How To Lower The Cost Of Health Insurance For Your Family


 

Click the graphic for a larger view.
Click the graphic for a larger view.

If you are going to use the “Split” insurance strategy in 2014, to save money on health insurance, you are running out of time.

In the past, you could make adjustment to your insurance portfolio any time you wanted.  The new “Obamacare” laws change that.

Under the new laws, you can only make adjustments, to “approved” plans until March 31.  After that date, your only option will be to change to a “non-approved” plan for the rest of the year and pay the “Shared Responsibility Payment” penalty when you file your taxes.

(Even after paying the “Shared Responsibility Payment” the Split Insurance strategy may save you several hundreds of dollars in health insurance premiums for 2014.  However, you will need to do the math and add the potential tax consequences into the equation to see if it will benefit you.)

The Split Insurance strategy is pretty simple.  The new “Obamacare” rules state that if a person is eligible to get health insurance, as a dependent on someone else’s group health insurance, that person is ineligible for a federal “subsidy” to help with the cost of premiums.

That means that a wife, who is covered on her husband’s group health insurance plan, is ineligible for a federal “subsidy.”  The restriction applies, regardless of if the husband’s employer helps pay for the wife’s health insurance.

The same is true for husbands who are covered under their wife’s group health insurance plan.

The Split Insurance strategy uses a principle from the world of stock trading called, “Arbitrage.”  It takes advantage of the price difference between two, essentially identical things.

Many of the options, for health insurance, in the individual marketplace are very similar to what is offered in group plans, but cost less.

The Split Insurance strategy take advantage of this price difference.  It requires the spouse receives a subsidy from his/her employer to remain on the group health insurance.

The spouse, or other dependent, should get an individual health insurance directly from their chosen health insurance company, and avoid using the government exchanges.

It is feasible, that if you use this strategy, your health insurance premiums will be several hundred dollars less each month.

WARNING

There is one warning that I must stress.  In order to take full advantage of this strategy, and avoid the “Shared Responsibility Payment,” your dependent must enroll in an approved plan by March 31.

The end of the National Open Enrollment is next Monday.  After that date, the Split Insurance strategy will still be available but you will need to factor in the cost of the “Shared Responsibility Payment”

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