Health care is a significant financial burden for many people. When it comes to those in retirement or with limited income, this burden can even become unbearable.
Though nearly 92% of Americans have health insurance coverage, medical expenses quickly add up for those with a chronic health condition or who experience a one-time health catastrophe. With insurance and prescription medication prices rising, how do you save money on medical costs?
How to Plan for Insurance Costs
If you’re struggling to pay for health insurance, you’re not alone. With 79 million Americans struggling to pay off medical debt, there’s reason for concern. To avoid financial ruin and prepare for your out-of-pocket costs, there are four areas to focus on when looking for ways to save money on medical costs:
- Premium – This is the amount you pay to buy health insurance coverage. Some employer health insurance plans will automatically deduct this from your paycheck on a weekly or bi-weekly basis, and other plans require a once-a-month payment.
- Deductible – Your deductible is what you pay for medical costs before your insurance company starts to pay anything. The exception is there are usually a few preventative health procedures your insurance will cover before your deductible is met.
- Copays – Most insurance companies require you to pay a small fee each time you get a medical service even after reaching your deductible. For instance, you might have a $40 copay for a regular medical office visit or a $100 copay for an emergency room visit. You’ll also likely pay copays for prescription medication.
- Out-of-Pocket-Maximum – The most you’ll have to spend for covered health services in a year. Once you reach this amount, you don’t have to pay the copay amount anymore, and the insurance company will pay 100% for covered services.
Tips for Lowering Medical Costs
If you haven’t yet adopted some strategies to lower the cost of health care and insurance, you need to know there are some tried and true ways to save money on medical costs. Here’s how to make sure you’re getting the best value for your money.
- Shop around for the right health insurance plan. The option with the lowest premium might cost you more money in the long run. It’s best to look at your family’s medical needs to determine what your optimal plan may be.
- Compare prescription costs. Often, your prescription copay is based on the cost of the medication. Since different pharmacies charge different amounts, saving money on prescriptions might make the drive across town worthwhile. Also, asking about a generic or over-the-counter equivalent can save you even more money.
- Consider paying with cash. Even if you have health insurance, it’s possible that you can get better rates on certain medical procedures and services when you opt to pay cash.
- Examine your medical bills. Before paying out of pocket for your medical bills, look them over to make sure the billing clerk and the insurance company didn’t miss anything. If the wrong billing code is entered, your insurance may refuse to pay because it isn’t a covered service. Or you may have been billed for the wrong procedure which can end up costing you more out of pocket.
- Take advantage of preventative care. Visiting your doctor and dentist for regular checkups can spot health concerns before they become major medical issues. And eating healthy and exercising helps to protect against diabetes and heart disease, which helps you save money on medical costs.
- Use Flexible Spending and Health Savings Accounts. Take advantage of Flexible Spending Accounts or set up a Health Savings Account to set aside some of your pre-tax dollars to use for medical expenses. This requires a little planning up front but can save you a lot of money on medical costs by lowering your taxable income.
Saving money on medical costs and insurance can alleviate a lot of your financial stress. Follow these tips to understand where you can save the most on health care expenses to protect your budget and your health.
If you still find that your medical costs are preventing you from having a good quality of life, you may want to consider getting a reverse mortgage. A reverse mortgage is a financial tool that allows you to access a portion of your home’s equity. These loans are eligible for homeowners over the age of 62 and have helped many people supplement their income in retirement.
For more information on obtaining a reverse mortgage, check out One Reverse Mortgage’s resource page to learn more.
Aja McClanahan is a freelance writer and owner of www.principlesofincrease.com.