As health care costs rise and insurance plans place greater financial burdens on the individuals they cover, frugal families still can find ways to save on health care and medical expenses.
Flexible medical spending accounts
Flexible spending accounts, or FSAs, allow you to put aside money on a pre-tax basis to pay for medical or childcare costs in a given time period. Depending on your tax bracket, a medical FSA can reduce your out-of-pocket spending on health care by 15 to 35 percent. Allowed expenses include deductibles and co-payments paid by the patient, over-the-counter drugs, and other medically necessary services. The IRS provides a list of covered services in its Publication 502.
The contribution limit for an FSA is $5,000. These plans will not refund money left over in the account at the end of year, so participants should plan carefully to anticipate expenses before they decide how much to contribute. You can change your contribution from year to year, so if you see a new pair of glasses or a set of braces for junior next year, you can bump up the amount you put into the plan.
Don’t buy too little, or too much, insurance
A healthy, 20-year-old single person might opt for low-cost, high-deductible insurance coverage and open a health savings account (HSA), a tax-deductible savings account used to pay for out-of-pocket expenses. The HSA can earn interest tax-free and can roll over from year to year.
As this young adult marries and has children, however, she may well benefit by moving to a more traditional insurance plan, if her employer offers one, even with higher premiums. Babies get ear infections, aging bodies demand more doctor visits and prescriptions. Raising a family is demanding enough without anxiety over insurance coverage.
For short-term insurance, however, a high-deductible plan could be a better choice than continuing coverage through a previous employer through the federal government’s COBRA provisions. The COBRA act allows employees to continue group coverage from a former employer, but they must now pay the entire cost of the insurance, including the employer’s portion. Healthy individuals with a short break between jobs may opt for cheaper short-term insurance to cover emergencies. Try Healthinsurance.com or a big insurer such as Blue Cross/Blue Shield.
Find preventive care at schools, colleges
Dental hygiene students, chiropractors and M.D.s all need to train on real patients. Many schools, colleges and training facilities for medical and health professions offer student clinics to help train their future providers. You can get steep discounts on care, such as teeth cleaning and X-rays, but you’ll have to be patient. Students often take more time than professionals and their work needs to be checked and monitored by an instructor. Find a dental hygiene school in your area through the American Dental Hygienists’ Association.
Ask for discounts
Hospitals will offer charity care for low income patients, but even those with moderate incomes can bargain down medical expenses. Insurance companies and Medicare negotiate discounts, why can’t you?
If you’re pregnant and your plan does not include maternity care, for example, ask to pay in advance and you may get a break in price similar to those offered HMOs and other insurers.
