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Five financial mistakes you might be making with your healthcare
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.
Geckos, double-checks, good hands? How to know which insurance is best for you.
You may love that goofy little gecko with the cockney accent, or Flo, the quirky, always happy-to-help checkout girl, but is that the reason you buy their insurance product? Those beloved mascots are well known, but there are other factors to weigh when choosing your insurance coverage.
It may be a daunting process, but some well-spent time comparing companies against your insurance needs and expectations could save you from future hassles or unnecessary spending. We all want great coverage for the most affordable price, so here are some tips for finding the perfect policy:
Decide what you need
Although insurance requirements vary by state, almost all states require a minimum amount of car insurance to cover damage or injuries caused by your car in the event of a collision. Liability insurance, personal injury protection or medical payments, and uninsured or under-insured motorist coverage are typically required. If you finance your purchase or lease a vehicle, there may be other requirements like collision and comprehensive coverage or gap insurance. Still, there are other extras that you may or may not need. Rental car reimbursement, roadside assistance or towing insurance, and full glass coverage are just a few. Each adds a cost to your coverage so know what features are important to you before you ask for a quote.
Choose a reputable insurance company
It takes repeated quality performance, a high level of customer care, and considerable time to develop a solid reputation. There’s a reason that companies brag about customer satisfaction. And, while you can’t please everyone all of the time, reputable companies are more reliable, work harder to provide excellent care, and pay close attention to the client’s experience. Review satisfaction rates surrounding claims, speed of payments, and resolution of non-claim issues, too. Some reputable companies will be better than others, so prioritize what’s most important to you.
Seek out independent reviews
While a company can control what’s reported on their website and in their marketing material, the good, the bad, and the ugly make its way out in one way or another. Talk to family and friends about their car insurance experiences. Check out comments and interact with insurers on Twitter, Facebook, Insta, and other platforms, and find out how they stand with the Better Business Bureau (BBB). The BBB rates companies from A+ to F and reports information like the length of time in operation and customer complaints and resolutions. These outlets together should paint an accurate picture of how they treat their customers and the level of service they provide.
Decide on an appropriate deductible
A higher the deductible will lower your insurance premium, so why consider anything else? Because, in the event of an accident, you’ll need to foot the bill for your deductible before your coverage kicks in. Consider the trade-off. If you’re a safe driver and have a good driving record, the extra risk may be worth it to you. But, we all know that even with cat-like reflexes, accidents happen to the best of us. Are you able to afford to pay your deductible if that were the case?
Compare repair services
Some insurers require you to choose from their network of repair shops. In most cases, that arrangement offers discounted costs to the insurance company in exchange for repair volume. That savings ideally trickles down to you in the form of affordable premiums. In some cases, however, repair shops rely on cheaper replacement parts instead of those from the manufacturer (OEM parts). While some parts may be comparable, tests have found that non-OEM parts are more prone to rust, may fit poorly, or don’t necessarily meet safety standards. The quality of a repair shop’s parts and labor deserve serious consideration.
Consider available discounts
You can’t compare insurance rates without considering driver discounts. If you’re of a certain age, married, or have a safe driving record, you may be classified as a low-risk driver and qualify for a reduced rate. Anti-theft and other safety features in your car can also reduce your premium, as can bundling your auto and home insurance policies with the same company. Does an insurer offer a student away at school discount, a loyalty and legacy program, or a family plan? If you choose to pay your annual premium in full or you’re a good student, there are discounts for those, too.
Work with an agent or broker
Unless you’re comfortable evaluating your insurance needs and comparing different quotes, you may want to work with an insurance agent or a broker. An agent works with a particular company and can help you find the best coverage and rate from among their offerings. If you’ve already decided on an insurance provider, an agent may be the way to go. A broker, on the other hand, can help you do the same, but across several companies. If you’re not set on any one provider yet, a broker can present more diverse options. They may, however, charge a broker fee for their service.
With a little legwork, you’ll be able to find both the level of coverage that works for you’re insurance needs and a rate that fits within your budget.
What are ancillary products (and are they really worth it)?
If you’ve ever purchased a vehicle, you’re probably familiar with the same old spiel – the finance guy (or gal) at the dealership sits you down and begins offering you product after product to protect your interest, and if you’re like most people, you end up feeling overwhelmed and confused. So, the question is, what are ancillary products and are they really worth it? Ultimately that decision is up to you, but we’ve highlighted some features and benefits about different loan protection options to help you make an educated choice the next time you’re faced with the decision to add ancillary products. Check them out below.
GAP insurance (or Guaranteed Asset Protection) is protection offered by finance companies, either through a dealership or through your credit union, to cover any difference on your loan (that your insurance doesn’t pay) if your vehicle is totaled and/or stolen.
- The cost of GAP can range from $300 to as much as $900 depending on where you purchase this coverage (e.g., through a credit union versus a dealership).
- If you are upside down (meaning you owe more than the vehicle is worth), GAP can be a huge money-saver. For a relatively small investment of $300 (competitively priced GAP), you could save thousands down the road. On the other hand, if you end up paying $900 (on the higher end of GAP coverage), your margin of savings will be much less.
- The key is knowing your Loan-to-Value (LTV). LTV is a percentage based on the amount you owe divided by the value of your vehicle. Example: if you owe $20,000 on your vehicle, but it’s worth $15,000, your LTV is 133%. Generally speaking, if you are over 90% LTV, you could benefit from GAP coverage. On average cars depreciate roughly 19% in the first year, and as much as 50% in the first 3 years – unless you plan on paying off your car in 3 years, GAP could be a huge money saver.
- Another factor to consider is some GAP policies will also pay your insurance deductible, so instead of paying $500 or $1,000 or higher (depending on your deductible), you pay nothing out-of-pocket.
Mechanical Repair Coverage
Mechanical Repair Coverage or extended warranties are offered in addition to the manufacturer warranty. The cost of extended warranties varies greatly depending on the make and the model of the vehicle, and who you purchase the extended warranty through.
Here are a few key questions you should ask yourself before considering the purchase of an extended warranty:
- How many years/miles does my manufacturer warranty have left on it? Most manufacturers offer a 3-year/36,000-mile factory warranty.
- What is the difference between the basic manufacturer warranty and the powertrain warranty? The basic warranty typically covers everything bumper-to-bumper, whereas the powertrain warranty only covers the powertrain and the associated parts.
- How long do I intend to keep the vehicle?
- How much will repairs cost if I encounter them down the road?
Most extended warranties cover you well over 100,000 miles – if you plan on keeping your car for longer than that, an extended warranty could be a great money-saving option. Some institutions will allow you to extend the term of your loan in order to absorb the cost of coverage while keeping your monthly payment the same. Of course, doing initial calculations and analyzing your budget and needs is necessary before making any financial decision.
Loan Protection is just like it sounds: protection that covers your payments or the entire loan balance following a significant life event, such as loss of life, unemployment, disability, and family medical leave. Some institutions, such as Georgia’s Own, provide additional protection for accidental dismemberment, terminal illness, hospitalization, and loss of life of a non-protected dependent.* The cost and coverage vary from institution to institution, so it would be wise to do your homework. Most institutions have a cost per hundred dollars of the current loan balance.
Highlights of loan protection programs:
- The events covered by most loan protection programs are: loss of life, disability, unemployment, and family leave.
- Most institutions offer various loan protection packages that can cover one, two, three, or all four of the life events mentioned. Some institutions offer additional coverage.
- Loan protection programs are available for most types of loans.
- There is typically a cap of coverage over a certain dollar amount.
Benefits of loan protection programs:
- Loss of Life protection can ease the burden on your family, and your debt can be completely cancelled.
- Disability protection could cover your payments for you when your income might be drastically reduced due to a disability event (most competitive employers only offer as much as 60% of your salary for a short-term disability).
- Unemployment protection could be invaluable in a time where you’ve lost your job unexpectedly and are unable to make your loan payments.
- If you are unable to work for an extended period of time, family leave coverage can help you maintain the same level of income.
The bottom line: There are a number of loan protection options available to help protect you when faced with the unexpected. Although these services come with a cost, it may be worth investing in the peace of mind these protection programs offer.
*Beginning August 1, 2017, Life Protection under Members Protection Plus will include even more. We’ve added accidental dismemberment, terminal illness, hospitalization, family medical leave, and loss of life of a non-protected dependent to our coverage.