Insurance

Health insurance is a pit that makes money disappear.  I have seen that proven over and over.

However, I have seen that the LACK of health insurance is an even larger pit that not only makes money disappear, but many times it leads to bankruptcy or worse – a failure to diagnose a major health issue.

Health insurance is costly, but I wanted to share some tips that might help you save money as you acquire insurance or evaluate your current coverage.

• Consider a High Deductible Health Plan.  An HDHP usually has a deductible of $2,500 or greater.  The insurance will not pay a dime for most items until the policy holder has paid an amount equal to the deductible.  After the deductible is reached, some plans pay 100% of the rest, other plans might require the policy holder to continue to pay a certain percentage.  Why is a HDHP good?  Because it is much cheaper because the policy holder has assumed more risk.  If you have a healthy family, a higher deductible can be a good risk to take because the deductible is not guaranteed to happen.  The premium is guaranteed to happen!
• Purchase insurance with a Health Savings Account.  Health savings accounts allow one to save money on their health care expenses because the money can be used tax-free for healthcare-related expenses.  Think about it for a minute.  If a doctors appointment costs you $70 and you have to pay for it, it actually costs MORE than $70.  Why?  Because the $70 is AFTER you have paid payroll and income taxes.  You had to earn about $100 to net home $70.  If you have a HSA, you are able to use BEFORE TAX money which stretches your money about 30%!
• Shop around.  There are a myriad of insurance plans available.  I personally shopped mine around on eHealthInsurance and with a local independent insurance agent.  I got a pretty good deal on a $5,000 Deductible Major Medical plan with a HSA.  After I spend $5,000 in the year, my insurance plan will pay 100% of the rest.
• Compare GUARANTEED costs and MAXIMUM costs.  The premiums are guaranteed to happen.  Take the monthly cost and multiply it by 12 to obtain an annual cost.  Let's say a plan has a monthly cost of $250 and a deductible of $5,000 and the insurance will pay 100% after the deductible is met.  The guaranteed cost is $3,000 ($250 x 12 months).  The maximum cost would be $8,000 ($3,000 premiums PLUS $5,000 deductible).  I personally make it an objective to fund my HSA with an amount equal to the maximum cost so that when a major medical event occurs (baby!), I will have the funds ready to roll.

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