A High Deductible Health Plan (HDHP) can be a wise way to save money on health insurance and take a proactive role in your healthcare.
A lower monthly premium gives you the power to choose how you want to spend your reserved healthcare funds. Instead of contributing your hard-earned dollars toward a healthcare network account, you can invest that same money, tax-free, into your HSA for your own medical costs and even earn interest.
Budgeting for better health
Traditional healthcare plans focus on managing your health benefits, but HDHPs focus on managing your health and your budget. If you can be self-disciplined and plan ahead, your HDHP will offer you flexibility and control. Here are some guidelines on how to maximize your cost savings and make your HDHP work for you:
Open an HSA and contribute the maximum amount each year
To open and put money into a Health Savings Account (HSA), you must have an HDHP. This is regulated by the Internal Revenue Service. Think of your HSA as a unique bank account whose sole purpose is to fund your HSA-qualified expenses. You are eligible to reserve $3,450 annually (pre-tax) for an individual and $6,850 (pre-tax) for a family to pay for qualified medical expenses, including your deductible. You can even request an HSA debit card that is linked to your HSA. This allows you to immediately pay for covered medical expenses using your reserved HSA dollars, instead of requesting to be reimbursed from your HSA later . Another advantage is that the dollars in your HSA account do not expire, so they roll into the following year if you do not use them.
When you open and fund an HSA, you have the flexibility to:
- Pay for eligible medical expenses on a claim-by-claim basis using your HSA or
- Use your own personal funds to cover medical expenses and save HSA dollars for future use
This is where personal monthly budgeting can help you get ahead. If you pay toward your deductible with your own funds and leave your HSA intact, you can accumulate a large savings account that can accrue interest.
Consistently building into your HSA can benefit you in two ways. You will be financially secure in the event of an unexpected medical event because you have funds readily available. You can also accumulate a sizable reserve for when you decide to enroll in Medicare (Part A and/or B). Although the IRS will not allow you to contribute to your HSA after you enroll in Medicare, you can still withdraw money from your HSA to help pay for medical expenses such as deductibles, premiums, copayments and coinsurances. As long as you use your HSA for qualified medical expenses, it will continue to be tax-free.
Price compare in-network doctors and facilities
There is no standard cost for a doctor visit or elective medical procedure, which means there can be huge cost variation among doctors and facilities in the same geographic area. Just as you would shop around before purchasing a new car, you should compare prices of doctors and facilities. By calling around to find low-cost, high-quality healthcare, you will be able to make informed decisions about how you spend your HSA funds.
Federal and state-initiated programs on healthcare price transparency allow you to obtain information regarding specific health charges and provider payments. This has not always been the case, but thanks to recent transparency laws, you are perfectly within your rights to call a doctor or facility and inquire about the cost of services such as non-emergency procedures and tests.
One of the best ways to reduce your medical costs is to stay in-network. Schedule your appointments with in-network doctors, and choose an ambulatory surgery center (ASC) over a hospital if you need an outpatient procedure. ASCs are modern healthcare facilities focused on providing same-day surgical care, including diagnostic and preventive procedures. They are a convenient alternative to hospital-based outpatient procedures, and many patients prefer ASCs because they offer quality care, personal service, convenient access, shorter wait times and lower cost. According to the Journal of the American Academy of Orthopedic Surgeons, ASCs save consumers between 17 and 43 percent compared to hospitals.
The role of screenings and lifestyle habits in preventive care
It is always more expensive to treat a disease than to prevent it. Preventive screenings like mammograms, colonoscopies and annual physicals offer early detection, quick intervention and disease prevention. HDHPs do not require you to pay for covered preventive care services as long as you stay within the guidelines of your plan. You may be required to see a doctor within your network for the procedure to be covered at 100 percent.
As much as 70 percent of healthcare spending can be attributed to behavioral and lifestyle choices. HDHPs encourage healthy lifestyle habits that keep your healthcare costs down. Because you pay out-of-pocket when you go to the doctor, staying healthy keeps money in your HSA where it belongs. Unhealthy choices like smoking, drinking alcohol and not exercising increase your risk for chronic conditions like heart disease, diabetes and cancer. These conditions are associated with frequent doctor visits, expensive medications and hospitalizations. Good nutrition, regular exercise, annual wellness exams and preventive screenings can save you thousands of dollars each year in medical costs.
Take control of your budget and your health. Consider an HDHP so you can get the most out of your healthcare plan. High-quality medical care does not have to be expensive, so inquire today about an HDHP that fits your needs.