“A ship is safe in harbor, but that’s not what ships are for.”― John A. Shedd
Risk is something that has always fascinated me. Growing up my dad had MS and we were essentially slaves to medical insurance. If we didn’t have medical insurance how would we afford important medicine? Afterall it was always cheaper to get insurance than pay out of pocket, right? This very situation is something that I’ve been thinking about alot lately. With a baby on the way and my wife most likely wanting to stay at home, what will putting an entire family on my insurance do to our income? Am I going to just be working to pay for health insurance? There’s no way I will be able to achieve financial independence supporting a family on my insurance. What do I do!? Well have no fear because I’m about to drop some knowledge in this blog on some insurance strategies that might prove to be cost saving without risking coverage… stay tuned!
Insurance Through Work – Getting insurance through work is kind of the default nowadays. The first thing our parents or grandparents ask after we get a new job is, “how are the health benefits?” (#yeaI’mhappytostartmynewcareerthanksforasking). Yet getting benefits from an employer is probably the best option if you’re a single individual. Typically insurance for a single individual is usually not all that expensive and is usually worth the coverage. Furthermore if you are in good shape and exercise regularly you are mitigating risk by actually having to use your insurance. So go with that high deductible plan, for as long as you take care of yourself; you’re ahead of the curve.
What I’ve found is that insurance gets dicey when you start adding dependents or a family. I know through my employer a family plan for the best insurance plan offered rings to the bell of about a 400.00 deduction PER paycheck. So essentially 800.00 a month is going towards health insurance that may or may not be used. Every ounce of me wishes I could accept this, but I can’t… so it was time to get on my thinking cap and come up with a solution.
As I mentioned earlier my wife doesn’t plan to go back to work (if anything, maybe a part time job) and with an additional little person, how will everyone be covered? The solution we came up with is that me and the baby will be on my insurance from work. By just adding a child to my separate work plan my deduction will only increase about 40.00 a paycheck; which I can live with. However I can’t leave my wife hanging so she needs to be insured.
The obvious choice here is to utilize the marketplace aka healthcare.gov. While most of the plans on the market place are #trash the benefit is that my wife isn’t going to be working which means there’s zero income, which means we’ll be in a different tax bracket, which ultimately means she’d get a greater subsidy and incentive from the government to purchase from the marketplace. Which makes this scenario work for us.
However this whole situation got me thinking what if someone doesn’t have a job and has a family they need to insure? What if they don’t want to pay 1700.00 a month from the marketplace to insure their family.
After doing some research I came up with a plan that might help those who want insurance but don’t want to sacrifice their income. Again this is just an idea, it can be used in parts of pieces or as a whole. In either way it’s always best to consult a healthcare broker or financial advisor. With that said, let’s begin!
Direct Providers – Doctors around the country know finding health insurance and more importantly affording health insurance can be challenging. That is why many providers offer Direct Provider plans. In a plan like this you simply pay your doctor a monthly fee and they cover basic visits such as physicals, basic office visit etc… usually these types of plans are under 100/mo.
Catastrophic plan- To supplement the direct provider plan you would also want to get a catastrophic plan. The reason for this is because your direct provider only provides a basic service or coverage to you such as annual physicals, doctors visits, bloodwork etc… The Catastrophic plan comes in, in the event you break your leg, or need surgery. Catastrophic plans typically come with high deductibles upwards to around 7-8k. However they do offer coverage in the event you need it. Also keep in mind you hopefully won’t be breaking a bone every month or hopefully won’t need surgery every month either. These plans are typically priced around 170/mo but like all insurances depends on your individual circumstance.
The HSA – The Healths Savings Account ties together this trifecta. An HSA is completely free and anyone can start their own. The idea behind an HSA is that you can use it as a savings account for medical expenses. However it’s so much more than that. With an HSA you can actually invest your contributions and your funds would grow as they would in a regular brokerage account invested in any mutual funds, index funds, or stocks of your choosing. Withdrawals are also tax free as long as they are used for medical purposes (this is for prescriptions or to put towards your Catastrophic plan deductible) and better yet by investing in an HSA you are reducing your taxable income while growing your money which is a beautiful thing.
Conclusion – I could probably sum up this blog by saying “insurance sucks.. The End” but we’re all better than that. I can say that insurance is now a strategy like a game of chess and the exorbitant costs make insurance work- arounds something that many individuals need to utilize. We can hope the healthcare system in the United States improves in years to come, however we also need to prepare and think creatively how we can work around an already existing system, there’s always a way! What are some of your healthcare strategies? How do you still optimize your savings while also providing the best coverage and insurance for your family? We’d love to hear everyone’s thoughts on this one!!