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four causes getting medical insurance earlier than December 15th is a great monetary transfer

This position was created in partnership with Stride, the leading company helping freelancers and self-employed people find and sign up for affordable health insurance.

Health insurance is critical to your physical and mental wellbeing, but it is also an important part of your financial wellbeing. The right health plan based on your needs and budget can make all the difference between saving a ton on your medical bills or falling into debt to get the care you need.

Unless you get health insurance through your employer, you are alone in finding the health insurance that best suits your specific needs. The good news is that Affordable Care Act (ACA) health insurance is more affordable than ever thanks to new legislation in the American Rescue Plan Act introduced earlier this year. But you should be sure to find the right plan and sign up by December 15th – otherwise you will not have insurance coverage for the next year.

Here are the top four reasons to make sure you don't miss this deadline.

1. Health insurance saves money

The most important (and well-known) financial benefit of health insurance is that it saves you money on medical costs. Health insurances cover some of the medical costs such as emergency rooms, hospital stays and medication. Qualified health insurances – those that meet the requirements of the Affordable Care Act – also cover 100% of the cost of preventive measures such as annual health checkups, flu and COVID-19 vaccinations, and screenings for cancer, diabetes, and depression.

Of course, health insurance comes at a price in the form of a monthly fee called a premium – but there are many ways you can reduce this cost. Thanks to financial aid in the form of Advanced Premium Tax Credits – sometimes referred to as grants – most people can find high-quality, Affordable Care Act-qualified health insurance that costs less than $ 10 a month. Stride can help you find all the savings and financial aid you deserve in just minutes.

2. Health insurance helps with planning

Knowing that in return for the same premium, you will pay less overall for health care each month, can help you decide how much you need to set aside for predictable expenses. You need to budget for things like your monthly premium and regular medication.

But how much should you save for unpredictable medical expenses? ACA-qualified health plans come with guard rails that can help you decide how much to add to your emergency savings for potential medical coverage. There are two guard rails that you should pay close attention to: your annual deductible and your contribution.

Annual deductible

Your plan's deductible is the amount you pay for your medical expenses (excluding preventive care – these are 100% covered) before your insurance starts paying that portion of the bill. Deductibles vary depending on the plan, but if your tariff is $ 500, for example, you can expect to pay at least that amount for unexpected health problems like broken bones or severe flu cases.

Your annual deductible is a good starting point for what to set aside for your annual expenses. Even if some people fail to meet their deductible, it is always possible that a surprising medical bill will overcome this hurdle.

Out of the pocket at most

Your maximum amount is the maximum amount that you can expect for healthcare. After you hit that number, your plan will pay 100% of the medical expenses for the rest of the year.

As with the deductibles, the maximum expense amounts vary depending on the plan. For example, if your budget is $ 5,000 and you can make room for it in your annual budget, you can avoid diving into your other savings or going into debt to pay for your health care.

Think of your max outlay as the ideal amount to add to your emergency medical expense savings.

3. Health insurance can reduce your tax burden

If you're like most self-employed people, you're always looking for ways to lower your tax burden, and there are two main ways health insurance can help: premium tax credits and a self-employed income adjustment.

Bonus tax credits

Unless you get health insurance from an employer, in addition to being eligible for an Affordable Care Act health insurance plan, you're also likely eligible for tax credits that lower the cost of your monthly plan premiums.

The premium tax credit depends on your income, family size, location and other factors. You don't have to wait for tax time to receive these credits. When you qualify, they automatically count towards your monthly premium – you only pay the rest. And you can potentially write this off as self-employed income compensation too.

Income adjustment for self-employment

If you have health insurance as a self-employed person, you can reduce your tax liability by the amount that you have paid for your health insurance premiums. You don't need to break down your expenses to make this income adjustment.

The catch is that you need to have a net income, which means you need to declare more income than expenses on your tax return.

4. Health insurance can increase your retirement savings

Health insurance can support you in two ways with your retirement provision. First, by spending less on medical bills, you can free more of your budget to save for later in life. Second, if you go for the right plan, you can open a tax-privileged account that can help fund your retirement. This powerful tool is called the Health Savings Account (HSA).

HSAs allow you to use pre-tax dollars – up to $ 3,650 in 2022 – on qualifying medical expenses. This includes things your health insurance covers (like doctor visits and prescriptions), as well as many things your plan probably doesn't cover (like acupuncture and over-the-counter Tylenol).

With this account you can pay medical expenses at any time and save taxes in the process. However, if you can avoid withdrawing from your HSA, your funds will stay in your account and grow tax-free, just like a retirement account. You can even invest your HSA funds in the stock market to help them grow faster.

To be eligible to open an HSA, you must have High Deductible Health Insurance (HDHP). This means that in 2022 you will need to choose a health insurance plan with a deductible of at least $ 1,400 (for you only) or $ 2,800 (if family members are also on your plan). The good news is that these plans are usually cheaper than lower deductible plans.

Stay healthy – physically and financially

As you work toward better financial well-being, don't forget that health insurance can play a huge role in achieving your goals. With a health insurance plan, you can save, budget, reduce your tax liability and increase your retirement savings.

With all these benefits, health insurance can also give you a lot of peace of mind – especially with Stride, which helps you find and sign up for the right health insurance plan in just 10 minutes. Don't miss the registration deadline on December 15th!

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