I don’t know about you, but I have become increasingly concerned about inflation over the past few years. And I make that statement not only as a financial advisor, but as a consumer who goes the supermarket, to the gas station and plenty of other stores. I have personally experienced the sting of higher prices on many items, especially those that seem essential for day-to-day living!
And though inflation since 2009, according to official government statistics, has been very tame, that might change in the years ahead. I was reminded of this possibility recently when I saw a press release announcing the results of a survey that found dramatically higher medical insurance premiums in the state during the past decade.
The cost of health insurance for California families rose 153% since 2002, more than five times the 29% increase in the rate of inflation, according to the study which was conducted by the California HealthCare Foundation and announced by Consumer Watchdog, a non-profit organization.
Those dramatic numbers reminded me that everyone should review their healthcare premiums and expenses from time to time and determine if there is a more cost effective way to take care of this important part of your life.
It may not be important to review your plan if you have medical coverage through an employer which subsidizes some of the cost. However, if you are self-employed (as I am) or if your employer does not offer such a subsidized plan, the search for quality coverage at an attractive price never stops!
One option is to consider a High Deductible Health Plan (“HDHP” as they are sometimes called). These plans often feature premiums that are lower – sometimes significantly so – than traditional health insurance plans. Of course, the trade-off with the lower premium is that you could incur much higher out-of-pocket expenses before you reach the higher deductible that is a part of such plans.
But sometimes these “HDHP” plans can make a great deal of sense, especially if you are in good health and are self-employed. You may also augment an “HDHP” with a Health Savings Account (“HSA”), which is a tax-advantaged savings account.
The money you put in tax-deductible, and withdrawals are tax free when used to pay for qualified medical expenses. Some of these tax benefits are more generous than a 401(k) plan which requires you to pay taxes on all distributions. If you are interested in this account, remember that you can only get the tax advantages of an HSA by enrolling in a “High Deductible Health Plan (“HDHP”).
So, if you think your healthcare expenses are too high, contact your financial advisor or go on the internet and seek out options! It could be a great step in beating the unrelenting inflation demon and stretching out your hard earned dollars!