Healthcare expenses are one of the biggest line items in every family’s budget. Whether you have a large family or small family, premiums, deductibles, and out of pocket expenses can be a very large burden on the person paying them. With healthcare expenses continuing to rise, everyone wants to know if there is another way. There must be a way to provide yourself with adequate health care coverage without having to jump through all of the hoops associated with the industry. To help shed some light on this topic, Alex recently sat down with Nathan Baar of HealthBar to talk about addressing these problems and his experience with self-funding his healthcare. If you are interested in listening to their conversation, the full podcast episode can be found on our Spotify page.
How do we make Healthcare more affordable and transparent?
Before we get into self-funding your healthcare, I wanted to spend a minute talking about HealthBar and what they are doing to change the industry. HealthBar is involved in bringing healthcare directly to people in a practical way. Their main purpose is to bring affordable services to people on a reliable basis wherever the patient may be. Paired with that is the enhancement of the usual primary care services that a person would receive at their doctor’s office. Two of the main issues in the health services industry are lack of transparency in pricing and inadequate service at the primary care level. The way to solve both of those issues is providing a wide range of services and detailing what each of those services will cost without any ambiguity. HealthBar does this by offering health services in an “a la carte” fashion to individuals and businesses providing the opportunity to pay for what services they want and skip anything they do not want or need. Their high quality and responsive care provides their patients with a positive experience and a predetermined expense. If you would like to learn more about HealthBar, visit their website at https://healthbar.com/services/.
How do you go about self-funding?
The first question to answer is what does that even mean? There are usually a couple ways that a person or a business will go about funding their healthcare needs. The first option is the more prevalent option and that is being fully-insured through health insurance. In this case the individual or the business will pay a premium for health insurance in which certain services and benefits will be covered. The insurance company bears the risk, you may have a deductible and co-pays for doctor’s visits, but your healthcare generates a bill that insurance will cover. The other option would be to go more the route of self-funding where the individual or business has a high deductible plan that has lower premiums, but also allows for an HSA. The HSA, or Health Savings Account, allows for the individual to save their own cash in this vehicle for use when healthcare expenses arise. HSA’s are triple tax advantaged meaning that an entity contributes money income tax-free, the interest and any investment gains on the contributions are tax-free, and any withdrawals from the account for qualified medical expenses are also done without creating a taxable income event.
Another way that people self-fund their healthcare which is a slight nuance from the strategy we just talked about is through the use of catastrophic health insurance. Catastrophic health insurance is a type of high deductible plan in which you have very low monthly premiums in comparison to traditional fully insured plans, but you have a very high deductible. This coverage is meant to cover you in the event of a catastrophic emergency which will result in extensive medical care, meaning that the healthcare services below that level of care are going to be funded by you. The idea is that you use the money that you would be paying in excess premium and you save it in a slush fund or an HSA. When medical expenses arise, you pay for them out of pocket with cash. Another item to note is that costs of healthcare services may decrease when you tell your provider that you are paying with cash rather than using insurance. Healthcare providers and insurance providers negotiate the prices that you will be getting billed and that insurance is going to cover. If you are paying in cash, that transaction amount will change for the better.
There are a few main takeaways when looking at self-funding your healthcare. The first is that, because you will be assuming more of the risk for your health expenses, your lifestyle choices will probably change. It’s likely that is the money is coming directly out of your pocket you are going to be more diligent in taking part in preventative health measures to make sure you end up in the doctor’s office less. It has also been shown that your health expenses as a whole will be lower because of the variety of factors we previously mentioned. If you are interested in taking higher ownership of your health and want to ditch traditional health insurance, this may be an option for you.
Thanks for reading this week’s blog. You can find the podcast that this blog was based on at the links below.
Have a great week!
Nathan Baar and HeatlhBar is not affiliated with or endorsed by LPL Financial and Provisio Retirement Partners.