Generation X is classically defined at people born between the years 1965 and 1979. Pretty much those of you in your early 30's to the mid 40's. However, having given personal financial advice to thousands of people, I can tell you that many of you who were born 1960 to 1964 fit within the Generation X type of financial and personal attitude. Since I am 42 and have had a good deal of financial success, I've noticed some big mistakes that I see my generation making with their money and how they think about money. This week I wanted to discuss what to do about your medical insurance after you get married.
One of the questions I'm getting a lot from Gen X'ers as of late (especially those recently married in their late 30's/early 40's) is around what to do with medical insurance after being married. Since the medical plans and financial contribution from each individual employer may vary, this is an important time in your life to really sit down as a family and analyze the overall situation. Especially if both of you have never had kids and are thinking within the first year or two you may start to have a family. Here are some main points to consider when looking at your plans.
- TRUE OUT OF POCKET COST - The first part of the analysis is for each of you to look at what you truly spent out of pocket over the past year. This includes both the part of the premium that was deducted from your paycheck and the money you spent for co-pay or coinsurance over the past year. You will also want to analyze what would have happened if you were on an employee plus spouse plan as well to compare and contrast the 'what would have happened' scenario.
- THE NETWORK - Depending on the state you live in, each plan will have some type in network and out of network for doctors within the plan. You should each look at the doctors you are currently using to see which plan may be most beneficial for the widest coverage within the people you use. There can be a difference in cost depending on whether the plan has a wider or smaller overall network.
- THE DEDUCTIBLE AND COINSURANCE - As you compare and contrast the plans, it is important to look closely at the deductible difference between the plans and what percentage coinsurance there is within the in network doctors. For example, one plan may have a $1,000 individual deductible and a $3,000 per family overall deductible with 100% coinsurance, and another plan may have the same deductible with an 80% coinsurance which will make the premium vary on what you will have to pay. This is part of the risk you may choose to take if you want to lower overall cost to your bottom line.
- CO PAY - It is also a good idea after looking at deductibles and coinsurance to compare and contrast the co pay you will make for generalist and specialist visits. If you have to go to the doctor regularly, a $20 per visit difference can put a dent within your budget for the overall year.
- HRA or HSA - One final item is to determine if your employer has an HSA or HRA plan to potentially lower your premium. Over the next several years, you will likely see the HRA become more popular as your small business owners try to mitigate their risk by offering a reimbursement to you if you have to use your own money to get to the deductible in the plan. If you don't, it gives them the chance to keep their expenses and cost down within the plan.
Obviously, the other major consideration will come if you have a pregnancy within the first year. It could end up being better to all be on one plan or actually separate between two plans based upon the overall net cost to you. Health insurance used to be a simple and easy decision, but with the complexity of plans and multitude of choices it is important to review this as a family or with a qualified financial advisor.
Go to www.oxygenfinancial.net to request a consultation with the leading financial experts for Generation X in the country.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc
Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice and Smart Money Moves to the X and Y Generation.
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