Money Matters: How to Research and Reduce Healthcare Costs

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By Nathaniel Sillin

Whether you’re planning a future procedure or navigating care after a sudden illness or accident, smart consumers have a plan in place to avoid hidden costs and billing errors common to our ever-changing healthcare system. You should too.

The Affordable Care Act (ACA) made it possible for all Americans to get some form of healthcare coverage regardless of their medical history. That’s the good news. The bad news is that everyone’s personal health circumstances and solutions are different, and we’re still far away from the day when the coverage we buy – either individually or through our employers – can prevent us from getting unexpected bills for services and procedures our insurer didn’t cover or errors made in the billing process.

It’s also important to know that many health insurers are adjusting to the reality of universal coverage by narrowing the assortment of doctors in their networks, leaving more patients at risk of “surprise bills if they are treated by practitioners outside their insurer’s network.

There are some helpful resources – both public and private  – which have emerged that price health procedures. Using those resources can help avoid some major out-of-pocket healthcare expenses. It’s also essential to determine what practitioners may be in or out of network, particularly if it’s an emergency.

So what can you do to prevent these unexpected health costs? If you are not on Medicare, which tends to have more standardized pricing and coverage, you need to question practitioners (or their billing departments) and price-comparing procedures the way you would any major purchase. Depending on your local medical resources, you may have the option to conduct your research online. Here are some ways to begin.

Know how you’re covered for both emergencies and non-emergencies. It’s easier to plan for a hip replacement you’ll need in six months than for emergency surgery after an accident or sudden illness, but it’s important to think through how your coverage works in both situations:

  • 178581-ambulance.jpgEmergency: Emergencies are a challenge to price because it’s tough to know which practitioners and services you’ll actually need. The key is to make a plan for emergencies. Speak to your insurer now – and consult your primary care physician – to confirm that you have a good range of in-network emergency doctors at the hospital of your choice. If not, you might want to think about switching plans during your next enrollment period. Put an easy-to-find “in case of emergency” card in your wallet next to your health insurance card that makes your preferred hospital visible to first responders or other helpers. Also, list your primary care doctor’s and your health care power of attorney‘s contact information. Finally, make sure the person you designate as your health care power of attorney has access to your insurance and physician network information so he or she can guide your care more affordably if you’re incapacitated.
  • Non-emergency: If your doctor is recommending a particular in-hospital or outpatient procedure in the coming weeks or months, you’ve got time to plan, so do it. Query your physician or his or her billing department about the cost of the procedure and what other practitioners (such as an anesthesiologist) might be involved. Then spend equal time speaking with your insurer about what you’ve learned and how extensively the procedure in question will be covered. Make sure you understand if your insurer covers the procedure on an inpatient (hospital) or outpatient (office) basis – some insurers are reportedly cutting back on outpatient coverage.

Know your deductible. The latest annual Kaiser Foundation employer health benefits survey indicated some whopping figures for health care deductibles – the out-of-pocket total you have to pay before the bulk of your health coverage kicks in. For example, if you have a $3,000 deductible that you haven’t touched this year, that’s the initial out-of-pocket amount you’re going to have to pay for any big procedure. Keep that figure in mind as you continue your research on medical options. That’s why it’s important to keep such sb10067502k-001-F.jpgamounts in an emergency fund or, if you have the option, set aside in a health savings account where you can keep funds not only for the deductible, but for other potential out-of-pocket health costs.

Review bills closely. One recent study has reported significant errors in medical bills, particularly for hospital stays. Keep in mind that the price-comparison exercise doesn’t stop on the way in to a procedure. You need to keep an eye on pre- and post-procedure bills from practitioners, hospitals and your health insurer for accuracy. If you see an error, contact the appropriate party or parties immediately to correct the problem.

Bottom line: There are very few industries going through as much change as healthcare. Universal coverage is good, but it’s important to know exactly what it pays for before you need it. Set aside time to think through your health issues and do your research to help reduce healthcare costs that can impact your overall budget. Learning to save money now can preserve your budget later.

 

Money Matters: 10 Open Enrollment Mistakes to Avoid

By Nathaniel Sillin

How much time do you spend reviewing your benefits before open enrollment each year?

If your answer is “not much,” you’re not alone. A recent survey by insurer Aflac says that 90 percent of Americans choose the same benefits year after year and that 42 percent forego up to $750 annually by making poor choices.

Rushing through annual benefits updates or making such uninformed decisions in insurance, retirement or other workplace-based benefits are actually part of a bigger story. Open enrollment is just one part of an overall financial plan: Unfortunately, too many employees see it as the only financial planning they have to do all year.

In reality, a safe financial future depends mostly on the savings, investing and spending decisions you make outside the workplace. As many employers are looking to shrink or discontinue the retirement and health benefits they offer, it’s time to take a fresh look at open enrollment.

Here are 10 benefits mistakes you might want to avoid:

  1. Not having an overall financial plan. Your company may offer excellent benefits now. However, a 2013 study published by the Bureau of Labor Statistics reports that average worker tenure at U.S. companies is only 4.6 years. So the biggest open enrollment mistake might be assuming your current benefits assure your financial future. It’s important to work alone or with qualified advisors to determine the right work-based benefits as part of overall spending, savings and investment activities throughout your lifetime.
  2. Making choices at the last minute. Your benefits are important and deserve time for consideration. Put your open enrollment dates on your personal calendar with a reminder a few weeks ahead of time to coordinate with qualified advisors if you have them.
  3. Forgetting to coordinate with your spouse or partner. Many employers are planning big changes to spouse/partner benefits. While the Patient Protection and Affordable Care Act (ACA) lets parents keep children on their health plans until they turn 26, more employers are instituting “spousal surcharges” or excluding spousal coverage altogether if they already have access to employer health insurance.
  4. Ignoring your state’s Health Insurance Marketplace. Even if you have employer health insurance, things change. If you lose a job or cannot stay on your spouse or partner’s health plan, it might be worthwhile to familiarize yourself with your state’s ACA-mandated health insurance marketplace ahead of time.
  5. Underestimating how big life events might affect your benefits. Salary changes, marriage, divorce, serious illness or starting a family are big signals to check your benefits, preferably well in advance of open enrollment. Think through every potential situation you might face and ask questions about how those changes might affect your benefit selections.
  6. Passing on flexible spending accounts (FSAs) and health savings accounts (HSAs). FSAs are workplace-based accounts that allow you to set aside money on a pre-tax basis to help you pay for healthcare and dependent care expenses during the calendar year. HSAs, if you qualify, also allow you to set aside pre-tax dollars in a qualified investment or savings account for long-and-short term medical expenses not covered by insurance. They don’t require you to spend out those funds every year. Your workplace benefits counselor, qualified financial advisor and Internal Revenue Service Publication 969 can assist with eligibility, types of accounts, contribution limits and tax issues associated with these choices.
  7. Leaving retirement selections unchanged. As the Aflac data indicates, many individuals don’t change their investment focus in self-directed retirement plans for years. That’s why reviewing options in advance is essential.
  8. Overlooking wellness options. Many employers pay for exercise, cholesterol screenings, weight loss, smoking cessation, immunizations or related benefits that can make you healthier, save money and possibly lower health premiums.
  9. Bypassing transportation breaks. If you drive or take public or company-sponsored transportation to and from work, you may qualify for specific discounts or tax deductions. IRS Publication 15-B covers these programs and how to use them most effectively.
  10. Forgetting education benefits. If an employer is willing to train you to advance in your career, don’t pass it up. However, get advice on the possibility of tax liability for these benefits. Separately, check out employer-sponsored education grant or scholarship awards for you or your kidsthat can be free money.

Bottom line: Open enrollment is just one piece of a well-organized financial puzzle. Make sure your employer provided benefits choices compliment savings, investing and spending decisions you’re making on your own.

Nathaniel Sillin directs Visa’s financial education programs.
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