Idaho MSA Blog

Combating Rising Premiums with an Idaho MSA

Here we are, smack-dab in the middle of our nation's new annual healthcare tradition...Open Enrollment Season!  This is the tiny window every American has each year (outside of a "life-changing event") to either renew their existing health insurance policy (if it still exists), or jump ship to a different policy or insurance carrier altogether.

What many Idahoans are quickly discovering, is that the average health insurance premium increase for 2017 is 24%.  24%!!  So the exact same thing you had last year, whether you used it or not, has now increased in cost by almost a quarter.  Unless you qualify for an income-based Federal subsidy through the exchange, insurance premiums were already so high that most of us would consider them in the same breath as a mortgage payment.  Speaking of a mortage payment, imagine getting a letter from your lender that said, "Due to the new Federal Affordable Mortgage Act, your mortgage is now going up 24% this year".  Nobody would stand for that, you would think.  Yet somehow we are all being led to believe this new annual tradition of health insurance hikes is not only both acceptable and justified, it is the new norm we must live with (and budget for!).

As if that wasn't bad enough, those increases are compound and happen annually.  So your policy that was $800/month in 2014 saw an increase of 20%, making it $960 in 2015.  Then in 2016 it went up 27% from $960 to $1,220.  Thankfully you got a "reprieve" for 2017, where it only went up an average of 24% from $1,220 to a staggering $1,512 for the same thing you paid $800 for, less than 3 years ago.  That monthly payment has basically doubled.  Forget the paltry mortgage payment reference I made above.  We're talking more like a second vacation home in Maui.  And seriously, forget the mortgage payment.  If you have health insurance premiums like that you can probably forget paying the mortgage, because good luck affording one.

What Can Be Done?

Unfortunately, there's nothing any of us here can do about the health insurance rate hikes.  That is a complicated and politically-driven quagmire that will have to be worked out through Washington DC.  But what we as Idahoans can do, is take advantage of the incredible benefit we have been given by the Idaho State Legislature to help us pay these outrageous costs.  We can deduct them, with an Idaho Medical Savings Account!

For the uninitiated, an Idaho MSA is a simple bank account anyone who files an income tax return in Idaho can open.  Every dollar you put into the account reduces your taxable income dollar for dollar, and whatever you don't spend each year just rolls over!  At this point you may be wondering, "What can I spend the tax-free money on"?  Great question.  The short answer is eligible medical expenses, but the main idea here is that you can pay for many products and services you typically have to pay out-of-pocket, like:

  • Doctor Visits, Hospital Bills & Surgeries
  • Dental Costs, Eye Exams & Hearing Aids
  • Even Contacts, Eye Glasses & Supplies like Band-Aids!

But the biggest benefit, and the reason we wrote this blog post, is because you can pay your health insurance, Medicare, and/or Long-Term Care premiums out of this account!  That's right.  The biggest burden we all have is now tax-deductible on the Idaho State level, first-dollar for everyone.

What Does This Mean?

This means you now have the ability to make all of your health insurance costs for you and your family, including insurance premiums, tax-free.  You may be wondering exactly how that translates to you based on your healthcare needs, or your financial picture.  This is exactly why we created our Free Online Savings Calculator, so we could help make something intangible like tax saving into an instant visual for anybody.  

As you enter dollar figures into the calculator for monthly premiums and other healthcare expenses like medical bills, dental, vision, prescriptions etc. the calculator instanty shows you (in red) what you're spending annually.  It also shows you (in green) what you'll save on your taxes, simply by paying all these expenses from an Idaho MSA as opposed to a normal checking account!

This will allow you to see in real time what you're leaving on the table every year, simply by paying these expenses you're going to pay anyway, out of the wrong account.  Check out the calculator and seriously ask yourself, why would you NOT take advantage of this?

Luckily, You Have A Choice

Ultimately, this means that as an Idahoan, you are very lucky.  Idaho is only 1 of 3 states in the entire country that has a program like this for its residents.  It also means that you have a choice.  You can pay your monthly premiums and medical expenses out of a normal checking account and get absolutely nothing for doing it.  Or, you can pay those expenses out of an Idaho MSA, reduce your taxable income and save 7.5% (the Idaho income tax rate) on everything you have to pay anyway!

As I said before, we can't control the skyrocketing costs of healthcare.  But as an Idaohan, you absolutely can control how and where you pay those expenses.  We should be taking every action available to save money for ourselves and for our families, and being proactive and opening an Idaho MSA will both check that box, and make a huge difference.  So stop throwing your money away!  Reduce your taxable income, pay yourself first and open an Idaho Medical Savings Account today!

Posted by idahomsa at 12/13/2016 11:26:00 PM
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