In May and June of this year, Alisa Toney took her19-month old daughter, Camille, to the urgent care facility for unplanned visits because she had recurrent ear infections. Each visit cost $100. Ordinarily, these unforeseen visits would have placed a strain on her household budget. However, with the Flexible Spending Account (FSA) that she signed up for under Cigna with her employer, Spelman College, she was able to pay for Camille’s visits with a prepaid PayFlex MasterCard, which had a $1,000 limit she selected.
“I love the flexible spending account because of the ease it allows me to manage my budget for healthcare costs and its pre-tax benefits,†says Toney, 42, who is married and also has an older child, Thomas, 8.
Toney joins millions of Americans who are taking advantage of creative ways to cut huge healthcare costs. According to the National Coalition on Health Care, employee contributions have increased more than 120% since 2000, while out of pocket expenses rose 115%. Consumers themselves can control their expenses to a certain extent. There are several options for saving money on healthcare while getting the proper treatment needed.
Do your homework during initial or open enrollment. “Conducting the proper research before selecting benefits cannot only save money, but ensure your family’s needs are properly met,†says Matt Tassey, past chairman of Life and Health Insurance Found
ation of Education (LIFE). Ask providers if they offer preventive care with no co-pays or before the deductible is reached. What incentives do they offer for nonsmoking or physically fit individuals? Ask employers about offers of lower deductions or various credits. Compare the premium, co-payments, out-of-pocket cost, deductibles, and lifetime or annual caps. Consider non-traditional care such as walk-in clinics at your local pharmacy or urgent care clinics.Ask your accountant or tax advisor about tax breaks. “Individuals can write off
as an itemized deduction all medical costs after they reach 7.5% of their adjusted gross income. For small businesses, all health insurance premiums are deductible. If you are an S Corporation, your medical premiums can be deducted at 100% for you, your spouse and dependents,†says Matthew Ware, an accountant and CEO of Ware’s Padgett Business Services. Itemized deductions can include medical and dental care, prescriptions, acupuncture, drug addition, weight loss program, false teeth, laser eye surgery, hearing aids, and meals and lodging with hospitalization. For additional approved deductions, see IRS publication 502.Take advantage of a Health Savings Account (HSA). “The HSA is like a personal savings account with investment options for health care, except it’s all tax-free. Participation through payroll deductions allows employee contributions to be pre-taxed,†says Dr. Rhonda Medows, commissioner, Georgia Department of Community Health. It also allows consumers to save for future medical and retiree health expenses. It rolls over each year. If your employer does not offer this, sign up with banks, credit unions, insurance companies or other approved organizations.
Take advantage of a Flexible Spending Account (FSA). “An FSA is an employee benefits program that allows employees to set aside a portion of their pre-tax earnings to pay for qualified expenses such as doctor co-pays and prescriptions. This account provides a substantial tax advantage since contributions are made before your paycheck is taxed,†says Tassey. The FSA allowed Toney to take out up to $3,000, though she decided on $1,000. The employer deducts a certain amount from the employee’s check each pay period that goes into an account. The only downside is that, unlike the HSA, the amount does not roll over to the new year and consumers can only sign up or make changes during open enrollment.
For more information, go to the Dependent Care and Health Accounts Website.
Carefully read your bill to solve any billing problems. “Medical identity theft is very real. Check to ensure that the services attributed to you were actually received by you. Review the bill to check for errors and duplications in billing,†says Dr. Medows. Make sure the document is actually a bill and not simply an insurance statement. Many billing problems can be alleviated by practicing prevention. Know your specific benefits and ensure that you
are covered before you schedule doctor’s visits and procedures. Save all receipts from the doctors’ office, canceled checks, receipts, and billing statements. Once the insurance provider has paid and you have received your final bill, call the insurance company to go over the statement if you have concerns.Wealth For Life Principles
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrens’ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses