How to deal with shock increases in health insurance expense

Shocking increases in health insurance rates for 2017 have many of my small business clients reeling. The problem affects most people who pay for their own health coverage throughout the country. Some states and certain health plans are hit harder than others. The smallest rate increase I’ve seen directly in communications with clients is about 30% and the largest about 55%. That translates to thousands of dollars in unanticipated new expense for everyone affected.

The Obama administration seems to by taking the issue too lightly, IMO. Wall Street Journal carried a typical comment today: “Headline rates do not reflect what most consumers actually pay,” said Marjorie Connolly, a spokeswoman for the Department of Health and Human Services. “Eighty-five percent of Marketplace consumers receive tax credits, and this year, most consumers will again have the option to select a plan for less than $75 per month.” Well, the fact is that my clients who are upper middle class people do not receive tax credits and do pay the full cost of insurance. A small number of businesses offering group health insurance received a tax credit for two years but that two year credit may have already expired. In many cases the insurance premium is more than a thousand dollars per month and the 2017 increase totals thousands of dollars.

The Obamacare insurance premium is not the only problem. Uncovered medical and dental expenses seem to be piling up faster than many people can cover them. Clearly the combination of health insurance and uninsured medical expenses make medical costs the fastest growing expense item for many small businesses and self-employed people.

The overall approach to dealing with medical cost increases that I take has not changed in 30 years. During that time I’ve published dozens, perhaps hundreds, of tips and strategies that might help. Recall that we had shock medical insurance rate increase in the 1980s and 1990s. There are many ways to respond but no “cookie cutter” approach that works for everyone. The best approach to this problem has always been to put  your current and future medical expenses at the core of your overall financial planning and begin work from there. The response that  works best for you will become evident from that financial planning conversation.

I am available to discuss health care planning in the context of the overall financial plan and the best response to 2017 health insurance rate increases.

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