Health Insurance Changes and my Employers Open Enrollment

I have worked at my place of employment for almost a decade and have participated in their health insurance plan since I qualified for open enrollment. Over the years I have noticed the decline in coverage matched by an increase in costs. Years ago my employer switched to a High Deductible Health insurance plan to keep employee and employer costs low and allow the opportunity to use a Health Savings Account (HSA) in order to cover the high deductible. Earlier this year I decided to Maximize my 100% employer price matched HSA contributions to the company allowed maximum of $24 dollars per week. After participating in my companies Open Enrollment and being informed of a change in insurance provider as well as an increase in deductible in order to keep my cost of health insurance the same. In order to compensate for this increase the weekly HSA contribution maximum still 100% price matched has been increased to $29 per week.

Having not much else of a choice for affordable insurance and being that I am a healthy individual I have no problem with a high deductible insurance plan. I think high deductible health insurance plans are a possible fix for future health insurance cost problems. I actually come out ahead because of my health insurance. The increase in deductible of course will change how much money I have in my pocket next year so I referred back to my write up on Payroll Adjustments for a link to a great tool to find out how payroll adjustments will affect my take home pay. Investing in mutual funds in my HSA as well as the immediate doubling of my money from my employers 100% matching of contributions allows my HSA to grow quickly and any funds that do not get used to pay towards my deductible will continue to grow over time.

Why I chose a Roth IRA over a Traditional IRA

The way I see the difference between a Roth IRA and a Traditional IRA is tax free vs. tax deferred. I had to choose if I wanted a tax break now or later or as I see it from now on. I decided against getting a tax deduction on current contributions into a Traditional IRA and saw the long term benefits of a Roth IRA which will provide me with tax free growth inside of my IRA as well as tax savings in the future when I start to withdraw my money in retirement. I would much rather pay known taxes now than to guess what the taxes I would be paying in 30 or more years on my IRA withdraws. I am currently 27 years old and am working on maximizing my IRA this year, if possible, and if not this year 2010 will be the first year I maximize my IRA contributions and I will continue to maximize my contributions for as long as I can. Maximizing any type of IRA contributions over the long term can accrue a vast amount of savings. But the golden opportunity that I see with a Roth IRA is not the amount of savings I can accrue but the tax free growth I can turn my savings into using dividend reinvestment over time.

I am not a financial adviser, this just what I am doing but thus far I am quite happy with my choice. Although in the future I may change my mind. Another idea I have been toying with is the possibility of also opening a Traditional IRA and splitting my maximized yearly IRA contributions between the two. The current tax break of a traditional IRA is nice and if my future tax rate decreases the traditional IRA is the way to go. However, if my future tax rate is the same as it is now or more the Roth is, in my opinion, the best option. I am not willing to gamble on the idea of my taxes being lower in the future because I don't live off of all that much now. I don't see my future retirement income causing a tax bracket reduction by today's standard so I think it is safer to assume that will apply in the future as well, although for all I know maybe all tax rates will be higher for everyone in the future. The Roth IRA is my hedge against unknown increased tax situations in the future. Perhaps using both he traditional and Roth IRA types for my contributions could cover me halfway for whichever situation the future holds, higher taxes or lower taxes. If I choose to implement the dual type of IRA idea I of course will report it.

For my current Roth IRA choice and if I choose to also open a Traditional I use Sharebuilder.com and have been very happy with them for a few years now.

Unexpected Christmas Bonus

I was notified that I will be getting an unexpected Christmas bonus of $500 on my next paycheck. Problem with bonuses is I would like to know how much of the bonus I am going to have after taxes. Just as I have found and use a payroll adjustments tool CalcXML Payroll Adjustments. I have also found a Bonus calculator to answer my question: How much will my company bonus net after taxes? The answer is at CalcXML with their Net Bonus Calculator. With this tool I was able to see how much of my bonus I am actually going to get and can plan to use it accordingly.

Investing in Mutual Funds in Health Savings Account

Having a high deductible health insurance plan and a health savings account has proven to be very beneficial to me thus far. I am a healthy individual and the greatest thing is that my health savings account (HSA), which my employer 100% price matches, is growing into a decent nest egg that will stay with me for my lifetime. Recently I have decided to take up the option to invest a portion of my HSA funds into a few mutual funds available to me. Out of about 15 available funds I carefully researched all of them and chose what I felt were 4 winners that were no load, having a great morningstar.com rating, and a prospectus that I found worthy of my money. I chose a minimal amount to maintain in my health savings account that was $1000 higher than the absolute minimum in order to make sure I can meet my high deductible should a medical emergency happen and also in order to help earn enough interest from the savings account to pay the $3 monthly fee. As my HSA savings account grows past my minimum balance the extra money will automatically be transferred into an investment account and then invested into the mutual funds by the percentages I set. Hopefully I will earn a great return in the long run by making the decision to invest the bulk of unused money into mutual funds from my HSA. With a large HSA nest egg in the future I will be able to use the funds to help me as I get older and my health begins to fade. As long as I have a high deductible health insurance plan I can contribute to an HSA. If I build up enough of a nest egg through the use of mutual funds and compound interest even if I can no longer contribute because I switched back to a traditional health insurance plan my HSA should continue to grow. In the future I will still be able to use the HSA funds tax free for medical expenses. It's best compared to an IRA but instead of retirement an HSA is for medical expenses. Although if I really needed to I could pull the money out to use it for non medical expenses or emergencies but I would be subject to taxes and other fees. I will later report how my mutual fund choices are working out and also update in the future my thoughts good or bad on having an HSA.