It's health plan renewal time for me. Every year, we go through this. In the last six years, my family's monthly insurance premium has nearly tripled — and our benefits have decreased. Have we had major health challenges? Nope. Each individual in my three-person family has only one or two doctor visits a year. We don't have new prescriptions. We don't have any pre-existing health conditions. We live a relatively healthy lifestyle. But the premiums keep going up.
Apparently, “administrative costs” are rising faster than anything else in the world of health care. (Maybe that's just my frustration talking.)
At any rate, this year I'm doing something about it. I've sent in a change of plan form, switching to a high deductible health plan that costs half as much as what I'm paying now. No, my current premium isn't a budget buster. But I am frustrated that so much money goes, with no benefit to me, into the pockets of insurance company execs. I figured out how much it would cost to pay everything out of pocket, and it's a fairly small fraction of what I've been paying in premiums for the last three years. The only reason I have health insurance is because of the worry that something expensive could happen. The new high deductible plan would help me keep more of my money for me, while at the same time making sure that my family is protected against unexpected health issues.
HSA: Saving Money On Health Care
There are a number of things you can do to save money on health care, from asking for discounts at hospitals and doctor offices, to joining a prescription plan. A Health Savings Account can help you put your money work to you. When you have a high deductible plan, you pay a lower monthly premium. I plan to put the amount that I save in premiums in the HSA. I'll still be paying the same amount, so it won't change my spending plan, but the money will be to my benefit. Here are some of the ways that a HSA can be of benefit:
- Contributions are tax-deductible.
- You can withdraw for medical expenses without tax liability.
- Money rolls over year-to-year.
- The HSA can act as a back-up IRA. It has the same rules as an IRA, so if you don't use the money for qualified medical expenses, you are subject to the same penalties if you aren't 59 1/2 (and to taxes if you are).
- You can use the money in the account to pay out of pocket medical expenses, including co-pays.
It's important to realize, though, that a HSA isn't for everyone. It works best for those who are reasonably healthy, without chronic conditions. Because the high deductible means you will be responsible for more costs for longer, expensive chronic conditions can be even more expensive with this arrangement. So, carefully consider your options, and what would work best for your financial situation. In some cases, you might find that a high deductible plan, paired with a HSA, could help you control more of the money in your budget.