A few weeks back when I highlighted my monthly budget, a few readers noticed a few absent line items.
One gigantic glaring absence, as reader, Jason, pointed out, was the cost of health insurance (and more generally, health care).
And, indeed, I did neglect to highlight that I have $36 per bi-weekly paycheck deducted automatically by my employer for health insurance (for 2). Or any health care expenses, for that matter.
So why would I neglect to include such essential expenses?
Is it because I’m trying to be deceptive in how low my costs are? Nope.
Is it because I forgot about it because it’s automatically deducted from my paycheck? No.
Is it because I don’t consider it an expense because it’s deducted before it ever hits my bank account? Nah.
It’s because I am net positive on my health insurance PLUS out-of-pocket health care costs. WTF?! How can that be?!
How I Actually MADE Money on Health Insurance & Health Care Last Year
Here’s the math:
- My annual premium (pre-tax, I might add) deductions for a high deductible health plan for two is $936.
- My employer contributes $1,600 to my HSA, plus an additional $400 in HSA bonuses if we each go in for annual preventative visits.
- My HSA expenses in year 1 totaled $906, and covered prescriptions, eye exam, contacts, and 1 urgent care visit. This left me with an HSA balance of $1,094 at the end of the year.
$1,094 in HSA savings (income) > $936 in premiums paid (expenses)
So I actually made a net positive $158 on health care last year, not factoring in tax deductibility, which would swing things even greater in my favor.
And because HSAs travel with you when you leave an employer and you can eventually withdraw funds in retirement (see my article on choosing the best HSA account if you’re not happy with your current one), I officially own that money.
Just a few more years at this pace, and I’ll reach a point where my HSA savings exceed my out-of-pocket maximums. That’s a real-life fantasyland we can call “health insurance nirvana“.
Health Care Costs Moving Forward
Previous results aren’t always a predictor of future, but my premiums did not rise this year. And now that birth control is free, that should save us another $200 this year. So I am crossing my fingers that I can have another net positive year for health care costs.
For a more in-depth overview of my HDHP vs. PPO cost savings in year 1, check out that link.
Really, this is not a surprise, as the title of this post would implicate. I consciously knew this would be a possibility, a goal even, when I made the move to the HDHP.
Granted, this isn’t possible for everyone. If your employer doesn’t offer a similar HDHP + HSA plan, aren’t as generous with their plans as mine, you have expensive medical conditions, or you’re older, you’re not going to be able to achieve similar net-positive results. My point for sharing this is not to pat myself on the back or suggest everyone is able to do it. I share it, because:
- I felt no need to highlight health care + health insurance costs when I was net positive on them, and you asked.
- There is a young and (presumably) healthy audience here. If I can achieve these results, others out there surely can too.
Even if you don’t have an HDHP option with your employer, they can be had for cheap elsewhere if you’re young and healthy (as most of you are). Check out the public health insurance exchange at healthcare.gov.
Health Care Costs Discussion:
I’m curious to hear if others were able to achieve similar results last year and the math behind it. And if you’re self-employed, what were your total costs with an HDHP?