It’s that time of year again. Families across Michigan and throughout the entire country have to re-evaluate and select their healthcare insurance program for 2016. Like so much else in our society these days, healthcare plan options are far more complex than in years past.
Most employer-sponsored plans offer a number of choices, running the
gamut from low deductibles with high premiums to high deductibles with
low premiums. Additionally, many employers also offer payroll deductible
Flexible Savings Accounts.
With an FSA, the dollars deposited can be used for various
healthcare-related items such as insurance deductibles and other
medically related expenses not covered by health insurance.
In other words, selecting the proper healthcare package for your
family requires a fair amount of research. And that includes a
projection of how your family’s health will fare in the year ahead.
For those not covered by insurance, it’s back to selecting their
favorite color. Bronze, silver, gold and platinum will again be the
available choices. And, of course, the higher the deductible, the lower
People who have Individual plans can also open a Health Savings
Account (HSA), similar to the FSA, to cover deductibles and other
non-covered medical expenses. If you’re on Medicare, the big decision is
selecting the Medicare supplement that best fits your needs and budget.
Regardless of age, whether you have an individual plan, group plan or
a Medicare supplement plan, it looks like a lot of households are
staring at significant increases in their healthcare premiums.
I’ve already received several snide comments stating the Affordable
Care Act is not very affordable. And I have to admit, I’m not aware of
anybody’s premium decreasing as healthcare advocates projected while the
law was being debated.
But, politics aside, healthcare premiums are taking a significantly
larger bite out of the family budget, so households need to adjust their
annual budgets accordingly.
On numerous occasions, I’ve had clients comment that their adult
children are facing a more difficult journey than they did. When I ask
why they feel that way, the inevitable response is the lack of pensions
and the high cost of health insurance.
For many current retirees, their employer paid virtually all their
monthly premiums during their working careers. Today, the employee’s
portion of the monthly premium takes a big bite out of the paycheck.
I don’t pretend to have a quick fix for the high cost of healthcare,
but I do know that, at every stage of the financial planning process, I
project that the cost of healthcare will increase at a rate steeper than
other areas of the economy.
I suggest you do the same. During your working career, expect that
healthcare premiums will increase every year. When you retire, plan on
allocating $250,000 of your nest egg for healthcare related costs,
keeping in mind that Medicare supplement plans are part of the equation.
Selecting the appropriate health care program every year is a complex
but necessary endeavor. A young family needs not only to select the
best healthcare option, but also to save for their kids’ education and
set money aside for retirement. Not to mention the mortgage and other
Life not only is complex, it can also be stressful. Good financial planning can mitigate that stress.