Carrying health insurance is a top priority of any sound financial plan. While we might hope that we never need the insurance, the possibility that a single health event could wipe out a lifetime’s worth of savings is far too great a risk for anybody to take on alone. According to a 2007 Harvard study, medical expenses account for 62% of bankruptcies in the United States.
However, just having health insurance is not enough. We are encouraging clients to periodically evaluate their coverage to verify that the benefits of your particular plan are a good fit for your particular needs. The cost of health insurance is an ever moving target with regular adjustments to monthly premiums, deductibles, co-pays and co-issuance. The health insurance industry is expected to continue to evolve as more baby boomers reach Medicare eligibility at age 65 and as the Affordable Care Act (Obamacare) takes effect.
No matter where you are getting your health insurance coverage, we suggest that you evaluate your coverage at least annually. Here are some things we suggest you pay attention to:
If you have health insurance through work: Be aware of your open enrollment period when you have the option to switch from one plan to another. A plan that made sense 10 years ago may not make as much sense today, especially if you’ve added or removed children from your coverage. You also want to be aware of your Health Savings Account (HSA) options and your Flexible Spending Account (FSA) options. Taking advantage of HSAs and FSAs can result in hundreds if not thousands of dollars of tax savings on an annual basis.
If you have Medicare eligibility (age 65+): Medicare is a maze of confusing names, options and requirements. Before you turn 65, we suggest that you set up a time to meet with us to talk you through your options and help you develop a plan. Medicare consists for Part A (Hospital Insurance), Part B (Doctor Insurance), Part D (Drug Insurance) and Part C (also known as Medicare Advantage) which is an integrated combination of all of the parts of Medicare and outside supplement insurance. We suggest that all Medicare participants consider either a Medicare Advantage program or adding private supplemental coverage to Parts A, B & D. This is because traditional Medicare by itself does not have an annual out of pocket maximum which can be a significant threat to your wealth.
If you do not have health insurance through work and you are not eligible for Medicare: October 1st of 2013 was the launch date of the state sponsored health insurance exchanges (Colorado’s can be found at www.connectforhealthco.com). Think of this of this as an Amazon.com for health insurance - a single market place where you can compare and shop for various health insurance plans available in your area. Multiple insurance companies will offer about 150 plans. Not only is this convenient, but it is game changing when combined with the new requirement that you cannot be denied coverage based on a pre-existing condition.
As always, we are available to consult with you about any of your major financial decisions – health insurance included. Until next time, here’s to your Health and your Wealth!