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Single Person Finance: Cancel Medical Insurance to repay Student Loans?

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Single Person Finance: Cancel Medical Insurance to repay Student Loans?

My company reimburses $700 per month for my medical insurance. My student loans are $700 per month. Should I cancel my medical insurance and use the medical reimbursement for my student loans, instead? Do I need to tell my company? Currently, there is no company benefit for educational needs. I go to the Doctor no more than two times per year for preventative care and to renew my prescription. Thank you for your input.

Message 1 of 13
12 REPLIES 12
Frequent Contributor

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

If it was me I wouldn’t cancel the insurance. If an emergency came up, you would end up with thousands if not tens of thousands of dollars more worth of debt.

Message 2 of 13
Frequent Contributor

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

That's an amazing benefit!  When my ex was in the military I worked for WorldCom, and I got less than $100 a month for denying their medical insurance.   $700 would have be fantastic!  

 

I agree that you shouldn't cancel your insurance, because you could end up in a hole bitter than your student loan debt. 




Message 3 of 13
Frequent Contributor

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

As other posters mentioned, a major reason to have health insurance is not so much to cover routine care, but to protect against unexpected events or diagnoses that can be very expensive. Going without insurance is a gamble that only you can decide if you want to take.

 

As far as using the reimbursement money for other purposes, here are a couple of things you'd want to check:

  • Does your company policy require the money to be used for health insurance?
  • Is the benefit taxed or non-taxed? If it is non-taxed because it is meant to be used for insurance, using it for other purposes could turn it into taxable income.
Current Score: Mar 2019: EX FICO8 779, TU FICO8 800, EQ FICO 780, TU Vantage 773, EQ Vantage 786
AoOA: closed: 35 years, open: 24 years; AAoA: 11.8 years; Inquiries: 2019: 2, 2018: 3; No BK ever, 1 30 day late in 2013
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Message 4 of 13
Established Member

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

The thing with medical insurance is you never know when you'd need it, and without one the fees could easily rack up. I agree with the posters above, I would not advise canceling it.

Message 5 of 13

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

Okay. Good advice. I want to keep the $8,400 in my disposable cash. However, I understand the risk if I cancel my medical insurance. Thank you.

Message 6 of 13

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

  • Does your company policy require the money to be used for health insurance? YES
  • Is the benefit taxed or non-taxed? If it is non-taxed because it is meant to be used for insurance, using it for other purposes could turn it into taxable income. TAXED
Message 7 of 13

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

Yes, it is an amazing benefit. I want to "flip it" and use it to pay my student loans, so I can keep the $8400 in my disposable cash. I do understand the risk if I get sick or hurt. Ugh. It is smarter to keep medical coverage. Thank you.

Message 8 of 13

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?

True! Thank you.

Message 9 of 13
Frequent Contributor

Re: Single Person Finance: Cancel Medical Insurance to repay Student Loans?


@privatedomainowner wrote:
  • Does your company policy require the money to be used for health insurance? YES

So what is the penalty for using the money for something else? If the company finds out do they stop paying the $700/mo? Do the require reimbursement for past amounts paid to you?

Current Score: Mar 2019: EX FICO8 779, TU FICO8 800, EQ FICO 780, TU Vantage 773, EQ Vantage 786
AoOA: closed: 35 years, open: 24 years; AAoA: 11.8 years; Inquiries: 2019: 2, 2018: 3; No BK ever, 1 30 day late in 2013
Amex Gold, Amex Green, Amex Blue, Amex ED, Amex Delta Gold, Amex Hilton Surpass, BoA Platinum Plus, Chase Slate, Chase Amazon, Chase CSP, Sync Lowes, Sync JC Penney - total CL 129k
Loans: Prosper (20k/3yrs 7.14%), Lending Club (10k/3yrs 5.89%), Chase car loan (35k/6yrs 0.9%)
Message 10 of 13
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