Step 1: Prepare the Sauce

1. Heat a skillet over medium-low heat and melt the butter.
2. Add the finely diced onion and sauté for about 10 minutes, stirring occasionally, until soft and translucent.
3. Sprinkle in the flour and whisk to combine. Cook for 2–3 minutes until lightly browned.
4. Gradually whisk in the milk, stirring continuously to avoid lumps. Cook until the sauce thickens, about 3–5 minutes.
5. Stir in the salt and pepper, then remove from heat.

Step 2: Assemble the Casserole

1. Preheat your oven to 350°F (175°C).
2. Lightly grease a medium-sized casserole dish with cooking spray or butter.
3. Arrange half of the sliced potatoes in the bottom of the dish.
4. Layer half of the cubed ham on top of the potatoes.
5. Sprinkle half of the cheddar and Monterey Jack cheeses over the ham.
6. Pour half of the prepared sauce over the cheese layer.
7. Repeat the layers with the remaining potatoes, ham, sauce, and cheese.

Step 3: Bake the Casserole

1. Cover the dish tightly with aluminum foil or a lid and bake for 40–60 minutes, depending on potato thickness.
2. Remove the foil and check for doneness by piercing the potatoes with a fork. If they’re tender, bake uncovered for an additional 20–30 minutes until the cheese is bubbly and golden brown.

Step 4: Serve and Garnish

1. Let the casserole rest for 5 minutes after baking to allow the layers to set.
2. Garnish with freshly chopped parsley for a pop of color and serve warm.