A new father considers healthcare in the face of life-changing events
Ryan Mace and his wife welcomed their first child in the midst of the pandemic. In this piece, Ryan shares how now, more than ever before, the health care choices we make can have a monumental impact on our financial wellness.
Life is crazy. These days more than ever before.
Sometimes the crazy is good, like the thrill of finding love, getting married, and starting a family. Or the freedom you feel when you finally move out of your parent’s house to start your own life. Or the culmination of a life’s work, when all of that effort, financial discipline, and planning comes to fruition in retirement.
Sometimes the crazy is bad. Like illness, financial hardship—or the onset of a global pandemic.
Like thousands of Americans, we never planned to start a family during the COVID-19 pandemic. The fact that we did meant that all of that nervous excitement we had—the good side of crazy—was touched with the added anxiety of wanting to protect ourselves and our baby, and wondering what exactly that would mean—the not-so-good side of crazy.
When it comes to these life-changing events, there are many things to consider. The emotional elation or burden they bring… the anxiety of not knowing how your life will change… and of course, the financial implications of these events cannot be understated.
How do your healthcare options play in?
It might not be something that’s at the forefront of your mind when you think of moving out, getting married, experiencing a divorce, or retiring, but if you think about it, your health and how you plan to maintain itis of the utmost importance. Not only that, but the choices you make surrounding your healthcare can have a monumental impact on your financial wellness. Sadly, a lot of us don’t consider these questions until we’re already in the middle of some health issue or event.
I promise I’m not trying to make you lose sleep, especially given the extra stress we’ve all been under this year. It sounds like a huge decision that could have a big influence on your life as a whole, but don’t panic. The process isn’t as daunting as it may seem.
These life-changing events (known in the industry as Qualifying Life Events, or QLEs) typically allow you significant flexibility in your healthcare decision making. And if you’re prepared, you can really make the most of your choices, stretching your dollars even further.
How do Qualifying Life Events work?
In a nutshell, a QLE allows you to change your health insurance coverage at any time during the year that the event takes place. What events qualify? Typically it’s things like marriage, divorce, getting a new job, losing a job, and possibly the most common, having a baby. Any of these events will act as the key to unlock the door on your health insurance and other benefits—you can change how many dependents you have and even change the kind of coverage you have in some circumstances.
Of course, any of these life-changing events can put a squeeze on your budget, so it’s always a good idea to look for ways to save on your healthcare and your taxes. One way you can make your money go further is by enrolling in a qualified high deductible health plan, (HDHP). Like any other plan, you will pay a set monthly premium, but you will also own a health savings account (HSA), that you control.
Reckoning with my own QLE
Hypotheticals are helpful for planning, but nothing makes you take things seriously like the real thing.
Exhibit A: My wife and I recently became parents in the midst of the COVID-19 pandemic. Talk about an anxious time! Not only were we worried about the normal stuff, like scheduling our first doctor’s appointments, telling our loved ones the news, and wondering how we were going to pay for it all. But we also had to deal with the realities of wearing masks, wondering whether the hospital and doctor’s offices we would frequently visit would be safe, and more.
Simple, exciting things like going to the doctor, planning for a baby shower, signing up for childbirth classes, and preparing to celebrate with family were anything but simple.
During the second half of her pregnancy, my wife had to visit the doctor by herself (no visitors allowed). The baby shower was limited to only immediate family, while many of our friends and loved ones could only attend virtually. We were unable to attend an in-person, childbirth preparation class. And when the big day finally came, no family members were allowed in the hospital to celebrate and meet our new arrival.
Even now, almost five months after our little girl arrived, things like visiting family and going to the doctor for a simple fever come with a heightened sense of anxiety.
Needless to say, these events that most have probably taken for granted are a little different for us. But through all of this, one thing has surprisingly helped us maintain a sense of calm—our health savings account (HSA). Not only has it provided a sense of financial security, but it also took one less burden off of our plate knowing that we had a health-centric safety net prepared for this situation.
How does an HDHP/HSA help my budget?
An HSA allows you to set aside tax-free money to save for qualifying medical expenses. Needless to say, this is a huge help when you’re getting ready to have a baby. Even with health insurance, maternity costs run well into the thousands of dollars and last well beyond the 9 months of pregnancy.
Luckily, with an HSA, you decide how much you want to contribute, which is super helpful when you know you’re going to have some major expenses.). The only thing you’re “limited” on is the maximum amount you can save each year. And besides giving you total control over your healthcare dollars, HSAs feature a triple-tax advantage that can really save you money.
- The money you put into your HSA (up to the IRS annual limit each year) comes out of your taxable income.
- As long as your HSA dollars are used for qualified medical expenses, your money is not taxed, no matter how much you spend!
- Over time, your HSA dollars accumulate interest, tax-free. You may even be able to invest and grow your savings through mutual funds.
On top of your HSA’s triple tax savings, your account’s funds roll over each year and never expire. An HSA is yours to keep and your savings stay with you, regardless of what life throws your way.
These are interesting times we’re living through. Even through all of the extra work that the pandemic has meant for us, we’re still so thankful to have a healthy baby and to be a family. And though we definitely would have preferred that 2020 had been a bit less crazy, we’re happy that we were able to experience the “good” crazy and that even the “bad” crazy left us with some lessons about our health and wealth that will stay with us long after the pandemic has finally, thankfully come to an end.