There’s An App For That: ‘Universally’ Slash Your Health Care Costs
Don’t Wait for the Government to Fix Your Health Care!
Previously, I gave real-world applications to help trim the food & dining budget. This seems like the obvious place to drastically help your financial well-being each month, since food expenses can literally vary by hundreds of dollars each month if not held in check.
Not so obvious, but just as dramatically punishing to your budget, is the cost of Health Care. In my household, I do project-based, temporary work, while my wife has the “stable” job. Her health care is covered by the employer, but adding me onto the policy has cost us nearly $400/month. Agh!!! Talk about a budget buster!
Auto-Deduct = Passive Mentality
To tell you the truth, fixed costs are often harder to be motivated to fix. It comes out of your check automatically, so you never see that money deposited into your account. At least with food, you see all the restaurant tabs add up!
A New Deal: How I Found New Coverage
$400/month for a relatively healthy, 30 y/o non-smoker like me should not cost so much. I was determined to find health insurance at a lower cost. Luckily I didn’t have to go very far.
I logged onto financial guru Dave Ramsey’s website and requested an Endorsed Local Provider (ELP) for health insurance. Within minutes I got an email from a local agent. I called him back on my way home from work, explaining my situation, and asking questions about my potential options. He was extremely helpful, and e-mailed me quotes before I even got home. How’s that for efficiency?
Application: High-Deductible, HSA
The answer for me is to purchase a high deductible health policy, and fund a Health Savings Account (HSA) to help pay any medical costs up to my deductible amount. You can fund an HSA pre-tax, and qualified health expenditures may also be tax free. The best part about an HSA – it’s not a “use it or lose it” account, which means you can continually fund it and grow it tax-deferred, essentially turning it into something similar to a retirement account.
Two of my agent’s quote allows me to stay with Blue Cross:
(1) With a $2,500 deductible, policy cost is $88/month. If I exceeded my deductible in a given year, I pay 25% of the cost of the next $2,000 in expenses ($500). So basically, the max out of pocket per year is $3,000.
(2) With a $5,000 yearly deductible, the price drops to $71/month. There is no additional out of pocket expenses; $5,000 is the ceiling on your expenses.
Funding the HSA
The IRS allows you to fund your HSA tax-free up to $3,000/year. To fund at that rate, you’d be saving $250/month. Add that to the cost of the plan, and I’m still better off by $50/month. Also, once you’ve saved your maximum yearly out of pocket expense in your HSA, you can reduce your HSA monthly savings rate, freeing up hundreds per month in your budget!
I will purchase Plan (1), the $88/month policy with the $2,500 yearly deductible. I plan on fully-funding the HSA since we have funds available. This will leave us with $300/month savings in our monthly cash flow. How’s that for a real-world budget buster?!?
Do you have questions, or currently have an HSA or high-deductible health insurance policy? Tell me about your experiences in the comments below!