Insurance: Health Insurance
How to Cut Your Health-Care Costs
IN CASE YOU HAVEN'T noticed, medical bills are shooting through the roof.
And employees are shouldering a significant part of those hikes. While everyone is feeling the pinch, those in a preferred provider organization (PPO), the most popular type of employer-sponsored health plan, are getting hit especially hard.
Why? Employers are "buying down" premiums by raising the amount their employees pay in coinsurance and deductibles. If that's not bad enough, they're also penalizing those who receive more medical services and those who seek out-of-network services.
But there are steps you can take to ease your financial pain. First and foremost: Arm yourself with information by reading your health plan's benefits book from cover to cover. "Often there are ways to save money, but it takes some digging to find them," Kessler says. Here are some other suggestions from industry experts on how you can get the most from your PPO.
Stay in Network
You've heard it before, but it's worth repeating: Always try to choose doctors, hospitals and other providers that participate in your insurance company's network. And make sure all of their colleagues, including members of a surgical team, are part of the network, too. It could save you hundreds, even thousands of dollars in any given year. "It's the most important way you can save money," says Alwyn Cassil, spokeswoman for the Center for Studying Health System Change, a nonpartisan policy research center funded by the Robert Wood Johnson Foundation.
Why is it cheaper to stay in-network? Insurers use their muscle to negotiate discounted rates with in-network providers. Out-of-network providers, on the other hand, charge as much as 50% more for their services. Many health plans also charge members significantly steeper coinsurance rates and larger deductibles when members leave the network. And don't forget that you're on the hook for the portion of the bill that exceeds what your carrier considers a usual and reasonable fee for your region of the country. Now that's some painful medicine.
Learn to Negotiate
Alas, there may be times when you need to go out-of-network. What can you do? Negotiate. Ask your doctor to lower his or her fee. You'll be surprised to see how much wiggle room there can be. "I know that any of our doctors are amenable to this sort of discussion," says Barbara Vester, an administrator with American Private Physicians Association, a nonprofit group of independent doctors. "They all started out with debt and young families, and they understand."
The key to negotiating successfully is knowledge. Call your insurer and ask a customer-service representative how much the company will cover for the type of service you need. Then pass that information along to your doctor. If your doctor isn't willing to come down in price, you may want to find a physician who will. Certain insurers will even help you shop around. Cigna, for example, offers a cost-comparison tool on its Web site.
Manage Your Own Medications
"Prescription drugs are the single largest component of out-of-pocket costs for consumers," says WageWork's Kessler. One way to slash your expenses is to ask your doctor or pharmacist for a generic equivalent whenever possible. While a typical drug plan may charge a nominal copay of $9 for a no-name pill, a branded medication could cost you $35 or more.
When a generic substitute isn't available, ask your doctor if there's a comparable medication on your plan's preferred drug list. These medications will run you more than a generic, but they may be less expensive than other brand-name drugs. "In many cases, [these drugs] aren't the same but are in the same class, and often are interchangeable," says Judith Weitzman, vice president of clinical services for pharmacy-benefits manager AdvancePCS.
One last tip: Use your drug plan's mail service for maintenance medications for such ailments as high blood pressure and diabetes. Pharmacy-benefits managers buy these medications in bulk and pass along the savings to customers who buy directly from their warehouses. A typical plan will provide a 90-day supply of a brand-name medication for what it would cost you to pick up a two-month supply from your local pharmacist, says Weitzman. That could save you as much as $60 a year, she says.
Tax Breaks
Even if you keep your costs to a minimum, you'll still be stuck paying out-of-pocket expenses for your coinsurance, deductible and medication copayments. And chances are, they will add up this year to much more than you spent last year. "A healthy, young family of four shouldn't be surprised to see out-of-pocket expenses of $500 to $1,000," Kessler says.
What can you do? If it's offered, take advantage of your employer's Flexible Spending Account (also known as a Medical Spending Account), which allows you to set aside pretax dollars for medical expenses. Middle-class families that set aside $1,500 can save more than $400 a year in taxes. "It's like getting another tax break," he says.
And don't forget to keep track of all of your out-of-pocket expenses. The government allows taxpayers to write off any medical bills that exceed 7.5% of your adjusted gross income.
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