The Kaiser Family Foundation and the Peterson Center on Healthcare have partnered on Health System Tracker, which helps policy wonks understand how the U.S. healthcare system works and where all the money goes — but it’s pretty interesting for regular people to understand how to optimize their health expenses, too. They recently found that while prescription drug prices on average have fallen, thanks to increased availability of generic drugs, individuals like you and me are paying more of our own money because insurers are paying less.
Did you know that your employer uses terms like “total rewards” when strategizing about what kinds of benefits they want to offer you? Did you know that those benefits can easily account for 20-35% of the “total compensation” they give you? Did you know that, cumulatively, employer benefits account for hundreds of billions of dollars every year, and that that expense, which rises 4-7% per year, is thought to be at least partially to blame for keeping your salary increases down?
There is much in the financial independence movement on the importance of saving for retirement, especially maxing out your 401(k) contribution and taking advantage of employer matches. There’s less information about the importance of your other benefits, especially health insurance.
Your employer thinks of your benefits, both retirement and health, as compensation. You should think of them as income — not just how selecting and using them wisely will help you reach your FIRE goals but also to ensure that your FIRE dreams aren’t derailed by bad luck and bad choices.