The following is a guest post from Laura D. Irwin, CFO and co-founder of eFinplan. Stay tuned this week as I will be giving away a 1-year subscription to the eFinPLAN online financial planning software (a $98 value). Make sure you are subscribed to the RSS feed or by email in order to have the chance to win!
In 1989 and 1991 we had our two babies at a cost of $10 each. We made a $10 co-pay at the first pre-natal visit, and all expenses including birth up through the baby’s 3-month checkups were covered by that first co-pay. Few people, perhaps other than Senators, receive health care today at such a low cost. Eleven years ago I was diagnosed with a chronic illness. Since then we have gleaned first-hand knowledge of how ongoing prescriptions and procedures can put a huge dent into a budget. Healthcare for all Americans is increasing at a much faster pace than incomes. If you or someone you love has dealt with a chronic illness, inadequate health insurance, or a costly procedure, the following tips may be helpful in lowering or at least taking control of medical expenses.
1. Learn all you can about your health insurance and do your research before your annual open enrollment. Compare costs, premiums, deductibles, maximum out-of-pocket expenses, prescription coverage, co-pays, and “˜in-network’ doctors (ask your doctor ““ do not rely on the insurance Web site or booklet). If you are married, compare all costs with your spouse’s plan. If you have a Human Resources department, make an appointment if you need help, and bring a list of medical expenses from the previous year so that you can make an educated guess of the best coverage for your needs.
2. If you have a high deductible policy, get a Health Savings Account (HSA) and contribute to it religiously. You may also weigh the benefits of a Flexible Spending Account (FSA) if available. Remember that most FSA’s do not roll over to the next year, so any unused money is lost. Most small businesses cannot afford to offer premium health insurance anymore and many have gone to higher deductible insurance. Single men benefit the most from these policies. When an employer changes to a high-deductible plan, it costs on average $1000/year more for women than for men because of mammograms, the cervical-cancer vaccine, Pap tests, birth control, and pregnancy-related services. Women also generally go to the doctor more regularly for preventive care.
3. Contribute extra to your Health Savings Account if you feel that your employment situation is precarious. Because health insurance is attached to employment, premium payments must be made after a job loss or the health insurance will be cancelled. “˜COBRA’ and “˜insurance continuation’ are great insurance bridges between jobs, but coverage is not inexpensive. You can get the employer’s actual monthly contribution amount from the Human Resources department and plan to save more in your HSA in case you lose your job.
4. Keep track of your medical expenses ““ they may be deductible. “˜You may deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income’ (see www.irs.gov publication 502). Also keep a record of mileage for medical reasons, and of health items you buy at the drug store.
5. Organize your medical bills into a folder by the “˜Date of Service’, which is the date you received medical treatment. This is unnecessary for regular checkups, but procedures or injuries are billed with this Date of Service as a reference, and keeping them organized will help. For a 5-day hospital stay a few years ago, we accumulated a 1-inch thick folder of bills from seemingly every department in the entire hospital except possibly the janitorial staff.
6. Investigate www.quicken.intuit.com/healthcare-management for complex medical billing to manage multiple insurance plans, Medicare, disputes, and payments. It has an appointment reminder, and it can also show you whether you have paid your bill, met deductibles, or qualified for a tax deduction. This might be ideal if you or someone in your family has a large stack of medical bills or perhaps manages parent’s health care.
7. Shop around for prescriptions. There are several ways to lower prescription prices, including 90-day mail orders, pill splitting, and $4 generics from several retailers. Spend some time calling around to several pharmacies to get their lowest prices, and carefully compare online pharmacies. Some pharmacies, such as Costco, offer a discount for those without prescription coverage. If your doctor is prescribing a new medicine, ask for a sample so that you do not have the expense of unused medicine should you become allergic. Also, discuss your financial concerns with your doctor and pharmacist because they can sometimes prescribe a less expensive alternative or perhaps an over-the-counter replacement. For example we recently saved $40 by buying an over-the-counter drug instead of the prescription. In addition, prescription Claritin used to cost our family $70/month. The generic is still over $1/pill or $30/month. At wholesale clubs the generic is approximately $30/year. Of course, you should not change any medicines or use over-the-counter medicines without talking with your doctor first.
8. Get serious about budgeting. Keep track of your expected medical expenses and make all your budgeting and savings plans accordingly. For example, if you know your ongoing prescription costs will be $150/month, enter that amount into your budget, and find ways to save in other categories. If you have a large bill, ask to pay the bill over time in smaller payments and make sure that you adjust your budget accordingly.
9. If you are in financial distress and cannot afford your medicine, you might try The Partnership for Prescription Assistance at www.pparx.org or www.RXassist.org to see if you qualify for assistance. You may also speak to your doctor and get the pharmacy representative’s contact information to see if the pharmacy has any programs that may help.
10. Live as healthfully as possible. Research indicates that lifestyle (e.g., stress, weight, smoking and drugs/alcohol abuse) are the chief causes or contributors to illness today. This recommendation bothers me a little because I didn’t do anything to cause my illness. However, we should all try to do whatever is in our control to stay healthy.
11. Most importantly, glean all the lessons learned from an illness, such as increased compassion, identifying and prioritizing the most important things in life, and discovering unconditional love from family and friends.
Make sure that your overall medical expenses are reflected in your financial plan, such as eFinPLAN.com. Dealing with an illness or injury is difficult enough without the addition of financial worries, but with organization techniques, education about insurance and prescription options, and diligent savings for health expenses, it need not cause you headaches too.