Setting Family Financial Priorities - Healthcare
Over the last ten years, my family has incurred well over $300,000 of medical bills - births, broken wrists, malpractice, sick kids, MRIs - it all adds up.
In my family budget, I include my premiums ($7,872) and my entire deductible ($7,500). We fund our deductible via our HSA ($6,550 family contribution limit in 2014) and top up when required. The HSA is funded automatically each month so I'm forced to save that money. Most US Bank's have a subsidiary that can help you set up an HSA.
$15,000 per annum is a lot of money but most years, we "save" a dollar for each dollar we pay out.
For example, my daughter spent 4 nights in the hospital:
$18,500 retail price became $8,500 after discounts given to my insurer
$8,500 bill blew through our deductible so we received a $7,500 invoice
We had previously saved $5,000 in our HSA so...
End result... I write an unexpected check for $2,500 instead of $18,500.
Health insurance offers up some benefits:
Cap our potential liability
Access the discounted rates offered to our insurance company
Pay automatically (direct debit insurance payments and HSA contributions)
Sidebar: work with health benefits would be a valuable addition to our family. A decent health plan could save us $15,000 per annum.
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My next investment is a long-term care policy - about $5,000 per annum for the two of us. Even though the likelihood of payout on the policy is remote - for now - the policy gives me a lot of comfort in case tragedy strikes my wife, or me.
More on this in a post from 2010.
If I couldn't afford my retirement investments then I'd skip the long-term care insurance, it has a low expected return on investment.