Flexible Spending Accounts (FSA’s) are offered by many employers in the United States. The benefits of a flexible spending account (FSA) is that it allows you to use pre-tax money to pay for qualified medical expenses. What is the benefit of that you ask? For simplicity’s sake, let’s assume that you make $1,000 per month and that your tax bracket is 25%, and you have $100 put into your FSA, now you’re only taxed on $900, or $225, meaning that you take home $675. At the end of the year, you’ll have $1,200 in your Flexible Spending Account which you can use for any qualified medical expenses. Now assume the same situiation, however, you don’t have an FSA setup. Each month, you earn $1,000, but you don’t contribute anything to an FSA, so you are taxed 25% and you only take home $750. At the end of the year, you have no money in an FSA account, and you only have an extra $900 (assuming you saved that money). Let’s say that you have an emergency procedure performed that costs $1,100 – In scenerio 1, you’ll be able to pay for the procedure from the Flexible Spending Account, however in option 2, you’ll be left to pay the bill on your own, with your post tax dollars.

Flexible Spending Accounts are great because they give your money more power since you aren’t paying taxes on the money that is contributed.

When choosing an auto insurance policy, make sure that you completely understand the policy, and more importantly for this topic, make sure you understand what makes your insurance premiums increase and/or decrease. For instance, some auto insurance companies will give you a discount for safe driving. Safe driving can oftentimes lower your insurance premium. You always want to be sure that your premium won’t increase for unsafe driving, such as a speeding ticket. Some insurance companies will increase your premium for a single speeding ticket, others will allow you to “waive” the increased premium by attending traffic school. Whatever the situiation, or the case, it’s always a good idea to have a firm understanding of your auto insurance premium, becuase even though none of us plan to get into accidents, or plan on getting speeding tickets, those things sometimes happen, and if at all possible, we’d like to avoid paying increased auto insurance premiums if at all possible.

One topic that we haven’t really touched on in this blog is renters insurance, but we’ll be sure to cover this topic more in upcoming posts. Renters insurance is a good idea for anyone who may be renting. As a renter, your landlord (in most cases) will have insurance that covers the building, but the landlord doesn’t necessarily care, or care to pay for insurance that will protect the individual belongings of all of the renters or tenants. Renters insurance is typically very cheap and affordable, so the best way to save money on renters insurance is to shop around before picking a plan. There typically aren’t too many ways to save money other than finding the best plan.

Some renters insurance policies will allow you to lower your cost by cataloging your belongings and knowing exactly how much you’ll need in case of an emergency such as a natural disaster – earthquake, fire, flood, etc.

This might seem like a trivial point, but you’d be surprised at how many people just go with the first and only quote that they get when it comes to insurance policies. Sure, it can be a hassle shopping around, but comparing insurance rates can potentially save you hundreds of dollars per year on homeowners insurance.

In order to get a good idea of a starting point, or a range of costs, call your state insurance department for a list showing typical prices charged by different insurance companies. From that list, you’ll be able to quickly see who the low cost insurers are. You should then proceed to call the 3-5 lowest priced companies and then compare their coverage options.

Think about it, there really isn’t any point to pay 30% more for the same coverage. Is there?

With the ever increasing cost of prescriptions drugs and medications, more and more people are looking for alternatives. I’ve seen newscasts and heard stories of people crossing international borders in order to be prescribed and/or purchase prescription medications. While I’m sure there are many legal issues with doing this, both in being prescribed prescription medications across borders and actually bringing prescription medications back into the U.S. (or whichever country you may reside). I cannot condone or recommend either.

One alternative to paying the high price is to use online pharmacies. By doing this, you’ll have to have a physical prescription from your doctor or physician and usually you’ll be asked to the fax the form in, in addition you’ll have to provide all of the contact information of your doctor. There are many reputable online pharmacies out there, such as Drugstore.com, WalMart, Pavillions, etc.

When it comes to routine checkups, and or picking up prescriptions, try visiting a local clinic. For college students, your university clinic is a great option. Chances are that rates will be more competitive for office visits, procedures and for prescription medications.

Don’t let the fact that you have no insurance keep you away from seeking medical care when you need it. Visit a clinic and find the pricing for an office visit for uninsured individuals.

The only way that the lowest premium will actually be the cheapest and lowest costing health care plan is if you do not go to the doctor or get any prescription drugs during the course of the year. For example (and this is just a rough example to illustrate a point), let’s say that you have a condition requires monthly checkups and medication – 12 doctor visits and 12 prescription drug purchases.

• Plan A – $50/month; $60/doctor visit; $50/prescription
  Assuming the above scenario, this person will spend $160 per month; or $1,920/year
• Plan B – $100/month; $25/doctor visit; $25/prescription
  Assuming the above scenario, this person will spend $$150 per month; or $1,800/year

This was obviously a very simple example, but it goes to show that different plans could have different effects on the amount spent/saved each year.

Choosing an insurance plan is just like choosing a car. There are many models out there, and there is probably one that will be best for you. When comparing insurance plans, you’ll need to consider what you need from a health insurance plan. For example, a single male will not need a plan that covers maternity (in most cases), so by selecting plans that do not offer maternity coverage, he will be able to find health care plans that have lower deductibles with similar options. Just make sure that when you’re comparing plans that you find a plan that doesn’t offer things that you don’t need, becuase in the end, if the plan offers it, you’ll be paying for it.

By increasing your deductible, you’re essentially saying that you’ll pay more whenever an insurance claim is filed. An insurance deductible is the amount of money that you’ll pay toward a claim prior to the insurance money starting to pay, thus, the higher your deductible, the less liability the insurance company carries, which in turn will lower your monthly premium.

Just as with car insurance, increasing your deductible from $500 to $1,000 could actually decrease your monthly premium insurance payment by up to 25%. Before adjusting your deductible, you’ll want to consider the pros and cons, as well as talk to your insurance agent to see if its the right move for you. If you live in an area that has common disasters – floods in the east, ice storms in the northeast, tornadoes in the midwest, earthquakes in California, etc. then increasing your deductible might not be the best idea, unless you’re comfortable covering the extra amount. In each of these disaster prone areas, you will most likely have a separate deductible for each type of disaster, so again, check with your insurance agent.

Yes, it’s true that health insurance is very, very expensive, but however expensive it may be, that doesn’t necessarily mean that you will save money by not having insurance. For example, let’s say that you have an insurance plan that costs you $200 per month ($200 a month is probably about average for a single private insurance plan, outside of potential employer coverage). Annually, you’ll be paying $2,400 for your health care coverage. If for any reason during the course of the year you are hospitalized for any reason, you could end up spending at least $2,400 while being hospitalized. A minor car accident can cost thousands of dollars, and major illnesses, cancer, etc. can cost hundreds of thousands, if not more.

Just keep the big picture in mind when considering health care coverage.