January 18, 2011
Step #5 - Evaluate Your Health Insurance - Can You Save By Switching?
For many people, health insurance is a major expense. Monthly health insurance premiums are often a good deal more than a car payment. How much evaluation and shopping did you do before you bought your last car? Did you spend that kind of time and effort on shopping for health insurance? Yes, it's true, you don't have the wide array of choices for health insurance that you have when looking for your next ride. But many people have at least some choice, and it may not always be the obvious one.
When choosing a health plan it pays to consider the coverage you will receive, and how much of the risk (read: cost) you are willing to accept. An increasing number of employers are offering High Deductible Plans (HDP) coupled with a Health Savings Account (HSA), and that kind of plan can be a meaningful savings for some people. An HDP covers big events, what I refer to as "car crash, heart attack, cancer." Most such plans also cover annual physical exams, inoculations, and some prescriptions. What they don't cover are trips to the doctor when you don't feel well. If you want to go see your doctor, you will pay for an office visit, generally by using the cash you build up in your HSA. The savings come in two forms: 1. The amounts you put into your HSA go in pre-tax (like a 401K) and come out without tax as well, and 2. If you don't go to many office visits, the savings you pile up in that HSA are yours to keep - unlike a Flex Spending Account, HSA balances are always yours and never expire.
It can sound very appealing to have a $10 or $20 co-pay for office visits vs. paying the full price from your HSA. But when someone else (your insurance company) is shouldering the risk of paying for office visits, then the basic price you pay is likely to be higher. HSAs aren't for everyone, but if you prefer to be in control of your personal finances, you may save money by checking them out.
Next - #6: Making a Donation? Maybe You Should Give Stock Instead of Cash.
GTC
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).