If you’re looking for the most cost-effective insurance plan, you might be drawn to a high-deductible health plan. Because the deductible for this type of plan can be as much as $1,000 or more, you typically pay lower monthly premiums, which can leave you with more money for other expenses. But if you get sick, you may pay more out of pocket for your healthcare costs.
With all of the factors associated with healthcare and healthcare costs, it’s important to think carefully when you compare health insurance plans and which one is right for you.
Here are some things to consider when evaluating different healthcare plans.
1.Health comes first.
When contemplating healthcare plans, keep in mind the state of your own health. If you see certain healthcare providers or take certain medications in order to maintain your health, some of these healthcare plan best practices may not apply to you.
2. Shop around.
We shop around for almost everything in our lives, and healthcare should not be any different. This is especially true when you consider that average healthcare costs can vary widely, depending on the facility and where it is located. In some cases, the variance in cost for the same procedure may vary by thousands of dollars. Compare prices at different facilities that accept your health insurance policy to find the best price.
3. Negotiate costs.
You can do more than shop around for the most affordable healthcare. In some cases, you can negotiate costs with healthcare providers.
Some healthcare facilities may be willing to negotiate on price if you have a high-deductible health plan. Other providers may offer a discount if you pay with cash and then handle reimbursement paperwork for your insurer on your own. At the very least, it’s often possible to arrange a payment plan with your healthcare provider and worth asking if you’re unsure.
4. Use a flexible spending or health savings account.
Another way to save money when you have a high-deductible health plan is with a health-related savings account. There are two main account types to consider:
- Flexible spending account (FSA): Money for your FSA comes out of your paycheck pre-tax, reducing your income (and your tax liability). You can use this money for qualified health expenses. It’s important to note that there is usually a “use it or lose it” policy with an FSA; although new federal guidance allows employers to let employees roll over a portion of their FSA money to the new year or to grant them a brief grace period in which to use it. Despite this, it’s still a good idea to use the money in your account by the end of the year so that you don’t run the risk of losing it.
- Health savings account (HSA): Only people who have a high-deductible health plan can open an HSA. With an HSA, your money rolls over indefinitely, so you don’t have to worry about losing it if you don’t use up the funds. Not only are your contributions tax-deductible, but they also go into an account that earns interest, and if you use the money for qualified health expenses, it is tax-free. This can mean big savings to you over time because the right planning means you never pay taxes on the money involved with your HSA.
While there are issues to consider, having a high-deductible health plan can save you money in a variety of ways. Put the money you save in a tax-advantaged account, and when you do need to pay out of pocket, it will be more manageable.
Miranda Marquit is a freelance journalist specializing in financial topics. Read more of her writing on Huffington Post, Wise Bread, AllBusiness, and at her website, Planting Money Seeds.