Posts filed under ‘insurance’

Health Insurance Update: Why We Chose a High Deductible Plan with an HSA

Two weeks ago I wrote about my need to leave COBRA. It has been nearly 18 months since I lost my job and I need to find a new health insurance plan before my COBRA coverage expires. I found a plausible solution that I think will work and I’m hopeful that my wonderful readers will provide comments if it sounds like a bad idea.

So here it goes…

We will switch from a POS plan to a high deductible insurance plan. The maximum deductible per individual is $1,300 and the maximum per family is $2,600. The plan sets out-of-pocket limits at $2,600 and $5,200 respectively.

Preventive services are covered 100% with no coinsurance or co-payments, so my son’s well-child care visits will be covered as well as physicals for my husband and I. The plan also covers routine gynecological visits and cancer screenings like Pap tests.

Everything else requires us to meet our deductible before insurance will kick in. This includes services like visiting the doctor when we’re ill, diagnostic testing, hospitalization and urgent care.   We won’t pay coinsurance if we stay in network, but we will owe co-pays for visiting doctors or emergency rooms after our deductible has been met. I believe the co-pays are comparable to what we currently pay.

So here are the numbers that helped us choose the HSA plan.

Current Monthly Premium: $1525
New Monthly Premium: $765
Monthly Savings: $760
Yearly Premium: $18,300
New Yearly Premium: $9180
Yearly Savings: $9120

That’s right by switching plans we will save $760 per month in premiums and $9120 over the course of a year!

According to the IRS we can contribute a maximum of $6,450 to our HSA. Since we’re already paying a ridiculous amount towards health insurance we won’t miss the money and will do our best to set aside each and every penny of the maximum this year.

If you divide $6,450 by 12 months it works out to $537.50 per month. Believe it or not when you add the monthly premium to the HSA contribution you still end up with a $224.50 monthly difference between our current plan and the new high deductible plan with HSA.

In the best scenario we won’t have too many unexpected medical expenses this year, we’ll pay the lower premiums and we’ll bank the rest of the money in our HSA. In the worst case scenario we pay a total of $7800 after meeting our family deductible and out-of-pocket limits. If we continued with our current plan, (which isn’t an option anyway), we would pay $9,120 more in premiums this year. So it appears that even in the worst case scenario we still make out better with the new plan.

I will, of course, point out that the plans are not entirely equal. Our current plan covers some medical items that the new high deductible plan won’t cover and vice versa, but without being able to predict the future we have to move forward with a plan that simply might not be as robust as our current one.

We do have the option of moving forward with a POS or PPO plan that is similar to the one we currently have, but we would continue to face $1500 monthly premiums and after running the numbers I’m not sure that makes much sense. With the new plan if we don’t use the money it can remain in our HSA. With the POS or PPO plan we fork over $1500 each month even if we never go to the doctor.

So what do you think? Is there anything about this plan that doesn’t make sense? Am I failing to think about anything important? If you have any thoughts on the issue please leave a comment below.

January 31, 2013 at 10:43 PM 6 comments

Uber Confused: Should I Select A High-Deductible Insurance Plan?

I have been paying full price for COBRA ever since I was laid off from my job November before last. While I paid very little as an employee I am currently paying over $1400 a month for myself, husband and 14 month old son. It’s time for us to find ourselves a new insurance plan, but I am uber confused by all of the options available.

I chose to stay on our current plan for as long as possible, but I am crazy about medical care. I have had a number of medical problems and know that above all else that I am willing to pay for quality care. In fact, I will cut back on just about everything else in my life to make certain we can afford good insurance. Over the years my insurance has paid for all sorts of services and procedures that would have been denied by other carriers.

As an employee I paid very little each month in premiums. Now that my husband and I will need to move over to a new plan, (he is self employed), we will pay the bill in it’s entirety.

I am considering moving over to a high-deductible insurance plan with an HSA. I read all of the paperwork associated with this plan and compared it to the standard PPO, but I’m still not certain which option to select.

I’m hoping someone out there can provide some input on my choices. While I will continue to read about the options I need to make a decision in the next month or two.

Here’s what I know. My husband is rarely sick and has not gone to the doctors for anything other than a physical for as long as I can remember. That doesn’t mean something couldn’t pop up for him. My medical problems came on sudden and strong, but in a typical year health insurance is a lot of money down the drain for him. My son just turned 15 months old. He doesn’t have any known health issues either. For the most part my medical problems are a thing of the past. I haven’t seen a doctor or surgeon in quite some time for my symptoms. I do see massage therapists from time to time, but those services were never covered by insurance anyway.

My husband and I are still debating having a second child. Some days I’m excited about the idea and other days I think I could be perfectly content with just one child. It is conceivable that I would pregnant again by the end of the year or shortly thereafter.

Does anyone have any thoughts on high-deductible plans versus standard PPOs? If so, does anyone know if there is a preferable route I should take if I become pregnant?

An update: To view my decision click here.

January 18, 2013 at 10:37 PM 7 comments

Old Memories: Shopping for Auto Insurance

In my junior year of college my dad loaned me the family car. It was an old school, sky blue Toyota Camry station wagon similar to the one pictured below. I moved off campus that year and started an internship in Annapolis that couldn’t be reached through public transportation.

Everyone made fun of that vehicle, but I loved it. It was big enough to transport my belongings back and forth, (at the time everything I owned other than my bed could fit in the back of it), and it was already old and rusted so I wasn’t worried or bothered by the fact that I never washed or took care of it.

When I graduated my dad let me keep the car for another year and when I moved to DC he told me I needed to attain my own policy to insure it. These days with computers at the ready and the Internet always handy I could search for auto insurance on a million different websites and find comparable rates in a matter of seconds.

Back then my dad called individual agents and asked them about their rates and policies. As strange as it now seems my dad and I drove out to an agent’s house, (he worked out of his home), to meet with him in person. It’s funny, but I have a very vivid memory of my dad and I driving through the city to meet this man. When we arrived he walked outside, looked at my vehicle and talked with my dad and I for an hour about insurance.

He was an older pudgy gentlemen with white hair and a big grin. He became my insurance agent and continued in that capacity for the next twelve years.

Although we’ve been with the same agent for over a decade, I still want to make certain we are getting the best price and policy for our needs. Once a year I log onto various websites to check out auto insurance rates at other companies. There are lots of sites available to help you compare free quotes. A good example is fullcoverageautoinsurances.com.

It’s funny to think about how much the Internet has changed our lives. I can receive free quotes on auto insurance in a matter of seconds at any time of day or night without every speaking with a human being.

These days I doubt any parent will drag their kid around the city to meet face-to-face with an insurance agent, but I must admit that the memory of driving around DC with my father is a good one. It definitely leaves me smiling.

August 21, 2012 at 10:00 AM 1 comment

Is Travel Insurance Needed?

My parents plan on taking my 89 year old grandmother on a 5500 mile trip this spring. She wants to make one last trip to visit my uncle who moved far away shortly after graduating from college. For her age I think my grandmother is in great health. She still lives at home alone and is able to walk unassisted.

The biggest problem is that she often doesn’t feel well. She doesn’t necessarily have a cold or anything, she just feels tired and run down. In essence, she doesn’t feel like she can leave the house.

Of course, from day to day she never knows whether or not she’ll feel well. Some days she wakes up feeling great and happy. Other days she simply doesn’t want to leave home. So how can my parents plan a cross country trip when they don’t know how she will feel on the day they leave for Hawaii?

I told my dad I would look into travel insurance, but after reviewing the details online I can’t quite make heads or tails of it. It seems like all three of them need to be insured so that if my grandmother is ill they will receive money back for all of their tickets, but I’m not exactly sure how that works.

I’m also not certain how insurers define ‘ill.’ I doubt the policy will pay out just because my grandmother says she doesn’t feel well. I would assume she needs some type of medical proof of her illness. Given that she isn’t necessarily ‘ill’ by medical definition, but rather just exhausted and tired I’m pretty sure that she would not be covered.

After talking it over with my dad I wonder if she really needs travel insurance at all. Perhaps she just needs to purchase more expensive, refundable tickets that would allow her to change or cancel her flight all together.

I need to gain a better understanding of the role and rules of travel insurance, but at first glance it does not appear to be particularly straight forward. I would hate for my family to purchase something they don’t need, but given my grandmother’s age and frailty I would also hate for them to lose money if she wakes up on the day of their trip and doesn’t feel well enough to fly.
Is anyone familiar with the rules of travel insurance? Do you think that travel insurance is necessary for my grandmother’s trip or are refundable airfare tickets all that she needs?

February 22, 2012 at 10:32 PM 17 comments

I’d Have to Pay More Money for My Car Insurance?

At my father’s insistence I emailed my insurance agent tonight to find out if staying-at-home with my son would result in a cheaper car insurance rate.

Apparently, when my father retired he called his car insurance company and told them that he was no longer driving to and from work each day. He explained that as a retiree he would be driving much less frequently and that more often than not he would be driving during off-peak hours.

According to my father the agent immediately lowered his insurance rates. The agent explained that insurance rates are often based on how far you have to drive to and from work and where your office is located. If you park your car outside on a city street you have a much greater chance of damage then if it’s parked safely in a garage. Of course, if it remains tucked inside your garage at home and you live in a safe neighborhood it has an even smaller chance of getting damaged.

It certainly seems reasonable to think that a commuter should pay a higher rate than a stay-at-home mom who is able to avoid peak driving times and rush hour. For six years I drove from Maryland to Virginia and I can tell you that I passed accidents at least once per week. In fact, the fear of cars shifting in and out of lanes every evening was one of the main reasons I switched to a job closer to home.

Well, surprisingly enough my insurance provider told me just the opposite of what I was expecting. I was told that my premium would actually increase by $50 a year if I remove the commuting rating from my policy. Apparently my driving would fit under the category of pleasure use only, which for some reason or another costs more. I’m not sure I understand how that makes any sense, but given that fact I’ve decided to leave my policy as it stands for now.

February 15, 2012 at 5:05 PM 4 comments

Life Insurance: Working Out the Numbers

With a little one on the way I decided to review our current insurance policies and am very close to pulling the trigger on a new life insurance policy for my husband. Our current policy was taken out three years ago. It’s a 20 year term for $500,000. At the time we owed very little on our primary home. In fact, we had nine years remaining on a fifteen year mortgage. We also didn’t have any children to consider.

Fast forward and our landscape is quite different. We are expecting a little one in October and now owe nearly double on our primary home. (We used a 15 year cash out refinance to purchase another property.) The additional property is now paid in full, but our primary mortgage is nearly double the amount it was three years ago when we applied for insurance.

Given the increased debt I would like to attain $1 million worth of coverage for at least the next fifteen years. We currently hold mortgages on two distinct properties in two different states. Since the mortgages will be paid off in fourteen years I would like to have enough insurance to pay for those properties outright if something happened to my husband. I would also need to think about his loss of income and child related costs including college.

At the end of fifteen years we may build another house on a piece a land we purchased using the cash-out refi. So I’d like to maintain a policy for at least $500,000 for fifteen to thirty years into the future.

Since we initially purchased insurance three years ago, when my husband was in better shape, our current policy costs just over $300 a year. I thought of canceling that policy in favor of purchasing a new $1 million 30 year term policy, but after thinking through the dates and expenses I’m now considering adding a new policy that would cover only $500,000 more.

In fifteen years the original policy will expire, but by that time our current houses will all be paid off. That means we would only need to consider paying off the new home, (if we build one), and paying for any child related expenses.

After reviewing my husband’s current weight/height ratio and looking over the various categories for coverage it seems that it is cheaper to purchase a new $500,000 30 year term policy while maintaining our current policy, then it is to purchase a new $1 million policy outright. (He weighs more now then he did three years ago and is no longer falling into the premier rate categories.)

So now I just have to rethink things and make sure my new plan makes sense. If our two homes will be paid off in fourteen years I see no reason we’ll need a $1 million policy after that. I think maintaining a $500,000 policy from years 15 through 30 should cover all our bases.

So tell me, in thinking through this am I missing or forgetting or not thinking about something important?

June 1, 2011 at 10:25 PM 2 comments

Reducing Insurance Costs

Over the years my husband and I have worked hard to reduce our insurance costs. I believe wholeheartedly in acquiring insurance, particularly disability insurance, but I sure hate shelling out money for each policy.

In order to reduce our overall insurance costs we built up a sizable emergency fund and waited to change our policies until we knew we could afford the larger out of pocket expenses. Once we achieved a solid financial footing we increased the deductibles on each and every policy. The changes started out relatively small. The first change altered our auto policies from $250 to $500, later we made the jump from $500 to $1000.

In my opinion increasing the deductible on homeowner’s policies is a no-brainer. Insurance premiums are bound to rise anytime you make a claim, so it makes the most sense to avoid claims for minor issues. Of course, in order to avoid claims you must have enough money in the bank to cover the cost repairs, which is why all roads lead back to building a solid emergency fund.

Another big savings came from merging our homeowners and auto insurance policies under one low cost provider. This alone saved us a few hundred dollars a year. There are many ways to search for low cost insurance. I simply searched the websites of most big name companies and used comparison sites like those provided by Progressive Insurance.

The other way to save on insurance is by purchasing used cars and holding on to them for the long haul. At this point all three of our vehicles are at least ten years old. When the blue book value of our vehicles falls below $3,000 we typically remove collision coverage from the policy. This usually puts another $100 or so back in our pockets.

Of course, car accidents and speeding tickets are the fastest way to drive up insurance costs, so my husband and I both do our best to practice safe driving. Although we’ve both been caught by speed cameras, neither one of us has ever been ticketed by the police or been the cause of a auto accident. A clean driving record goes a long way in keeping costs down.

Between our clean records, low cost provider, merged policies, older vehicles and high deductibles I bet my husband and I spend at least 50% less on insurance than most of our friends and family.

December 21, 2009 at 12:25 AM Leave a comment


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