When I was a young girl, I remember my grandmother saying she was thankful our family had good health. At the time, I thought that was a silly thing to be thankful for – now I have a better understanding of what she meant. When we're healthy, we tend to take health for granted; however, our lives change dramatically when poor health or an accident occurs.
Health insurance protects us from some of the impact of poor health or an accident. Without any health insurance, expensive medical expenses can quickly drain your savings and other assets. The challenge is that health insurance is expensive too. The Kaiser Family Foundation's 2018 report on employer-sponsored health benefits found that health insurance for a single person had a 3% increase in premium costs (the amount a person pays for the insurance) and a 5% increase for family coverage. Annual premiums for employer-sponsored family health coverage reached $19,616 this year, with workers on average paying $5,547 toward the cost of their coverage. This is an average; some people pay more and some pay less.
Overall, the Consumer Expenditure Survey shows that on average people in the U.S. pay about 8% of their annual expenditures towards health care costs. Using the Survey's categories, we only spend more on food, housing, personal insurance and pensions, and transportation.
Know When to Enroll
The 2019 Open Enrollment for Marketplace Health Insurance ends December 15, 2018. To compare policies and to enroll, go to https://www.healthcare.gov/get-coverage/. Whether you obtain health insurance through the Marketplace, your employer or other sources, it makes sense to comparison shop. Find the health insurance plan that works best for you. You will want to compare services provided as well as other factors.
Comparison Shop
When comparing different health insurance policies, there are different costs to keep in mind. Monthly health insurance premiums (the amount you pay for the insurance) is the first cost people typically consider.
However, be sure to pay attention to the deductible level – the amount you pay before your insurance begins paying for covered services. While higher deductibles typically lead to a lower monthly premium, it also requires that you can afford to pay the deductible if needed.
Deductible costs have risen an amazing amount! The recent Kaiser Family Foundation report shows that since 2008, the cumulative increase in the average health insurance deductible is 212%. In contrast, workers' earnings have increased 26% since 2008.
What's your health insurance policy's deductible? In a worst-case scenario, how do you plan to pay this deductible if needed?
When choosing a health insurance policy you will need to balance the costs of the premium with the deductible cost. Also, keep in mind the maximum out-of-pocket cost of the insurance plan. This is the most you have to pay for covered services (not premiums) in a plan year. After this amount is spent, the health insurance plan pays 100% of covered benefits.
Consider Tax-Advantage Savings Accounts
More and more health insurance plans have high deductibles that can be hard to pay without savings. People can use tax-advantaged accounts for these savings. If your deductible is a high deductible health plan (as defined by the IRS) then you may be able to save for the deductible and other medical costs in a Health Savings Account (HSA). The main advantage of a HSA is that you avoid paying income tax on money you use for medical expenses. The tax isn't just deferred – you never pay tax on the money if you use it for qualified expenses. There may be other advantages for you too. Rules limit who can use a HSA. For more information go to https://www.irs.gov/forms-pubs/about-publication-969.
Your employer may offer you a healthcare flexible spending account (FSA). Typically, FSAs are funded with payroll deductions. Like HSAs, FSAs also allow you to pay for qualified medical expenses with pre-tax earnings. Check with your human resources office to see if this job benefit is available to you.
The next time you choose a health insurance plan, remember to compare different plans. Consider your immediate costs as well as the costs if your health situation changes. For personal help comparing plans, go to https://localhelp.healthcare.gov/ to locate someone nearby.