Your Personal Finance Pro http://yourpfpro.com Personal Finance for Young Professionals Thu, 19 Apr 2018 15:53:26 +0000 en-US hourly 1 31591919 How to Save on Your Medical Bills http://yourpfpro.com/how-to-save-on-your-medical-bills/ http://yourpfpro.com/how-to-save-on-your-medical-bills/#respond Mon, 18 Sep 2017 11:00:59 +0000 http://yourpfpro.com/?p=7355 It goes without saying that medical expenses for many Americans are at an all-time high. Prescription costs are through the roof. Doctor visits and emergency room visits have gotten so expensive many who need healthcare aren’t using these services. To make matters worse, insurance rates have risen dramatically over the last few years. The result […]

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Save on Your Medical BillsIt goes without saying that medical expenses for many Americans are at an all-time high. Prescription costs are through the roof. Doctor visits and emergency room visits have gotten so expensive many who need healthcare aren’t using these services.

To make matters worse, insurance rates have risen dramatically over the last few years. The result is that, despite the promises of Obamacare, healthcare is now even less affordable than ever.

Unfortunately, I don’t have the ability to solve all of these problems. Neither am I promising advice that will help you to get free medical care nor even cheap medical care. However, having worked in the health care industry for many years, I can offer some tips on how to save on your medical bills.

1. Call When You Can

There may be times when you don’t actually need to go see a medical provider in person if you are sick. Please note that I am not suggesting you diagnose yourself entirely and skip seeing a medical provider for all situations. You must be the judge of how sick you are.

But some people do tend to go to the doctor’s office or hospital emergency room for every little sniffle or ache. Each of these visits can add up and really eat away at your monthly budget.

As an alternative, perhaps you could call your medical provider’s office and talk to a nurse. Give them your symptoms and seek their advice as to whether or not a doctor’s visit is actually necessary. This could save you some money in the long run.

2. Know When Not to Wait

If on a Friday you suspect you have an illness that could require a prescription, don’t wait to call the doctor’s office. Often, if you think you can hold out until Monday you will end up in the emergency room over the weekend anyway.

Should that happen, you’ll end up with a bill that is somewhere between seven to ten times higher than if you had gone to the clinic on Friday instead.

3. Use Walk-in Services

Some clinics have walk-in hours on Saturday mornings. Ask if yours does ahead of time so you know for sure. If your clinic has them you can’t wait for a regular appointment, it should still be cheaper than a trip to the emergency room.

4. Negotiate

You might be able to save on your medical bills if you are willing to try to negotiate. Give your medical provider or hospital billing department a call to see if your bill could be lowered in some way.

For example, some hospitals will reduce the bill if you are willing to pay the balance in full by a certain date. Or, you might qualify to make payments or receive financial assistance.

5. Save Ahead

Another way to save on your medical bills is to save ahead for them. You may be able to set up a health savings account or a regular savings account specifically for medical care.

The advantage of a Health Savings Account is that the money you contribute is pre-tax. Check with your bank to find out all of the requirements before you set one up.

Of course, you can also set up your own savings account to be used as you need it. Or, ask if your employer has a flexible spending account for healthcare that you could contribute to each pay period.

All of these alternatives can help you save on your medical bills by avoiding interest, late fees, collection agency charges, or any number of other additional fees. Furthermore, a couple of them also save when tax time rolls around.

6. Shop Around

One of the ways some people choose to save when it comes to healthcare costs is to shop around. You might choose to go to a different medical provider or hospital entirely if the prices are lower.

A different option not everyone thinks of is to seek medical care from a different country altogether. There may be travel expenses associated with this choice too, obviously, but if the price is low enough it may be worth it.

In summary, we all know medical costs have skyrocketed in the last few years. But there are ways to save on your medical bills and keep your costs as low as possible if you look for them.

What are some of the ways you have chosen to save on your medical bills?

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Money Moves to Make in Your 30s http://yourpfpro.com/money-moves-make-30s/ http://yourpfpro.com/money-moves-make-30s/#comments Sat, 31 Jan 2015 14:30:10 +0000 http://yourPFpro.com/?p=5843 In today’s society, it’s easy to get complacent when it comes to your finances.  Today, PF Pro contributor, Melissa Hoffman takes a look at five money moves you should make in your 30’s.  Don’t put these off until it’s too late, take action now! While your twenties may have been a time of massive change […]

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Money Moves to Make in Your 30s

In today’s society, it’s easy to get complacent when it comes to your finances.  Today, PF Pro contributor, Melissa Hoffman takes a look at five money moves you should make in your 30’s.  Don’t put these off until it’s too late, take action now!

While your twenties may have been a time of massive change (and perhaps some massive debt, either in student loans or credit cards), your thirties are the sweet spot: young enough to still have tons of earning potential, and old enough to have made enough mistakes and (hopefully) be more prepared for the life expenses coming your way.

Some things in your 30s will stay constant: building up your emergency savings and making sure you can survive an unexpected job loss or major car repair, saving up for retirement and increasing your contribution rate. However, your 30s bring additional challenges in the form of a spouse who may rely on you, kids you may want (or are currently raising), and buying a house (or maintaining the one you have). With your 30s brings great responsibility, but also great power to harness your maximum potential.

Money Move #1: Focus on your career

By now, you probably have a few years of experience under your belt in your chosen field. Now is the time to evaluate your career track: is this a career you’ll want to stick with for another 20-25 years? If yes, ramp up your exposure to the company. Volunteer for more visible roles, sign up for public speaking classes, and document all of your achievements. If there is a position you want, aggressively pursue it by reading up on the job description and getting some of that experience under your belt. When the position opens up, you’ll already have the exposure and experience to be a seamless fit.

If you don’t like your job, take the skills you’ve mastered over the last few years and shop them around to new companies. Dust off your resume and update it to reflect your new skills, then send it to sectors or employers you’ve heard about and are interested in working for. Don’t feel tied to one location, either. If you don’t yet own a home, open up your search nationwide, or narrow it down to a few different cities you like. Now is your time to maximize your earning potential, so don’t hesitate to apply for many different jobs.

Money Move #2: Ask for a raise

Check salaries on Glassdoor.com to see if you’re being paid equitably. While some companies are more transparent about pay, some are not, which is where Glassdoor.com comes in handy. If you’re friends with coworkers, you could broach the topic of pay, but tread carefully. If you think you’re underpaid compared to Glassdoor’s analysis or your own sleuthing, take a look at your accomplishments and draft up a game plan to ask for a raise.

An employee moving up the ladder who takes on additional work is an incredible asset to companies, and in your 30s, you have enough experience to ask for more. You’re no longer entry-level, so you have much more negotiating power than you may have had in your 20s.

Money Move #3: Shore up your income by side hustling or establishing passive income

If you’ve been reading Your PF Pro for a while, you’ll know that Harry is a big proponent of side hustling to bring in extra money. Whether yours is to pay off debts or bring in extra income, your 30s are a good time to establish some form of extra income generation.

Get started by evaluating your strengths: are you good at Excel and managing databases? Offer your services on Elance.com or network with people who work in your sector. Want a more passive income stream? Consider investing in dividend-paying funds or, if you have the money, consider buying a home to rent out. Being a landlord isn’t necessarily an easy way to make money, but with the right renters, you could have a steady stream of income that will last for decades.

Money Move #4: Get Your Affairs in Order

In your 30s, you may own a house, have a child, or are planning on settling down and expanding your family. Have you looked at your insurance lately? If you’ve had any major life changes, it’s time to review your insurance policy. If you have a spouse and kid(s), it’s imperative you have a life insurance policy set up to take care of them in case of your death. Even if you are not the primary breadwinner, it’s still important to have a life insurance policy to help out with expenses if you pass away. While no one wants to think of that, it’s important to have a policy in place, because the alternative (no money for your family) is worse.

In addition to making sure you have the right insurance (including home, auto, and adequate health insurance for your family), you’ll want to get your estate in order. I know, it sounds so far off: your “estate.” But your estate means a lot of things: if the worst were to happen, who do you want to take care of your kids? If you have your own business, have you set up a trust to make sure your assets are protected? At the very least, sit down with a lawyer and draft up a will. If you have anything of value, you’ll want it protected and bequeathed to people you choose, and not have it tied up in probate forever.

Money Move #5: Become a Finance Ninja

If you still have debt, especially credit card debt, work your butt off to eliminate it in your 30s. By erasing as much debt as you can in your 30s, you’ll free up your 40s to invest the maximum in your retirement accounts. If you don’t have any debt by your 30s (congratulations!), take advantage of company benefits. If your employer matches 401(k) contributions, contribute the maximum to take advantage of the match. Enrolled in a High Deductible Health Plan with a Health Savings Account? Invest in that for a double benefit: reduce your taxable income and save for health related expenses in retirement.

Continue with your current investment strategy, but seek to max out at least one investment account, whether it’s your 401(k), Roth IRA, or traditional IRA. If you haven’t bought a house, consider buying one, particularly if you’re in a city and job you love. It’s a major investment, with its own major expenses, but it’s another way to build equity. A house also includes the intangibles, including having a place to call home and raise your family.

While 30 may not be the new 20, that’s not necessarily a bad thing. A lot of us going into our 30s graduated during the recession of 2008 and are finally starting to get our on feet. Your 30s should be the decade to really get going on life: establishing a solid career or your own business, having a family (whatever your definition of family is – pets included!), and buying a house (or being a traveling nomad). By following these money moves, you’ll enter your 4th decade on this planet already ahead of the game!

What money moves are you making to enter your 30s successfully, or what money moves did you make in your 30s? Do you agree with this list, or are there money moves you would add?

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Medical Tourism 101 http://yourpfpro.com/medical-tourism-101/ http://yourpfpro.com/medical-tourism-101/#comments Wed, 07 Jan 2015 02:30:48 +0000 http://yourPFpro.com/?p=5723 Finding cheap and affordable health care is always tough.  Today, PF Pro contributor, Melissa the Sunburnt Saver tells us all about her experience with medical tourism. The cost of medical procedures in the US is often difficult to determine. As we learned from Harry’s experience, prices can vary dramatically, if you can even get an […]

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Is Medical Tourism right for you? Medical Tourism 101 on YourPFPro.com

Finding cheap and affordable health care is always tough.  Today, PF Pro contributor, Melissa the Sunburnt Saver tells us all about her experience with medical tourism.

The cost of medical procedures in the US is often difficult to determine. As we learned from Harry’s experience, prices can vary dramatically, if you can even get an accurate price up front.

What you may not know is that prices in other countries vary as well – often in Americans favor. Many Americans, particularly retired Americans, are increasingly looking to other countries for routine medical procedures such as knee replacements or dental care.

While once looked down upon as a risky, cheap way to avoid paying for quality American medical care, medical tourism is increasing in popularity. Furthermore, if you live close to a country with quality medical care or are traveling, you may want to investigate medical tourism for yourself.

What is Medical Tourism?

Medical tourism is similar to regular tourism, but includes receiving medical care in the country you are visiting. In some cases, people combine their travel plans with medical procedures in order to have a vacation and receive medical care.  Medical tourism is a growing business, with an estimated 1.25 million Americans traveling this year outside the US for medical treatment.

Medical tourism is increasing in popularity due to lower cost and similar treatment.  Foreign doctors are well trained, yet they charge a fraction of the cost.  A knee surgery in Mexico will cost just $12,000 while the same exact procedure would be $50,000 in the US!

Depending on where you go, you can receive quality health care in another country at a fraction of the price. According to Patients Beyond Borders, an organization that provides information to medical tourists, some of the most common and popular medical procedures include:

  • Cosmetic surgery
  • Dentistry (general, restorative, cosmetic)
  • Cardiovascular (angioplasty, CABG, transplants)
  • Orthopedics (joint and spine; sports medicine)

Benefits of Medical Tourism

The biggest benefit of medical tourism is how much you can save on on high quality, standardized care. A 2013 Comparative Price Report by the International Federation of Health Plans has a wide variety of procedures that compares the US cost to costs around the world, primarily Europe but also South America, Canada and New Zealand.

For example, an appendectomy in the US averages around $14,000. The same appendectomy in Spain costs less than half: an average of $2,200. For more expensive procedures, such as a hip replacements, the US cost averages $26,000, whereas Spain averages $8,000.

Beyond costs, many countries are investing heavily in medicine specifically to lure medical tourists. India and Singapore have now become globally recognized for their cardiac care, on par with the US at a fraction of the price. South Korea has invested heavily in medical procedures and is now known as the plastic surgery mecca of the world. According to Forbes, “Korean doctors are some of the best in the world, and their technology is top of the class.”

Precautions

Medical tourism does not come without its critics, and rightly so. Certain precautions to be aware of include quality of care, your health care coverage, and legal protections.

The Centers for Disease Control and Prevention list a few things to consider, including:

  • Communication issues. If you do not speak the language where you are receiving care, this increases the chances for miscommunication and misunderstanding.
  • Medication can be counterfeit or of poor quality in some countries.
  • Antibiotic resistance is a global problem, and resistant bacteria may be more common in other countries than the US.

Other things to consider when traveling abroad for health care include your own health care coverage. If you have health insurance, call your provider and see if they cover out-of-country procedures. Some health plans do, but it varies according to which type of plan or health provider you have.

In addition, you may not have the same legal protections against doctors that do poor quality work as you do in the United States. The Organization of Safety, Asepsis, and Prevention, an organization that focuses on oral healthcare, suggests you ask for recommendations from other Americans who have had procedures done in other countries, the American consulate or Embassy, or hotel staff in the country you are visiting.

Medical Tourism: My Story

Personally, I went to another country for dental care and received stellar service at a fraction of the cost I would have paid in the US. If you’re concerned about quality of care, take the steps I did to ensure you get the best care while out of the country.

I went to Mexico for a fairly common dental procedure: wisdom teeth removal of 2 teeth. The process wouldn’t have been very expensive, around $1,000-$1,200, including sedation. However, I didn’t have dental insurance and couldn’t afford that expense, so I decided to go to Nogales, Mexico for the procedure. My parents also lived close to Nogales, which meant I would have a place to recuperate afterwards.

Before scheduling any appointments, I researched online forums discussing dentists in Nogales, Mexico, visited people close to the border to ask about their experiences, and, luckily, had my Dad’s experience with his dentist. Yes, we’re a family of medical tourists. By far the most beneficial way to find a dentist was word of mouth: by talking to people near the border, at check out lines and in restaurants, I learned the questions to ask and dentists to definitely avoid.

I visited Nogales to interview 3 dentists before scheduling my procedure. I asked them questions about how they did the procedure, how many removals they had done over the course of their career, and if they could show me their office. In these visits, I learned more about the dentists, but also got a feel for the intangibles like: did I feel comfortable with this dentist? Could I have a conversation with him/her and clearly understand them? I speak Spanish, but I wanted an English-speaking dentist because I wasn’t sure how good my Spanish would be after coming out of sedation.

In the end, the procedure was easy, quick, and fairly painless. The exact cost I can’t remember, but it was much less than half of what an American dentist would have cost. I did have to pay in full before leaving, but a ~$400 bill was more affordable than a $1,000-1,200 bill.

Is Medical Tourism for You?

When I share my story of medical tourism, I get a lot of criticism. Interestingly enough, it’s usually from other American doctors and dentists, who deride non-American doctors (particularly Mexican doctors) as “not as good” as American doctors. Many people also seem afraid of the risks of going to another country, usually the risk that the doctor isn’t as skilled as an American doctor and could make grave mistakes. Obviously, I don’t agree with all of these mischaracterizations: dental work is not the only care I have received while in other countries, and so far I’m still alive (and I’m pretty sure I still have both my kidneys, too).

As long as you do your research before you go and choose a reputable doctor, your chances of success are just as great in another country as they are in the US. Saving money on the procedure is just another benefit.

In the end, medical tourism comes down to your comfort and how much you would like to spend. Take into account how much it costs to get to your destination as well. If you’re having a procedure done that costs $10,000 in the US and $6,000 in Spain, it may seem well worth it. However, if your flight and stay in Spain costs you another $4,000, that procedure won’t save you anything.

Today, medical tourism isn’t only for retired people or those looking to save money on cosmetic surgery. Increasingly, many Americans are looking to medical tourism to avoid unnecessary medical tests, lack of transparency in prices, and ever-increasing medical costs for common medical procedures. While medical tourism may not appeal to some, or may not be possible, it is certainly something to consider in the future.

Would you ever consider medical tourism, either right now or in the future?

-Melissa @ PF Pro

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My Favorite Time of The Year: Annual Enrollment http://yourpfpro.com/favorite-time-year-annual-enrollment/ http://yourpfpro.com/favorite-time-year-annual-enrollment/#comments Wed, 12 Nov 2014 15:14:07 +0000 http://yourPFpro.com/?p=5635 Fall is one of my favorite times of the year: the leaves start to change color, the temperature starts to drop…wait a minute, actually none of that is true since I live in California and it topped 90 degrees at the beaches last week!  November is my favorite time of the year for a different […]

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Fall is one of my favorite times of the year: the leaves start to change color, the temperature starts to drop…wait a minute, actually none of that is true since I live in California and it topped 90 degrees at the beaches last week!  November is my favorite time of the year for a different reason: Annual Enrollment.

For the past 5 years of my corporate life, I’ve truly enjoyed annual enrollment because it gives me a chance to step back and assess how much money I’m going to save (and really make) in the upcoming year.  For those who don’t know, I switched from a PPO to an HSA back in 2010 and it was one of the best moves I’ve ever made.  Here’s why.

My Insurance Philosophy

I don’t think most people understand how insurance works.  Here are the cliff notes: the premiums you pay have to go towards all of the payouts an insurance company makes, the company’s overhead, salaries, advertisements and any profit they might take home.  So by that definition, the average policy holder will get less (and usually a lot less) than what they put in.  Those are the facts.

For this reason, HSA’s likely won’t ever catch on because they require too much math.  But if you can do some simple math with me, you’ll likely see the enormous benefits of opting for this type of plan.  My insurance strategy is actually pretty simple with regards to HSA/HDHP’s and it really applies to all aspects of life: pay for the things you can afford and insure against the things you can not.

I can afford a lot.  I might not want to pay $5,000 for a hospital bill but I can definitely afford it.  Any time you involve insurance into the mix, you know that you’re generally going to get less than if you would have paid for it on your own.  So basically I  insure against the catastrophic type events and self-insure the rest.

HSA’s Are The Perfect Tool If You Like Your Money

I won’t get into the nitty gritty of why HSA’s are so great since I’ve already written extensively on the topic but there are a lot of reasons why they might make sense for you.  I’m going to take a look at my plan and show how the HSA option is going to benefit me going forward.

The Facts Of My Plan

My employer offers a wide variety of plans but here are the pertinent details for the HSA (these are all the numbers for a family plan too since I’m now married!)

  • Employer Contribution: $1,200
  • Bi-monthly premium: $0
  • Deductible: $2,500
  • 10% co-insurance after the deductible for most services/appointments
  • Out Of Pocket Max: $5,700
  • All preventive care is covered
  • 2015 Family HSA Limit (employer + employee contribution): $6,650

Note: If I were to opt for the PPO Plan, my premium would be $22.50 or $585 per year.

Let’s Do Some Math

Now here’s where it gets fun (for me at least).  By opting for the HSA plan instead of the PPO, I will automatically make $1,785 with one click of a button.  That money comes from my employer’s contribution ($1,200) and the premium savings ($585) of opting for HSA instead of PPO.  Most people forget to include the latter in their analysis.

So right off the bat, if my wife or I don’t see a doctor next year, we will make $1,785.  That sounds like a great deal doesn’t it?  It is.  Remember, HSA plans reward young and healthy individuals who rarely have to go to the doctor.  If you get sick a lot, you want to be on a PPO type plan where there are a bunch of healthy people who will subsidize your health care.

That’s the only way to really take advantage of insurance: if you know you’re going to be sick a lot.  But the problem with PPO’s is that a lot of people have the mindset of ‘getting their money’s worth’ so that’s a big reason why premiums go up each and every year.  You don’t see the same type of premium increases with HSA/HDHP’s.

Why I Like The HSA/HDHP Combo

The reason why I like the HSA/HDHP combo is because it rewards people who shop around for medical services and the less you see the doctor, the more money you get to keep in your pocket.  Even though you get a free $1,785 per year, once that money hits your account it’s a whole different story.  As I discovered when I injured my knee earlier, when you have to pay for things, an estimate of $200-$600 for a first visit just isn’t acceptable.

When you have regular PPO insurance, you don’t have the incentive to shop around since you never see the actual cost of the bill.  The insurance ‘pays for it’ and then raises everyone’s premiums the next year to make up for it.

Additional Contributions

The 2015 family limit for HSA contributions is $6,650.  So after the $1,200 in employer contributions and the $585 in premium savings (which I will contribute to my HSA), I will be contributing an additional $4,865 per year to my HSA or $187 per paycheck.

That might seem like a lot, but to me it’s a no brainer.  I generally recommend maxing out your HSA after 401 (k) match because it is the only account that is TRIPLE-tax advantaged.  The money you put in isn’t taxed, the money you earn isn’t taxed and the money you take out isn’t taxed as long as it’s used for medical purposes.  And since we all know the direction that the cost of health care is headed I can assure you that you will use this money at some point in your life.

Another Benefit of Getting Married

The increased family contribution is just another awesome financial benefit of getting married.  And I actually take the HSA one step further since I pay for all of my expenses with after tax dollars instead of my HSA.  There is a provision that will allow me to withdraw that money at ANY point in the future.

So let’s say I spend $500 on medical related expenses in 2015 but pay with my credit card.  I can keep the $500 in my HSA (that I would have spent) and invest it in an index fund and take out that same $500 in 40 years and spend it on WHATEVER I WANT completely tax free.  All of the earnings on that $500 in my HSA account can now be used tax free too as long as it’s on medical purchases.

If I would have originally withdrawn $500 from my HSA to pay for those expenses and invested the after tax $500 in the same index fund I would have to pay long term capital gains taxes on the earnings (plus taxes on any dividends throughout the years).  If I assume a 5% growth rate, that $500 will grow to $3,519 after 40 years.  So my earnings will be $3,019 and if I assume a 15% LTCG, then I just saved $530.

Now imagine how much money you can save if you add up all of the thousands of dollars in medical care you’ll have over your lifetime.  I actually don’t even rack up many medical expenses, but since HSA’s can be used for other ancillary medical services I have a ton of saved receipts for things like new contacts, contact solution, medical massage, acupuncture, physical therapy, etc.

Readers, how does my HSA plan compare to yours?  I already know that I’m very luck to have such a generous HSA plan but even if it wasn’t so generous, I would likely still opt for it.  If you’re interested in reading more of my HSA articles, you can find them here.

-Harry @ PF Pro

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Getting Married Saved Me Over $4,200 In Healthcare Costs http://yourpfpro.com/getting-married-saved-me-over-4200-in-healthcare-costs/ http://yourpfpro.com/getting-married-saved-me-over-4200-in-healthcare-costs/#comments Fri, 03 Oct 2014 14:33:11 +0000 http://yourPFpro.com/?p=5472 I thought getting married would prompt a rash of wedding related articles on the blog, but to be honest, I was so wiped out by all the planning, the last thing I wanted to do was write about it.  Now that I’m a few months out though, I’ve gotten over the wedding hangover and you […]

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I thought getting married would prompt a rash of wedding related articles on the blog, but to be honest, I was so wiped out by all the planning, the last thing I wanted to do was write about it.  Now that I’m a few months out though, I’ve gotten over the wedding hangover and you can expect a few wedding related articles sprinkled here and there over the next few months.

We often hear a lot about the marriage penalty in personal finance and for some high income earners it might even be a good enough reason not to get married.  You see, once you get into the 28% tax bracket, two individuals that get married will actually pay a higher effective tax rate than if they were single.  Some people think this is because the government is sexist and other people like me have no idea why it’s like this.

But to be honest, if you’re in the 28% tax bracket, paying a little extra taxes probably isn’t a big deal to you.  Personally, I’m nowhere near that tax bracket and getting married actually ended up saving us a lot of money.  Here’s how:

Same Income, Lower Tax Bracket

The biggest tax break from getting married will come due to the fact that since my wife isn’t working anymore, my entire income will now land in a lower tax bracket.  Last year, my marginal tax bracket as a single individual was 25% but now that we’re married we’ll be in the 15% tax bracket.

Obviously it’s nice to pay less in taxes but being in the 15% tax bracket opens up a lot of unique opportunities if I wanted to rollover my old 401k to a Roth IRA for example.  I could roll over just enough to get to the 25% tax bracket ($73,800) and lock in a 15% tax rate.  Since our income is slated to go up in the future, this might be a good strategy.  More on this in a future post.

Student Healthcare Is A Bitch

I’ve always let my wife handle her side of the finances when it came to things like taking out student loans and paying for school but prior to getting married I took an in-depth look at her yearly bill and realized that we were paying $3,537 per year for her healthcare!  I’ve never really bought healthcare on my own since I’ve always been covered under my mom’s plan or by my employer, but $300 a month seems pretty steep for a young, in shape 28 year old female.

As you guys know, I’m a HUGE proponent of HSA’s and high deductible plans because I feel that insurance should be reserved only for catastrophes.  It doesn’t make sense to insure against services you know you’re going to need since there’s no ‘free lunch’ when it comes to insurance.

The premiums that you pay have to cover all the benefits that an insurance company pays out, all of the expenses of running the company (including salaries, rent on buildings, etc) and any profit there might/will be.  So by the laws of math, the average client will get less than what they put into it: that’s how insurance works.  So it behooves you as a consumer to avoid any type of insurance unless you really need it.

Adding My Wife As A Dependent

In this situation, we couldn’t really avoid insurance altogether but we could add her as a dependent to my employer’s health plan and save money that way.  I’ve always been tempted to leave my day job and go out on my own but I have to admit there are some really nice perks of working for a great company.  My current healthcare plan costs me $0/month and it’s actually free to add my wife.

Related Article: Annual Enrollment Time: HSA vs PPO

I was already saving $546 in premiums by opting for the HSA/HDHP combo instead of the PPO plan (in addition to a $600 employer contribution to my HSA) but once I added her, we got an additional $600 contribution from my employer.  So altogether, my work is now paying me $1,746 every single year to go with the HSA/HDHP combo (the savings are actually even higher compared to a PPO since my PPO premiums would have gone up once I got married).

Adding It All Up

At the end of the day, getting married was a $4,200 swing.  We saved $3,600 since we no longer have to pay student healthcare and we actually got an extra $600 HSA contribution from my employer after adding my wife to the plan.  Obviously the HSA is a no brainer in this scenario but it’s pretty amazing that we can save $4,200 just by singing our names on a piece of paper.  And remember that $3,600 is actually with after tax dollars so the savings are even greater!

Readers, what do you think about getting married just to save on healthcare?  Should we have gotten married one year earlier so we could have saved another $4,200?  Have there been any big financial gains in your life after getting married or have you experienced the dreaded marriage penalty?

-Harry @ PF Pro

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HSA’s Are Great Until You Get Sick http://yourpfpro.com/hsas-great-get-sick/ http://yourpfpro.com/hsas-great-get-sick/#comments Wed, 03 Sep 2014 16:38:01 +0000 http://yourPFpro.com/?p=5300 I’ve been a huge fan of Health Savings Accounts (HSA’s) since I started working full time 5 years ago.  It didn’t take me long to realize that the HSA/HDHP combo is a great plan for young and healthy people like myself who rarely visit a doctor.  Over the years, my HSA balance has grown to […]

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I’ve been a huge fan of Health Savings Accounts (HSA’s) since I started working full time 5 years ago.  It didn’t take me long to realize that the HSA/HDHP combo is a great plan for young and healthy people like myself who rarely visit a doctor.  Over the years, my HSA balance has grown to about $15,000 with the help of employer contributions, premium savings and my own contributions.

During that time, I’ve racked up a couple thousand in various reimbursable expenses (acupuncture, massage, OTC meds, contacts stuff, etc) and since I paid for it all in cash I’ll be able to re-imburse myself at any point in the future.  Meanwhile, I’ve got my HSA fully invested in an aggressive mix of stocks and bonds that will one day come back to me triple-tax free.  

Just Don’t Get Sick (Or Injured)

That sounds like a pretty sweet deal doesn’t it?  Well it is as long as you don’t get sick or have to see the doctor.  Unfortunately for me though, I had a little incident at a bachelor party where my knee collided with a paintball from about 15 feet away.  Within a day, my knee was the size of a balloon, I could barely walk and I was in a lot of pain.  Drinking seemed to help though.

I’ve seen people tear ligaments and although my injury hurt, I was fairly sure it wasn’t a tear.  If you don’t hear blood-curdling screams, it’s probably not a tear fyi and yes that is my medical opinion.  Even though I technically had insurance, my deductible was $1,250 so there was no way I was going to the ER – just a cheek swab in there would have wiped out my deductible.

I’ll Tough It Out

I thought about visiting an urgent care facility but in the end I decided to just tough it out.  I was in a lot of pain but there wouldn’t be much a doctor could do anyways until the swelling was completely gone.  So I iced, rested and in general, just tried to take it easy.  After a couple weeks, I was still in pain but things were getting better.  I kept telling myself as long as things were getting better I didn’t need to see a doctor.

Eventually a couple weeks turned into a couple months and my recovery had pretty much plateaued.  I was at about 70-80% but my knee just wasn’t getting any better.

Help Me Find An Orthopedist

At this point, I decided it was time to see a doctor.  I went on Yelp of course and found a few good orthopedists in the area.  I thought to myself: Ok this should be fun, time to negotiate some prices.

But every single place I called quoted me in the range of $250-$600 just for a first visit!  I might have been able to stomach $200 but what could a doctor possibly do in 30 minutes that could warrant $600?  This didn’t even include the cost of x-rays and/or an MRI which would have added another $100-$750.

The thing that irked me the most though was that they couldn’t give me a specific price – every receptionist I talked to all said that it depends on the services performed.  Which of course means we get to charge you however much we want and you can’t do sh*t about it.  In my book, that was just unacceptable so I refused to make an appointment.

Let’s Try A Physical Therapist

After some google-ing and recommendations from two different people, I decided to see a physical therapist.  The problem with doctors these days is that they don’t have much incentive to make treatment affordable for patients.  It’s in their best interest to order un-needed x-rays and MRI’s in order to cover their ass in case they get sued.  I don’t blame them, I blame the system of incentives that is placed upon them.  Doctors don’t have the right monetary incentives to make treatment affordable and for patients to get better.

I ended up finding a great physical therapist who charged me $100 for the initial consultation and treatment plan and $75 for subsequent sessions.  The pricing was transparent and since I paid with my HSA, I was able to pay with pre-tax dollars.  I’ve only done two sessions so far with this physical therapist but my knee is already seeing a ton of improvement.

I wish I would have seen this guy sooner since he was still able to do all the ligament, stability and pain checks that a normal orthopedist would have done.  If my injury would have been more serious, I would have had to bite the bullet and pay an orthopedist but the PT doctor ended up working out pretty well.

Your Money Matters

Most people don’t understand the point of the HDHP/HSA combo and I’m sure there are lots of people out there who would say this is the perfect example of why you want ‘real’ health insurance.  But I couldn’t disagree more.  If I would have had PPO/HMO health insurance I would have gone to the first orthopedist I could find and probably spent over $1,500 when it was all said and done.  That sounds like a great system until you think about who will ultimately bear that cost.

Doctors and insurance companies sure as hell aren’t going to take a loss so the inflated cost of my hypothetical treatment and MRI will be passed on to subscribers.  That’s me!  Now imagine if everyone that gets injured does the same thing.  And that right there is the reason why health insurance is so damn expensive and premiums are always going up!

The problem with our current health insurance system is that there is no consumer choice.  Prices aren’t transparent and we never have to pay a direct cost.  That means that we’re free to spend the insurance company’s money on whatever damn doctor we want but in reality that is our money.  We’re  just taking a loan from our insurance companies that we’re going to have to pay back next year with higher premiums.

HSA’s will always have their naysayers but anyone who truly cares about the money they spend should see that it is the best health plan on the market.  If everyone cared about how much an initial consultation with a doctor cost I wouldn’t get these bullshit $250-$600 range answers.  Doctors would have to list their pricing on their website like a normal business and then there would be a healthy level of competition.

I don’t think HSA’s will ever catch on but for now I’m going to take advantage of them for as long as I can and do my part to reduce the cost of healthcare.

Readers, what do you think about my knee injury and how I handled it?  What would you have done differently and what do you think about the HSA/HDHP combo?

-Harry @ PF Pro

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What Is The Difference Between HMO And PPO? http://yourpfpro.com/difference-hmo-ppo/ http://yourpfpro.com/difference-hmo-ppo/#comments Mon, 21 Jul 2014 13:42:47 +0000 http://yourPFpro.com/?p=5056 Editor’s Note: Hey guys, right now I’m sitting on the edge of a volcano looking down at the amazing caldera views of Santorini.  Everything they say about the views, the food, the sunset, it’s all true.  Stay tuned for my honeymoon trip review when I get back and I’ll tell you guys all about it! […]

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What Is The Difference Between HMO And PPO?

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Editor’s Note: Hey guys, right now I’m sitting on the edge of a volcano looking down at the amazing caldera views of Santorini.  Everything they say about the views, the food, the sunset, it’s all true.  Stay tuned for my honeymoon trip review when I get back and I’ll tell you guys all about it!  

In the mean time, we have a post from my friend Derek at FinanceQA.  Derek has been blogging and working in the online sphere for almost 10 years so I hope you guys enjoy his answer to the following question:

Kathleen D. from Fairbanks, Alaska asked the following question

I am currently shopping for health insurance and frankly, I am overwhelmed by the different kinds of plans available. In particular, I am a little bit confused by two main terms, HMO and PPO. What is the difference between HMO and PPO?

Health Maintenance Organizations or HMOs and Preferred Provider Organizations or PPOs are two kinds of managed care plans in the realm of health insurance. A common feature of managed care plans is that they contract with a network of healthcare providers, such as physicians, clinics, hospitals, pharmacies and others to provide services to their policyholders. In both HMOs and PPOs, plan holders pay monthly premiums as well as a copayment for each visit. However, these managed care plans differ from each other in terms of how the services are dispensed.

In an HMO, you will be required to get your healthcare services from the plan’s specified network of providers. You will also be asked to choose your primary care physician who will act as your personal doctor and give you the basic healthcare services you need. Your primary care physician will also be responsible for referring you to specialists or other providers within the network or giving a request to have a laboratory test performed.

An HMO generally gives the most affordable and hassle-free coverage for policyholders. The downside with HMOs is that it limits your choice of physicians. If you also opt to get covered by a physician that is not included in your provider network, you can expect to pay more.

A PPO, on the other hand, operates by having a network of “preferred” providers that policyholders can select from. It differs from an HMO in that it does not require the plan holder to choose a primary care physician. If you have a PPO, you can also see any healthcare provider in the network without the need for a referral. One advantage of a PPO is that its network of doctors is often more extensive than that of an HMO. You can also see doctors outside of the network anytime you want to.

However, premiums in a PPO are generally higher compared to that of an HMO. Also, the out-of-pocket payments you make each time you visit a doctor is also typically more than if you were enrolled in an HMO. If you see providers that are outside the PPO network, you can expect to make higher payments as well. In addition to copayments some PPOs also require annual deductibles for services offered both in the network and out of it.

HMOs and PPOs also differ in terms of how services obtained by policyholders out of the network are paid for. If you are enrolled in an HMO, you are basically not covered if you got services outside of the provider network unless these are care that the HMO does not offer. That means that you’ll have to be shouldering the cost on your own. If you signed up with a PPO, however, and you obtained care out of the PPO network, part of your care will be reimbursed for as long as you have met the annual deductibles and coinsurance. You will still need to pay the healthcare services provider upfront and then file a claim for reimbursement with your PPO.

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How I Got $480 Worth of Contact Lenses for $20 http://yourpfpro.com/got-480-worth-contact-lenses-20/ http://yourpfpro.com/got-480-worth-contact-lenses-20/#comments Fri, 09 May 2014 12:58:20 +0000 http://yourPFpro.com/?p=4524 My parents discovered that I was blind as a bat when I was in kindergarten. I was an exceptional reader so they were always asking me to read things in books and magazines but one day they pointed to a street sign and as the story goes, I couldn’t see anything! I don’t really remember […]

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How I Got $480 Worth of Contact Lenses for $20My parents discovered that I was blind as a bat when I was in kindergarten. I was an exceptional reader so they were always asking me to read things in books and magazines but one day they pointed to a street sign and as the story goes, I couldn’t see anything! I don’t really remember that story but one thing I do know is that to this day, I still can’t see. I’m extremely nearsighted and I also have astigmatisms in both eyes. If natural selection could have had its way, I would have walked off a cliff a long time ago.

Thankfully though, contacts were invented(I don’t even see very well with glasses since my prescription is so high) and the rest is history. I started wearing hard lenses in 6th grade and haven’t looked back since. Now a days, wearing contacts is like second nature to me and I can wear them all day without a problem. Once a year I’ll drop by my optometrist’s office and get an eye exam and a new prescription.

Since my vision is so bad I have to get special lenses for astigmatism that cost a lot of money compared to regular lenses. I get free VSP insurance from work but VSP is one of the dumbest types of insurance out there. Everyone who needs contacts or glasses is going to insure themselves and everyone who doesn’t won’t. So basically you’re just paying a 3rd party(VSP) for the privilege of paying an optometrist.

How VSP Works

Optometrists might not make as much as the average doctor but they’re still doing pretty well. I don’t know the exact revenue breakdown but they don’t charge much for eye exams and fittings so they can’t be making much off that portion of their business. Instead, they make most of their money off selling frames and contacts since that’s where the real mark up is. Even though you can get frames and contacts online, a lot of people still pay for them in store due to the convenience factor. And as I’ve noticed lately, there’s a lot of pressure from the staff at my optometrist to buy lenses with them.

I’m not a sucker so I would never buy contact lenses from an optometrist but most VSP plans offer an allowance every year towards contact lenses. My plan gets me a $20 co-pay on the exam, a 15% discount on the lens fitting and a $120 allowance towards contacts. So most of the time I pay the co-pay and the discounted exam price, spend the rest of the allowance on however many boxes of contacts I can get and then buy the rest of my contacts online. Like I said, my contacts are pretty expensive and my optometrist charges $60 a box for them(3 month supply for one eye) so that means I can only get 2 boxes(3 month supply for both eyes) with my $120 allowance.

Taking Advantage of the Out of Network Allowance

This year I did a little research and figured out that my plan(and almost all other ones too) allows you to use that $120 allowance on in network OR out of network providers. So instead of buying contacts with my optometrist, all I paid for was the co-pay and the discounted exam price and went straight to the internet. I found the exact same box of contacts online from Vision Direct for $28/box including, tax fees and shipping so I bought a year’s worth of contacts from them and sent in the reimbursement form through VSP.

How I Got 480 Worth of Contact Lenses for 20

Here’s the proof!(Minus the processing fee of $1.99)

It was a little awkward at the optometrist’s office since they are really pushing you to buy contacts with them. At first, they were trying to get me to buy a whole year’s supply with them. Then they told me I might as well just buy two boxes right now since it would be free(after my $120 VSP allowance). Obviously they’re not going to tell customers that that $120 can also be used with online providers who are way cheaper so it’s up to you to figure that part out.  I ended up just telling them I wanted to double check the price I could get online to see if I should order a year’s supply with the optometrist or not.  They bought it…

Adding up all the Savings

At the end of the day, my total order was $223.93 for 8 boxes of contacts(I used the code NEW25VISION for a nice 25% discount). I also used a cash back site called uPromise and that got me 9% cash back($20.15) on my purchase. Since I used my AA Executive card that also got me back about 1 cent per dollar spent($2.24). Plus Vision Direct has this promotion with Drugstore.com and that got me 5% back($11.20) in Drugstore.com dollars.  And finally I applied my $120 out of network allowable to the balance and I ended up only paying $70.34.

But wait, there was one more discount that I forgot to include.

HSA to the Rescue

Most people use the triple tax savings of an HSA to pay for big medical expenses like doctor visits and medication. But since I’ve been blessed with great health up to this point in my life, the only time I really use my HSA is to pay for vision related services(contacts, solution, exams). Since I paid for that $223.93 contact lens bill with my credit card, I can save the receipt and withdraw that money from my HSA at any point in the future. So if you take my marginal federal tax bracket(15% since I’m getting married!) and add it to FICA/Medicare(7.65%) I saved 22.65% on my taxes($50.72).

So when it’s all said and done I only paid $19.62 for a year’s worth of contacts. Last year Acuvue actually had a $50 rebate if you bought a year’s worth of contacts but this year they eliminated it for online purchases(you can still get the rebate if you buy a year’s supply in store). My goal next year is to figure out a way to actually make money off buying a year’s worth supply of contacts.  Wish me luck.

Readers, what do you think about all the ways I went through to save money on contacts? Did you know that most VSP plans allow you to spend your contacts or glasses allowance at an out of network provider? Do you ever feel pressured at the optometrist’s office to buy lenses and glasses from them?

If you sign up for uPromise, I get a small referral fee so it’s a great way to support the site!

-Harry @ PF Pro

 

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Reader Question: How Should I Invest my HSA? http://yourpfpro.com/reader-question-invest-hsa/ http://yourpfpro.com/reader-question-invest-hsa/#comments Fri, 18 Apr 2014 12:15:53 +0000 http://yourPFpro.com/?p=4493 Editor’s Note: For those who aren’t familiar with Health Savings Accounts, I’ve written extensively on the topic before, take a look. Reader GP writes in this week asking about HSA’s: I’ve got a pretty substantial HSA balance now and I need to know how to invest it. Simple and to the point, I like those […]

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Reader Question: How Should I Invest my HSA?

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Editor’s Note: For those who aren’t familiar with Health Savings Accounts, I’ve written extensively on the topic before, take a look.

Reader GP writes in this week asking about HSA’s:

I’ve got a pretty substantial HSA balance now and I need to know how to invest it.

Simple and to the point, I like those types of questions. As you may or may not know, HSA’s are my favorite investment vehicle of all time. I probably won’t stop writing about them until everyone in America has one. The reason why I love HSA’s so much are because they encompass two things close to my heart: they stick it to the insurance industry and they allow you to completely avoid taxes.

HSA’s force you to consider the cost of medical procedures and insurance only comes into play when you truly need it(ie a catastrophic event). There’s no point in insuring things like simple doctor visits and routine check-ups since we know we’re going to need those. Involving a third party in something like that is only going to make it more expensive: that’s ECON 101.

There are lots of reasons to not like paying taxes but an HSA is the only answer I’ve found to truly(and legally) avoiding taxes. The money you put into an HSA is tax free, the money you take out is tax free and your investment gain is tax free. Do I need to say more?

How do you Treat Your HSA?

The first thing I asked reader GP was how he treated his HSA. I treat my HSA as an extension of my 401(k) so my contribution order is 401(k) up to the match, HSA up to the max and then a combination of 401(k)/Roth IRA until I hit the contribution limits. Remember, even if you don’t end up spending the money in your HSA on medical expenses you can still withdraw the money after the age of 65 just like a normal 401(k).

They say that nothing is certain in life but death and taxes. I think you could add one more item to that list though: the cost of health care. I’m about 99% sure that the cost of health care will be going up as we get older. I also think we’re going to need more of it as we get older(duh!) so why not plan for it now? Fidelity estimates that a 65 year old couple retiring in 2013 would need $220,000 to cover their medical expenses for the rest of their life time. That’s more than some people even have saved up for retirement.

The government is giving you a way to pay for your medical expenses completely tax free and it’s a good idea to take advantage of it while it lasts(HSA’s might come to a crashing halt when I withdraw $30,000 of saved receipts in 30 years and pay for my yacht). That’s another cool feature of the HSA: you can pay for your current medical expenses with your after tax dollars instead of your HSA money, save the receipts, and withdraw that money at ANY point in the future.

So let’s say I pay for $1,000 worth of medical expenses in 2014 with regular after tax dollars instead of my HSA money. That leaves $1,000 in my HSA that will grow to $7,612 over 30 years(assuming 7% growth) and in 30 years I can withdraw that original $1,000 tax free(and spend it on whatever I want) and use the other $6,612 to pay for my medical expenses in retirement(again, tax free!).

Invest or Use Your HSA

Reader GP told me that he doesn’t have many medical expenses but when he does he pays for them with his HSA. That’s a fine strategy too since if you don’t go to the doctor much you’ll quickly rack up a decent amount of cash. In this case, I advised GP to keep a small buffer in cash(equal to his deductible) and invest the rest. That way he’ll be able to cover any large medical expenses that may come up but he’ll still be able to start investing his money today.

If he has a decent emergency fund, he could actually invest the entire amount and pay himself back should any large medical expenses come up.

Let’s assume that GP invests his entire 10k HSA balance but has $2k in medical expenses this year. GP can wait until he has contributed $2k into his HSA again(through payroll and employer contributions over the course of this year and next year) and withdraw that money or he could wait until his investments are at a gain and sell part of those and pay himself back that way.

Short or Long Term Use?

If you plan on needing/using your HSA money in the future it’s not a good idea to invest in anything too risky(ie stocks/longer term bonds). But if you are treating your HSA as a long term investment vehicle, you should invest it accordingly. Personally, I invest my HSA in 70% stocks(VB – Vanguard Small Cap ETF) and 30% bonds(TIPS – iShares TIP Bond ETF). You can read more about why I invested that way here.

In reader GP’s case, I advised him to invest in a total market index fund(like VTI) and an inexpensive bond fund or even a target date retirement fund. I take a little less risk with my HSA but any asset allocation that’s age appropriate will work just fine for your HSA. One thing to keep in mind is that if you live in an HSA taxable state like California you will have to pay state taxes on the investment gains(in addition to contributions).

Where to Invest?

The last thing to consider is where you’re going to invest your money. Most employer offered HSA plans have horrible investment options so you probably want to avoid investing there at all cost. I just wrote about my latest HSA provider but there are lots of options to choose from. I like companies that offer low or no fees, no minimum balance requirements and free investing. The only one I’ve found that hits all of those is Eli Lilly Federal Credit Union. They have no fees whatsoever and they allow you to invest in commission free ETF’s through TD-Ameritrade.

You can do partial or full transfers(trustee to trustee) from your employer’s HSA plan to ElfCU as many times as you want in a given year. If your employer’s HSA plan does charge a fee for doing a transfer you can do a self-rollover once a year for free. I usually do a trustee to trustee transfer at the end of every year.

Readers, is the HSA not the greatest investment account of all time? If you have a question for me, please contact me and I’ll do my best to answer it.

-Harry @ PF Pro

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My New HSA Provider: Eli Lilly Federal Credit Union http://yourpfpro.com/new-hsa-provider-eli-lilly-federal-credit-union/ http://yourpfpro.com/new-hsa-provider-eli-lilly-federal-credit-union/#comments Mon, 31 Mar 2014 15:59:06 +0000 http://yourPFpro.com/?p=4265 Update(4/21/14):  ElfCU now charges a $24 wire transfer fee for transferring your money from ElfCU to TDA. Update(5/28/14):  ElfCU now charges a $3 monthly account fee if you don’t hold at least $2,500 in the savings account.  Still the best option in my opinion though. Last year I wrote an article about how to rollover […]

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Update(4/21/14):  ElfCU now charges a $24 wire transfer fee for transferring your money from ElfCU to TDA.

Update(5/28/14):  ElfCU now charges a $3 monthly account fee if you don’t hold at least $2,500 in the savings account.  Still the best option in my opinion though.
My New HSA Provider: Eli Lilly Federal Credit UnionLast year I wrote an article about how to rollover or use a trustee transfer in order to invest your HSA money for free using HSA Bank. Well it’s been a year and my investments have done very well(thank you S&P Gods), but I was only able to invest about $7,000 of my $12,000 balance. The reason why is that HSA Bank requires you to hold $5,000 in their savings account in order to avoid maintenance fees.

I had a short discussion with Blake in the comments section of that article about the opportunity cost of investing that $5,000. He argued that the investment gain would outweigh the few bucks a month in fees. Blake was totally right, but I still didn’t want to invest that money because I just couldn’t bring myself to pay a fee – it goes against everything I believe in 🙂 But alas, I’ve found a new credit union that allows me to invest all of my HSA money(hat tip to TFB).

ElfCU to Save the Day

I used to have two HSA’s.  The first one was my HSA Bank account that was formed when I rolled over my last employer’s HSA(I no longer have this account anymore now that I’ve rolled it over to ElfCU) and the second one was through my current employer.  I still have the second one but it’s administered by Health Equity and the investment options are very poor.  There are a limited array of funds and most of the expense ratios are around 1%, yikes!

ElfCU is a small credit union that anyone can join with a $5 contribution to TruDirect. They have no monthly fees on their HSA’s and you can invest 100% of your account through TD-Ameritrade. TDA charges normal brokerage fees but they do have a wide selection of no cost ETF’s. Since HSA Bank also used TDA I’ll be able to keep the same funds and asset allocation.

So now I have two HSA’s: one with ElfCU and one with Health Equity.  I plan on keeping my Health Equity account in cash and rolling it over once or twice a year for free to my ElfCU HSA where I can invest everything with no fees.  So there you have it, I finally have an HSA that has no minimums and no fees and it lets me invest in my no cost ETF’s with TD-Ameritrade.

The Process

If you’re interested in rolling over your HSA to ElfCU the first thing you’ll want to do is open an account with ElfCU.  You’ll have to make a $5 donation to TruDirect but that ends up showing up in your savings account once you’re all done.  After I signed up, I got an e-mail confirmation from ElfCU with my member ID, HSA account number and money market savings account number.

Logging in to ElfCU HSA

Logging in to your ElfCU HSA is relatively easy. You can navigate to www.ElfCU.org/HSA and select HSA Account Login or you can use this link to go directly to their HSA login page.

I wasn’t able to register/create an ID for my HSA using my HSA number until the day after I signed up though. ElfCU uses a third party site called Marsh HSA Services to manage their HSA accounts. You can login/create a new ID using this page.

Logging in to ElfCU Online Banking

Since ElfCU uses a third party site for their HSA accounts you’ll need to create a separate login for their online banking system. You will also get a savings account when you sign up for an HSA since they are a credit union.  This is the account that you would link to Mint or Quicken in order to view your HSA balance.

It took a few days(HSA login will be instant) before I was able to register for a new ID but the process was nearly identical to registering for the HSA member ID.  After 3-4 days, I went to www.ElfCU.org and selected enroll in eBranch. When I logged on for the first time, I saw that I had $5 in my savings account and it also showed my HSA balance of $0.

Transfer Money from HSA Bank to ElfCU

Since I had investments through TDA/HSA Bank, I had to first liquidate my TDA account and transfer it back to HSA Bank(this process took about a week). Once the entire account balance was in the savings portion of my HSA Bank account and my accounts were all set up at ElfCU, I filled out a transfer form and e-mailed it to ElfCU at: Sping@elfcu.org.

This transfer form will effectively close out your old HSA and transfer it entirely to ElfCU. HSA Bank charges a $25 account closure fee but there are no other fees to transfer.  If your HSA provider charges a transfer fee you can write yourself a check and do a direct rollover(only one of these allowed per year though) but that seemed like a lot of work for $25.

Almost There

About 4-5 days after I e-mailed in my transfer form to ElfCU I noticed that my HSA Bank account had been liquidated(and I was charged a $25 account closing fee). 10 days after that, the money showed up in my ElfCU HSA and I opened a TDA account and got to investing!

Editor’s Note: I have no financial relation with ElfCU. But I use them because they don’t charge any monthly fees on my HSA account and I can invest my entire balance for free.

Readers, where do you invest the money in your HSA?  Do you pay for all of your medical expenses out of pocket like I do so that you can maximize the triple-tax power of the HSA?  Think it’s worth it to switch to ElfCU?

-Harry @ PF Pro

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Annual Enrollment for 2014: My Company’s HSA vs Traditional Plan http://yourpfpro.com/annual-enrollment-2014-companys-hsa-vs-traditional-plan/ http://yourpfpro.com/annual-enrollment-2014-companys-hsa-vs-traditional-plan/#comments Mon, 11 Nov 2013 13:45:08 +0000 http://yourPFpro.com/?p=3327 As most of you know, a health savings account or HSA is one of my favorite investment vehicles of all time.  It’s the only investment that allows for triple tax savings – the money you put in isn’t taxed, the money you take out isn’t taxed and the earnings aren’t taxed – as long as you […]

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Annual Enrollment for 2014- My Company's HSA vs Traditional Plan

As most of you know, a health savings account or HSA is one of my favorite investment vehicles of all time.  It’s the only investment that allows for triple tax savings – the money you put in isn’t taxed, the money you take out isn’t taxed and the earnings aren’t taxed – as long as you spend the money on qualified medical expenses.  If you’re the perfect specimen of health by the time you retire, you can withdraw the funds in your HSA just like you would with a normal 401(k) or traditional IRA.

I would argue that HSA’s should be maxed out as soon as you’ve contributed enough to get your 401(k) company match since they can be invested just like regular retirement accounts.  There’s really no risk to over-contributing either since your HSA acts like a regular pre-tax retirement account for non-medical expenses.

I’m obviously all for HSA’s but there are still many who are too stuck in their ways to see the light.  I know it’s hard to make changes if you’re comfortable or happy with what you currently have.  But in order to succeed in business or even life in general, you need to be open and willing to look at new things and embrace change.

I’m going to use my employer’s plan as an example but you can apply the same comparison techniques that I use below to determine if an HSA is right for you or not.  Spoiler alert: it probably is.

My New Company’s Plan

My new company has over 170,000 employees so it makes sense that they offer the HSA/HDHP option to employees.  In fact, they’re pushing it pretty hard since it probably saves them a ton of money.  I’ve read articles in the company magazine, gotten e-mails from HR, and there’s even a special section on our website that talks about all the great benefits of the HSA/HDHP option.

In exchange for signing up for the HSA, my company offers an employer contribution to the HSA and reduced premiums.  They will give $600 to anyone willing to sign up for the HSA/HDHP plan and the premium is $0/month.  My last employer only gave $500 and had a monthly premium of $26 for the HSA option so I’ll take the extra $100 and the reduced premiums.  If I  go for the traditional medical plan with my new company, the monthly premium would be $21/month.

Here’s a brief summary of how the two plans compare:

HDHP vs HSA Plan - Benefits Compariosn Pt 1

HDHP vs HSA Plan - Benefits Compariosn Pt 1

As you can see, the main differences between the two plans are the premiums, deductibles, out of pocket maximums and the co-pays vs co-insurance for things like office visits.  So let’s take a look at the plans and see which option makes the most sense

Premiums & Deductibles

At my last employer, the deductible was $3,000!  My new company generously gives us a $1,250 deductible which is actually the lowest amount allowed by law.  Any lower of a deductible and the plan would not qualify to be paired with an HSA.

The traditional plan comes with a $300 deductible but you have to remember that co-pays generally do not count towards deductible.  So just based on the deductible and premiums alone, the HSA is a no brainer.

Here’s why:

If you go with the HSA/HDHP option you’ll be saving $21 per paycheck in premiums plus you’ll get an additional $600 contribution from the company.  That’s a total of $1,146($600 + $21*26) in free money if you go with the HSA/HDHP option.  Essentially, your deductible for the HSA plan would be almost free.

Keep in mind that with the traditional plan, you would still have a $300 deductible.  With that plan, office visits and specialist visits are generally covered with a co-pay but once you require an x-ray or additional testing, you will have to pay for everything up until the deductible.  Once you reach the deductible, you would pay co-insurance up to your out of pocket maximum.

Here’s an example of how my employer’s traditional plan would work.

Let’s say your shoulder has been hurting so you go to your primary care doctor for a visit.  You would pay a $20 co-pay for the visit but that doesn’t cover any additional treatment.  If he orders an x-ray, there is 10% co-insurance after the deductible is met.  So you will have to pay for the full cost of the x-ray which very well could be $300 the way diagnostic tests are priced these days and then you would pay co-insurance for anything after your deductible.

As you can see from this example, once you hit your deductible you’ll still have to pay, but you’re basically getting a 90% discount since your co-insurance is only 10%.

If the same thing happened but you had the HSA/HDHP combo you would have to pay for the full cost of the office visit(probably in the $100-$150 range) and you would pay the same price for the x-ray(assuming it was less than $300).  So you’d be paying more for the visit but remember that you got $1,146 free so you haven’t actually spent a dime yet.

Aren’t Co-Pays Better?

It might seem like a pretty good deal to only have to pay $20 every time you want to see the doctor but you’re paying for that privilege with a much higher premium.  Not only do you have to pay $21 more per paycheck but your employer is probably paying hundreds more on your behalf too.  And if your employer’s medical costs are going up, it will definitely be reflected in your lower salary or lack of bonus.

Choosing the HSA over the traditional plan will give you $1,146 in free money.  Since you can also contribute money to an HSA on a pre-tax basis, every dollar you spend after $1,146 on medical care will be tax free.  That could mean that you’re receiving a 20-50% discount on your healthcare depending on your income since these contributions would be coming out of your marginal tax bracket.

Out of Pocket Maximum

Two of the things that scare people away from HSA’s are the high deductibles and out of pocket maximums.  I’ve already shown that the deductible favors the HSA and now I’m going to show the same thing for the OOP Maximum.

Since we’re getting $1,146 in free money, if there was a catastrophic event and you racked up tens of thousands in hospital bills you would only be on the hook for a total of $2,850 with the HSA/HDHP option.  Since we get $1,146 free, that would leave us to cover the rest: $1,704.  Compare that number to the out of pocket maximum for the traditional plan($2,000) and you could actually be on the hook for more money going with the traditional plan.  Not to mention that the $1,704 would be tax free while the $2,000 would have to be paid with after tax dollars(if your medical expenses are greater than 7.5% of your AGI, then they would be tax deductible for traditional plan holders).

Clear Winner is the HSA

I think the clear winner here is the HSA/HDHP option.  Normally HSA’s make sense if you’re young and healthy, but here it would probably work out in your benefit 90% of the time.  I really lucked out this year, my company offers a great health plan and with the HSA, I’ll be able to save a thousand dollars a year, plus contribute another couple thousand.

Since the deductible and OOP max are so low, I’m able to get the same tax deferred savings but with way less risk(my last plan had a 5k OOP max!).

Readers, what do you think about my new company’s HSA plan?  Why would anyone sign up for a traditional plan here when the HSA is so clearly incentivized?

-Harry @ PF Pro

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I Finally Invested My HSA Money http://yourpfpro.com/finally-invested-hsa-money/ http://yourpfpro.com/finally-invested-hsa-money/#comments Mon, 04 Nov 2013 13:45:11 +0000 http://yourPFpro.com/?p=3216 It’s been a while since I wrote about my new HSA rollover strategy and lots of things have happened since then.  I quit my old job, got free health insurance for a couple months, got my own insurance for a month and will have employer health insurance again next week!  I’ll probably go with the […]

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I Finally Invested My HSA MoneyIt’s been a while since I wrote about my new HSA rollover strategy and lots of things have happened since then.  I quit my old job, got free health insurance for a couple months, got my own insurance for a month and will have employer health insurance again next week!  I’ll probably go with the HSA option at my new employer when I start, but for now I have all my HSA money with HSA Bank.

HSA Bank has changed its fees for 2014 and you will need $4,925 in your savings account in order to avoid the $2.50 monthly account maintenance fee and the $3 monthly investment fee(what allows you to invest your money with TDA).  The reason why I have my money with HSA Bank is that they allow you to invest your HSA with TD-Ameritrade and their no cost ETF’s.  There are a few other comparable options but I think HSA Bank is one of the most reputable companies out there.

My Laziness

The reason why it took me so long to invest my HSA money was a) laziness and b) I wasn’t sure how I wanted to invest the money.  There are a lot of ways to look at your HSA – do you want to use it to pay for current expenses, do you want to pay for current expenses out of pocket, etc?  And how you look at it will affect how you invest it.  Do you want to include it as part of your overall AA or use it as a separate account?  I did a lot of research though and I think I found a suitable plan based on how I use my HSA.

Since I pay for all of my healthcare expenses out of pocket instead of with my HSA funds, that enables me to withdraw those purchase from my HSA at any point in the future.  So if I spend $1,000 on healthcare this year but pay for it with a regular credit card instead of my HSA account I can invest that money for 10, 20 or however many years I want and withdraw that $1,000 at any point in the future.  Meanwhile if that $1,000 earns a 5% interest rate over 20 years I get to keep the earnings($1,653) completely tax free as long as it’s spent on healthcare.  That is the real power of the HSA in my opinion.

My Investment Strategy

There are so many different things to consider when investing your HSA and even today, I’m still not 100% sure of my plan but here’s what I’ve got so far.  The simplest solution would be to just drop my $7,000 in a target date retirement fund.  But since TDA doesn’t offer no cost versions of these I’m going to do something a little different.

Since I don’t know when I’ll want/need to access the money in my HSA, I don’t want to invest it like a regular retirement account.  I know I won’t touch it for 10-20 years but I’m going to be a little more conservative with it so that I can access the money if I need it sooner rather than later.

Stock Investment

Since I live in California(and I plan on staying here!), HSA’s are not tax exempt at the state level.  So obviously my contributions and any earnings that I receive will be taxed.

I decided on a 70/30 Stocks/Bonds allocation for my HSA.  In order to avoid paying lots of dividend taxes every year though, I’m going to invest in VB(Vanguard Small Cap ETF).  VB is a small cap blend fund that has a low dividend yield so it shouldn’t trigger too much in state taxes every year, I will still have to pay state taxes though on the capital gains when I sell.  With this fund, I’ll also be able to tax harvest losses on a state level in years that the fund goes down.

For anyone wondering, California treats all dividends the same so any dividends that my index fund spits out will be taxed at the my normal California tax rate.

Bond Investment

I decided to invest in TIP(iShares TIPS Bond ETF) since the dividends on TIPS are tax exempt on a state level.  I’ll still have to pay CA taxes though on the capital gains if/when I sell this fund.  Normally, TIPS funds are said to be pretty tax in-efficient but I’m effectively using the power of the HSA to offset the federal taxes and the CA tax treatment laws to offset the dividend taxes.  I’m only going to have to pay CA taxes on the capital gains with this fund.

One Last Twist

One of my readers(Blake) actually got me thinking about investing my savings portion and paying the $5.50 a month in fees.  On a $4,925 balance that would only equate to a 1.3% fee to invest that money.  After A LOT of debate, I decided against doing that though since I want to keep that $5,000 as my “health care emergency fund”.  I’d probably be able to easily earn back that 1.3% fee every year but I don’t want to get too greedy with my HSA and there’s something inside of me that just can’t stand paying a fee.

There’s really no right or wrong way to invest your HSA.  But since I know I can avoid taxes by investing in low dividend yield funds and TIPS I’m going to do just that.  Any time you can legally avoid taxes, I think that’s a great thing.

Readers, how do you invest your HSA?  Or do you just let it sit there in a savings account?  What do you do to avoid fees?

-Harry @ PF Pro

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