When I was first out of college and started paying my own medical bills, going to the doctor terrified me. Not because my doctors weren’t wonderful people, but because of that slow walk to the billing counter after my visit. Not knowing much about my insurance (or health insurance in general), I had no idea what my visit/prescription/etc. would cost or the best way to pay for it.
But as with any system, there are some pretty great tricks that can lessen the sting of medical costs. Here are some of the hacks I have picked up along the way:
Pay in cash
Many medical providers have a discounted price for services paid for with cash. To get the deal, most often you do not get to use your insurance, so there is no credit to reaching your deductible if you have a PPO plan. But if you are unlikely to hit your deductible anyway, it may be worth it.
Shop Around
Many people find themselves in health insurance plans that do not make sense for their needs. For example, a higher-priced HMO plan may not make sense for the 35-year-old who visits the doctor once a year. Alternatively, for dual-working couples, one spouse’s medical plan may have better family benefits than the other. Compare your options and costs to see if your plan matches your lifestyle.
Open an HSA
Health savings accounts are tax-advantaged accounts available to people with high-deductible health insurance plans. HSAs allow you to pay for medical expenses using before-tax dollars, which can net a savings north of 40% for taxpayers in the highest tax bracket. Contributions are limited to $3,350 a year for individuals and $6,650 a year for families, but unlike flexible spending accounts, you don’t have to use all the contributions in the same year. In fact, if you build up a balance over time, the account turns into an IRA at age 65 and distributions can come out for non-medical purposes.
Track All Expenses
Most people know to keep records of what they paid to their doctor, but there are many more expenses that should be tracked as potential itemized deductions. Chiropractors, dentists, acupuncturists and any other nontraditional medical practitioner visits count. Prescriptions are also just the start—eyeglasses, parking fees and even transportation costs can also add up to tax savings on your tax return.
Consider Filing Separately
If you have a year of high medical costs for one spouse, check with your CPA to see if it makes sense to file separate returns. Since medical expenses have to be over a 7.5% or 10% adjusted gross income amount before they are deductible, lowering the income for that spouse can help one reach that floor sooner.
Ultimately, all you need to do is keep good records, ask questions of the billing departments and put a little upfront work into making your health care plan perfect for you. No one wants to have to go to the doctor, but you can at least try to save some money when you do.
If you have questions about these or other savings options that may be available to you, then reach out an Abacus advisor. Schedule a call with our team today and see what a difference a financial partner can bring to your life and money.
