Would you do this?

Discussion in 'Teacher Time Out' started by futuremathsprof, Oct 14, 2018.

  1. futuremathsprof

    futuremathsprof Aficionado

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    Oct 14, 2018

    As many of you know, I am always looking to find ways to increase how much money I make. Well, I recently convinced my admin at my private school to offer employees the option of accepting an annual cash payout equal to cost of their current health insurance plans — mine costs $9,000/year to the school. It would work like this: When you are renewed each year and go to sign your contract, you would just check the box that says that you will have the payout instead of receiving healthcare coverage. This is substantial for me as I would normally make $69,000 next year, but with the cash payout I would make $78,000.

    My question is, would you do this if you were given the option? Why or why not?

    For me, since I am going to be single for life (this is non-negotiable) I have no need for family health insurance coverage. Also, I have found a cheaper plan than my current one that offers the same benefits except it has higher copays, which are still way within my budget if I ever had need of using said plan.

    Can anyone think of a flaw in my thought process? I want to make sure that I don’t do something and then regret it later. Is there something that I am overlooking?

    Thank you for your time!
     
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  3. Aces

    Aces Habitué

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    Because I'm not sure how your school does health insurance and such, does your school pay for all of your benefits, or do you pay partial or what? Because my line of thinking is that by losing health insurance through your school of your school pays for it, you're adding a bill to yourself. Even though you said you found one that's cheaper but with higher co-pays, by adding an extra bill, you could end up negating whatever profit you made from the $9,000, possibly even putting yourself in the negative. Just because you're in good health now doesn't mean that you'll continue to be. You could get in a car accident tomorrow.
     
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  4. futuremathsprof

    futuremathsprof Aficionado

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    You’ve brought up some important points and I appreciate your input!

    FYI, my school pays 100% of our healthcare benefits and the plan I’m looking at costs about $300-$400/month, so I would profit by $4,200-$5,400/year. I still come out ahead unless I don’t account for some unforeseen consequence. Right now, my copays are like $0-50 for preventive care and regular checkups and around $1,000-$1,500 for major procedures. My new plan looks like it would be about the same for the copays, but the copay for major procedures would like $2,000-$2,500, which is well within my budget.

    NOTE: I’m still going to have health insurance, just most likely not through my employer.

    Does that make sense?
     
  5. Aces

    Aces Habitué

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    So here's the thing. You're not going to see a net profit of $9,000. Your net profit is going to be $9,000 minus the total overall cost to replace your insurance. Because I'm sure that doesn't include vision or dental which you may or may not need. So if you think about it, assume your premium is $350/month, plus $50 copay for office visits. And say for arguments sake you go 24 times in a year. (I know extreme case but bare with me) that's $4,200 in premiums every year, plus $1,200 in copay. So you're up to $5,400 already. Then let's say you have to have two major surgeries because you're just sick. That's an additional $5,000 in co-pay, if they're $2,500 each. Meaning that now you're in the hole by $1,400. Meaning you lost money overall.

    Now I realize that this is an extreme case but when it comes to insurance, you never know.
     
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  6. futuremathsprof

    futuremathsprof Aficionado

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    Oct 14, 2018

    I know I’m not going to see a net profit of $9,000. I mentioned that in my previous post.

    Being in the hole by $1,400 (though 24 times is a bit much) is okay for a one-time occurrence to me because in subsequent years I would be ahead as it would be extremely unlikely for me to keep needing major surgeries again and again. I’m not saying it can’t happen, but it is unlikely.

    Though, you are making me think of the potential fallouts more. Hm.
     
  7. Missy

    Missy Aficionado

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    Oct 14, 2018

    Have you checked with your school to see if you can get back on their plan in future years?
    Health care costs tend to go up much more for individuals than for group plans.
    To me, this amount of money is not worth the possibility of huge bills if something unexpected happens, no matter how healthy you are now.
     
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  8. jadorelafrance

    jadorelafrance Cohort

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    Only do this if you plan to put the money in some kind of HSA for future uh ohs. Don’t tie the money up in a house or car or whatever else and end up in a bad situation when you really need the money.
     
  9. Aces

    Aces Habitué

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    I know it's an extreme case but I have a coworker who last year went to the doctor's office 27 times and had 4 major surgeries done.
     
  10. MrsC

    MrsC Multitudinous

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    Health insurance here in Ontario is completely different, so I can't discuss specifics. I do know, however, that in the past 5 years, 4 colleagues have been faced with life-changing health issues--none of which had to do with life-style choices. Without very comprehensive health benefits, their medical expenses and loss of income would have been prohibitive. Never say never; be sure that you are prepared for anything as best as you can be.
     
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  11. mathmagic

    mathmagic Enthusiast

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    Oct 14, 2018

    Seems like a personal choice hovering around risk, much like one might make in investing in a company.

    Will the difference in coverage amounts (i.e. the greater out of pocket amount, given the need for healthcare) be significant enough given the possibility of some significant need for care (it just takes one major issue - and those can happen to any, perfectly healthy or not)? I don't think any of us can make the call.

    Think like a actuary. If, given only minor visits, you'd be saving $3000, but at risk for $300,000 (I'm literally using random numbers here, just to illustrate) if something were to happen, that's counting on 100 years (ha) of perfect health. Obviously a wild number, but I'd do some careful calculations based on a handful of major surgeries/issues, regardless of if you think you'll have it or not. Granted, if it's a yearly choice, you could roll the dice each year, I suppose...

    Not trying to convince you one way or the other; simply thinking mathematically.
     
  12. Zelda~*

    Zelda~* Devotee

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    Oct 14, 2018

    Keep your health insurance. I recommend this because you said you plan to stay single (also my own plan). Because of the lack of a "safety net" of a spouse's insurance/salary, I would encourage you keep your plan. Things come out of the blue all of the time, and it would be awful to lose more money than you would have gained. Just my :2cents: Be cautious.
     
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  13. vickilyn

    vickilyn Magnifico

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    I suspect that OP will be willing to take the risk because he is willing to gamble on his health. As someone who had major surgeries unexpectedly at a fairly young age, and then finding that insurance companies often don't want to insure you after that for the cheaper premiums that you might get if you had stayed in good health, I would stay with a group policy where you can't be excluded or asked to pay higher premiums. One major surgery may not eat up your profits, but if one becomes two or more in the same year, well you will be in a hole.

    It is also possible that the school may not let you back into the plan if you have had major health issues, simply because you may cause their premiums to rise for everyone else if the schools policy has to jump in and bail you out. Honestly, you are gambling on your health assuming that you have the safety net of rejoining the group policy. In all honesty, it shouldn't be available to rejoin the group policy. Should you receive any greater payout as their premiums rise? Yes. Should you be able to wander in and out of the policy? No. I've had to provide my own coverage at various times in my life, and I can tell you that I wouldn't give up my group coverage for $9000/year. This is just the opinion of someone who has had to use the insurance more than I ever thought possible at a fairly young age. Oh, by the way, I don't gamble on my health - it is too precious.
     
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  14. Aces

    Aces Habitué

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    I have to agree here. I mean I take full advantage of my health insurance and all of its perks both from my employer and from Uncle Sam (prosthetic legs aren't cheap!).
     
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  15. TrademarkTer

    TrademarkTer Groupie

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    Oct 14, 2018

    I'm someone who has health insurance, but hasn't even bothered going to the doctor in the last 3 years (yikes I should get on that!), but I still wouldn't gamble it.
     
  16. futuremathsprof

    futuremathsprof Aficionado

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    This is an excellent question. I don’t know if you can, so I will ask the business office at my school before I make my decision.
     
  17. futuremathsprof

    futuremathsprof Aficionado

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    You should go get a routine checkup, my friend. I know someone who thought they were okay and they had a precancerous lesion on their forearm that the doctor caught just before it became malignant.
     
  18. futuremathsprof

    futuremathsprof Aficionado

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    I’m not gambling with my health, IMO. Gambling with my health would be to not have health insurance at all and to take the payout. I’m still going to be insured through a nearly identical albeit “cheaper” plan. Moreover, another reason why I’m considering this is because I have an older doctor friend who owns his private practice in the town where I work who answers all of medical questions free of charge whenever I ask and he charges me very little for when I visit him. at his practice. He has been practicing for 30 years and is one of the best doctors around and I’ve spent like $1,000 over 5 years of going to him. It’s a sweet deal.

    I’m still going to check with the business office, but the wording of my current contract says you can only join at the beginning of each academic year. If I have the option to rejoin, then I will accept the payout when it benefits me and not do so when it benefits me to be in the group plan.
     
  19. futuremathsprof

    futuremathsprof Aficionado

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    Yet another perspective that I didn’t think about. Thanks you guys, you all are great! :)
     
  20. futuremathsprof

    futuremathsprof Aficionado

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    I already paid off my new car that I bought last year and have a car fund set aside ($20,000) to buy a new one, should I ever need one, outright. I also have a separate housing fund ($51,000), so this new money would *not* be put to that. It’s just money for entertainment and the purchase of the new plan.

    But an HSA might be worth looking into! I didn’t think of that. Decisions decisions.
     
  21. Aces

    Aces Habitué

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    Your HSA is a really neat thing. So with mine I do $250/yr. When it comes to glasses – which I can't live without – I have a $150 allowance from my vision insurance. So together I outright have $400 to spend on glasses. Which the HSA you don't even think about until you need it then it's like oh yeah!
     
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  22. futuremathsprof

    futuremathsprof Aficionado

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    This makes sense and sounds amazing! Could you explain how the money is dispersed and more about the plan itself? I’m not very familiar with an HSA and would like more information.
     
  23. Aces

    Aces Habitué

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    Okay so basically every pay period or month (however you set it up) you would contribute X amount of dollars to your HSA. Sometimes it's an outright contribution meaning whatever total amount you want divided by however many total contributions. (For instance $250 over 26 paychecks is $9.62/each). Or it's a matched contribution where your employer will match whatever you contribute. So in this example, your paycheck contribution would be $4.81 and your employer matches.

    It's kind of like a credit card rather than a debit card in that you have a $250 allowance. Which can be used at any time during the year (even though you pay for it all year). So for instance if your plan starts Nov 1, and on Dec 5th it's time to pay for new glasses you have that full $250 allowance you can use. Your HSA can be used for any out of pocket expense including co-pays and things. Personally I always use mine on glasses because I get extra stuff on mine so it helps.
     
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  24. futuremathsprof

    futuremathsprof Aficionado

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    Thank you so much! Does the amount carry year to year?
     
  25. jadorelafrance

    jadorelafrance Cohort

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    Usually you have to spend it all or lose it within the year however there may be different types of plans/accounts. I just think whatever money you get back from this should go into a separate account that doesn’t get spent except for medical reasons.
     
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  26. Aces

    Aces Habitué

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    Yeah I was going to say it's usually a use it or loose it. And the amount depends on what your elect.
     
  27. futuremathsprof

    futuremathsprof Aficionado

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    This is good advice, except I always maintain a balance above $5,000 in my checking just in case I have to incur a large medical expense in the form of a copay.

    And if the HSA does not carry over year to year I would lose money. Hence, I will probably just keep the money in my checking account and build a larger reserve.

    You guys have made me think this is too small of a security net. I will increase my minimum balance to $10,000.
     
  28. Aces

    Aces Habitué

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    I mean... My coworker fighting cancer last year had around $51,000 in out of pocket expenses last year so... Take that with a grain of salt.
     
  29. Aces

    Aces Habitué

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    And I mean I like my HSA but of course I use it too. Speaking of which almost time for new glasses.
     
  30. waterfall

    waterfall Maven

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    No, I would not do this. It may make sense now, because you were able to find a cheaper plan due to the fact that you're young and don't have any major health problems. That could change in an instant. Young and healthy people get in accidents. You could also develop cancer or another illness that has nothing to do with lifestyle choices. Your plan doesn't make sense long term. If/when something happens, you'll be in a position where you either can't find insurance to take you on, or the cost is incredibly high. As you get older, the cost will rise even if you remain in perfect health and nothing happens to you. Under your employer's plan, they can't kick you off or individually raise your price over the years. It's really not a matter of having savings. Health care costs can very easily go into the hundreds of thousands for pretty basic stuff.
     
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  31. futuremathsprof

    futuremathsprof Aficionado

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    This is mightily useful. Thank you.

    I think I’m going to go with my current plan in the short term until I am 30, provided that I can rejoin the group plan. I also think it would benefit me to contribute to my medical reserves until it gets to the tens of thousands.

    However, if I cannot rejoin the group plan, then I will not do this as I don’t want to encounter a situation where I have to deplete my housing fund, for instance.
     
  32. jadorelafrance

    jadorelafrance Cohort

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    You also may get taxed on that money, so that’s another 25-30% taken out.
     
  33. futuremathsprof

    futuremathsprof Aficionado

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    I have a really good accountant, so my effective tax bracket is only like 15%. ;)
     
  34. Aces

    Aces Habitué

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    Yeah but what's 15% of $9,000.
     
  35. futuremathsprof

    futuremathsprof Aficionado

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    $1,350. But I invest a lot, so I’ll get that back presumably.
     
  36. Aces

    Aces Habitué

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    Presumptions are dangerous when it comes to your health.
     
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  37. Ima Teacher

    Ima Teacher Maven

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    My DH doesn’t know the last time he went to the doctor, but he still won’t risk being uninsured. I have always carried health insurance even when I was young, healthy, and single. You never know what can happen, and I am not risking financial ruin because of a health issue.

    I’ll find better ways to save money.

    Group policies are generally a better deal than individual.
     
    Last edited: Oct 14, 2018
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  38. Backroads

    Backroads Aficionado

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    Possibly. I have a kid who needs insurance. However, there's a chance I could take the payout and buy insurance privately to the same effect.
     
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  39. Ima Teacher

    Ima Teacher Maven

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    I have an FSA and an HSA in addition to my health insurance. My insurance plan includes $500 HSA contribution, and I contribute an additional $150 a month to an FSA and that $2300 is available Jan. 1. it is enough to cover my entire deductible and a good chunk of my maximum out-of-pocket amount. Generally I meet my deductible ($1125) in June or July. After that I’m paying 15% of the insurance rate, which isn’t much.

    HSA amounts do not carry over, but FSA money will.

    HSA is money contributed by an employer on your behalf. FSA is money you contribute.

    I use my FSA card to pay all doctor, dental, and vision plus my monthly massages. It also is what I use for my glasses, my contacts, and my bite guard. I can also purchase OTC medical items like bandaids.
     
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  40. Backroads

    Backroads Aficionado

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    To note, my district actually will pay out the cost of the plan--providing you have proof you are insured otherwise.
     
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  41. geoteacher

    geoteacher Habitué

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    Before doing anything, check into all of these, but make sure that you check on what is applicable for your area. My HSA does roll over from year to year. My employer makes a contribution at the beginning for the calendar year, and then I choose to contribute an additional amount up to the maximum allowed by law. To participate, I need to be enrolled in a high deductible insurance plan.
     

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