Money Rehab with Nicole Lapin - Don't Make These Health Insurance Mistakes

Episode Date: November 14, 2023

It's open enrollment szn and you know what that means! Advice to help you get the smartest medical insurance plan for you, of course. Nicole gives you all the best tips— including one that will definitely blow your mind. To listen to Nicole's episode with her insurance broker, click here: https://link.chtbl.com/JfEZPR_R

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To get started, visit bofa.com slash newprosmedia. That's B-O-F-A dot com slash N-E-W pros, P-R-O-S, media. Bofa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Well, are you ready to get a wider smile and keep more money in your pocket at the end of every month? If so, get pumped, because today we are talking about insurance. I know insurance talk can be so boring, and the topic is so full of jargon. But if you're going to pay for something every single month and depend on it for your life, literally, you should probably spend as much time researching it as you have deciding between Peacock and Hulu. Only me? Okay, moving on. The reason to talk about

this now is that it's open enrollment season. So today I'm going to break down all of the tips and tricks for saving money on your insurance plan. And I know you always listen to these episodes right through the very end, obviously. But just in case, I want to call out that you should really listen to this one till the very end, because the last tip could increase the amount of money you save for your future exponentially. Honestly, it's a game changer, so don't sleep on it. First up, a quick dictionary note. An open enrollment period is the time when you can make changes to your medical insurance plan. Generally speaking, your insurance is a year long commitment and barring few life changing events like getting married or having a baby,

you can't really make any changes to the plan. Open enrollment is the time when you can make changes, like adding dental coverage if your kid is going to need braces or ending your vision coverage if you just got laser surgery to correct your eyesight six months ago. But it can be so much more. The open enrollment period at many businesses takes place during November and December, which means they coincide with the open enrollment period at the federal health insurance marketplace. The health insurance marketplace is the healthcare.gov website where you can shop for insurance if it's not offered through your job. A few states run their own sites, but generally you can go directly there between November 1st and January 15th to shop for coverage solo or with support over the phone or in person.

That coverage isn't only for the uninsured. So if you have terrible workplace coverage, let's say, that's too expensive and not meeting your needs, know that you do have other options. This won't be the solution for everyone, but for some people, a federal marketplace plan may be a better choice. Even if your current health care plan mostly meets your needs, open enrollment is a good time to do a little checkup. It takes about as long as a dental visit and it's way less painful. This month, look over your existing plan and your expenses over the last year and look at what other plans your workplace or the marketplace offer and if there's a better fit for you and your family. Or if you want to add supplemental coverage, for example, if you have a child who needs braces or aligners and you want to consider

dental coverage, calculate what you've been spending on dental care for yourself and your family and a rough estimate of how much it's going to cost to fix your kid's teeth. Then find out what a dental care plan would cover and how much it would cost extra per month to get that coverage. If the total cost of the premiums or the monthly fees is less than it would cost to get dental care for your family and orthodontics for your kid, then get dental insurance. And here's the last important step. You do need to call around to make sure that your dentist and area orthodontists, in the case of braces, accept that insurance. For those of you using the Marketplace, take this time to check on your tax

situation before the end of the year. You may be eligible for the premium tax credit, and that's a tax credit to help pay for your insurance premium. This tax credit is based on several factors like income, number of people in your household, and location. So if you've moved to Texas, let's say, had a baby and switched to working part-time this year, you want to check and see if your eligibility for the tax credit has changed. However, if you started making more money this year, your tax credit could be smaller and you'll end up needing to pay it back. And no one likes a surprise tax bill. I certainly do not. Use this time to also take a deep dive into what perks your insurance company offers. If you have a workplace plan, check in on what extra benefits

your plan or your employer offers. This is where familiarity on both sides can help you get the most out of your coverage. Sometimes these hidden perks can come in the form of coupons, discounts, or reimbursement for health-related services like gyms or workout classes. Other forms of aid can come from employee assistant plans, which can get you free memberships to mindfulness apps, reimbursement for a handful of mental health care appointments, or even provide help paying for rehab. Savings here can range from 20 bucks a month off your gym membership to thousands of dollars in alcohol and drug abuse counseling. What's available to you and what you need, of course, will vary, but you're probably eligible for some perks already that you didn't even know about.

So think of this as a little reward for your annual health insurance checkup. Finally, we need to talk about health savings accounts or HSAs. But before we get there, let's double click on premiums versus deductibles. Remember, a premium is what you pay every month to the insurance company for your coverage, and a deductible is what you pay out of pocket at the doctor's office. A large-scale study by a national insurance company found that many people are overpaying in premiums and under-saving for retirement. They also identified a direct relationship between those two behaviors. Now, I get that having large out-of-pocket medical bills is

terrifying, but try to put that fear on hold for a second and ask yourself, is this you? Are you paying too much for insurance and not saving enough for retirement? My final tip is one of those rare cases where you can have your cake and eat it too. And that's where HSAs come in. If you choose to enroll in a high-deductible, low-premium health insurance plan, you will be eligible to open a health savings account. This is a tax-free account, so paying into it is tax-deductible, withdrawing from it for qualifying expenses is untaxed, and you can invest this money and the profit untaxed as well. So how do we maximize this triple threat of an account? Well, when you sign up for a high-deductible, low-premium account, you don't just take that extra cash and treat yourself. You should set up an HSA with a broker

and contribute to it regularly. When you sign up for a high deductible, low premium account, don't just take that extra money and treat yourself. Consider signing up for an HSA with a broker and contribute regularly. Initially, you'll want it in a money market account or other very easy to access accounts. The money rolls over every single year, and as that little stash grows, you can start to allocate a percentage of it to longer-term investments like bonds. You can even fund it by rolling over money from a traditional or Roth IRA while still deducting money from your tax bill. So for 2024, an individual can contribute four thousand one hundred and fifty dollars and a family can contribute.

Eighty three hundred bucks. Now, if you have a medical emergency or a costly medical condition, you can use this money to pay for that. You can also use this money for health care costs if you're pregnant. This account basically lets you take the risk of paying lower premiums by providing you with a safety net. But consider paying for those costs out of pocket because this is where the real treasure comes into this account. There is no requirement to use this money in your account to reimburse yourself within a set amount of time.

So if you have a baby, pay out of pocket and save the receipts. You can use those receipts at any time to get a little tax-free money out of your account for medical expenses. And suddenly, you have an extra emergency fund. The real magic here happens after 65. At that point, you can withdraw money from your HSA without penalty for any reason. Although it will be taxed as income, but basically, it becomes a little backup 401k. HSAs are a great

way to set up an emergency fund that also functions as an IRA while lowering your monthly premiums. Everyone's needs are a little different, and I know that sitting down and dealing with insurance can be so boring. Think of it this way. If someone offered you a thousand bucks to make a few phone calls and read some stuff online, you would jump at that chance, right? That is basically what's happening here. And sure, not every year is going to result in huge savings. But if you take the time to do this every year, you will at least know for sure that you haven't cost yourself thousands of dollars by picking the wrong plan. So instead of thinking about this as being one boring chore, think about it as being a treasure hunt for some serious savings and investment opportunities. For today's tip, you can take

straight to the bank. When it comes to any kind of insurance, don't go on autopilot. When you're doing this healthcare insurance checkup, take this opportunity to also shop around for better deals on other insurance plans like car insurance. If you haven't compared rates in a few years, you should. Maybe there's a better deal out there with another company or even your own insurance company might be willing to offer you a break for being a good driver. Don't miss out on savings by assuming that the good deal you got three years ago is still the best deal out there. Or you can hire an insurance broker to help you with a comparative analysis. Usually you don't pay for this service. The

insurance companies pay for the service. You can also listen to the episode we did with my own insurance broker to hear more about it. And I've linked it in the show notes. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously,

thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.