Ways we saved money on Health Insurance

I was skeptical if I should save money on health insurance. As it turns out, I was able to save a lot by making a few changes!

Health insurance was the second biggest spend item for the Finer household (after housing). For the longest time, I did not pay attention to how much we paid for our health insurance. I had health insurance through my employer. Every year, at the time of renewal, I would simply renew the coverage from the prior year.

I assumed I was getting a good deal because my employer was paying part of the insurance premiums. As it turns out, there was a bunch of money I could save here.

Thinking Differently

The first thing I had to unlearn was that health was an expense. Yes, I had to pay money to buy health insurance. But instead of treating it as an expense, I should treat my health as an investment.

I invest money, so it grows in the future. I should treat health like this. I should invest in my health so that it will save me money in the future.

Do not view healthcare as an expense. Instead, treat your health as an investment.

Should I Save on Health Insurance?

I did not want to be – penny wise pound foolish. What if saving a little bit of money on health insurance ended up costing a lot on big medical bills?

I discovered High-Deductible insurance plans. They have fewer monthly premiums (which helps me save money). On the flip side, they have a higher deductible – which means I have to pay more upfront before the insurance kicks in.

Because of the point above, I started paying attention to my health. This gave me the confidence that I could switch to a high-deductible plan. More importantly, it enabled me to take advantage of the best investment vehicle out there: HSA.

Health Saving Account (HSA)

Health Saving Account (HSA) is the best thing since sliced bread. At least it is the best thing in the investment space. This is the only account with a triple tax benefit – you can invest tax-free, the money grows tax-free, and you can withdraw tax-free (for medical expenses). I have not found another investment that has these three tax benefits.

HSA is also flexible – you can choose to invest in a broad array of investments (depending on the HSA provider). Lastly, employers typically also pay into your HSA accounts – so you earn free money.

Insurance and Early Retirement

Now that I am at FI, I am thinking about retirement. One of the big worries I had before was managing health insurance expenses after I retire.

It turns out that the Affordable Care Act (Obamacare) has made it much easier. The plans and coverage vary by state, but you can find a plan for less than what you were paying before retirement in most states. Even better, some states have HSA eligible plans.

In Conclusion

Once I started paying attention to our healthcare expenses, I was able to save a lot of money. I did this by investing in our health. I also switched to a high-deductible plan to take advantage of the Health Saving Account (HSA).

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