Cutting Healthcare Costs
Healthcare costs can be extremely tricky for your finances. Not only do you have the regular cost of insurance, but a single trip to the emergency room can easily throw your finances completely off track. With over $2 trillion spend on healthcare each year in the U.S. and healthcare costs increasing by 113% since 2001, it’s no wonder healthcare costs cause so much trouble for so many people. In fact a report released in 2012 shows approximately 50% of all personal bankruptcy cases are caused medical expenses.
However, with the right money management strategy, you can ensure you aren’t spending more than you should to keep you and your family healthy. If healthcare costs and unexpected medical expenses are causing problems for your finances, give us a call at . We can offer resources to help you get the most out of your healthcare expenditures, as well as recommendations on how to financially weather a healthcare crisis and pay off costly ER bills.
Tip #1: Prevention costs less care
One of the easiest ways to cut your healthcare costs is to simply avoid getting sick in the first place. Living a healthy lifestyle not only increases your life expectancy, it also decreases the amount of money you will need to cover your healthcare costs. Consider that 70% of yearly healthcare costs are associated with illness and disease that could have been prevented.
Consider these money-savings preventative healthcare tips:
- Eat healthy. You know an apple a day keeps the doctor away—it also keeps his bill out of your mailbox. A study of Medicare recipients showed people with the highest intake of fruits and vegetables saved $3,000 in their annual healthcare expenses.
- Maintain a healthy weight. Studies show people facing problems with obesity spend, on average, about $1,500 more annually on healthcare than those who maintain a good weight for their size.
- Sleep tight. Americans spend $150 billion annually on healthcare costs related to stress caused by sleep deprivation and sleep disorders. Maintaining a regular schedule and making sure you get good sleep each night can help keep you out of the doctor’s office.
- Be safe. Spending a little money to ensure safety can go a long way in avoiding disaster. From buckling up in the car and wearing the proper equipment on a bike or skateboard to drastically reduce your risk and cost in case of an accident, to making sure you have working smoke detectors and fire extinguishers in your house, inexpensive safety measures can save you big in the long run.
- Lose some vices. From smoking cigarettes or drinking more than you ought to each night, to giving yourself an ulcer from too much caffeine, those guilty pleasures are costing you big. Not only do you have the expense incurred from indulging, you also have statistically higher medical costs.
Tip #2: Keep tabs on your insurance costs
Having the right health insurance ensures you aren’t paying too many out-of-pocket expenses when healthcare issues arise. However as of 2012, 28% of middle income families report they are having trouble paying for health insurance. While health insurance can be a big monthly expense, it helps you avoid even greater financial hardship if you’re not covered when a problem occurs.
Here are some tips that can help reduce your health insurance costs, as well as the out-of-pocket expenses caused by not having the right insurance:
- Know what’s covered in your policy. Often people get into trouble with healthcare costs because they thought something was covered when it’s not or they weren’t expecting such a high deductible. Read your health insurance policy carefully to make sure you know exactly what you’ll pay and what will be covered.
- Shop around regularly. Particularly with constantly changing healthcare policy in the U.S., you may be able to find a plan that covers what you need for less money. Research online to compare coverage, talk to friends and family to see what kind of insurance they have, and even contact your local Chamber of Commerce to see if you have a local health insurance committee that can provide more information and company referrals.
- Pick a plan that covers what you need. Many consumers choose a more expensive POS plan, because they assume that gives them more and/or better options for health services. However, if all of your doctors are in-network, why pay more for an option to go out-of-network? You can save big money with the right HMO. Also, make sure your plan covers what you need as far as prescription costs.
- Consider medical spending/savings accounts. An FSA is a flexible spending account that you can enroll in each year through your employer. You set aside pre-tax income into the account and can use it to pay deductibles and cover prescription costs. An MSA is a medical savings account—in some ways like a medical IRA—that allows you to contribute money that can be put towards medical expenses; the savings are tax deductible, earnings are tax deferred, and withdrawals are tax-free.
Tip #3: Reduce costs at the doctor’s office
When it comes to the doctor’s office, make sure you get the right care for your condition. If you don’t need a specialist then there’s no reason to pay for a specialist. In fact, one of the easiest ways to reduce healthcare costs is to establish a relationship with a good general practitioner or family doctor first and only go to a specialist on their recommendation.
Tip #4: Don’t overpay on medicine
The latest greatest medicine is often the most expensive—and in some cases, it hasn’t even been proven as effective as medicine that’s been on the market for years. If your prescription cost seems too high, ask your doctor about alternative or generic drugs. You can often pay pennies per pill, rather than dollars.
Tip #5: What to do at the hospital
If you have an emergency and need medical care immediately, consider visiting an emergency clinic rather than the ER for any minor medical emergency. The cost for a minor emergency clinic is often much lower than an ER, so it’s a good cost-reducing alternative if you don’t need a full-service ER.
In addition, always review your medical bills carefully. The U.S. general accounting office estimates 75%-95% of all hospital bills contain errors and Equifax indicates the average consumer overpays for health services by $1,300. As such, it’s important to make sure you’re paying for services and treatment you actually received.