Avoiding the PPO Scam and Keeping More of Your Paycheck

I used to not think too much about which health insurance I signed up for at work. The first time I signed up, I just wanted to pay as little as possible so I got an HMO. It was terrible. The second and third time I signed up, I got a PPO and essentially hemorrhaged all this money I could have put to good use. Now that open enrollment is around the corner, I decided to do a little bit of research before signing up for health insurance.

Health Insurance in America seems like a big scam. It actually might be. Depending on which plan you signed up for, hundreds of dollars will be deducted from your paycheck twice a month to cover potential expenses. But what really happens, when you think about it, is that you end up spending a lot less on your healthcare costs than you had paid into your health plan. For me this has been true for the past couple of years. I get more than $200 deducted from each paycheck for health insurance. That’s about $4800 per year and $9600 thus far. Because of my condition, I’m someone that needs to go to the doctor at least 4-5 times a year. I get lab work done for each visit. I also had a lot of dental work done this year including taking out two wisdom teeth, 8 fillings and two teeth cleanings. Even with all of these medical/dental expenses, the amount that was required for me to spend was a grand total of $2552.79. The year before, my health care spending totaled about $2,105. So the healthcare provider took $4800 per year for two years and I only ended up getting $4657.80 worth of care over the same amount of time. They pocketed about $4942!! WHAT?!?!?

Ok, the good news is that Open Enrollment is in a month or so, so I will be able to put an end to this soon. What I’m going to do is sign up for a High Deductible Healthcare Plan (HDHP) that requires a higher deductible for my healthcare costs but a lower amount taken out of my paycheck. That by itself does not sound appealing. But the HDHP also comes with a Health Savings Account (HSA). HSA is a n account you can contribute money too before taxes to cover your health care costs. It pretty much lets you save the actual amount you need instead of giving away a ridiculous amount of money to your healthcare provider. So for me, I would save $3000 in my HSA which is the amount I need and reduce the amount that’s taken out of my paycheck for healthcare by $1800. Β And get this, an HSA is an actual account, like an investment account. So while its sitting there waiting for you to visit the doctor, its earning money in the form of interest! Also, its your money so the healthcare provider doesn’t eat it up and you can take it with you even if you leave your job! I feel like such a chump for not having discovered this earlier. Well now I know. So here’s my plan:

-Enroll in a HDHP and open an HSA

-To save $3000 for health care costs/year which ends up being $125 per paycheck which is a lot less than the $200 plus dollars being deducted out of every paycheck

-Increase my 401K contribution by the amount I’m saving so I can avoid being taxed on it and also get employer match. So I increase my 401K contribution by $1800 per year without having to reduce the amount I’m getting after taxes by just reducing the amount I’m giving away for free.

I think this is a no brainer.




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