How Does Your Credit Score Impact Out-of-Pocket Insurance Expenses?

How Does Your Credit Score Impact Out-of-Pocket Insurance Expenses?
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Mike Randall
By: Mike Randall
Posted: November 28, 2013
Experts share their tips and advice daily on BadCredit.org, helping subprime consumers navigate the world of personal finance.

Lately it seems there are more questions than answers when it comes to insurance costs. Although none of us has control over the way insurance is administered, we usually do have the ability to choose what coverage we get.

Once we choose a plan, the amount we pay each month is just a part of our overall insurance expense

The cost of insurance, as it turns out, is more than just paying your premium each month. There are also deductible costs, coinsurance costs, copayments and not to mention services and procedures that are not covered by our plan.

These extras can quickly add up, but does your credit score have any impact on your out-of-pocket insurance expenses?

The fact is insurance companies have historically based the rates we pay for insurance at least partly on our credit score. The lower your score, the more you can expect to pay for insurance.

These apply to out-of-pocket expenses, too.

The good news:

However, there is some good news on the horizon. The new health care law known as the Affordable Care Act or Obamacare mandates that insurers can no longer use our credit score to set the rate we pay for insurance.

This means our insurance rates – including those out-of-pocket expenses – will not cost us more just because we have a less than perfect credit score.

Under this new structure, you will be able to choose a plan and know the amount you pay for a doctor’s office visit or pharmacy copay does not depend on how good or bad your credit score is.

“Those with lower credit scores are

the least able to afford health care.”

A low credit score can still cost you.

However, there are certain types of insurance that can still use a low credit score against you.

Auto insurance, renter’s insurance and even certain homeowner’s insurance policies will still cost more if you have a low credit score.

The best way to avoid the problem of high out-of-pocket insurance expenses is to ensure your credit score is as high as it can be. This means checking your credit report frequently and disputing any entries that were not incurred by you.

It also means making all of your payments on time and not exceeding your credit and debt limits.

By working hard to maintain the highest credit score possible, it will pay off in ways that can actually help you keep more of your hard-earned cash. That is the best reward of all.

Photo source: bp.blogspot.com.