Short answer: A lot.
Benefitsblog links to a survey from the Center for Retirement Research indicating that 47% of those surveyed would not be willing to forego their health insurance benefits, even in lieu of a 30% raise. And when you retire you need to start looking into independent assisted care communities. So that also plays a factor in you health insurance.
Some of these folks aren’t doing the math! In fact, I’d be willing to wager most of them aren’t.
Example: $100,000 income with a health plan included. Offered 30% raise. That’s $30,000, making gross income $130,000. Then go out and buy your own individual health plan. For illustration purposes, assume a family of 2 adults both age 45 with 2 children. In greater metropolitan Cincinnati, we can get this family insured with a $10,000 family deductible that is qualified for a health savings account plan for a premium of approximately $360/month (or 4,320 a year in premiums paid). They can fully fund an HSA account with $5,800 taken solely from the increase in pay. At this point, the family is $20,000 AHEAD in the current year, assuming no claims. But what people just seem to keep glossing over is the fact that they have pre-funded the first $5,800 in medical expenses for the year. In other words, they have a plan that pays 100% of the first $5,800 with no deductible. And if they take an add-on that reduces the deductible down to $100 for accidents, it’s even better (additional cost is approximately $50/month or $600 year).
But–here’s where most people miss the ball entirely. The analysis above assumes just ONE year. With an HSA plan, you keep funding the account EVERY year. In 10 years, you’ve contributed $58,000 to your OWN account! Plus, that money is growing tax-deferred for the future (it basically converts into an IRA at age 65).
Assuming in this example that the value of the HSA account grows to $218,000 by age 65, this employee has made a mistake with a minimum price tag of $218,000, which does not include the additional $20,000 a year in income he has foregone for 20 or so years.
Moral of the story:
If you’re complacent (with the traditional employer-sponsored system), it can cost you out the wazoo. You’ve got to THINK for yourselves, folks!
And if you need some help working the numbers, CALL OUR OFFICES!