Friday, January 29, 2016

How to Save Money on Healthcare

Hospital bed with patient
Many families want to know how to save money on healthcare. While it is a major portion of many family budgets, there are ways to, if not save money, at least get the most for it.

Compare the Costs and Value of Offered Insurance Plans:

Whether you purchase your health insurance on Obamacare Exchanges, get it as a fringe benefit at work or buy it from an agent, to save money on healthcare, carefully consider all your choices.  Many employers are offering a variety of choices and those buying from the exchanges or from an agent need to decide on the appropriate level of coverage.  Look at the portion of the premiums you will pay, the co-pays and the deductibles.  Then, sit down and figure out what your family will pay 
  • If no one in your family gets any healthcare this year except for routine physicals (which are supposed to be covered 100%);
  • If your family gets your usual and expected healthcare; and
  • If someone in your family gets sick enough to reach the maximum deductible/co-pay on the policy.
Often, for the same network of doctors, the high-deductible plans are cheaper in all three cases; however, if someone else (like your employer or the government) is subsidizing the plan, that may not be true.  The only way to find out for sure which is best to save money on healthcare is to run the numbers.  Even after  you run the numbers, be honest with yourself.  If the high deductible plan would be cheaper, would you put the premium savings in an HSA for healthcare expenses, or would you spend it?  If spending it is likely, what would you do if you incurred a large medical expense?  Even if you would save the premium savings, what would happen if someone in your family incurred major expenses next week?

Also, you may be asked to choose between plans with various networks, network benefits and out-of-network benefits.  Some plans require that care be coordinated through a primary care physician; others do not.  In short, generally the more limited your choices, the lower your cost, if you follow the rules.  However, those limited networks may not include the doctors you want to use or, if the doctors are included, they may have few slots available for patients with that insurance.  If you are contemplating switching insurance, particularly if that switch will require you to switch doctors, call the preferred new doctor's office and ask for an appointment for a check-up, and when they ask about your insurance, tell them you have the plan you are contemplating.  If it will be a while before that doctor can see you, tell the appointment clerk that you do not yet have that insurance, but are considering it.  If you need ongoing care, tell her why (eg. I take blood pressure medication) and that you are considering switching insurance and switching to Dr. X as your primary care physician.  Ask how soon after the insurance takes effect you would be able to see Dr. X, and if it isn't soon enough, consider another choice.  If you do not need ongoing care, tell the clerk that you are considering switching to that insurance and to Dr. X as your primary care physician, and ask what you should do if you develop an acute illness before you are able to be seen for a check-up.  The answer to that question should be part of your choice.  If you are going to end up in the emergency room because the doctor won't/can't see you, and the insurance is going to deny your claim because your sore throat should not have made you fear loss of life or limb, then the low premium isn't much consolation.  

Know the Terms of Your Policy, and Follow Them:

What happens if you go to an out-of-network doctor?  What happens if you go to the emergency room for what is deemed a non-emergency?  What happens if you self-refer to a specialist?  How much will your prescription cost?  Those are all questions to consider both when selecting a policy and when seeking healthcare.  If you choose to pay an out-of-network provider, and that provider prescribes medicine, is the medicine covered?  Which hospital are you supposed to use?  Do you have to try a generic drug first, before a brand name?  You will not save money on healthcare if you do not follow the terms of your policy.  

If Your Employer Offers a Flexible Spending Account, Use It

Flexible Spending Accounts are a way many employers help employees save money on healthcare.  Flexible Spending Accounts allow employees to choose to have up to $2550.00 per year withheld from their paychecks and placed into an account that can only be used for healthcare expenses.  Insurance co-pays and deductibles are eligible expenses, as are prescription drugs, out-of-network doctors, dental or orthodontic care and even some over-the-counter drugs.  The advantage of an FSA account is that the money is withheld pre-tax.  If you use after-tax dollars to pay those expenses, you can only deduct those expenses that exceed 10% of your adjusted gross income; with the FSA, all the expenses are, in effect, deductible.  Also, your employer may allow you to spend the money before it is deducted from your check so that a root canal in January can be paid for from the plan in January, and basically financed for the rest of the year.  The downside of an FSA is that if you don't use it, you lose it, though employers can allow you to carry forward a small amount.

If You Have a High-Deductible Plan, Get a Health Savings Account

People whose health insurance deductible (the amount they pay before the policy pays anything) exceeds $1,300 per person/$2,600 per family qualify for a Health Savings Account.  Some employers offer them; if yours does not, your bank probably does.  You receive a tax deduction for money deposited into the account, and you do not pay taxes on money that is withdrawn, as long as you use it to pay healthcare expenses.  You can carry over the account from year to year.  One tactic people use is to choose a high-deductible plan and then put the difference between the premiums for the high -deductible and low-deductible plans in an HSA.  As long as  you do not have major claims, after a few years there will be more than enough in that account to pay the deductibles.

Don't Buy Stupid Insurance

The purpose of insurance is to protect you against things you cannot afford to have happen.  If you are going to pay money for premiums, you want to buy insurance that makes a difference if it is needed.  There are many "supplemental" insurance plans offered by companies like AFLAC or sold via newspaper ads that pay if you get cancer, if you are in an accident, if you are hospitalized, or if some specified disease occurs.  While the low premiums are the selling point for these policies, the possible payouts are also relatively low, and in the grand scheme of things, for many people,  are unlikely to make much of a difference in your life. Sit down and run the numbers.  How many months would you have to pay premiums before your benefit would equal what you paid?  How much difference would that check make if the bad thing happened?  Is there a period of time during which the policy will only return the premiums paid, rather than paying the face value?  Remember you are betting against an insurance company that knows the odds.

Pick the Right Level of Care

Face it, emergency rooms are expensive.  Unless you have no other choice, don't go there.  While choices may be limited in rural areas or small towns, larger cities have other options including drugstore minute clinics and urgent care clinics.  Unless you suspect broken bones, major trauma or serious illness, try the minute clinic or urgent care if your doctor can't see you.  Also, your primary care physician is often the least expensive person to see about an illness.  Yes, it is possible that s/he will refer you to a specialist, so that you will get two bills instead of the one you would have gotten had you gone straight to the specialist, but the reality is that most problems can be handled by an internist, family medicine doctor or pediatrician.  

Check Your Bills
medical bills

Medical bills are pages and pages long and include procedure codes, diagnosis codes and charges upon charges.  Make sure you or your loved one got what you were billed for.  My husband received two bills for his colonoscopy one year.  As he said "I may be an A----but I don't have two of them".

Keep Yourself Healthy

Some healthcare problems are unavoidable; however many are of our own making.  Eating right, maintaining a health weight and exercising regularly and avoiding stupidity behind the wheel will do as much to lower average medical bills as any fancy government program or overpriced medicine.  

Healthcare is expensive.  We all know it.  There are no magic bullets that allow us cheap healthcare; however, becoming better consumers can help save money on healthcare.  Do you have any advice for those struggling to pay for healthcare?

Linked to Frugal Friday.

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Friday Night Shenanigans*

1 comment:

  1. I had no idea you could get an HSA from anywhere other than your employer!! That's fantastic and I'm definitely going to look into it with my banks.