9 Ways to Cut Health-Care Costs
Add Hundreds to Your Paycheck
By Motley Fool Staff
November 20, 2009
Every year, you get a chance to make a decision that will
have a big impact on your paycheck. The right choice can mean
saving hundreds or even thousands of dollars. The wrong
choice can cost you.
If you have health insurance at work, November is
typically the month when your health plan has its annual
enrollment period. Depending on your plan, you can add or
remove dependents from your policy, set aside money to cover
medical expenses, or even choose among various levels of
coverage for yourself and your family. Choosing the right
options can make the difference between saving a bundle and
spending too much.
The coverage you need
In response to soaring health insurance costs,
many companies have scaled back the coverage they provide to
employees. As more companies look for ways to save, you may
end up paying more out of your own pocket in order to get
comprehensive coverage.
Before you opt for the priciest policy, however, consider
how much insurance you really need. If you're in good health,
choosing a policy with a higher deductible or larger
co-payments can translate to much lower premiums. Even if you
pay more to see a doctor, the increase in your take-home pay
will often leave you ahead.
Looking at your past year's medical expenses can give you
an idea which coverage options might save you the most. While
you shouldn't ignore the possibility of an unforeseen illness
or injury, basing your decision on past experience is a good
starting point.
Enlist Uncle Sam's help
Once you pick your coverage and have an idea
of how much you'll spend on medical bills, you might be able
to get a tax break for those costs. If your employer offers a
flexible spending account or flex plan, take full advantage
of it.
Although many people think that dealing with such plans is
too much of a bother, using a flex plan can give you big tax
savings. Each dollar you save in a flex plan can pay you back
as much as 40 cents or more on your income tax return. That's
worth a little effort.
Multiple-choice test
Finally, if you're part of a family, you have
to figure out how to get your dependents covered.
Spousal coverage is usually simple, but many companies are
now also allowing unmarried domestic partners to get health
benefits. If your partner also has employer coverage, you've
got a choice to make: Who goes on which plan? Many employers
only subsidize your own individual coverage, making employees
pay for family members. That usually means that it makes
sense for each member of a couple to keep their own
individual coverage.
If you have kids in the picture, it's often simply a
matter of seeing which plan is cheaper. But be sure to
consider the quality of coverage as well -- lower premiums
may cost you more in the long run if the coverage isn't as
good.
Understanding your health insurance isn't always easy. But
the potential savings make it worth the effort. Since you
only get to choose once each year, make your choice count.
Your wallet will thank you.
For more Foolishness:
One Stock to Rule the Recession
Warren Buffett Goes Shopping
Everyone Is Buying These Stocks
This article was originally published as
Add Hundreds to Your Paycheckon
Fool.com
Copyright © 2009 The Motley Fool, LLC. All rights
reserved.
9 Ways to Cut Health-Care Costs
By Robert Brokamp
November 20, 2009
Over the past 25 years, health-care costs have grown more
than twice as fast as overall inflation. What's a Fool to do?
Here are nine ways to alleviate the health-bill blues:
Two-income couples should coordinate their insurance
benefits. It might make sense to opt out of one plan and
choose the family option on another. On the other hand,
maintaining coverage with two providers can make sense, if
one will fill the gaps of the other.
Do you smoke, overeat, or overdrink? Not only are you
endangering your health, but you have some expensive
habits.
Contribute to a flexible spending account (FSA), which
allows you to use pre-tax money to pay for medical costs
not covered by a health plan, such as deductibles,
co-payments, and even eyeglasses. This could shave a few
hundred dollars off your tax bill, depending on your
medical expenses and tax bracket. If you participate in a
plan that operates according to the calendar year, you must
exhaust your account by Dec. 31, or you lose the money
forever. More plans are extending the deadline into March,
but check with your benefits department for your actual due
date.
Choose the right plan: Most employees are offered a
choice of health plans, ranging from options that don't
cost as much yet don't allow much flexibility (such as a
health maintenance organization, or HMO) to plans with more
flexibility but higher costs (such as a preferred provider
organization, or PPO). Unless you significantly benefit
from more choice, an HMO is the most cost-effective option
-- but not always. So learn about your options before you
choose.
If you incur extraordinary medical expenses in one
year, you can deduct from your taxable income the medical
costs that exceed 7.5% of your adjusted gross income. This
can include out-of-pocket insurance premiums and a host of
other expenses. See
IRS
Publication 502for the complete list.
Take advantage of the free and discounted services
offered by your health plan. Many providers subsidize flu
shots, gym memberships, nutrition classes, and other
preventive care.
Check your bills. According to one
Consumer Reportssurvey from a few years back, 5%
of patients found serious errors in their hospital bills.
Those who paid $2,000 or more out of pocket for their care
were twice as likely to find billing boo-boos.
If you've covered your deductible for the year and can
get an appointment, get a service done before the New
Year.
For more Foolishness:
Everybody Is Buying These Stocks
1 Stock to Rule the Recession
Warren Buffett Goes Shopping
This article was originally published as
9 Ways to Cut Health-Care Costson
Fool.com
Copyright © 2009 The Motley Fool, LLC. All rights
reserved.
Published on November 20, 2009
Business
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