Five financial mistakes you might be making with your healthcare
According to a 2018 American Household Credit Card Debt Study, medical costs have increased by 33% since 2008. On the bright side, the median income is on the rise, too. However, it’s growing at a significantly slower pace than healthcare costs. How are patients managing? Nerd Wallet reports that up to 27 million adults in the United States are charging medical expenses on credit cards–that’s how.
The rising healthcare numbers are frightening, especially since most medical costs aren’t optional. Maybe patients are paying those charges off at the end of the month, although with the increase in revolving debt in the U.S, it’s not likely. In fact, healthcare costs are the number one cause of personal bankruptcy.
Healthcare is a critical concern for many people, and so is managing their finances and making smart financial decisions. So, here are five common healthcare-related financial mistakes that you may be making right now and how you can turn them around.
1. Not comparing healthcare plans
The best way to find the most affordable health care coverage is to shop and compare prices, features, coverage, deductibles, prescription benefits, and provider networks for different insurance plans. We know that sounds tedious and complicated, but there are websites that allow you to compare plans on your own, or you can simply contact a local insurance agent to help.
If you qualify for your employer’s healthcare plan, be sure to review and compare your options there, too. Many employers still pay a portion of the monthly premium, and since your premiums are paid with pre-tax dollars, it lowers your taxable income, too. Those plans are generally hard to beat in terms of pricing and features, especially if you work for a mid- or large-size company, but do your due diligence.
It’s easy to compare plans by their monthly premium, but there’s more to them than just their price tag. A less expensive premium will lower your monthly out-of-pocket cost, but, in the end, you might wind up paying more on claims.
Consider your healthcare needs, the average number of times per year that you visit your doctor, your copay amount, the cost of your prescriptions, and whether your preferred doctors are in-network. Keep in mind that the highest and most expensive plan is not necessarily the best option for everyone, even if your budget can afford it.
2. Not knowing how your plan works
One your insurance plan is in place, it’s important to know how it works. It may be a bit confusing at first, but if you don’t take the time to understand the rules and features, you run the risk of spending far more money than you should.
For example, your physician may be in-network, but their in-house lab may not. Or, the hospital may be in-network, but not the doctor you see. Check with your insurance company before any scheduled service or procedure to make sure you’re utilizing as many in-network providers as possible. It’s also important to know when you need pre-authorization for an upcoming test or a procedure. Without it, your insurance company may not pay any portion of the cost, which can be pretty hefty.
Getting to know your plan isn’t only about discovering the limitations. If you’re lucky, you might find some hidden gems along the way, like reimbursement for your gym membership or a weight loss program, or a free smoking cessation program. If you have questions about your plan, don’t hesitate to call your insurance company’s customer service department. They’ll help you make better, more informed decisions and ultimately avoid unwelcome surprises.
3. Forgetting to compare service costs
If you’re in the market for a new television, want to hire a lawn service, or need to have your home painted, you shop around for the best price, right? Why not do the same when your doctor orders labwork or an MRI? Sometimes these can be big-ticket items, and there’s no standard price across the board.
Whether you’re choosing a doctor, planning to have surgery, or searching for a pharmacy, you should compare costs. Prices for these services vary widely. With a little research, you can really save some cash. To get started, check out these highly regarded online cost comparison tools for the latest pricing on common medical procedures, prescription drugs, and services.
Consider too, the day of the week and the facility you choose when you need medical attention. Without question, in the case of an emergency, you should go directly to the nearest Emergency Room. If, however, you visit the ER every time you come down with a cold or the flu, there’s an opportunity to lower your costs significantly.
If it’s after business hours or over a weekend, consider whether your condition can be handled by an Urgent Care Clinic. During the week, a visit to your primary care physician is a financially smarter choice. Minor illnesses can even be handled through a virtual visit with an online physician if your insurance plan allows. All of these solutions are more cost and time effective than an Emergency Room visit, so if it’s not a true emergency, you might want to explore another option.
4. Not inquiring about generic brands
According to the FDA, a generic medication works in the same way and provides the same clinical benefit as its brand-name version. It’s the same in dosage, safety, effectiveness, strength, stability, and quality, the way in which it’s taken and used.
Generic brands have the same active ingredients, works in the same way, and come with the same risks and benefits as its brand-name counterpart. So, if a generic medication delivers the same result and is less expensive, why not use it?
The main difference between generic and a name-brand drugs comes down to cost. Unlike brand companies, generic manufacturers compete directly on price, which results in a lower cost for patients. How much lower? Generics have saved Americans $1.67 trillion over the last decade.
Any time your doctor orders a prescription, be sure to ask if there’s a generic alternative. You’ll feel better both medically and financially!
5. Neglecting to negotiate a payment plan
Sometimes an unexpected illness, an accident, or a hospital stay brings costly medical bills that your insurance plan won’t cover. Or, maybe you don’t have a medical insurance policy to help offset some of the cost.
While it’s easy to see how a situation like this could wreak havoc on your finances, there are ways to make the cost somewhat more palatable. Contact the billing department and ask about any discounts you may qualify for, especially if you’re able to pay a lump sum or a portion of it up front.
Some hospitals, nonprofits in particular, have financial assistance programs designed to help people pay for medical care that they couldn’t normally afford, and there are others that offer a 0% interest repayment loan. Neither you nor the provider wants the bill to go to collection, so you both have a vested interest in working together to find a comfortable solution.