Should You Choose a High Deductible Health Insurance Plan?

March 27, 2025

With “consumer-driven health care” (CDHC) being a common option during annual enrollment, you may soon face the decision of whether to switch to a high–deductible health care plan with a health savings account (HSA) if you don’t have one already. The basic idea is that your health insurance premiums are lower but you have to pay more out-of-pocket (the deductible) before the insurance kicks in. To help you cover those higher out-of-pocket costs, you and your employer can contribute pre-tax to a health savings account, which allows you to use the money tax-free for qualified medical expenses like a medical FSA. Continue reading “Should You Choose a High Deductible Health Insurance Plan?”

How to Reduce Your Auto Insurance Costs

October 25, 2016

You can only imagine all of the crazy scenarios that go on in your brain when you have had two car accidents in under six months. Unfortunately, these scenarios led me to getting practically every auto insurance option available when we bought our cars. Needless to say, I think I went a little overboard, which of course I figured out when I saw my first auto insurance premium bill. If you find that your auto insurance is higher than you would like, consider pairing down by doing the following:

Shop around: Do not assume that the policy you have is the best you can get. First, contact your current insurance company and ask for discounts for things like: multiple vehicles and good driving records to name a few. Consider getting all of your policies (home, renters, cars) from the same insurer to help reduce costs. Next, review websites to help you evaluate various auto insurance companies and consider using sites like Esurance, NerdWallet or The Zebra to help you price auto coverage.

Deductibles: In general, the easiest way to reduce your premiums is to increase your deductible. Typically, the more you have to pay out-of-pocket, the cheaper the policy. A rule of thumb is to choose a deductible amount you can easily pay if needed or allocate a portion of your savings to cover the deductible you choose.

Dump unnecessary coverage: Collision insurance covers physical damage to your car if you collide with an object (car or tree) and comprehensive insurance covers other damages like a flood, theft and fire. A rule of thumb is to consider dropping full coverage when the annual cost for the insurance is more than 10% of the actual cash value of your car. If you decide to drop coverage, consider creating a “car budget” to cover the cost of repairs and a newer vehicle.

Ultimately, I ended up increasing my deductible to an amount that I can afford to pay out-of-pocket and I dropped comprehensive coverage on one of the older vehicles we purchased, which lowered my overall premium. Consider annually scheduling a time to review all of your insurance policies. You can use your birthday or you can use your open enrollment period as a time to not only review your benefits at work but to review your auto insurance policies as well. Taking a few hours to review your policy can help you save money that can go towards other goals like paying off debt, building an emergency savings and saving for college.

Are HSAs Still a Good Deal?

August 29, 2016

A few years ago, my colleague Greg Ward wrote a blog post called Why I Max Out My Health Savings Account (And You Should Too). In the past, health savings account (HSA) eligible health plans were a lot less expensive than their traditional counterparts, but premiums for HSA-eligible plans have recently gone up, and as a result, the difference in the premiums is not always as great as it was in the past. This has caused some readers to question whether or not Greg still believes the HSA is a good deal. Here is his response to a recent inquiry he received regarding this issue:

The reader writes:

“I’m really struggling to understand all of this. You have to have an HSA insurance plan to have the HSA, but the premiums and deductible are still really high and it doesn’t cover very much so I feel like I’m missing something. Also, are you still suggesting that we max out our contributions to the HSA but then not use the money for qualified expenses or are you incurring the expenses and then having them reimbursed later? It seems that a person will have to be a meticulous record keeper or it just won’t work…or you’ll get audited…or penalized. Am I right to be this worried??”

Here’s my response:

Hi [Reader],

Thanks for your comments. It is true that you must be enrolled in a high-deductible plan in order to be eligible to contribute to a health savings account (HSA). In general, the higher the deductible, the lower the premium, so while your premiums for a high-deductible plan may seem “really high,” they should still be less than their lower-deductible alternatives. Since the participant bears more of the financial responsibility under a high-deductible plan, they are more appropriate for healthy families that do not incur a lot of out-of-pocket expenses for healthcare services.

For example, let’s say my HSA-eligible plan costs $600 a month and my traditional plan costs $1,000 a month. If I incur $3,000 of out-of-pocket expenses for the year, my total cost under the HSA-eligible plan would be $10,200 versus $12,000 under my traditional plan (assuming the traditional plan covered the $3,000 of out-of-pocket expenses). The less I incur in out-of-pocket expenses, the greater the savings under the HSA-eligible plan (and vice versa).

Since my need for healthcare services will likely be greater in the future, such as in retirement, I choose not to use my HSA funds for current healthcare expenditures. That way I can invest the money so that I have more of it in the future. As long as you are not using the funds for unintended purposes, you probably don’t need to worry about an audit or penalty.

I hope that gives you more confidence to use the HSA if you’re eligible, but don’t let the HSA tail wag the health insurance dog. You should choose your health insurance based on your anticipated need for services. If you have an ongoing need for health care that will meet or exceed your deductible under an HSA-eligible plan, then a traditional plan may be more appropriate.

As you can see, I still believe in the HSA. I recognize that with premium disparity, the decision may not be as cut and dry as it’s been in the past. That said, if you (and your family) are healthy, and you feel comfortable investing your HSA dollars for future healthcare expenditures, I strongly believe in the value of this health insurance option.

6 Easy Ways to Lower Your Homeowner’s Insurance

March 14, 2012

I used to think the cost of homeowner’s insurance was a fixed, non-negotiable expense. I bought my homeowner’s insurance 10 years ago and rarely thought about it thereafter. Since the bills were paid out of an escrow account, I didn’t have to specifically budget for it, which may be why I didn’t notice the “pinch.” Continue reading “6 Easy Ways to Lower Your Homeowner’s Insurance”