[Video] Employee Benefits: Health Insurance And HSA
MICHELLE SMALENBERGER CFP® & TREVORE MEYER, CFP®, CKA®
Michelle: So a major cost that many people are always thinking about is health insurance.
And you can get this through your employer. It’s an employee benefit that is usually available to you at some level.
Insurance Companies Offer Group Discounts To Employers
Why this is so important and the benefit of getting this through your employer is because there are group discounts that insurance companies give to large companies or just employer in general to be on a group policy.
This is why getting it through your employer is better than going out on your own and getting it through the insurance exchange.
So, Trevore what are some factors we should be considering when we are thinking about for health insurance.
Trevore: First and foremost, how much are you going to pay for your coverage? And that is often termed your premium. Premiums can vary widely by the type of coverage involved and amount of insurance you are purchasing.
Another term you might hear is deductibles. You often hear high deductible health plans and we will actually get to those a little later.
You will also hear about the out-of-pocket maximum. It is the max you can pay for that health plan for that given year.
Michelle: That is really helpful because every family is different. Maybe you have a lot of prescriptions to cover or a lot of doctor visits that you know you’ll have. But some people dont’ know so they have coverage incase something happens.
So what are some tools that can reduce these costs we pay.
FSA VS HSA
Trevore: Two are FSA and HSA. Just quickly, an FSA has a slightly lower contribution limit but is more restricted.
It is a use it or loose it kinda deal.
If you don’t use up money for plan, you could potentially lose that money. It’s potentially a complicated system to designate a certain amount of money toward.
A better one in my opinion is actually the HSA. The reason why is because whatever money you contribute to that account, you get to keep. And you get to allow it to continue to grow and invest in some cases.
HSA Grows Tax Free
But effectively you can allow this account to grow as you contribute to it and invest it. This is even as you need current health care costs or potentially future healthcare costs. You can use this account and everything is tax free.
And, as long as you are using it for an actual healthcare related expense, you not only get the tax benefit up front by not having to pay taxes, but you also don’t have to pay taxes when it comes out.
So that’s another additional benefit.
Michelle: So this is a great tool. Let’s say you are a relatively healthy person. This is a way you can save money so now if we fast forward to retirement, you could potentially have a large amount that is going to help fund those premiums in retirement with medicare and things like that.
So this is really helpful! Hopefully you can now see some of the tools available, some of the factors available for what to consider. And maybe choosing in this benefit season what kind of health insurance plan you should have.
If you need help, we at Financial Design Studio are happy to help you!
Wondering which option is best for you? Schedule a call with Financial Design Studio to discuss this and your portfolio today.