Friday, September 10, 2021

Creative financing

As I'm waiting for the final medical bills to start arriving, I'm doing a bit of creative financing to help lessen the blow at least a little bit.  First off is the HSA account I started this year. To get it started I am contributing $50 a month and my employer contributes a (max) $50 a month/$600 year. But, I can contribute more, if I want to. My maximum contribution limit for 2021 is $4600, as being over 55 years old I get to add another $1000 "catch up" if I chose. 

This got me to thinking. I had noticed, in clicking around my new HSA account online, that in addition to my payroll deduction and employer contributions, I can also make a direct contribution, from my bank account. I just would not realize the tax break benefits of any contribution I make on my own, until I file and report it on my tax return. With my contributions and the employer $50 a month, but the end of this year I will have $700 balance (it didn't start until June of this year). This leaves me with being able to add a max of $3900 directly, myself, if I want to.

This would be a smart thing to do, I think, since I'm going to have thousands of dollars to pay out for dh's medical bills. I might as well contribute the remaining limit of $3900 to that account and then pay towards his medical bills out of it. That way, when I file my tax return next spring, I will be able to report the contribution of the $3900 and get the tax break for it.

I double checked and yes, I can use my HSA account for my spouse's expenses. And yes, I can claim the contribution that didn't go through payroll on my tax return.

I can also pay these doctor and hospital bills on my credit card that earns 2% cash back. Of course that is only smart if I am going to pay off the whole balance charged when the first credit card statement comes for it. I don't have $22,500 in the bank right now. I certainly don't want to pay interest that a credit card would charge on these hospital bills. I also realized I can double dip on the HSA tax break, by first charging the medical expense to my 2% cash back card and then requesting the reimbursement for the medical through the HSA to come direct back to me, rather than paying it direct to the medical provider out of the HSA account. The $4600 (HSA account balance) paid via the cash back card, first, is a $92 cash back refund I wouldn't get if I just paid the $4600 out of the HSA direct to the provider. 

Ok, so back to the fact that I don't have $22,500 in savings right now. By the time these bills come due (I'm expecting in the next 30 days or so) I will have $11,000. I don't want to pay interest for several months on the remaining $11,500. Ok, well just yesterday I got in the mail a credit card offer for 2% cash back (same as the one I already use regularly) and also a special $200 bonus if $1000 is charged within the first 3 months, AND no interest for 15 months. I also got a similar email for a Capital One credit card. This would probably be the best option to use. While I don't know how what the credit limit on the card is (I haven't applied for it), I'm guessing it would be fairly high limit, based on my income and around 800 credit score. I don't plan to spend 15 months paying it off, but with zero interest at least I have that option, should other unexpected expenses arise.

Now, of course I could easily borrow this from my mom. But, as I'm very conservative with her finances, this is my last resort. She has more than enough in her regular checking and savings to cover that. Let alone, her dang investment account earns that amount in like a month, LOL. But, again, I'd rather cover this myself, but if I have to, in order to avoid a high credit card interest rate, I would do that.

Here's my calculations of what I'm actually going to chip off that $22,500 out of pocket expense by being a little creative:

Income tax savings: $760

2% cash back: $450

Extra cash back reward: $200

That's a total of $1100 reduction in the $22,500 cost.  

I've also heard people say (but this was several years ago) that they have gotten big doctor bills and called the hospital or doctor and offered to settle and pay it all off and would they give a discount for doing so. Many say yes. I used to work in the billing dept for 2 different doctors years ago and we did this for people all the time. They'd have a big balance and call up and say if I pay this all off right now, rather than make payments, can you give me a discount and we always did. It's worth a shot. I just don't know that I feel comfortable doing that is this dang small town! Everybody knows everybody's business, right down to something like that. Same reason I have no desire to ask them to set up a payment plan for me on the balance. I'm sure they do that all the time and it would be no big deal to do that, but again, that would be my last resort.

12 comments:

  1. Wow, it's probably because I don't understand the system but I have to say medical bills in the US frighten the life out of me!

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  2. When I shared my pre retirement goals, Chef Owings has commented a couple times to make sure to have a medical account as things were was more than they had planned for, so I am heeding her advice. We could handle a couple years with out of pocket costs as you describe, but not for the long haul. As your husband now has a pre-existing condition, and may need more in years to come, I can see it would be smart for you to plan ahead as much as possible. I'm a bit surprised by your savings balance considering how you've described all the inputs of your house and property-I'd be concerned for having at least an ample reserve for living expenses. But of course, who would expect such a horribly long time for him to be hospitalized with no answers. Good luck with your accoutning.

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    1. the savings is still low because we've still been gradually spending on the house, furnishings, etc. My plan with the HSA was to build up, but didn't get to plan ahead to far with that one. I'll have the second half of the hospital bills paid off in a few months, just trying to avoid interest and dragging it out too long. And take advantage of some cash back/tax breaks where I can.

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  3. It seems you have thought it through well.

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  4. Not trying to be mean but you’ve talked of your husbands full shed with larger scale items he doesn’t want to part with, probably thousands of dollars in there. It seems like the scrimping and savings always rest on you. Maybe even sell the pickup? (This is no retribution for him getting sick!) I hope he feels better but this is not just your worry, he has some assets also. Might be time to pony those up, a frank discussion, we owe 22,000 how much could you pull in? Thanks

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  5. Sorry don’t know why it went in so much!

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    1. I fixed it :) I'm not worried about paying for the medical bills. My disposable income over my expenses is almost 4000 a month, so I will be able to pay off the other half of these bills within a few months. I was just trying to figure out a way to maximize some savings off it having to pay it.

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  6. Don't forget that if the doctor/hospital doesn't give you a discount (with husband's AML, I have found some do and some don't), you can still work out a monthly payment plan without interest. One-it sounds like you are on the right track. I use ALL the strategies that you have listed to maximize savings also. Please make sure you review EVERY bill and EOB to make sure they charged correctly. Always ask the hospital for an itemized statement (UB04). Most recent itemized statement I received had the bone marrow biopsy procedure charged 4 times (1st day of thier new accounting software glitches) - insurance paid it, but it increased my OOP by 4 times. I asked for a review of the bill at the hospital and they adjusted it correctly.

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    1. thank you for the tips. I do plan to ask for itemized billing copy to make sure he didn't get charged for things he didn't have done. I thought the EOB from the insurance company would be more detailed, but it's not at all.

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