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Healthcare expenses can take a huge chunk out of any familyâs budget so I want to break down how a family can weigh the pros and cons of a traditional health plan vs a high deductible one.
Health Insurance Getting Too Expensive
If I asked you whatâs are your biggest expenses each month, what would you say? If youâre like most families, youâd probably mention rent (or mortgage), food, or transportation. And yes, those are huge expenses for the typical family.
However, one of the largest can be healthcare. The crazy thing is how much it can drain from your budget even if youâre a relatively healthy family.
We found out firsthand a few years ago when my husbandâs employer had open enrollment. Each year we review the health insurance options and it seemed to us that the costs kept rising. After having kids, we went with the âbasicâ family plan and the monthly premiums still rose pretty fast. Finally, we hit our limit.
With the latest update, our monthly premiums would pretty much be the same as our mortgage. Considering we only visit the doctors for the girlsâ annual well visits, we knew we needed to change things up. We know weâre not the only family dealing with this.
Right now for a family of four, the average monthly premium paid is $833 orÂ $9,996 annually. Add in the costs of the average deductible and you can see what a huge chunk of money health insurance can be.
However, this year when you get ready to review your options during open-enrollment, you may want to look into whether a high deductible health plan is a practical and affordable solution for your family.
How High Deductible Health Plans Work
As the name suggests, a High Deductible Health Plan (HDHP) comes with a larger deductible than a typical health insurance plan. The appeal for employers and insurance companies to offer this is that youâre taking on more financial responsibility for your health care costs.
The upside for you is that you should see a drop in the monthly premiums. For us, we saw a difference of a few hundred dollars for each month for premiums. Using a $300/month in savings, thatâs like an extra $3,600/year that can be used for other financial goals that you may have.
Huge Tax Wins with a Health Savings Accounts
Another reason why a high deductible plan may be appealing for families is the ability to have a Health Savings Account (HSA).Â Itâs an extremely tax-advantaged account that you can use to pay for medical expenses.
If this sounds familiar, it may be because youâve heard of or used a Flexible Spending Account (FSA). Thatâs whatâs typically offered with the âmore standardâ health plans. Basically you put money in there before taxes.
We used an FSA for years and it helped us to pay for regular expenses like my glasses and contacts. The problem was making sure we calculated enough to go into the account because if we didnât use it by the end of the year, weâd lose it.
With a Health Savings Account, however, whatever you donât use you keep. It can then grow in the account over the years. After saving enough to cover things like the deductible, you may decide to invest a portion to improve growth over the long term.
Making it even better is the fact that your HSA contributions are tax-deductible. Depending on your employer, they may also offer contributions to your HSA. Thatâs a fantastic bonus!
What really sweetens the deal is that families can contribute up to $6,900 each year, that money grows tax-free, and if we use the money for qualified medical expenses, what we pull out is tax-free.
Sounds amazing, right?
Itâs enough to make you want to jump in and switch right now, but a high deductible and HSA may not be the best solution for your family.
The Pros and Cons of High Deductible Health Plans
A high deductible plan sounds great, but there are some costs to consider. With the higher deductible, you need to be aware of what your typical annual expenses would be to make sure youâre coming out ahead.
For example, if you have chronic health issues that require regular visits and perhaps medication, then youâd be paying a lot of money upfront before you hit your deductible and have your insurance cover their portion.
One way you can review your expenses is by using Mint to pull the numbers quickly. You can then easily see how much youâve paid out of pocket.
When we looked at a few years of expenses, it confirmed that our visits were pretty much limited to annual well-visits (which are covered by HDHP plans), meaning we can save a significant amount of money.
When I spoke to a certified financial planner about what families need to consider, he pointed out families should also be aware of their out of pocket maximums with the plan they are looking into.
You want to have enough stashed away (either with your general savings or with your HSA) to cover those expenses.
A relative of mine recently had a procedure done. Even with insurance, her portion came out to be $3,000!
Thankfully she has some savings she can tap into, but still, thatâs quite a bit of money.
So please run the numbers to make sure you could absorb a medical problem, especially during that first year of switching plans.
Choose the Best Plan for Your Family
So after weighing the costs and benefits, took the leap and switched over to a high deductible health plan and opened an HSA. Years later, we feel it was the best decision for our situation.
I hope you now have a better understanding of your options when it comes to health insurance. Having that knowledge can assist you in making the best decision for your family and finances.
Iâd love to hear from you – what plan are using now? Do you have any plans on switching?
The post How to Choose the Best Healthcare Plan for Your Budget appeared first on MintLife Blog.
This year took so many twists and turns we havenât been able to keep countâ often leaving us in complete overwhelm with a whirlwind of thoughts and emotions. Grief, anxiety, and sheer disappointment are just a handful that comes to mind when we reflect on the endless amount of curveballs life has thrown over the past year. Tragedy and loss plagued the entire world, leaving us speechless day after day. Despite the darkness that loomed for what seems like an eternity there has been an outpour of positives that we canât forget to remember. As 2020 quickly comes to a close, letâs take the time to decompress and reflect on the happier moments we were lucky enough to live through and witness. Even though Thanksgiving may look less traditional than previous years, we still can readily name some things that shift our hearts to a place of gratitude.
Letâs face it â the hustle and bustle of life impact our family and friends more than weâd like to admit. Competing schedules, conflicts, and not making enough time for those that matter are often reasons why we are unable to nurture the people we hold near and dear. Because of restrictions on travel and other entertainment, we were forced to become more creative with our time indoors; in turn, helping us to restore the meaning of family and work-life balance. Quite frankly, it allowed us to hit the pause button on everything that probably was unintentionally too high on the priority list in the past. Our families served as the safety net itâs supposed to be when the weight of the world (and social media) became overbearing with less than desirable news. We utilized technology to a new degree when scheduling virtual happy hours, catch up sessions with our loved ones, and birthday celebrations in other geographic areas. It made us truly appreciate the very thing we took for granted; all the people that make up our family tribe. Â
Curating and developing passions
2020 generated a newfound level of introspection, leaving our minds to really consider what it is that we really cherish the most. Whether it be career-related or new passion projects, this year made room for some much-needed self-reflection, making us reassess where our fulfillment really comes from. Leveraging books, social media outlets, and various streams of consuming knowledge-based information sent us on a path of rediscovery. Remember that âotherâ to-do list thatâs filled with the things you really donât want to do around the house? It even made that list appear fun-filled! Home improvement projects and DIY tasks were done with enjoyment while being budget-friendly. Adulthood can be full of things that arenât as exciting, but mustering up the courage to take ideas from ideation to execution served as a second wind. New business ventures and side hustles were birthed with unmatched creativity, a place many of us havenât been in quite some time. Existing businesses were able to thrive despite the unprecedented events occurring nationally. Funding was also provided to various business owners which granted many small businesses to increase their visibility while positively generating profit.Â
The importance of sustainment
There are a countless number of families that were impacted by job loss and/or unexpected expenses. It doesnât matter if things started off rocky financially â what matters most is youâre still standing. Getting caught up on bills, eliminating some debt and saving are all things to be very proud of. Temporary hardships donât have to turn into permanent problems. Creating a plan of action and sticking to it no matter what arises will always be rewarding. Celebrating the small wins should never be overlooked. Weâve all handled this year in different ways â but whatâs most important is discovering what works for you. Rule of thumb for those that are battling with the ânot enoughâ emotions: donât believe the hype. While there is a multitude of people accomplishing great things, there are also many imposters. Social media is a highlight reel, a virtual platform where people can share whatever information they choose, at their discretion. People are more likely to share their highs versus their lows, so be sure to keep in mind you may only be getting a small piece of the overall story. Donât look at someone elseâs life and fail to recognize what youâve done on your own. Financial progress, no matter how insignificant you may think it is â is still progress. We all make financial missteps and life has a way of making things very difficult that hit us where it really hurts. Keeping your head above water, remaining afloat, maintaining your health, and providing for your family should never be considered a small feat. Grant yourself some grace and reflect on the dedication it took for you to get (and stay) where you currently are.
Back to the basics
This year forced us to really hone in on what matters and prioritize accordingly. This applies to our lives, but most importantly our finances. Pulling back the curtain to really take a look and evaluate where money was going served as a constant reminder that we should be doing this more than the occasional once or twice a year. Itâs never too late (or too early) to create new money habits! Financial stability is essential â and maybe the cushion we imagined should be enough proved itself to be untrue. Our willingness to make changes at a faster rate to ensure the financial security of our families felt less painful and so much more intentional. The uncertainty of everything occurring allowed us to complain less while redefining comfort levels with our contingency plans.
No matter what has transpired this year, what are you most thankful for? As things come to mind be sure to jot them down. Reference them when your days seem laborious or when your feelings try to force you to reflect on things that arenât as positive. Itâs clear we donât know what the future holds, but we do know (and have been reintroduced) to the moments, things, and people that continually keep us hopeful and thankful â no matter what lies ahead.
The post Gratitude in a Difficult Year appeared first on MintLife Blog.