Over 66% of bankruptcies in the United States are related to medical issues. From a financial perspective, how someone handles their health and medical treatment can significantly impact their money. The decisions that one makes around their health care and health insurance are very important. Since it’s open enrollment time in the U.S., health insurance is a timely topic.
No Compromising On Health Insurance
I’ve worked for myself full-time for 7 years now. Sometimes it has been a tremendous struggle. No matter what kind of challenge I’ve faced from an income perspective, the one thing I haven’t sacrificed is health insurance. It has always been a priority for me. I cannot think of a time I’ve ever seriously considered going without it.
As you may know, I’ve dealt with fibroid tumors for about the last 14 to 15 years of my life. Aside from those and issues related to those, I’m healthy. My blood pressure is great; my cholesterol is great; I’m not diabetic; I don’t have any chronic pain. The only medication I take regularly is Flonase. I say this to say, I wouldn’t consider myself to be one of those people who must, must, must have health insurance due to chronic illness or the need for expensive prescription drugs.
That – one’s general health – is part of the analysis for people who are self-employed and can’t rely on an employer to provide health care (or supplemented health care) for them. For the single and self-employed, especially, not only is there no employer, but there’s no spouse’s employer who can come to the rescue either. As a result, many self-employed folks go without the insurance or get very minimal plans. A couple of months ago, a friend of mine who recently got terminated from his job, stated flat-out that he’ll just “take the tax hit” instead of utilizing COBRA or obtaining a policy on his own.
Self-Employed Plans Suck
Plans for the self-employed aren’t great. Most are high-deductible (if you want to have a lower monthly premium payment). As far as I’m concerned, the premiums are high, too. And there’s not as much flexibility with the coverage as I used to have during the pre-Affordable Care Act (“ACA”) days.
I did have a downright bad policy one year. That was due to me being on the verge of missing the open enrollment deadline and picking some stupid plan in haste. I soon learned that it was some catastrophic health insurance bullshit that didn’t cover a damn thing. I’ve learned to do better and be more diligent about looking into plans.
This year I’m on top of the healthcare process earlier than I’ve ever been in the past. Of course, my premium went up a bit from last year for the same policy. The difference is $51.25 per month.
Before the ACA, I was always on a PPO plan. I like flexibility. I don’t want to have to get approval before seeing any provider that I want to see. In recent years, however, I’ve been on an HMO plan because the PPO plans were more than I was interested in paying.
My Insurance
Below you’ll see what I currently pay.
- Premium: $337.03 per month
- Deductible: $6,700
Here’s what I’ll be paying in 2020:
- Premium: $388.28 per month
- Deductible: $6,800
A Health Savings Account (HSA) Plan
I made sure to pick a plan that is HSA eligible. An HSA allows an employee to make savings contributions for their health care on a pre-tax basis (or tax-deductible basis if not done through an employer). The HSA contributions, effectively, reduce one’s tax burden by decreasing the amount on which a person will be taxed.
Another advantage of an HSA is that the funds held in the account can be invested and the earnings will be tax free. Considering where I am in my debt free journey (Baby Step 2 in the Dave Ramsey plan, which is the payoff of all debt besides my mortgage), I’m not concerned much about the investment benefit. My primary concern is the reduction in my tax liability using money that I’m going to spend anyway. As an additional benefit, my accountant told me that I’ll be able to receive reimbursement from my business for the $7,000+ I spent on my uterine fibroid embolization last year.
Before a couple of years ago, I didn’t realize that you couldn’t just tack on an HSA to whatever your existing plan was. You have to have a plan that is eligible for the HSA. That’s going to be a plan that qualifies as a high deductible health insurance plan, according to the guidelines for that established by the IRS.
Since I have a high-deductible plan, and one that is specifically designated as high-deductible, I’m eligible for the HSA. My aim is, obviously, to use the HSA to reduce my tax burden.
On another good note, fortunately, my dental insurance didn’t go up. That’s still $47.38 per month.
Choosing health insurance is so not my favorite thing. How are you handling it? Do you have an HSA? What was your decision-making process in selecting the appropriate plan?