What’s your Health Insurance IQ?

As many of you, it was that time of year to make sure I had my health insurance figured out for 2019.

My employer doesn’t offer health insurance benefits so it’s something I take care of on my own. That’s okay with me because it gives ME control of what kind of health insurance I want or need. It’s my health insurance and I should know what I need, right?!

Before choosing a plan:

So there are a few things about health insurance one needs to become familiar with prior to comparing plans.

Copays: a fixed dollar amount you pay each time for a certain type of care. For example: $25/ doctor visit. Many of us are familiar with this one.

Deductible: a amount you must pay for most insurances begin to pay. Beware: the deductible may not apply to all services so check over your plan. Again, many of us are familiar with deductibles, specially with other insurances we have. KEY: The higher the deductible, the lower the premium.

Coinsurance: your share of cost of a covered service calculated as a percentage. For example: 20%/80% = you pay 20% of the bill and your insurance would pay 80%. This breakdown kicks in after the deductible is met.

Common breakdowns I’ve seen are 20/80 and 30/70. This is one not everyone is familiar with and it doesn’t really tell you an actual dollar amount it’s going to cost you. KEY: The lower your share, the higher the premium.

Out-of-pocket-max: The most you have to pay for health services during the year. The out-of-pocket maximum includes your deductible, copays, and coinsurance. This can get over looked, when people focus more of their time looking at the other items above.

What I look at in choosing a plan:

Most people would consider lower copays and 20%/80% better than a 30%/70% plan with higher copays, right?

I only look at 1 number when I compare plans and that is: OUT-OF-POCKET-MAX -aka what is the most this is going to cost me in a year?

To me, the other items of fluff and mean little to nothing to me.

 

Difference in plans out there:

Let’s play with some numbers. 🙂

Example of a Typical Health Insurance Plan: Premium $250/month – $3,000/year

Copays: $30/doctor visits, $40/urgent care, etc

Deductible: $3,300/member

Coinsurance: 30%/70%

Out-of-Pocket-Max: $7,300/member

 

Example of a Non-typical Health Insurance  – HSA APPROVED: Premium $160/month – $1,920/year

KEY: Member is to pay bills in full until deductible is meet

Deductible: $6,700/member

Coinsurance: n/a – after deductible is meet, insurance covers in full

Out-of-Pocket-Max: $6,700/member

 

Okay, hold up! What is an HSA?

A HSA is a health saving account. Think of it as an emergency fund just for your medical bills. 🙂

 

Now we got that out of the way….

Which plan would you chose?

Which plan would give you good coverage for the cost?

Let’s walk through the examples as I follow Dave Ramsey’s philosophy (cover the small stuff and transfer the risk of the big stuff to the insurance companies).

Typical Insurance: Total premium is $3,000 + $7,300 = $10,300 maximum potential total cost for a year

Non-tropical Insurance: Total premium is $1,920 + $6,700 = $8,620 maximum potential total cost for a year. A SAVING OF $1,680.

 

So why aren’t more people getting HSA approved health insurance?

Great question! Who wants to pay $1,680 MORE if they are hospitalized?! Not me. If I’m hospitalized, I have bigger problems to be concerned with, right?!

The kicker with HSA approved health insurance follows Dave Ramsey’s philosophy in that, YOU are responsible to cover the small stuff (doctor visits, minor medical care, etc) while transferring the risk of the big stuff (hello! being hospitalized, surgery, etc) to the insurance companies.

Taking on some risk up front, drills down the yearly premium, which is what you want too. Take that money saved in premium and put in into your HSA account.

But the HSA approved health insurance deductible is so high!

$6,700 is a lot for a single mom to dish out, but remember it’s also the Out-Of-Pocket-Max number too! That’s huge!

AND if you are like me, only really using the health insurance to cover something major, you won’t need to use the HSA account often, therefore it’s going to start building up. YESS!!!

The goal is to have your Out-Of-Pocket-Max saved in your HSA account along with some extra cash as a cushion for random medical bills that come in. The amount of the cushion would be the amount you feel comfortable with having in there.

For example, by the end of 2018, I will have almost all of my deductible saved. 😀

Talk about peace of mind! And if I get sick and need to see the doctor, I’m not worried how am I going to come with the max-out-of-pocket money in my tight budget to pay for it. I just write the check. Simple as that.

 

Before you dump your savings into your HSA….

The government limits how much you can put into a HSA account so make sure you are following those requirements.

Source: https://www.irs.gov/forms-pubs/2018-hsa-contribution-limit-for-individuals-with-family-hdhp-coverage

So per the IRS, 2018 limit was $3,450/year.

(Math time again! WHOOHOO!!!!!) 😀

I had set up automatically, $40 to come out of my checking account (after I got paid) to be transferred into my HSA savings account. That would be $1,040 ($40 x 26 paychecks) for the year. So I had room to add more money to my HSA account so today I transferred an additional $2,000 from my saving to my HSA saving. (Don’t worry, I’m going to hustle to replace that $2,000 ASAP!) 😉

Why contribution (deposit) the limit or close to the limit year year? Well, currently (not sure if what the new tax changes will be in the future), I am able to take what I contributed to my HSA for that year and DEDUCT it off my income when I do my tax return PRIOR to the standard deductions, etc (since I am using after tax-dollars to fund my HSA.

 

Other things to know about HSA’s:

1. You can’t pay your premiums from this account

2. Your health insurance HAS TO be HSA approved to be able to have a HSA account.

3. Any deductions have to be a medical expense and the monies in the HSA account can only be used for such.

 

Okay, okay, okay. Why am I so passionate about HSA’s and health insurance?

So yeah, I’m slightly passionate about the topic. Not only do I save money throughout the year via lower premiums, I have built up a saving in my HSA which give peace of mind if something major happens, and I get a tax benefit at the end of the year via my tax return.

Need another reason?!?!……

 

Why I feel having an HSA and choosing the right health insurance is SO IMPORTANT?

 

THE #1 REASON AMERICANS FILE FOR BANKRUPTCY IS NOT CREDIT CARD DEBT BUT MEDICAL DEBT.

Let that sink in for a moment……….

 

Source: https://www.fool.com/retirement/2017/05/01/this-is-the-no-1-reason-americans-file-for-bankrup.aspx

Additional Source: https://www.apexedi.com/medical-bills-the-leading-cause-of-bankruptcy-in-the-united-states/

 

So when you are building wealth, you don’t want to lose it all and your financial stability over one incident when you find yourself in the hospital.

 

As Dave Ramsey says, cover the small stuff and transfer the risk of the big stuff to the insurance companies.

Why I make my kids give back

Every year since I could remember, I would let the my children pick out a Sharing Tree tag that we would fill as a family. It was one of our traditions I wanted to do during the holiday season, to instill in my children the real reason for Christmas.

Over  4 years ago, I lost 1/2 my income when my ex exited out of my life, leaving me with all the debt and bills.

It was a devastating time for me, only a few months before Christmas. Not only did I have to try to figure out how to pay the monthly bills and keep a roof over my children’s heads, how was I ever going to provide them a Christmas? I couldn’t.

A local community charity reached out to me, asking me if I wanted my family to be “adopted” via the Sharing Tree program. I was also asked by members of my church, what we wanted for Christmas and that they too wanted to “adopt” us for Christmas after they heard from another person of our recent struggles.

A few months later, we had a we a wonderful Christmas.

Since then I continued to get excited when the Sharing Trees at our church goes up and I decided each of us, the children and I, will each have our own Sharing Tree tag to fill. I told my daughters to pick a tag for a child who is the same age or close to their age so they can relate and get excited to pick out the gift. Oh, and that they had to pay for their gift with their own allowance money to truly make it come from them.

We have done this for the past 3 years and the girls enjoy picking out their tag, gift, and wrapping it.

So once again, two weeks ago, the Sharing Trees went up and we went over BEFORE church started so we could pick our tags before other people started to take some. We each picked out our tags. I chose a young mom and both girls chose a child their age. That weekend, we purchased their gifts and wrapped them. We got everything on their list! 😀

Then a few days ago, I was at church with my youngest and noticed there were lingering tags and I became sadden because these children and adults may not have one Christmas gift to open. My heart sank thinking of these children who’s parents may be going through something just as we did 4 short years prior.

I looked them over and grabbed another tag when my daughter asked, “Why are you getting another one? We each did one.”

I asked her if she could remember the first Christmas when it was just the 3 of us, and asked her if she remembered not having presents. She answered no. Then I told her how WE were once on these same trees and generous people out there gave us a wonderful Christmas (that I’m beyond grateful, even to this day) to where my children didn’t notice a change from years past.

“That’s why mom is grabbing another tag.” (I grabbed two, actually – A little girl and little boy.)

She looked over the tags and said, “I’ll do another,” and picked a girl near her age who wanted boots.

My children will learn to give and understand the reason for giving and the importance of it. After what I went through, I am a firm believer of paying it forward, sending good vibes and kindness out into the world that seems filled with selfishness and backstabbing to get ahead.

It’s easy to look around and see people be grumpy, rude, or filled with greed. It’s easy to see ungratefully kids demand the latest toys not understanding the costs of what they are asking for. It’s easy to see people, hands filled with shopping bags, walk past the charities who are standing in front of stores without giving even a smile let alone a few dollars.

My children will be none of those. My children will give, they will learn to true reason for holiday season and guess what….it’s not them. They will be reminded we were helped by generous people who GAVE to us and it’s our duty to GIVE BACK to those who need it as well.

 

Even the best have their struggles

I have lived on a budget ever since I jumped on the Dave Ramsey bandwagon years ago.  Whenever I pay bills or get paid, I pull out my Excel spreadsheet and start checking bills off. Check, check, check. 😀

But there are times like today were I’m struggling to stay on the bandwagon. I have been “blue” for a couple of weeks and this past weekend, the shade of blue has become a “royal” blue shade. I as sit here and write, I am having the urge to go out and do a little retail therapy.

If you follow Dave Ramsey’s bandwagon, retail therapy is a huge no-no. What I would be buying is NOT a NEED but a WANT….to fill in the void I am feeling. Rational me knows that whatever I buy, no matter how much I buy, that void will still be there and then it will be accompanied with guilt from wasting money on things I don’t need nor had the money for. I know I don’t have the money for because I budgeted my money, I told my money where to go, and the stores I want therapy from is not on that budget.

Let me tell you, the force is strong with this one (retail therapy urge)!!

Uh oh! What now?

Lunch came and it reared up it’s ugly head! Instead of going to the gym, my head screamed, ‘To the store!!!!”

I read a few months ago when I started to go to the gym – Never miss the Monday workout – start the work week right. If a person didn’t do their first workout on Monday, the chances it would be pushed off again the next day increased.

I didn’t want that so I headed to the gym on my lunch. Victory! I didn’t cave into the retail therapy urge. But the end of the work day is creeping up and the voice in my head grows louder and louder.

Even with my accounting background, getting geeked up about budgets and spreadsheets, even I struggle at times with spending. I’m not perfect nor have will power of steel. I stumble at times.

How am I going to deal with this struggle?

A few options:

1. Go home after work and try to keep my mind busy at home. I may overeat, trying to fill the void that triggered the retail therapy urge.
2. Allow myself $5-$10 to spend and see if that satisfies the urge. Sometimes withholding with an iron fist makes things worse. Maybe I’ll cruise over the Goodwill and find a shirt or two that fit that allowance.
3. Go home and write in my journal, trying to figure out my I’m so down lately, been so blue. Maybe getting it on paper will help the void. Or maybe I’ll go home and talk to a friend about what I’m feeling.

Do I know which option I am doing? Not yet and probably won’t until I’m walking out the office door.

Wish me luck!