Are you paying too much for health insurance? Expensive health insurance costs can eat away at your budget. If you suspect you might need to switch plans, consider taking the following steps as you experiment with health insurance options.

What is your average annual health cost?

Take the records from your past five years of medical bills and figure out how much you paid in premiums, how much you paid out in deductibles and how much you paid out of pocket or as co-pays. If you can, look over medical bills to determine how much your insurance company has paid out. Now that you have some numbers available, consider changing health insurance plans.

Do you anticipate a lot of health expenses this next year?

Are there any scheduled or impending surgeries? Births? Treatments? Is your family relatively healthy, or are there ongoing health needs? If your family is relatively healthy, you may be best off using a plan with a low monthly premium but a high deductible before the insurance policy kicks in. This way you can pay the lower premium, set aside the money you would have spent on a higher premium, and see if you need it throughout the year as you pay for medical costs out of pocket (making sure they are recorded as going towards your deductible by submitting claims) throughout the year.

Evaluate your situation again.

At the end of the year, make note of how much money you have in that reserve account where you put the amount you would have spent had you been paying the full premium. Did you spend it all to satisfy the deductible? Did you have to spend more than you would have had you been paying the higher premiums? Did you save a considerable amount? Reconsider your options and see which way you should go. If you did not spend much money at all last year, consider plans with even lower premiums and higher deductibles. Follow the same plan as last time, paying the lower monthly premium and saving the rest of the money you would have paid out in premiums in an account, just so you will be set if any medical emergency does come up that requires you to pay out the deductible. Each year, determine which plan will lower your overall health insurance costs and act accordingly.

What are exceptions to this?

If you happen to work a job that is particularly dangerous or have a dangerous hobby, you would be wise to pay the higher premiums and be sure to have the appropriate coverage because expensive health insurance is worth it if you carry a high risk.