Health Insurance

Health Insurance plans fall into several main categories described below.

Usually paid for with PRE-TAX dollars

High-Deductible Health Plan (HDHP)

• For 2027, the minimum deductible is $1,750 for an individual or $3,500 for a family. Out of pocket maximums (including deductibles, coinsurance, or copays) must be limited to $8,700 for an individual and $17,400 in network for a family.
• Monthly premiums are usually very low, so ideal if you are not going to the doctor frequently or if you feel you will hit your deductible quickly.

Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged account used for paying qualified medical expenses in conjunction with a HDHP.

• The account is owned by the individual and the funds roll over year to year, (unlike an FSA account which is “use it or lose it”).
• Maximum contribution amount for 2027 for self-only coverage is $4,500 and for family coverage $9,000.
• Catch-up contributions:  Individuals aged 55 or older can contribute an additional $1,000

PPO – Preferred Provider Organization

• Contracts with several doctors, specialists, and hospitals, which provide broader access to providers.
• No requirement to consult with primary care provider before seeing a specialist.
• In network means you pay less, out of network you incur an additional cost

HMO – Health Maintenance Organization

• Group of doctors and hospitals that provide services for a copay
• Tend to be more affordable
• Only cover in-network services and will not pay for services from out-of-network providers
• Requires physician to provide “access” to specialist care

Flexible Spending Accounts (FSA)

• Similar to an HSA, you can save pre-tax dollars in an account to pay for qualified medical expenses.
• Usually used with HMOs or PPOs
• Maximum contribution amount for 2027 is projected to be $3,500 (lower than an HSA)
• Unlike an HSA, you may only roll over $680 (2027 projected) at the end of the year — “use it or lose it” – if you don’t spend the amount allocated you will lose all but the carryover.
• If you leave your employer you don’t get to take the account with you, unlike an HSA

Dependent Care FSA

• Contribution limits up to $7,500 to cover costs of daycare, after school costs, summer day camps, or taking care of a disabled spouse or older relatives

Paid for with AFTER-TAX dollars

If you are self-employed, are not covered through work, or are bridging the gap between retirement and Medicare eligibility, the open enrollment period for obtaining coverage through the Health Insurance Marketplace is November 1^st through January 15^th. For coverage to start on January 1, you must enroll by December 15^th.

While you have to pay the premiums up front and are not receiving any additional employer coverage, it is worth noting that the premiums paid with after-tax dollars still can provide some tax savings.  Any medical expenses and premiums over 7.5% of income can be deducted if you itemize.  If you are self-employed, you can deduct these health insurance premiums on your 1040.

Medicare

If you are 65 or older and are already enrolled in Medicare open enrollment runs October 15 – December 7 which is the time to review your current plan to ensure it remains the best option.  Specifically, the enrollment period applies for Part C aka Advantage Plans and Part D (prescription drug coverage).  For example, the plan you were covered under in 2026 may not cover the same prescriptions, costs for medications may have changed, or a provider can opt in or out of a plan.

Also check out our additional resource on What You Need to Know About Medicare to Avoid Retirement Mistakes or view our Medicare Webinar On Demand