Our New Health Insurance
So, I finally made the leap this past week. We are purchasing our own private medical insurance starting in January. After getting notice from my employer that my current HSA plan will be going up in cost by 7% this next year, I decided it was time to move out on our own.
We will actually be on the same plan through the same insurer, but only on a private policy rather than a group policy. Here’s the details of the 2 plans.
Group:
- Deductible - $2,000/$4,000 (Individual/Family)
- Out of Pocket Max - $4,000, 0% Coinsurance thereafter
- Employer HSA Contribution - $500
- Max HSA Contribution - $5,950 annually (before tax)
- Current HSA Contribution - $3,250 (before tax)
- Monthly Premium - $634 (before tax)
- Total Out of Pocket - $10,858 (before tax)
Private:
- Deductible - $6,000 (Family)
- Out of Pocket Max - $6,000, 0% Coinsurance thereafter
- Max HSA Contribution - $5,950 annually (before tax)
- Monthly Premium - $318 (after tax), $374 (before tax assuming 15% tax bracket)
- Total Out of Pocket - $10,438 (before tax)
So, by contributing the max this next year to our HSA account, we will still save over $400 on our medical insurance. We’ll have around $1,200 in our HSA account at the end of the current year, so I expect to have a balance of close to $6,000 by the end of 2009. That means, for 2010, we’ll have savings set aside to pay our entire deductible for a year should we need it and have access to another $6,000 for paying down debt.
To make the savings even better, I’m planning on actually putting my HSA funds into one of our E*Trade savings accounts at 3.3% interest during the year and make a gross contribution by year end to get the tax write off. I may have to move some money earlier in the year to pay medical expenses for my braces though(which I finish paying for come May). Either way, the 3.3% interest is a much better deal than the 1% in the HSA currently.
In reality, we won’t see much of a savings in 2009, but in years past that it should get considerably better. The fact that we can spend our health care dollars this next year, saving for future years tax free, leaves me feeling very good about the solution. That’s what we’re doing to save money on our medical insurance, what about you?
December 8th, 2008 at 3:24 pm
Have you considered the possible impact of the switch from group status to an individual plan? Group plans generally offer much better consumer protections. Whenever you hear horror stories of insurance companies dropping their customers after they become gravely ill and rack up huge hospital bills it is 99.9% of the time an individual plan, as this behavior is illegal in most states for group plans. So even though the plans appear identical, they may not be. I’m certainly no expert, but you may want to dig deeper.
March 29th, 2010 at 6:45 pm
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