Every day for the last 11 months, you’ve made millions of tiny decisions. Now it’s November, it gets dark at like 6 hours earlier, it’s cold, you’re bedraggled and you just want to wind down and enjoy the holiday season. But noooo, here come these complicated health plans with deadlines and a bunch of made up words and alphabet soup acronyms.
Open Enrollment is that one end-of-year ritual that usually isn’t met with any fanfare. It’s one of those things where you’re typically locked into your decision for a full year, but they make you do it at a time where Decision Fatigue is sky high.
It can be frustrating and time-consuming, but I’m here to encourage you to PUSH THROUGH because enrolling in a health insurance plan is a high-stakes decision. Don’t wait till the last minute and don’t throw in the towel with your selections. Review them carefully and make a conscious choice, even if it isn’t perfect.
It’s ironic that health insurance is one of the most important purchases you’ll make yet there aren’t many resources teaching us how to shop for it. It’s hard to be confident about your choices with no guidance or systems to help you. In fact, 77% of American consumers have regretted a health care decision and I am one of them.
When I was in my 20’s, my mindset towards insurance was coverage driven. I didn’t know the right questions to ask when picking a plan and I had no idea where to put my anxiety about the future so I put it all in the policy. I spent some of my healthiest years paying for expensive policies that I didn’t need in order maintain 100% coverage and a super low deductible.I didn’t know what was going to happen, I just knew I couldn’t afford a bill when it did Click To Tweet
My philosophy has evolved since then. Now I only insure what we can’t afford to repair or replace, and I use Health Savings Accounts to manage my uncertainty. At this stage in my life,
a “good” insurance policy is one that protects me from major financial setbacks, not one that prevents a bill from showing up.
The big trade-off
We’re blessed not to have any chronic conditions and we also don’t anticipate any major procedures, so we elect to enroll in a High Deductible Health Plan (also called an HDHP) in exchange for a lower monthly premium. This means less is taken out of my paycheck, but whenever any of us need medical care outside of standard check-ups, we pay more out-of-pocket.
Does agreeing to absorb a larger portion of our care make me nervous? HELL YES. Medical costs are rising overall, and baby r&R is in this weird climbing phase so he’s bound to fall off a couch any day now. I do it anyway because I know that winning with money means getting comfortable with risk and managing trade-offs.
On the upside, it has forced me to change the way I was approaching medical treatment. I am willing to walk away from a Doctor that I love if the service experience outside of the exam doesn’t meet my expectations. I also ask for recommendations from friends, read reviews, and I am a vocal advocate for pricing transparency. It’s wild that the system requires us to opt into procedures and prescriptions without knowing how much something costs first. Where else does that happen??
We’ve been very fortunate. Even with baby r&R’s delivery and postpartum care last year, we haven’t even come close to hitting the ~$13,000 HDHP out-of-pocket max for the past 2 years. I still get the occasional sticker shock when I see a $750 bill for x-rays and lab work or a $140 urgent care visit, but the math tells me that we still come out on top vs. paying a higher monthly premium over the same period of time.
Thank goodness for math, it keeps these emotions in check!
Planning for out of pocket expenses
Beyond becoming a savvier patient, the bigger benefit of having an HDHP is that it made us eligible for a Health Savings Account (HSA). A Health Savings Account is a tax-deferred account that we contribute to with pre-tax payroll deductions, similar to a 401(k). When anyone under our plan encounters a medical expense, we have the option to reimburse ourselves from that account.
But the real beauty of an HSA is that it comes with investment options, all while maintaining the liquidity of a normal bank account (I have an HSA debit card and everything!). Once deposited, I can either keep my contributions in a FDIC insured account earning normal <1% interest rates, or I can put them to work in the markets and let compound interest do what it do.
Not only do we max out HSA contributions every year ($7,000 in 2019) to lower our tax burden, but a portion of that money gets invested in low cost index funds just like the rest of our portfolio. Lord willin’, we’ll stay healthy and it can grow tax-deferred until we’re 65. At that point, we can withdraw it penalty free and treat it like an additional retirement account or we can use it to cover Medicare premiums. $7000 a year for 30 years at a 5% rate is equal to over $448,000.
If you aren’t eligible for an HSA, you may have access to other health savings options like a Flexible Spending Account (FSA) or a Health Reimbursement Account (HRA). FSAs are “use it or lose it” and must be spent within a calendar year. HRAs are similar, but are employer-funded so you can’t take it with you if you leave the company.
If you’re not in a position to max out a health savings account, you can start with just contributing a few dollars every month in the spirit of paying yourself first. If you’re hesitant, think of it this way: you’re spending it anyway, it’s just going to the government in the form of taxes.
Over time, I’ve learned to view my employee benefits as a part of my total compensation; with health care as the most valuable benefit by far. In my situation, not taking advantage of a triple-tax-advantaged accounts like an HSA leaves money on the table.
Having a health savings account enables us to think about our health holistically, and not just when we’re sick. Because contributions to our HSA is pre-tax, we treat it like a generic 30% off coupon that can be used for anything from co-pays to chiropractic care. These funds can be applied to thousands of items, including therapy and family planning (list here and here).
Bottom line: Living a healthy lifestyle requires resources like time, attention and money and Open Enrollment is a process that requires all three, at once, but it’s worth it.