As the new year approaches, and the current year winds down along comes the annual end-of year tasks. Collecting up the final pay stub and estimating taxes, re-examining accounts payable, insurance and job benefits…all of the important stuff, I feel the need to blog about my plan.
Most people probably won’t care about this stuff because it’s more about my well being and peace of mind than anything else, so if you aren’t interested in that you might as well stop reading now. However, if you are in a similar situation to me and would like to see what I’m doing to make my life what I want it to be…. read on!
My company has just started offering an HDHP (I touched on this a little in “Socialist Healthcare? Yuck!“) which is what I have been hoping would happen for awhile. This allows me to cancel my Flex Pay, switch Insurance plans and start an HSA. An HSA is like a Flex Pay and insurance plan in one, but at the end of the term, your money isn’t magically wisped away into the abyss. What I mean by this is; With Flex Pay accounts, anything you don’t use by the end of the year doesn’t roll over to the next year. It’s gone, and you will never see it again…. so if you have it and haven’t gotten sick or gone to the doctor’s much, you’re pretty much out of luck. With a standard insurance plan, you pay higher premiums for the benefit of being able to go to the doctor’s more often and get a better deal on co-pay. If you are generally healthy, a great deal of the money you pay in will never be used by you. That’s kind of a bummer, isn’t it?
With a HDHP (High Deductible Health Plan) you pay a smaller premium, but have a higher deductible. (ours is $1300… no lean feat) However, the government allows you to have a tax-deal on a Health Savings Account. This is an account that is used to store up funds to pay the deductible on your HDHP. It can also be used for other health expenses such as over the counter cold medicine, and a number of other things that most standard insurance plans simply don’t cover. The drawback is, if you go to the doctors a lot, or are generally unhealthy, your HSA savings will never be able to keep up with your deductible. The advantage is, at the end of the year, your money is still yours. If you lose your job or cancel your insurance, any money in your HSA is still there, and can be used for health expenses. Granted it won’t cover what it can with a Health Plan, but it doesn’t go away. You can contribute up to $3,000 (single, more for a family) a year to an HSA, so if you manage to go a few years without getting sick much, and only a few visits to the doctor’s, you can build up quit a pretty chunk of change, and never have to worry about whether you will meet your deductible.
So in short, I will be changing to this new health plan, cancelling my Flex Pay, putting the difference between premiums, and all of what I’m putting into my Flex Pay into an HSA to keep myself covered into the future.
In the long term, I plan to get to $3000 in the account as quickly as possible then cut my HSA contribution down to $1000 a year. (just by redirecting my Flex Pay and Difference in premiums, I will put in more than $2,000 this year without seeing any difference at all in my net pay… chew on that for awhile.)
Taxes are fun, especially if you play your cards right. If you ensure that enough money is being withheld, you will be getting a pretty chunk of change back at the end of the year. I will be estimating mine before the end of January, and filing them as soon as I have all of my year-end documentation.
To ensure my credit accuracy, I usually get annual credit reports from all three bureaus (separately). This is something everyone who uses credit should do to protect their credit score, and ensure the accuracy of your identity. It doesn’t cost a dime, and can save you a lot of headaches in the future, so it is foolish not to. A few years ago, I managed to clean off an old debt I paid off that was still on there, and clear my name of some things that were on my credit report because of inaccurate reporting. (imagine that with a name like Amos Vryhof…. your name is likely to be more common)
I will be getting into a 401k plan soon. It’s a good investment, and if I play my cards right, the money I save by switching to an HSA will become 401k money and open up a whole world of planning for the future.
Bills / Expenses
I will continue to keep a month ahead on everything, adjust my budget regularly and pay extra on things when I can. Best plan, pretty stress-free and easy to maintain as of when I started it.
So that sums up my housekeeping for 2009, and fiscal plans for 2010. I know it’s sharing a lot of private information, but it’s information I’m comfortable sharing… especially if it will help others facing similar decisions.