The year 2023 will bring many changes to individual health plans and the
news is not positive.
Most of the new plans are high deductible plans that usually have deductibles and maximums out-of-pocket as high as $8700 each. Meaning that you pay the contracted rates the insurance companies have with the facilities be it doctors, labs or hospitals or any other medical services. These type plans dominate the bronze and silver plans, and the gold plans have lower deductibles but higher premiums. Simply put, you will be paying higher insurance premiums in 2023 than you did previously.
How do you handle these higher premiums when you are on a budget and have other expenses like mortgage, food, and clothing? The simple answer is you throw the dice and hope you don’t get ill.
If I were buying health insurance for my family today and needed to save as much as I can on health insurance premiums, I’d take the highest deductible plan available and make sure it is an HSA, meaning the plan has no fixed copays so it is HSA qualified. The HSA portion of the plan allows you to save
money but deducting it pre-tax from your wages, so you are paying out of pocket medical expenses with pre-tax dollars. A lot to swallow so let’s break it down to simplify it.
The first component is the insurance, and it must be a high deductible plan without any fixed copays for services rendered or for prescription medications. That means you pay the contracted rates for services rendered. (as far as prescriptions are concerned there are ways to save money by using Singlecare.com; GoodRX.com or Nevadadrugcard.com and pay cash for your medications. It is not really allowed but it is your money so use it wisely.
The second part is the HSA account itself. This is optional but highly recommended. You establish your own HSA account at the bank and deposit money into it before taxes. Thus, using pre-tax dollars to pay out of pocket medical expenses. It also allows you to reduce your gross income by those pre-tax dollars thus saving you money on your taxes.
Once the account is established and funded you get a debit card to use to pay your out-of-pocket medical bills. Thus, you save money on both ends. It also allows you to put money into this account until you turn 65 and go onto Medicare. Once on Medicare you cannot contribute any more money into your account, but you can use that money to pay your supplemental premiums or pay your medical bills until the account is at zero dollars. It’s a win all around. Saving premium dollars on the insurance, then paying those out-of-pocket medical bills with pre-tax dollars and lastly when you retire using the balance left in that HSA account to pay your insurance and out of pocket medical bills to exhaust the account.
The cost of insurance today is extremely high so using the HSA reduces your overall cost of insurance. A smart way to handle high insurance premiums. I hope this information is useful and it anyone has questions, please contact me via phone or email and I will respond quickly.
Also take a look at Medicare 2023 Information.
The Barend Agency Inc.
Len Barend, Broker