proactive approach to managing expenses.

This guide offers practical strategies to help individuals under 65 reduce their health insurance premiums while maintaining essential coverage. Whether you are self-employed, a freelancer, or simply seeking more affordable options, the insights provided here will empower you to make informed decisions.

1. Choosing the Right Health Insurance Plan

Selecting the right health insurance plan is one of the most effective ways to lower your premiums. Different plans offer varying levels of coverage, network restrictions, and cost structures. Understanding these differences can help you choose a plan that balances affordability with necessary medical care.

High-Deductible Health Plans (HDHPs)

A high-deductible health plan (HDHP) is an insurance plan with lower monthly premiums but higher out-of-pocket costs before coverage begins. These plans are often paired with Health Savings Accounts (HSAs), which allow you to save money tax-free for medical expenses.

Pros of HDHPs:

  • Lower monthly premiums, making them ideal for individuals who don’t require frequent medical care.
  • Eligibility for an HSA, which provides tax advantages and long-term savings.
  • Preventive care is still covered without needing to meet the deductible.

Cons of HDHPs:

  • Higher out-of-pocket costs if you need frequent medical care.
  • Not ideal for individuals with chronic conditions or those who anticipate high healthcare expenses.

For 2024, the minimum deductible for an individual HDHP is $1,600, while the maximum out-of-pocket limit is $8,050. If you are generally healthy and don’t expect frequent medical visits, an HDHP could be a cost-effective choice.

Comparing HMO, PPO, and EPO Plans

The type of insurance plan you select—HMO, PPO, or EPO—affects your premium costs and flexibility in choosing healthcare providers.

Plan Type Premium Cost Network Restrictions Primary Care Physician (PCP) & Referrals
HMO (Health Maintenance Organization) Lower Requires in-network providers Must select a PCP; referrals required
PPO (Preferred Provider Organization) Higher Covers both in-network and out-of-network No referrals needed
EPO (Exclusive Provider Organization) Moderate Requires in-network providers (except in emergencies) No referrals needed
  • HMOs tend to have the lowest premiums but restrict access to in-network doctors and require referrals for specialists.
  • PPOs offer greater flexibility, including out-of-network coverage, but come with higher premiums.
  • EPOs are a middle ground, allowing direct specialist access but requiring care within a designated network.

Choosing an HMO or EPO over a PPO can significantly lower premiums if you don’t need frequent out-of-network care.

When to Consider Catastrophic or Short-Term Plans

For those looking for the lowest possible premiums, catastrophic or short-term health insurance plans might be an option.

  • Catastrophic Plans: These are available to individuals under 30 or those with a hardship exemption. They feature very low monthly premiums but high deductibles (around $9,450 in 2024). These plans are designed for worst-case scenarios rather than routine care.
  • Short-Term Health Plans: These plans aren’t ACA-compliant but can provide temporary, low-cost coverage. They typically offer basic benefits with fewer protections for pre-existing conditions. While they may be a viable stopgap, they should not be relied upon for long-term healthcare needs.

2. Taking Advantage of ACA Subsidies and Cost-Sharing Reductions

One of the most effective ways to lower health insurance premiums is by leveraging Affordable Care Act (ACA) subsidies and cost-sharing reductions. These programs help eligible individuals and families reduce both monthly premiums and out-of-pocket expenses.

How Premium Tax Credits Lower Monthly Costs

The premium tax credit (PTC) is a government subsidy designed to make health insurance more affordable for those who purchase plans through the Health Insurance Marketplace.

Who Qualifies?

  • Individuals and families with household incomes between 100% and 400% of the federal poverty level (FPL) may qualify for tax credits.
  • For 2024, a single individual earning up to $60,240 per year could receive subsidies.
  • Families earning up to $125,280 (for a family of four) may also be eligible.

How Does It Work?

  • Tax credits reduce monthly premiums by covering part of the cost directly.
  • They can be applied in advance (to lower monthly costs) or claimed at tax time as a refund.

Understanding Cost-Sharing Reductions (CSRs)

Cost-sharing reductions (CSRs) are an additional benefit for individuals earning between 100% and 250% of the FPL who enroll in a Silver-tier Marketplace plan. Unlike premium tax credits, CSRs lower out-of-pocket expenses like deductibles, copayments, and coinsurance.

Who Qualifies?

  • Single individuals earning up to $37,650 in 2024.
  • A family of four earning up to $77,250.

How CSRs Work:

  • CSRs lower deductibles (e.g., from $5,000 to $800).
  • They reduce copays and coinsurance for doctor visits and prescriptions.
  • They are only available with Silver plans but provide better coverage at the same price.

Medicaid and CHIP: Alternative Coverage Options

For lower-income individuals and families, Medicaid and the Children’s Health Insurance Program (CHIP) offer free or low-cost coverage.

Medicaid Eligibility:

  • Available to individuals earning up to 138% of the FPL ($20,783 for individuals; $43,056 for a family of four).
  • Some states offer expanded Medicaid for additional eligibility.

CHIP for Children:

  • CHIP provides affordable coverage for children in families with moderate incomes that exceed Medicaid limits.
  • Some states extend CHIP to pregnant women and parents.

Make sure to check your eligibility for Medicaid or CHIP at HealthCare.gov, as income limits vary by state.

3. Opting for a Higher Deductible

One of the simplest ways to reduce your monthly health insurance premiums is by choosing a plan with a higher deductible. While this means you’ll pay more out of pocket before your insurance kicks in, it can be a smart financial move depending on your healthcare needs and financial situation.

How Higher Deductibles Lower Premiums

Insurance providers lower premiums for high-deductible plans because they reduce the insurer’s risk of paying out claims early. These plans are ideal for individuals who are:

  • Generally healthy and don’t require frequent medical visits.
  • Able to cover a higher upfront cost in case of an emergency.
  • Looking to pair their plan with a Health Savings Account (HSA) for tax advantages.

Example:

Plan Type Monthly Premium Deductible Out-of-Pocket Maximum
Low-Deductible Plan $500 $1,000 $6,000
High-Deductible Plan $250 $4,500 $7,500

In this example, opting for the high-deductible plan saves $250 per month ($3,000 annually) but requires a higher out-of-pocket payment for medical expenses.

When a Higher Deductible Makes Financial Sense

A high-deductible plan is a good choice if:

  • You rarely visit doctors or require medical services.
  • You have enough savings to cover the deductible in case of a major expense.
  • You qualify for and use a Health Savings Account (HSA) to offset costs.

A high-deductible plan may not be ideal if:

  • You expect frequent doctor visits or require ongoing prescriptions.
  • You don’t have enough savings to pay the deductible in case of a medical emergency.

Mitigating Risk with an Emergency Fund

Since high-deductible plans require larger upfront payments for medical expenses, having an emergency fund with at least the deductible amount saved can help avoid financial strain in case of an unexpected medical event..

4. Using an HSA or FSA

Using a Health Savings Account (HSA) or Flexible Spending Account (FSA) can significantly lower your overall healthcare costs by allowing you to pay for medical expenses with pre-tax dollars. These accounts help offset the cost of higher deductibles, copayments, and other out-of-pocket expenses.

Health Savings Accounts (HSAs)

Available for HDHP enrollees, HSAs allow tax-free savings for medical expenses. Contribution limits for 2024:

  • Individuals: $4,150
  • Families: $8,300
  • Catch-up (55+): $1,000 extra

Unlike FSAs, HSA funds roll over yearly and can be invested tax-free.

Flexible Spending Accounts (FSAs)

FSAs let employees contribute pre-tax money for medical costs, but most funds must be used within the plan year. The 2024 contribution limit is $3,200.

5. Staying In-Network & Using Telemedicine

One of the simplest ways to avoid unnecessary healthcare costs is by ensuring that you stay in-network and utilize telemedicine when possible.

How Staying In-Network Lowers Costs

Health insurance providers negotiate discounted rates with specific healthcare providers within their network. If you visit an out-of-network provider, you could face higher copays, higher deductibles, or even full-cost charges for medical services.

Using Telemedicine to Save Money

Telemedicine has become a cost-effective alternative to in-person doctor visits, especially for minor illnesses, mental health care, and routine check-ups. Many insurance providers now offer low-cost or free telehealth services as part of their coverage.

6. Shopping Around & Comparing Plans Annually

Insurance costs, plan benefits, and subsidy eligibility change annually, making it essential to review and compare plans to ensure you’re getting the best deal.

Premiums and Deductibles Change Every Year

  • Insurance companies adjust premiums, deductibles, and out-of-pocket costs annually based on market conditions.
  • Even if your current plan worked well this year, a similar new plan may offer better value for the next year.

Subsidies and Tax Credits May Increase or Decrease

  • If your income changes, you may qualify for better ACA premium tax credits or cost-sharing reductions.
  • Federal and state funding adjustments impact subsidy amounts, making some plans more affordable.

New Plans May Offer Better Coverage at Lower Costs

  • Insurers introduce new plans with improved benefits and lower premiums each year.
  • Marketplace offerings vary annually, so shopping around could save you hundreds or even thousands.

How to Compare Health Insurance Plans Effectively

To ensure you find the most cost-effective plan, consider the following steps during the Open Enrollment Period:

1. Review Your Current Plan

  • How much did you actually spend on healthcare this year?
  • Did you frequently meet or exceed your deductible?
  • Were there any unexpected costs (out-of-network charges, high prescription costs)?

2. Compare Key Factors Between Plans

Factor What to Check
Premiums Look for lower-cost plans with similar benefits.
Deductibles Choose a higher deductible if you’re healthy and want lower premiums.
Copayments & Coinsurance Ensure doctor visits, prescriptions, and hospital stays remain affordable.
Prescription Coverage Check if your medications are covered at a reasonable cost.
Network Providers Confirm your preferred doctors and hospitals are still in-network.

3. Check for New or Improved Subsidies

  • If your income changed, update your details on the Health Insurance Marketplace to see if you qualify for better subsidies.
  • Even small income adjustments can make a major difference in how much you pay per month.

7. Taking Advantage of Preventive Care

Preventive care is a crucial but often overlooked strategy for reducing long-term healthcare costs. By using free preventive services covered under the Affordable Care Act (ACA), individuals can detect health issues early, avoid costly treatments, and lower insurance premiums over time.

Under the ACA, most health insurance plans (including Marketplace, employer-sponsored, and Medicaid plans) must cover preventive services at no additional cost—meaning no copayments, deductibles, or coinsurance.

8. Considering Group or Association Plans

For individuals under 65 who don’t have access to employer-sponsored health insurance, group health plans through professional organizations, trade associations, or faith-based health sharing programs can provide cost-effective alternatives to traditional individual plans.

How to Find Group or Association Plans

  • Check Trade & Business Associations: Many industry groups offer exclusive health insurance options.
  • Look at Freelance Networks: Organizations like the Freelancers Union provide group insurance plans.
  • Explore Local Chambers of Commerce: Small businesses and independent contractors may qualify.

9. Maintaining a Healthy Lifestyle to Lower Costs

Insurance companies assess risk factors when pricing plans. Individuals with fewer health risks are less likely to require expensive medical treatments, which can lead to lower premiums over time.

Factors That Can Reduce Health Costs:

  • Maintaining a Healthy Weight – Reduces risk for chronic conditions like diabetes, heart disease, and high blood pressure.
  • Quitting Smoking – Smokers pay up to 50% more in insurance premiums under certain plans.
  • Regular Exercise – Helps prevent obesity, reduce stress, and strengthen the immune system.
  • Preventing Chronic Illness – Managing conditions like hypertension and cholesterol lowers long-term costs.

Conclusion

Lowering health insurance premiums while maintaining adequate coverage requires a strategic approach. By making informed choices about plan selection, subsidies, preventive care, and lifestyle habits, individuals under 65 can significantly reduce their healthcare costs.

By following the strategies detailed in this article, U65 individuals can significantly lower their health insurance premiums while ensuring essential coverage.