Having health insurance gives you peace of mind. Knowing how to use that insurance is like money in the bank.
Jessica S. Banthin, PhD, an economist with the Agency for Healthcare Research and Quality, offers these smart-shopping strategies that can keep you as healthy as possible without shelling out more than necessary for copayments, deductibles, and coinsurance.
“One of the main things you should not do is skip preventive care and checkups,” Dr. Banthin stresses.
Getting recommended health screenings is as basic to your health as good nutrition. Yet, many people still haven’t gotten the message that early detection usually means better health and lower costs. Found early, cancer can often be cured outright. Found early, heart disease and diabetes can often be stopped in their tracks through lifestyle changes or drug therapy.
Ignored or denied, over time illnesses like these can cost you big—not just in terms of frail health and a shortened life span, but also in dollars and cents. One study Dr. Banthin coauthored found that 40 percent of people with diabetes spend more than 10 percent of their after-tax income on health care, suggesting there’s a hard dollar value to investing in preventive care.
Be choosy about prescription drugs
“One of the largest out-of-pocket expenses is for prescription drugs,” says Dr. Banthin. “And one of the best ways to save money on these drugs is to ask your doctor if a lower-cost generic option is available.”
Drug manufacturers often supply physicians with free samples of pricey brand-name drugs, and some doctors hand them out to patients without checking what’s best in the long run for the patients and their pocketbooks.
“An expensive free sample looks like a good deal, but it may not be later on if you renew the prescription,” says Dr. Banthin. “Tell your doctor you’re trying to save money. Ask: ‘What’s my least expensive option?’ ”
Get another opinion before agreeing to surgery or undergoing expensive medical tests.
“It’s always good to get a second opinion before embarking on an invasive surgical procedure. This is an area where people often have to pay a lot out of pocket,” adds Dr. Banthin.
For example, if your doctor recommends surgery to treat chronic back pain, ask if you’re a candidate for physical therapy instead. And, some men do well with “watchful waiting” as an alternative to prostate cancer surgery.
Check to see if your employer offers this option. Doing so can bring significant savings since it lets you make out-of-pocket health care payments using pretax dollars.
For example, if you need $1,000 worth of dental care that’s not covered by your health plan, depending on your tax bracket, an FSA could save you $200 to $400 or more in taxes. This option requires careful planning to ensure that enough money is deposited in your account to serve your potential health care needs for the coming year.
But don’t deposit too much. By the end of the plan year, any unused FSA funds must be forfeited.
This is important if you are enrolled in an eligible high-deductible health plan. If you suddenly find yourself facing thousands of dollars in out-of-pocket expenses, an adequately funded HSA will permit you to easily pay off those expenses using tax-free money. Plus, any unused funds stay in your account from year to year, and the account becomes a retirement account at age 65.
Know who is—or isn’t—in your health plan network. You can save a bundle by using only the doctors on your health plan’s list of lower-cost providers. This applies not just to your primary care physician, but also to any specialists you use.
Likewise, when you need hospital care, be aware that an in-plan hospital could save you hundreds or even thousands of dollars in out-of-pocket payments over a non-network hospital.
Stick with your treatment plan for any chronic conditions, such as asthma, high blood pressure, or diabetes. Medications, in particular, can be very effective in keeping diseases under control and preventing serious, expensive complications that can put you in the emergency room or worse.
“One of the most important recommendations is to try to stay healthy,” Dr. Banthin stresses. “Keep your weight down, eat a healthful diet, and get regular exercise.”
A healthy lifestyle is your front-line approach to avoiding or controlling many forms of serious chronic illnesses—and avoiding having to spend a lot on prescription medications and other treatments.
“In the long run, that’s far and away the most effective way of saving money,” says Dr. Banthin.
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