My husband switched jobs not so long ago, and we knew that would result in several changes. For one thing, his current job is remote, so he doesn’t have to drag himself into an office day in, day out.
Another thing that changed when my husband switched jobs was that we went from having a health insurance plan with no deductible to a plan with a large deductible. Of course, I recognize that we were privileged to be without a deductible for many years, since many people have to fork over some amount of money before their insurers pick up the tab for their care.
But still, going from a $0 deductible to the $3,200 deductible we have now was not an easy thing. So we’ve had to make changes to deal with that shift.
Reworking our budget to account for higher medical bills
Once my husband and I realized that we’d be going from no health insurance deductible to a giant one, we immediately sat down and started crunching numbers. And we made some changes to our budget to account for the fact that we’d potentially have to spend $3,200 a year or beyond on medical costs.
To be fair, it’s not like we were paying $0 under our old plan. Every time we went to the doctor, I had to shell out anywhere from $25 to $40, depending on whether it was a primary care provider or a specialist. And that doesn’t include the cost of medication and supplies.
But still, this change has left us spending hundreds of dollars more each month on healthcare. For the most part, that money has had to come out of our travel and entertainment budget.
That said, we base our budget on a certain income we bring in jointly. But as a freelance writer, my income is variable. So some months, I’m able to earn more, and when I do, that money goes into a special savings account that’s earmarked for travel and leisure.
The one benefit of a high-deductible insurance plan
Being on a high-deductible health insurance plan isn’t so fun — especially when your kids get injured or sick and you find that you’ve basically paid your multi-thousand-dollar deductible before the midpoint of the year (true story). That said, there is one perk to having a high health insurance deductible, and it’s getting access to a health savings account, or HSA.
To qualify for an HSA in 2024, you need a minimum individual deductible of $1,600 or a minimum family deductible of $3,200. Your plan also needs to have an out-of-pocket maximum of $8,050 for individual coverage or $16,100 for family coverage.
Since our health plan meets these requirements, we’re able to contribute up to $8,300 to our HSA this year. And that’s money that goes in on a pre-tax basis, allowing us to exempt $8,300 of our income from taxes. (Note that for individual coverage, the limit is $4,150, and there’s also a $1,000 catch-up contribution for savers 55 and over at both the individual and family level.)
Now, that said, one thing we don’t do with our HSA is dip into it. That might seem counterintuitive when I just said that we’re now spending thousands of dollars extra per year on medical care.
But the reason is that HSA funds that aren’t withdrawn can be invested and grown tax free. So I’d rather pay for my medical bills from my earnings and let my HSA gain value over time.
My goal is to reserve my HSA for retirement, since seniors tend to see their healthcare costs rise. At the same time, though, I know that my HSA is there for me should I need to use the money sooner.
It hasn’t been easy seeing our health insurance costs rise so much. But the silver lining is that our high deductible gives us access to a really useful savings tool that helps us enjoy tax breaks in more than one regard.
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