For the multi-jobbers, coordinating health insurance with multiple jobs is a high-wired act. Here’s some good news: you can have multiple health insurance plans from different employers! While we won’t dissecting the whole health insurance market, you should walk away from this article knowing:
1) Yes, you can be overinsured. No one, especially your employers, will care. Your health care plan is entirely your own business. To further complicate matters, there’s also the once-a-year enrollment period, with off-cycle “qualifying events” allowed only when you (gulp) qualify.
2) The health insurance market allows for coordination of benefits between primary and secondary plans. If you’re paying, then you should ask your providers to perform coordination of benefits and multi-claim.
Now let’s break down some common approaches the Overemployed can take with health insurance with multiple jobs.
Simplest Solution: Stick With Your Primary Job’s Health Insurance Plan
If J1 is your long-term cash cow, then the simplest solution is to stick with your current health insurance plan. Do this even if J2’s health insurance plan is better or cheaper. When in doubt, always KISS (keep it simple stupid). You’re already executing a complex game plan by working two remote jobs at once. Why create an additional stressor for yourself?
Overlapping Health Insurance With Multiple Jobs: The Curious Case Of The Double Insured
For a majority of you, the most likely case is running into overlapping health insurance plans. This is especially true if you enroll in J2’s health insurance when you joined. For a period of 12 months or less (depending on enrollment periods), you’ll be double insured until you can disenroll from J1’s health plan. While paying two insurance premiums isn’t ideal, it’s still far better than not being insured at all. Plus, there’s a tax penalty for not having health insurance. So why not just KISS and have double coverage for a little bit.
Here’s the bonus. Remember the “coordination of benefits” concept discussed earlier? Now with double insurance, you can get some elective healthcare taken care of like skincare or braces at less cost. Caveat: do check with your insurance plans and providers on costs before proceeding.
Also, overlapping health insurance isn’t as uncommon as you’d think. This happens often for those with government health benefits like medicare or medical benefits for military veterans. Now this curious case is happening with the Overemployed as well.
Health Savings Accounts and High Deductible Health Plan For Multi-Jobbers
Remember in the intro we mentioned tax incentives? When in doubt, IRS publication 969 is the source document for what we’re saying here. We recommend you “google” and download the latest PDF for a quick read. We’re not linking it here because the information changes with each tax year.
Health savings accounts, or HSA, let people set aside money pre-tax for health and medical expenses not covered by their insurance plan. There’s never a deadline for using money in an HSA, and the account goes with you if you change jobs. Your HSA accounts must be paired with an HSA-compatible high deductible health plan. For 2022, contributions may be as high as $3,650 for individuals and $7,300 for family coverage. People 55 and older can set aside an additional $1,000 in catch-up contributions. Some employers will offer an HSA employer contribution as well.
#1 Thou shalt have one, and only one, high deductible health plan with a health savings account
Much like multiple 401Ks, the Overemployed can have multiple health insurance plans. However, there’s an exception when enrolling in a high deductible health plan (HDHP). An HDHP is a health plan that qualifies you for an employer-contributed health savings account or HSA. Now the HSA is what financial planners call a triple tax-advantaged investment vehicle (even better than the double tax-advantaged Roth). There’s only one catch – HSA can only be used for medical expenses tax-free, for all other use you’ll have to pay taxes and a 20% penalty (ouch). Once you reached 65, the magical “triple bottom line” happens: you contribute tax-free, use the contribution tax-free for medical expenses, and withdraw tax-free. More on HSA investing and how withdrawal works in another post.
Bottom line: HSA is a tax-exempt account to help defray high out-of-pocket costs when you’ve covered under a HDHP.
An HDHP, as the name suggests, is a high deductible health plan. That means you’ll have to pay more out-of-pocket before the HDHP will kick in to cover the costs. As a result, the IRS allows a tax-advantaged HSA ($7,100 contribution limit in 2020) for employers to contribute and subsidize the high out-of-pocket costs. However, this isn’t charity. Employers offer HDHPs to save on healthcare costs. Young employees in good health should enroll in HDHP to pocket the employer’s HSA contributions, assuming no major health needs. It’s a healthcare casino royale!
Per IRS Pub 969: if you enrolled in a high-deductible health plan, then you CANNOT have any other medical health insurance. Read carefully here. You basically cannot have a “coordination of benefits” with dual insurance if you participate in HDHP with HSA.
#2 Thou can have multiple dental and vision plans still while in a high deductible health (medical) plan
The IRS, however, does allow you to shop around for better or lower-cost dental and other health insurance coverages. See below directly from IRS Pub 969 on “Other health coverage.”
Other health coverage.
If you (and your spouse, if you have family coverage) have HDHP coverage, you can’t generally have any other health coverage. However, you can still be an eligible individual even if your spouse has non-HDHP coverage, provided you aren’t covered by that plan.
You can have additional insurance that provides benefits only for the following items.
- Liabilities incurred under workers’ compensation laws, tort liabilities, or liabilities related to ownership or use of property.
- A specific disease or illness.
- A fixed amount per day (or other period) of hospitalization.
You can also have coverage (whether provided through insurance or otherwise) for the following items.
- Dental care.
- Vision care.
- Long-term care.
- Telehealth and other remote care (for plan years beginning before 2022).
When it comes to healthcare, the Overemployed Way is to keep it simple. You should focus your energy on 2x-ing your income instead. Here’s a quick recap:
- Stick with one primary employer for medical insurance
- Double health insurance is better than gapping coverage when switching cash cows
- Only play in the healthcare casino royale (HDHP with HSA) if you’re healthy or can stomach the risks
- When in doubt, elect the option that gives you better sleep at night
Here’s what we don’t want: you or a family member fall ill and find out healthcare costs are uncapped. That defeats the point of being Overemployed and having early financial freedom. Practice KISS instead. Cue the Geico commercial…