Your Complete Guide To Cutting Health Care Costs

Stethoscope Laying on Stacks of Hundred Dollar Bills with Narrow Depth of Field.

A typical family will spend an average of $8,200 on health care this year, or about 11% of their income.

Though the figure varies by state and county, there is no denying that health care is a major expense. This is the case whether you have an employer-based health plan, you buy insurance on your own or you’re part of the Healthcare Marketplace.

However, there are ways to spend less money on health care. Read on for 10 ways to save on medical care.

Skyrocketing Health Care Costs

Although the passage of the Affordable Care Act aimed to lower healthcare costs, that has not been the case for everyone. Monthly premiums and deductibles continue to rise every year.

A premium is an amount you pay every month for an insurance plan. Your employer may pay all or some of your premium, depending on your benefits. If you buy insurance on your own, you pay this cost completely.

Average premiums can cost anywhere from $152/month (for a healthy 21-year-old in Utah) to over $400 a month for adults aged 45-54.

It is possible to find an affordable, quality plan. If you are looking for health insurance, Custom Health Plans can help you find short-term health insurance to cover your medical expenses for up to a year (12 months).

Now, let’s look at 10 ways to save money on your medical care.

10 Ways to Save On Medical Costs

1. See If You Qualify for a Subsidy

Some people qualify to receive a subsidy in order to pay for monthly premiums. Use an online subsidy calculator to determine how much you might be able to get.

2. Understand Coinsurance Costs

Even if you meet your deductible, your insurance may not cover 100 percent of your medical costs. Some plans still require you to pay a percentage of costs, anywhere from 10 to 30 percent.

3. Determine the Maximum Out-Of-Pocket Limit

Even with coinsurance, there is a maximum out-of-pocket amount you’ll have to pay before your plan pays 100 percent of your medical costs. There is a limit for individuals and families. These limits can vary among the plans, and the amount changes every year.

For example…

Let’s say your plan has a $3,000 deductible and 20% coinsurance. However, your maximum out-of-pocket is $7,150.

You (an otherwise healthy single person) injure your knee and wind up in the emergency room. Maybe you even need surgery.

  • You would pay the entire amount up to your deductible ($3,000) before your insurance plan kicks in.
  • You’re still on the hook for 20 percent of the costs between $3,000 and $7,150.
  • After the $7,150 limit is met, your plan will cover the rest.

4. Consider All Your Options

Does your employer offer a health plan? Many businesses are required to provide health insurance or face a penalty. Yours might pay for all or part of your monthly premiums.

5. Can You Get Coverage Under Your Spouse/Partner’s Plan?

If your employer doesn’t offer a plan, can you get health coverage under your spouse/partner’s plan? In some cases, it may be more cost-effective to add your name to his/her plan rather than buy one on your own. Large companies are often able to negotiate better group rates than a single person.

Here are the benefits of an employer plan, according to Dave Ramsey:

  • Your employer pays or shares the cost of health insurance premiums.
  • Premium contributions are made pre-tax, which can help reduce your taxable income rate.
  • Your employer chooses a plan so you don’t have to search and compare yourself.

 6. Compare Different Plans

It’s always a good idea to compare plans. If you and your spouse/partner have different plans (either on your own or through an employer), see which one offers the best coverage or advantages. As mentioned above, pay attention to the monthly premium, deductible, and coinsurance.

You also want to see if certain types of procedures and/or preventive tests are covered, such as free annual physicals or preventive health screenings.

If you need to buy a plan on your own, it’s a good idea to consult with an independent insurance broker.

7. Understand the Different Types of Plans

Within the insurance world, there are different types of plans. Each works in a different way so you want to make sure you choose one that works with your budget and lifestyle.

Types of insurance plans:

  • Health maintenance organization (HMO) – With this type of plan, you have to use providers that are part of the plan’s network. If you see a doctor outside of the network, your costs may not be covered.
  • Preferred provider organization (PPO) – These plans are a little more flexible. You are still encouraged to choose in-network providers, but you can also see a provider outside of the network. However, you’ll pay more for the privilege. Your monthly premiums are usually higher, too.
  • Point of Service (POS) – These plans require you to choose a primary care physician (PPC) who will refer you to specialists. If you see a provider outside the network, you will have more out-of-pocket costs.

8. Choose a Plan with a Higher Deductible

A deductible is the amount of money you pay before your insurance kicks in. In most cases, a lower deductible means you’ll pay a higher monthly premium. If you’re healthy and rarely go to the doctor, this may be a way to get a policy for less money. Although it might seem like a gamble, you may not need to use your plan as much.

Two things to consider:

  • How much can you afford to pay out of pocket?
  • What are the health needs of your family?

9. Use In-Network Providers

No matter what type of plan you have, you’ll pay less if you visit an in-network physician, specialist, or hospital. Your copayment, deductible, and coinsurance rate will be lower. This is because in-network providers agree to discount their services, which is why you pay less when you use them.

10. Set up a Health Savings Account

A health savings account (HSA) enables you to contribute tax-free funds, which can be used to pay health care costs. You can contribute up to a certain dollar amount every year. Your employer may offer an HSA or you can set one up on your own.

 Advantages of an HSA:

  • Annual tax-free contributions
  • Save money by lowering your monthly premiums
  • You can roll over contributions year-to-year
  • Invest HSA funds to enable growth long-term

Smart Ways to Save on Medical Care

Health care is a big expense, but there are smart ways to save on medical costs. It’s important to conduct research and consult with a professional insurance broker to make sure you find the right plan.

All Things Finance provides many resources to help you save money, make wise financial investments, and reduce debt. We deliver high-quality personal finance news and advice that informs, empowers, educates, and entertains. If you have questions or need advice, contact All Things Financial today.

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