How to Save on Health Care Costs
Five Tips to Keep More Money in Your Pockets
In 2018, a family of four averaged a staggering $28,166 in health care costs under an employer-sponsored PPO health insurance plan. Yet according to the 2018 Milliman Index — which comprehensively measures the costs of health care benefits, including both premiums and the employers’ cost — the index’s 4.5% annual increase rate was around the lowest in the 18 years since its first report was generated.
Small consolation though considering that annual health care costs continue to increase by slightly more than $100 a month for the average family.
In addition to the astronomical costs shared by employers and employees, medical bills are hard to decipher, with consumers often surprised by out-of-pocket costs. While you may never gain the upper hand on the multiple players that determine health care costs, the following are tips savvy consumers can use to keep more money in their pockets.
1. A high-deductible plan may be right for you
If you are a generally healthy person then a high-deductible health plan might make sense. Yes deductibles, or the amount you pay before insurance kicks in, are higher than traditional health plans. For instance, you’ll pay at least $1,350 per person or $2,700 per family, but that is offset by lower monthly premiums.
2. Consider a health savings account
HSAs paired with a high-deductible health plan are gaining popularity because they help save a lot of money. Some people with this combo counteract the higher deductible by depositing the difference in premiums saved into the HSA. The beauty lies in the tax savings. According to smartassets.com, “HSAs are the only retirement account that is triple tax free: The money you put in is tax free, the money you take out is tax free, and the investment gains are tax free.”
Some employers even match contributions. If you are healthy and never end up using health insurance, an HSA can grow into a sizeable stockpile later used to cover larger medical bills. It also stays with the consumer regardless of change in employer. Those with individual insurance are also eligible for HSAs.
3. Price shop medical procedures
Unless you work in the health care industry and are intimately familiar with billing codes, it is often difficult to predetermine the cost of a medical service. U.S. health care is notorious for its lack of transparency. Having said that, it never hurts to call first. Ask how much a standard medical procedure might cost before deciding on the service provider. Surprisingly, the same medical service offered by two different in-network providers can cost two very different prices. ClearHealthCosts.com is a great resource. Founded by a New York Times reporter, the website uses crowdsourcing to gather pricing data on medical services and increase transparency in health care costs for the average American.
4. Paying in cash may be cheaper than using your insurance
Many providers have several different prices for the same procedure: the sticker price, the self-pay/cash rate, the insurance company’s negotiated rate, a financial hardship rate, a Medicare rate, etc. Many consumers with insurance coverage say they have saved money by paying the cash rate. And they can use their HSA to pay for it, thus keeping more money in their pockets.
5. Make preventative care a priority
Finally, the best way to save on health care is to keep healthy. Eat well, drink well, sleep well and move often.