Optimizing Healthcare Expenses
As you start to optimize your expenses, you may think of healthcare expenses as non-negotiable. With the confusing state of the healthcare system, that is an understandable thought. However, it is completely possible to optimize your healthcare expenses to accelerate your path to FI.
Although you should never skimp on your healthcare needs, that doesn’t mean you need to pay an arm and a leg.
Healthcare costs can add up
With the average American household spending $4,968 on healthcare each year, it is an expense that can get out of control quickly. If you have a major medical emergency, then your medical costs can skyrocket. It is critical to have a plan in place to cover these costs without derailing your financial future.
How to eliminate healthcare expenses
If you want to eliminate your healthcare costs, then you’ll need to get creative. Don’t rule anything out until you walk through the option in light of your own healthcare needs. Consider these different ways to minimize your healthcare spending without sacrificing your quality of care.
The most effective way to eliminate your healthcare costs is to stay healthy. Of course, that is easier said than done. However, it is completely possible to reduce your healthcare expenses by taking better care of yourself.
You could start by eating healthier foods or exercising more often. If you’d like to take it a step farther, then talk to your doctor about adding vitamins or supplements to your diet.
An ounce of preventative maintenance can go a long way. Don’t gloss over this powerful way to reduce your long term medical costs.
Shop around for a new plan
Health insurance premiums can be expensive. Even if you are paying for health insurance through your W2 employer, it can be a major annual expense. If you haven’t shopped around for a healthcare plan, then you should definitely take a look.
As you look for a healthcare plan, there are three options that you’ll likely run into:
Health insurance marketplace. The relatively new health insurance marketplace allows you to shop around for an affordable healthcare plan. Generally, you’ll need to earn less than a variable income threshold in order to make this an affordable option.
Private insurers. Private insurers are willing to provide insurance whether or not you have a W2 job. However, these plans are often more expensive than an employer-subsidized plan.
Health shares. Health share ministries are often dramatically less expensive than traditional health insurance. However, it is important to note that these ministries are not under a legal obligation to cover your medical expenses. Make sure that you are comfortable with the rules of the health share before you sign up.
Open an HSA
An HSA, or health savings account, is an excellent place to save money. It is a tax-advantaged account that you are able to contribute to if you are enrolled in a high deductible health insurance plan. As of 2019, you can contribute up to $3,500 for a single person or $7,000 for a couple.
Since the money is contributed before taxes, it is a way to minimize the real cost of your healthcare. You’ll be able to cover many qualified medical expenses through your HSA.
The bottom line
As you go through this process, consider your personal healthcare needs. Make sure that you are comfortable with your level of coverage. Although reducing your healthcare expenses will require some upfront legwork, it could allow you to reach FI faster. With a reduced expense burden, you can focus your efforts on saving and investing your newfound money. Be sure to check out the first article in our getting to FI series to get a full overview on how to accelerate your path to FI: https://fibyrei.com/how-to-accelerate-your-path-to-fi/