Rising health care costs mean more money out of your pocket for insurance and medical care, whether you get coverage through an employer or buy it on your own.
An analysis by human resource consulting firm Aon Hewitt projected that people with employer-sponsored health plans would pay an average of $5,151 in 2015 toward coverage and for out-of-pocket medical expenses. That’s a 52 percent jump in five years.
A 2014 Commonwealth Fund survey found that more than one in five 19- to 64-year-olds with insurance spent 5 percent or more of their income on out-of-pocket medical expenses, not including premiums. And 13 percent spent 10 percent or more.
Given that you’re on the hook for a larger share of the costs, shop wisely and find help. Here are 12 ways to save.
1. Do your homework before choosing a health insurance plan
Consider how much health care you’re likely to use in the next year. Construct some likely what-if scenarios, and then compare among plans how much you would pay out of pocket for the year in premiums, copays, co-insurance and deductibles.
Remember, in general the higher the deductible, copays and co-insurance, the lower the premium you pay. Is it worth paying an extra $500 a month for a low-deductible plan if you rarely go to the doctor? Probably not.
2. See if you qualify for a premium tax credit, subsidy or government health plan
To get a premium tax credit to help you pay for an individual or family health insurance plan, you must:
- Not have access to employer-sponsored health insurance.
- Meet family income guidelines, which for 2015 are no more than $46,680 for a single person, $62,920 for a family of two, $79,160 for a family of three and $95,400 for a family of four.
- Buy a plan through the government-run health insurance marketplace in your state.
To qualify for a tax credit and a subsidy to lower deductibles, copayments and co-insurance, your household income must be no more than $29,175 for a single person, $39,325 for a family of two, $49,475 for a family of three and $59,625 for a family of four.
If your family income is low enough, you might qualify for Medicaid or the Children’s Health Insurance Program, federal- and state-funded health insurance plans.
3. Take advantage of tax-favored savings accounts
A health savings account, or HSA, is a savings account paired with a high-deductible health plan. In 2015, the minimum deductible for an HSA plan is $1,300 for a single person and $2,600 for a family. These accounts offer a number of advantages:
- Your contributions to the account are 100 percent tax deductible, and interest accumulates on a tax-deferred basis. This year you can contribute up to $3,350 as a single person or up to $6,650 as a family to the account. You can contribute an additional $1,000 more a year if you’re 55 or older.
- Have an HSA plan through work? Many employers chip in money for the HSA.
- You can withdraw money from the account tax-free to pay for out-of-pocket medical expenses, such as copays and deductibles, and any money you don’t spend rolls over to the next year.
- The money is yours to keep, even if you change health plans.
- You can use the money in retirement.
Unlike an HSA, a health reimbursement arrangement (HRA) is owned and funded by the employer. The HRA reimburses you tax-free for qualified medical expenses up to a certain limit each year set by the employer.
A health care flexible spending account (FSA) lets you set aside pre-tax dollars through payroll deductions to pay for medical expenses. Unlike an HSA, the account is designed on a use-it-or-lose it basis. You don’t get to keep any of the unspent money at the end of the year.
Here’s more on surviving your high-deductible health plan.
4. Stay in your health plan network
Most health plans today contract with a network of health care providers and facilities. With a preferred provider organization plan, you pay a higher portion of the cost when you visit a doctor or facility out of the network. With a health maintenance organization (HMO) plan you likely pay the full cost when you go out of the network, unless it’s an emergency or the treatment has been pre-approved by the insurer.
This is why it’s so important to make sure the plan network includes the health care providers you need before you sign up.
5. Be prepared for emergencies
Know which hospitals and urgent care clinics are in your health plan network before an emergency arises.
The Affordable Care Act requires health insurance plans to provide the same emergency care benefits, whether you go to a hospital in or out of the network. But you still might end up with a hefty bill from an out-of-network ER, even if your insurance company pays as promised.
Here’s why: In-network hospitals have contracts with your insurer to accept a certain amount of payment. Out-of-network hospitals are not contracted with your insurer, and they might charge higher prices than what your insurance company pays. In some instances, an out-of-network hospital might charge you for the balance between what it charges and what your insurance company paid.
6. Don’t get more care than you need
Choose urgent care over a hospital emergency room for non-life threatening injuries and illnesses when you can’t get in to see your primary care doctor.
Even if you’ve satisfied your deductible, you’ll save more by choosing urgent care. That’s because insurers generally charge lower copays for urgent care than the ER, and treatment at the ER is far more expensive than treatment at an urgent care clinic. So even if your insurer pays 80 percent of the bill, you still have to worry about the 20 percent portion, known as co-insurance.
According to a 2014 analysis by Aetna, the average patient out-of-pocket cost to get treated for a sprain, flu or minor wound is $550 to $750 at a hospital emergency room and $110 to $150 at urgent care.
Not sure where to go? Many insurers offer a free 24-hour telephone consultation service with a nurse to give you guidance.
7. Choose generic prescription drugs
Generic drugs must have the same quality and performance as their brand-name counterparts, and research shows they work just as well, according to the U.S. Food and Drug Administration. But they’re enormously cheaper. On average, you can expect to save 80 to 85 percent buying a generic versus a brand-name drug, the FDA says.
You could save even more, thanks to discount programs at big-box stores and major pharmacies, where some generic drugs are just $4 for a one-month supply and $10 for a 90-day supply. If your generic drug isn’t on one pharmacy’s discount list, see if it’s on another’s $4 list.
If the expensive drug you take doesn’t have a generic version, ask your doctor if there’s a lower-cost alternative to treat your condition.
In addition, many drug-makers have “patient assistance programs” that provide free and low-cost drugs to patients who can’t afford their medication. Check with the maker of your brand-name medication.
8. Compare drug prices at pharmacies
It pays to check prices at different pharmacies to find the best deal. A 2013 “secret shopper” survey by Consumer Reports found that prices for generic versions of five popular drugs varied by 447 percent among 200 pharmacies. Consumer Reports also found that some independent drugstores and grocery-store pharmacies charged more in big cities than in rural areas. One pharmacy in Raleigh, North Carolina, for instance, charged $203 for a 30-day supply of generic Actos, while a store in a rural area in the state charged only $37.
Check prices online to fill prescriptions by mail order, or use apps like GoodRx and WeRx to find the lowest prices in drug stores and online.
9. Comparison shop for doctors and facilities
Prices for tests and procedures can vary widely at different locations. A study published in 2014 for the National Institute for Health Care Reform found that the average price for a basic colonoscopy at a hospital outpatient department was $1,383, compared to $625 at community-based clinics. The average price for an MRI of a knee was $900 in a hospital outpatient department and $600 in a physician’s office or freestanding imaging center.
Health insurance companies and other organizations are developing tools to make comparing prices easier. Aetna, for instance, provides a Member Payment Estimator, which lets users compare costs for procedures, office visits, lab tests and surgery from different doctors and hospitals.
10. Quit smoking
When buying an individual health plan, you pay higher health insurance premiums in most states if you smoke. Under the Affordable Care Act, health insurance companies can charge up to 50 percent higher premiums for smokers than non-smokers. States can make their own rules to reduce or eliminate that variation, but most have chosen to go by the federal standard.
You might also pay more for coverage if you’re a smoker and you get health insurance through work. Twenty-six percent of large employers, up from 23 percent in 2013, require employees who smoke to contribute more toward the premium than nonsmokers, or they provide other incentives to encourage employees not to smoke, according to a 2014 national survey of employers by Mercer, a human resource consulting firm.
Even if you don’t pay a higher health insurance premium, you probably will use more health care than a nonsmoker and therefore pay higher out-of-pocket costs.
Smokers get sick, need to go to the doctor and are admitted to the hospital more often and miss more work than nonsmokers, according to the Centers for Disease Control and Prevention. Smoking is the No. 1 cause of preventable disease and death.
11. Take advantage of incentives
A growing number of employers offer workers financial incentives for efforts toward improving their health. The incentives vary by company but may include gift cards, cash bonuses, and discounts on employees’ contributions toward their health insurance premiums.
Fifty-six percent of large employers with wellness programs offer workers financial incentives for participating, according to Mercer’s 2014 national survey of employers. That’s up from 52 percent in 2013. Twenty-three percent of employers, up from 20 percent the previous year, give rewards for showing progress toward a specific health-related goal, such as losing weight or lowering blood pressure.
12. Use freebies
Most health insurance plans must fully cover preventive care without making you pay anything out of pocket. A long list of services are considered preventive, including mammograms for women over 40, colorectal cancer screening for adults over age 50 and immunizations for children and adults.
Be aware that you must get the service from a provider in your health plan’s network. Otherwise you’ll have to pay for it.
Take advantage of free wellness programs and tools your health plan or employer offer, such as disease management, stress-reduction and smoking-cession programs. Some health plans even offer free gym memberships.