Do you have a child or other family member that requires significantly more medical care than the rest of the family?
I do. My daughter Ruby has Down syndrome. While her medical care isn’t very expensive now that she’s 5 years old, her therapy expenses still are. If we paid out-of-pocket for all of her therapies it would cost nearly $1,000/month. That’s extremely expensive, and probably unaffordable for most families, but it created a health insurance planning opportunity for our family that we took advantage of in 2015, and it literally saved us thousands of dollars.
So what did we do? We put Ruby on her own health insurance plan. Did you know you could do that? Honestly, until Joe Neal Kerr at the Kerr Insurance Group mentioned it to me, I didn’t know we could. It’s just so common to search for a single health insurance plan for the family and sign everyone up.
With “Obamacare” though, there aren’t any underwriting requirements for insurance plans, and you can’t be turned away for pre-existing conditions. So her diagnosis doesn’t count against her when applying for medical coverage.
Here’s how this particular strategy worked for us:
My wife, my eldest daughter and I all signed up for a family Health Savings Account (HSA) plan. An HSA plan allows us to save money tax-free for health care. That’s right…tax free. Not tax-deferred, not tax-advantaged, but completely tax-free. The IRS tax code gives HSAs the most generous tax treatment of all investment vehicles.
One caveat of using an HSA plan though, is that it must be a high deductible plan. That’s fine for the three of us, since we rarely visit the doctor or have health related issues. Since high deductible plans offer lower monthly rates, we’re able to reduce our overall family health insurance costs by combining low monthly rates with tax-free savings.
Sounds great… so what’s the problem? Unfortunately, this doesn’t work for Ruby. Given her extensive therapy costs, it’s far better for her to have a health insurance plan that’s the complete opposite of ours. She’s better off with a plan that has a super low deductible so she can max it out as quickly as possible and we can cover her therapy costs through co-pays for the remainder of the year.
We did this last year and literally saved thousands of dollars. We were able to reduce the cost of her therapies from $11,000 to under $3,500 by utilizing the proper health insurance plan.
Maybe this works for your family, and maybe it doesn’t. Either way, you’ve only got a few days left to get signed up for an exchange plan, so make the most of it. The deadline is December 15th for coverage starting on January 1st.
Tim Plachta, CFP® is the founder of Reliant Wealth Management, LLC, co-founder of Ruby’s Rainbow, Inc., and a CERTIFIED FINANCIAL PLANNER™ practitioner. He works with clients all over the country to help guide them toward financial independence.