Read this before signing up for health insurance at work
Find out how signing up for health insurance at work can save you money during the enrollment period. Here's everything you need to know.
- Enrollment Period: Savings Opportunity
- “High Deductible” Plans and HSAs
- Consider your family’s medical needs
If you are lucky enough to have health insurance coverage at work, consider the following:
The annual opening of the registration period offers you a golden opportunity to save money.
Financial expert Clark Howard says many people don’t take the time to examine their health insurance options with certainty during the enrollment period.
“They just (without giving it much thought) fill out the form in a few seconds and don’t pay attention to the options available,” he says.
Consider an HSA-qualified high-deductible plan
Choosing the right health care option is so important to avoid spending money in the short term and especially in the long term.
During the enrollment period you could run into traditional insurance plans and what are known as “high deductible” plans.
With the latter, you typically pay a lower insurance premium each month, but when it’s time for medical care, you’ll pay more of your money before the insurance kicks in.
Because of this, “high-deductible plans scare people away,” Clark says.
Be sure to research
But there is an important benefit of some high-deductible health insurance plans that are candidates for an HSA (Health Savings Account).
An HSA allows you to set aside pre-tax capital that you can cash in and spend tax-free.
“If you were to switch during this open enrollment to a candidate high-deductible HSA, then you have access to the best tax-free account we have to offer.”
Not all high-deductible health insurance plans are candidates for an HSA, so when you’re looking at your options, be sure to do your research.
Benefits of an HSA
Clark says that an HSA could help you offset your medical expenses in many ways.
“With an HSA, you get a tax benefit up front, money grows in the HSA tax free…”
«And then you spend it tax free when you use it for medical expenses for which it applies” he expresses. And the points are another benefit:
«If you’re starting an enrollment with an employer, many times they’ll give you the money to put into an HSA, which covers a portion of that deductible that you’re taking on the high-deductible health plan.»
With an HSA you can also:
Invest in any number of funds from Fidelity, Vanguard and Schwab. Build a balloon payment by means of the years that you can spend tax-free.
Reduce health expenses that come out of your wallet. Save on taxes and renegotiate the account when you leave your employer.
“And so if you’re doing this with pre-tax dollars that grow tax-free that you spend tax-free. It’s really sublime,” says Clark.
Who should take this advice?
To decide what type of plan you should get, you must discuss your family’s medical needs.
“If someone has a chronic condition that requires ongoing care, then it’s a bad idea to go with a high-deductible health plan,” Clark says.
«If you have multiple family members who are often with health professionals because you are always in consultation of some kind, this is a very bad idea for you.»
“On the other hand, if you don’t go in for medical care very often and you’re in good health, then you might want to look into a high-deductible plan that’s an HSA candidate,” he says.
Final notes
Because the medical industry isn’t very transparent when it comes to pricing, it’s hard to compare when it comes to investing, Clark says.
That’s why he says that signing up for a high-deductible health plan and subsequently opening up taxes HSA might make sense for you.
But only if you and your relatives do not require a lot of medical expenses throughout the year.
“I want you to look at an HSA qualified high deductible health plan if your boss gives you that as an option,” says Clark.
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