Want financial success? Have a solid healthcare strategy.
You can’t turn on your computer or mobile device today without seeing news about the current state of healthcare in America. If you’re anything like me, you let most of it exit the opposite ear immediately, to protect your sanity. But if you pay attention, and if you know what you’re doing, selecting the correct healthcare strategy can lead you towards financial success.
About a month ago, I made the mistake of totaling up the amount of money I spent on all types of insurance (life, auto, home, health, etc.) in the last 15 years. It was well over $150,000. And what did I get in return for these insurance premiums besides peace of mind? Not a whole lot.
I’m a responsible person who doesn’t want to go without insurance or expose myself to too much risk. Realizing this, I saw an opening. Insurance, especially health insurance, is subtlety reactive. You purchase the policy protection, and then you don’t do much else—except hope that you don’t need the coverage. If there was some way to use a proactive approach to risk management to reduce insurance costs, then you could flip the reactive paradigm on its head.
Fortunately, there is a way. If you elect to purchase a high-deductible health insurance plan paired with a Health Savings Account (HSA) you can create a proactive scenario in which your good health could benefit you financially. Here’s how it works.
The health insurance that you purchase has a higher deductible. This means that you are responsible for a vast majority of your medical expenses, including prescriptions, until your deductible is met. This higher deductible makes the insurance less expensive than “traditional” health insurance plans that come with lower deductibles. This creates a significant savings in regards to monthly premiums paid.
At this point, the insured opens an HSA, and makes deposits to help cover medical expenses. Wellness visits don’t count toward the deductible and don’t cost the insured a dime, so the HSA is used to pay for non-covered doctor visits, prescriptions and all other medical expenses until the deductible is reached.
Furthermore, HSA contributions offer triple tax advantages. Deposits to the HSA are tax-deductible, with tax-deferred growth and are tax-free at withdrawal (for qualified medical expenses). This means the money you don’t use for your medical expenses will stay yours, and it will stay tax advantageous. And as simplistic as this sounds, the more proactive you are with healthy living—think healthy eating habits, a commitment to fitness, abstaining from smoking—the less you will be forced to spend on “mandatory” high insurance premiums. This strategy allows you to financially benefit from your wellness.
I personally made this switch several months ago, and I couldn’t be happier with the choice. Taking control of my health means a longer, more enjoyable life, not to mention significant financial incentives led by a consumer-driven healthcare plan.
Peter Dunn, aka Pete the Planner, is an award-winning financial mind who has authored 5 books, hosts the popular Pete the Planner radio show and travels around the country offering financial education. His signature wit will have you laughing as you learn. You can learn more about him at www.petetheplanner.com.