I was feeling sorry for myself after finding out I'd pay more than $400 per month for my company-provided health insurance next year for myself and two children. But after reading a USA Today article about the sticker shock of health exchange shoppers, I realized I am better off than many people. Everyone has to evaluate their individual situation to determine how to best budget for increased health insurance costs. For me, the main solution I can think of is to put my retirement savings on hold until I can earn more money. According to the article, a lot of middle-class consumers such as myself are finding out they aren't eligible for subsidies under the Affordable Care Act. I'm not sure why the word, "affordable" is associated with the health care exchange since the pricing is out-of-reach for me. Depending on where they live, people will be paying between $437 and $819 a month for PPOs, according to the USA Today article.
Changing my contributions for retirement
After signing up during open enrollment, I knew I'd have to make some adjustments to my retirement savings. Just before the new year, I'll lower my 401(k) contributions down to just 3 percent. It pains me to have to lower my saving contribution rate, but I don't have many other options. Since I put aside a higher percentage toward retirement when I was in my 30s, I still have a shot at retiring with a half a million. For me, the key will be to keep re-investing the dividends so my balance continues to grow.
Banking my paid time off
I'm allowed to bank several weeks worth of paid time off or PTO. Although I wouldn't receive the money until I retired or left, it would boost my retirement if I had an extra $2,000 thanks to my banked PTO. After banking the maximum number of hours, I will take any vacation time I need to take. Every little bit helps.
Using my tax return to pay bills
In the past, I used my tax returns to fund my Roth IRA. I would put anywhere from $500 to $2,000 in my Roth for the year. Because of the extra $400 a month or $4,800 a year I owe in health insurance costs, I'll need my tax return to pay the day-to-day bills. My tax return will immediate go into my checking account to pay down credit-card bills. If there is anything left, I'll use it to fund my slim emergency savings account.
According to a Wall Street Journal article, some companies are passing on more health care costs to their employees in the wake of health care reform. Family rates are expected to be higher since the "affordability" rule is based on the cost of individual coverage. The cost is capped at 9.5 percent of income. Although I'm not a math genius, it seems as though I'm paying more 9.5 percent of my income with my individual plus children policy. Unfortunately, many people are going to do what I'm doing and scale back on retirement savings. It seems the health care reform mess will just exacerbate the ongoing retirement crisis.
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