Every year, most people enter a time called “Open Enrollment,” which allows them to make changes to their benefits elections with their employer. This corporate-world phenomenon comes with its ups and downs; occasionally, they will need to raise the cost of certain things.

For example:

The second picture shows my current deductions, and those are semi-monthly, so you have to double them to match the monthly part of the first image. That means my identical health plan from October 1, 2025, to October 1, 2026, had a premium of $309.08 per month, or $3,708.96 for the year. This new pricing option is $945.67 per month, or $11,348.04 per year. That is an over 300% increase in just premiums.

Pretty much all other elections are unchanged. Dental increased by $12.24 a month, and Long-Term-Disability increased by $6.63 per month, which will suck out $226.44 more per year. What my employer did offer us were two never-before-seen options for High-Deductible Health Plans (HDHP). This is very exciting because they are finally offering us Health Savings Accounts (HSA), which are one of my favorite retirement vehicles. I covered these briefly in the investing order, but the short version is that an HSA is an account you can fund with income before FICA taxes, federal income taxes, state income taxes, and, in Ohio, city income taxes. For lucky me, with a 22% federal, 2.75% state and city tax rates, plus 7.65% for FICA, I save 35.15% on those contributions.

But wait, there’s more! My employer will also be contributing $3,000 to the HSA. Now, unlike a 401(k), this is not in addition to your own contributions; it counts against your cap, so imagine it as a tax-free pay raise. For 2027, that means I will only need to contribute $6,000 myself, which will save me $2,109 in taxes.

What’s the downside of an HSA and HDHP? Well, many of them have very high deductibles; the one I’m choosing is $6,800 versus the $1,500 deductible of the old plan. This really favors two kinds of people: the first who barely use their medical in a year and can stack the HSA into investments and let it grow like an IRA until retirement age, and the second — which is my family — who reach our out-of-pocket limit every single year.

The question I’m sure you’re asking is, “Huh?” Well, let me show you some math.

See, the premium of the HDHP 3400 plan is actually slightly cheaper ($182.76 for the year). This is why the bottom number is vital. Since my family always hits the max out-of-pocket we need to look at the out-of-pocket limit plus the annual premiums. This makes the 3400 plan the cheapest by a pretty wide margin, but it gets even better. The HSA protects me from $2,109 in taxes, and my employer is putting $3,000 into my HSA. That means my total max cost is actually $14,534.84 – $5,109 = $9,425.84, which is $2,291.76 below my 2026 out-of-pocket costs.

So, because of the benefits provided by the HSA, I will actually spend less money on medical expenses in 2027 than I did in 2026. I also learned about a rule the IRS has called “The Last Month Rule.” This is a special rule that allows me to fund my 2026 HSA out of pocket as long as I am covered by a HDHP from December 1st to December 31st of this year. Since our plans start October 1, I meet that requirement and am able to put up to $8,750 into my HSA and then claim the deductions on my 2026 taxes. Unfortunately, self-funding does not allow the FICA deduction or the city tax deduction, so only 24.75% can be saved, which is $2,165.62 in tax savings.

The problem is, of course, funding nearly $9,000 between now and December 31st. The tax savings alone might justify pulling the money out of my brokerage accounts if I can’t side hustle that much together in that time-frame.

~~Miniwing~~
Investor, Stoic, Parent