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6 Tips to Save on Healthcare and Fitness in the New Year

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6 Tips to Save on Healthcare and Fitness in the New Year

Feeling good, looking good, and living the lifestyle you want are just a few of the well-known benefits that come from improving your physical fitness. But did you know that getting in shape can also boost your finances?

Here are six ways to get fit and save on healthcare in the New Year:

1. Use a Health Savings Account (HSA)

Surveys continue to show that too few Americans take advantage of health savings accounts, or “HSAs.” Either they just don’t know that they exist or they underestimate how much they save on healthcare.

You’re eligible to contribute to an HSA when you’re covered by a high deductible health plan. High deductible plans are becoming more popular because they’re more affordable. The higher your deductible, the lower your premium will be.

The beauty of an HSA is that as long as you spend it on qualified medial expenses, the funds are never taxed. Contributions to an HSA, other than those from an employer, are deductible on your tax return, no matter if you itemize deductions or not.

That means that if your average income tax rate is 25%, you get an immediate 25% discount on all your out-of-pocket medical expenses. That’s huge!

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You can take distributions from the account to pay for medical expenses—such as doctor co-pays, prescriptions, and supplies—before your deductible is satisfied and your health benefits kick in. But if you spend money in an HSA on non-qualified expenses, the amount you withdraw will be subject to income tax, plus a 20% penalty.

You can also use HSA funds for a long list of other types of expenses, even if you don’t have insurance for them, such as going to a dentist, ophthalmologist, chiropractor, or psychologist. One of my favorite ways to use HSA money is to get new pair of prescription sunglasses every couple of years.

Another benefit of an HSA is that you don’t have to take any distributions each year; you can let the savings accumulate indefinitely without penalty.

Find out if your health insurance qualifies as a high deductible plan. If so, open up an HSA and begin funding it as soon as possible so you can get a tax break on your next medical expense. For 2017, you can contribute up to $3,400 if you have individual coverage or $6,650 for a family plan.

2. Use a Health Flexible Savings Arrangement (FSA)

Flexible spending arrangements have some similarities to HSAs, but are only offered by employers. An FSA allows you or your employer to make contributions on a pre-tax basis, usually through payroll deductions. For 2017, eligible employees can contribute up to $2,600.

As long as you spend FSA funds on qualified medical expenses, they’re never taxed. So, just like with an HSA, you save an amount equal to the income taxes you would have paid on the money.

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But unlike an HSA, an FSA is a “use-it-or-lose-it” plan. That means you generally must empty the account every year or else only carry over a small amount, while funds in an HSA can roll over from year to year without penalty.

3. Get Healthcare Subsidies 

The Affordable Care Act, also known as Obamacare, mandates every American to have health insurance. Even if Obamacare is eventually repealed, you’re required to have it until changes are officially made. If you can afford heath insurance but choose not to buy it, you’ll be subject to a tax penalty.

Depending on your income, the state where you live, and the number of people in your household, you may be eligible for financial assistance to save on healthcare. In most states, if you earn less than 400% of the Federal Poverty Level, you can get a healthcare subsidy, which reduces your monthly health insurance premium.

The open enrollment period to get health insurance for 2017 began on November 1, 2016 and ends January 31, 2017. So if you remain uninsured, don’t miss the opportunity to get the coverage you need to protect your health and your finances. Use the Obamacare Subsidy Calculator to estimate your monthly health insurance costs.

4. Max Out Your Health Insurance Benefits

Health insurance benefits, such as free preventative checkups and deductibles, are tied to an annual schedule. That means you need to pay attention to the calendar in order to max out your benefits.

For instance, if you burn through your health deductible and need a medical procedure, make sure to get it before the end of the year. If you wait until the following year, you could end up paying more than you have to.

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In other words, take advantage of the time each year after you reach your deductible so you can get your insurance company to pay for as much of your medical expenses as possible.

If there are capped benefits, like a certain number of therapy sessions or an allowable amount of dental work, get part completed in December and the rest in January, in order to take advantage of 2 years’ worth of benefits.

And don’t skimp on the free preventative appointments, like annual physicals, well-woman visits, mammograms, prostate screenings, dental cleanings, and eye exams.

5. Claim Medical Tax Deductions

The IRS allows you to save money by claiming medical expenses as deductions on your tax return. However, the catch is that you must itemize deductions, instead of taking the standard deduction for your tax filing status.

When you itemize, you can claim medical expenses paid for yourself, your spouse, and dependents, unless they’re already excluded from your taxable income, paid for using your HSA or FSA, or were reimbursed to you. In other words, you can’t double dip and get a tax deduction twice.

Another important point with medical deductions is that you can only claim amounts that exceed 10% of your adjusted gross income. For example, let’s say your AGI is $50,000 and your medical expenses for the tax year are $6,000. You could deduct the amount over $5,000, or $1,000. If your medical expenses are less than 10% of your income, then you can’t deduct any of them.

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There’s a long list of expenses that qualify for a tax deduction, and some of them, such as acupuncture, weight-loss programs, and transportation, may surprise you. You can even claim the cost of your health insurance premiums if you pay them as an individual—but not if they’re paid on a pre-tax basis from your paycheck at work.

I encourage your to take a look at the full list of deductible costs found on IRS Publication 502, Medical and Dental Expenses. There are probably many medical expenses that you might not realize are deductible.

6. Review Your Medical Bills Carefully

My last tip to save money on healthcare and fitness is to review your medical bills carefully. If you don’t understand a charge, don’t pay it until the medical provider and your insurance company can explain why you owe it.

If you believe that a health insurance claim has been denied in error, perhaps because of an administrative or coding error, fight for your rights and file an appeal if necessary.

Laura Adams is a personal finance expert, award-winning author, and host of the top-rated Money Girl Podcast. To learn more and connect, click here.

Featured photo credit: Little Perfect Stock via shutterstock.com

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

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Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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