How to Minimize Your Health Care Costs

The average employee contribution for health insurance has soared more than 143 percent since 2000. Typical out-of-pocket expenses that consumers pay for deductibles, prescription co-payments and coinsurance for doctor and hospital visits have jumped 115 percent during the same period, based on facts compiled by the National Coalition on Health Care. According to the Virginia Society of CPAs, you and your family can still afford to receive the treatment you need by taking some simple steps to limit your costs.

Be tax savvy

Don’t miss out on the tax-advantaged options for lowering your health care costs. For example, find out if your employer offers a Flexible Spending Account (FSA), which will allow you to set aside some of your earnings tax free to cover unreimbursed medical costs, such as co-payments and deductibles, as well as items that might not be included in your plan, like eye care or eyeglasses, hearing tests, chiropractic care and the cost of prescriptions. It’s important to remember that you must use your FSA contributions in the year they are made or you will lose them, although your employer can give you an additional two and a half months to spend the funds. That’s why it’s a good idea to perform a careful estimate of your out-of-pocket health care costs during a recent year — and consider how that amount may change in the coming year —before contributing to an FSA account.

Health Savings Accounts are another option generally open to people under 65 who are covered by one high-deductible health insurance plan. Contributions are tax deductible and can be used to pay for the expenses that your insurance doesn’t cover. The earnings accumulate tax free and withdrawals are tax free when used to pay for qualified medical expenses —- but you will face a 10 percent penalty if you withdraw money for another purpose.

Examine your plan options

As another cost-cutting step, be aware that the health care plan with the lowest premium may not be the best one for you. In fact, you may find that it is more expensive in the end due to higher costs for co-pays or unreimbursed charges. A cheaper bare-bones plan also may cover fewer services or providers, which means you may face more out-of-pocket costs.

When picking a plan, your family situation will be an important factor. A family with young children may do better selecting one with low co-pays or deductibles — even if the premiums are a little higher than other options — because they may have frequent doctor visits. A younger single person or couple, on the other hand, might select a plan with lower premiums and higher co-pays if they rarely see the doctor outside of annual check-ups.

Be alert for errors

Check your medical bills for accuracy. Common hospital billing errors include duplicate charges, charging for extra days or for services that weren’t actually rendered or simple typos that can add dollars to your bill. Also, review the statements you receive from your insurer to verify that the facts are correct and that you received the right reimbursements.

Appeal decisions

Finally, if your insurance company denies coverage, you don’t have to take no for an answer. You have the right to appeal their decision and try to negotiate a better outcome.

Your CPA can help you understand the health care options open to you. Turn to your local CPA for advice on making the most of your health care dollars.

The Virginia Society of Certified Public Accountants (VSCPA) is the leading professional association dedicated to enhancing the success of CPAs. Founded in 1909, the VSCPA has approximately 8,300 members who work in public accounting, industry, government and education. For more information, please visit the Press Room on the VSCPA Web site at www.vscpa.com, e-mail vscpa@vscpa.com or call (800) 733-8272. For more information on financial literacy topics like money management, or to search for a CPA in your geographic region, visit www.FinancialFitness.org.  

© 2008 American Institute of Certified Public Accountants