Strategy to Save Money on Insurance and Save Money for the Future

As a full time employee, every year I have to decide on my health insurance plan. And, every year I do this, I am amazed at how much money goes towards insurance, that honestly is never used. Of course, this is for protection, blah, blah, blah… but if I never use it, it just disappears.

I always wondered if there was a way around it, and there is. Not too long ago, I decided to use a High Deductible Insurance plan with an HSA (Health Savings Account). I was so excited I did.

Also, if you’re a divorced dad, this technique is even better if your kids are healthy. Why? Because if you’re like me and have to pay half of the medical expenses, the ex will have to split it… and you will have money in the account to pay for the expenses. If the cost of services does go up, the ex will have to help cover the rest.

So, here is my plan. I’m still young and don’t need a lot of benefits now, but will in the future. I figured, how can I take the money I’m spending now and use it in the future. So, I decided to invest in the HSA and take the money from today and use it in the future. I can do this because the HSA does not have to be spent every year like a Flexible Spending Account (FSA)

How I did it. Because I was used to paying a certain amount monthly, I decided to keep that amount going forward. For ease of use, let’s say it’s $500 a month. Then instead of putting that 500 strictly towards insurance, I would split that up towards insurance and the HSA. Example is below.

Straight Insurance, no FSA or HSA

  • $500 per month towards insurance
  • $6000 per year
  • Amount remaining after 12 months: $0

Insurance, plus FSA

  • $500 per month total
  • Adjusted insurance plan with a higher deductible
  • $100 per month towards an FSA
  • $400 per month towards insurance
  • Amount remaining after 12 months: $0

Insurance, plus HSA

  • $500 per month total
  • Adjusted insurance plan with the High Deductible Insurance
  • $200 per month towards HSA
  • $300 per month towards insurance
  • Amount remaining after 12 months: Approximately $2400

I used the above plan for years and was able to save a lot of money. Now, this is risky as though you will have a higher deductible. But, if you can go about a year or more without any real medical expenses, you will be able to save up enough to cover your entire deductible and more.

 

 



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