Coming up with a health care spending plan makes good sense and doesn't have to be complicated.
It may seem odd at first to come up with a budget for something so important, and sometimes unpredictable, as your health.
But health care costs can stress families, impacting their health and wallets. According to the Centers for Disease Control and Prevention, 1 in 10 Americans reported putting off medical care in 2015 due to cost.
So coming up with a plan to manage health care spending makes good sense—no pun intended.
It doesn't have to be complicated, either. It really just takes five steps to create a plan, and you can use several online tools that can make the task even easier.
Let's get started.
Step 1: Add up your routine health costs
Do you have regular, monthly prescriptions? Do you expect to take sick kids to the doctor a few times a year?
Chances are you can count on a number of regular medical bills every year. If you've been a health plan member for at least a year, you can check your explanation of benefits (EOB) statements for the past 12 months to see what you spent on doctor visits and procedures last year. Just sign in to your Member dashboard and select EOB statements.
Also, call your pharmacy and get the amount you spent on prescriptions last year to get an idea of what next year will look like.
Step 2: Consider any new health costs
What are your health-related plans this year? Budgeting for anticipated health costs—like starting a family or repairing that old knee injury, for example—can help you prepare now and even save money when the time comes.
Sign in to your Member dashboard and select Treatment Cost Estimator to get a sense of how much a procedure like surgery or childbirth will cost. You need to sign in so the cost estimator can take into account your health benefits and provide a more accurate estimate.
You can also use Treatment Cost Estimator to compare charges across hospitals and clinics. Perhaps scheduling a surgery at an ambulatory surgical clinic would cost less than scheduling it at a hospital, for example.
Step 3: Set aside money for unexpected costs
Stuff happens. It's hard to predict if your child will break an arm or your summer vacation will include a side trip to urgent care.
But you can plan on having something unplanned happen during the course of the year. Take a look at your overall budget and put some money aside for those health care costs you never expected.
Step 4: Take advantage of money-saving tools
At this point, you should have a good estimate of how much you're likely to spend in the coming year. Now it's time for a plan to start regularly putting that money aside.
If you're on a high-deductible health plan (according to the IRS, this is a plan with at least a $1,640 deductible for an individual or at least a $2,600 deductible for a family), you're able to open a health savings account (HSA).
HSAs have tons of benefits. The first is that you don't have to pay any taxes on money you put in your HSA. This lowers the income that's taxed by the government.
You can open an HSA yourself and put money into it. Or if your employer allows the option, you can deposit money into an HSA directly from your paycheck.
Many people like HSAs because all of the money you put in it rolls over from year to year, and you can hold onto it even if you change employers or health plans. HSA funds can be used for anything when you turn 65.
Many HSA accounts, such as those through HealthEquity®, come with a debit card that you can easily use to pay for out-of-pocket medical expenses.
HealthEquity is our preferred partner for HSA accounts. Through our tie to HealthEquity, you can have your claims information automatically sent to HealthEquity to let you manage your account 24/7.
You also can set aside money using what's called a flexible spending account (FSA). FSAs provide similar income tax benefits to HSAs.
Unlike HSAs, FSAs are only available through an employer and can't go with you if you change jobs. Also, FSAs are a "use it or lose it" type of account because there is a limit to how much money you can roll over from year to year.
If your employer offers an FSA, you can open one regardless of the type of health plan you have.
There's a lot more to learn about HSAs and FSAs and how they can help you save money. We suggest you start here.
Step 5: Get to know your health plan
Okay, you have a health care budget now. So why the fifth step?
Because we know health care costs are a big concern. And, one of the best ways to control your health care spending is to get to know and understand how your health plan works.
There are three main parts of your health plan to pay attention to: deductible, network and copay/coinsurance.
- Deductible: In short, your deductible is the amount of money you must pay out of pocket before your benefits kick in. Exceptions are preventive care—think well-child visits and your annual physical—that's covered 100% when you use an in-network provider (more on that below). But most other type of visits will be your responsibility until you meet your deductible.
- Network: Your network consists of the doctors, pharmacies, clinics and hospitals we've worked with on your behalf to negotiate discounts on services. When you stay in-network you benefit from those discounts, and once you meet your deductible, your plan pays more of the bill.
- Copay or coinsurance: Your copay or coinsurance (some plans have both, others just have coinsurance) is the amount you must pay for doctor visits and medical procedures—whether you've met the deductible or not. There's no copay or coinsurance for office visits that are covered by your preventive health benefits—again, those are covered 100% when you stay in-network.
We know this is a lot of information. Just consider the relief that comes with having a health care spending budget in place–and the power you'll have to make decisions that are good for your health and bank account.
Don't hesitate to contact us if you have questions.