Welcome to the Making Margin podcast! Greenway’s team is here to discuss common financial mistakes and to help you navigate them.
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Today’s topic is health insurance and HSAs: What are some ideas to combat the ever rising cost?
- Last year, employers spent an average of $15,159 in premiums to cover a family of four, according to an analysis from the Kaiser Family Foundation. In all, that’s an increase of 51% from a decade ago.
- The average family of four paid a total of $7,726 in 2018, according to the foundation. That’s an increase of 67% from 10 years ago. Of that amount, families paid $4,706 in premium contributions for coverage at work, plus $3,020 in cost-sharing — that is, deductibles, coinsurance and copayments. (Bear in mind, employers still shoulder a large share of premiums. Employees also have the advantage of paying premiums on a pretax basis, as opposed to buying coverage elsewhere with after-tax dollars.)
- In contrast, on the private market, a family of four with an annual household income of $80,000 would pay $7,888 per year in premiums for a silver plan purchased through the health insurance marketplace — provided they are eligible for a premium tax credit of $9,961 per year, according to Kaiser.
Without the credit, the plan would cost close to $18,000 per year. - “Insurance companies get a lot of heat for raising deductibles and premiums,” said Cynthia Cox, vice president at the Kaiser Family Foundation. “But if you look at what’s driving health-care costs year to year, it’s the price of health care: the cost of doctor’s visit, the cost of a hospital stay,” she added. “That’s really what’s making those premiums and deductibles go up each year.”
Discussion topics:
- A medical bill that we have each received that was shockingly high.
- Policy wise: What’s the solution?
- HSA: Is it the magic bullet to combat rising health costs?
- As Advisors, how do we estimate future health care costs with so much uncertainty?
Take away:
Take advantage of an HSA if you are able to. They’re a great hedge against unexpected health care costs.
