Financial Wellness: How to Stretch Your Healthcare Dollars
Jun 24, 2020 | Employee Benefits Communication|
Before this whole COVID thing, I went to the doctor for a regular check-up. It was my first visit with a new insurance policy, which means different costs and new rules to learn for maintaining my financial wellness. I’m kind of lucky in that my first real writing job was as an editor at Lloyd's of London Press. I got an education in all kinds of insurance that most master's degree programs can't match. Insurers receive a bad reputation and only some of it is deserved. Often, people don't know the rules until it’s too late and their bank accounts are suffering and, right now, there are plenty of reasons to be worried about financial wellness.
Insurance Is Part of the Larger Financial Wellness Equation
First off, insurance shouldn’t be the focus of your financial wellness program as an employer. But tips for saving money around healthcare can contribute to improved financial health. For instance, you don't need to go to the doctor to get a flu shot. Lots of places offer them free as flu season starts. Even if you only have a co-pay of $15, a family of four can save $60 this way. I get a flu shot every year but, this last year, I got busy, didn't bother, and got the flu. So, smart decisions help. Cancer screenings, blood-pressure assessments and other basics are often part of community health fairs.
Second, the tax code can subsidize your medical costs. When you pay out of pocket for medical care, the IRS lets you deduct it. But even if you don't, health savings accounts (HSAs) allow you to save money, tax free, to be spent on healthcare. Not all health plans allow for HSAs, though, so make sure you look to offer plans with tax benefits employees can take advantage of.
Gaming the Game
Learn how to play the game. There are rules to this game, some of which can be made to benefit you. Deductibles and HSAs, for instance, are calculated on a calendar-year basis. That being the case, have non-emergency procedures done in January and February rather than November and December. Why? You’re more likely to hit the cap on your deductibles this way. Once you do, the insurer picks up the rest.
Suppose you have $20,000 of medical procedures over six months and an annual deductible of $3,000. If those six months are in the same calendar year, you’ll pay $3,000 out of pocket and the insurer pays the rest. However, if you have the same procedures done the same way but starting in October, those six months fall into two calendar years. You would pay $3,000 and the insurer pays the rest until December 31. Then, you would pay another $3,000 in deductibles from January through March 31 because your deductible reset with the new year. So, depending on timing, you could pay twice as much out of pocket. You didn't make up the rules, but you can take advantage of them. Timing is important to your financial wellness when it comes to healthcare.
Seniors can take advantage of Medicare supplementary insurance. There’s a myth that when you hit age 65 in America, the Medicare system takes over all your bills. Wrong. Medicare has four parts: A, B, C and D. You’re still on the hook for about 20% of Medicare Part A, for instance. Part C is the supplementary insurance you don't have to participate in (but the premiums you pay can help cover the 20% of Part A that isn't covered). When you’re on a fixed income, that’s a big deal.
Stay Ahead of the Game
Financial wellness goes hand in hand with physical wellness. One of the things you can do to save money on healthcare is not getting sick in the first place. Employer wellness programs reduce the premiums paid for the company's policy but, at the same time, they can prevent you from needing medical attention at all. You can save a lot on blood pressure medicine if your blood pressure doesn't need treatment.
Save money by getting the right insurance plan. In an earlier post, I talked about decision-support tools and the importance of these employer-provided systems needs underscoring. For instance, a 25-year-old, non-smoking, single woman has different healthcare needs than her dad. Accidents are a bigger risk for her than illness. Her dad may need pills for conditions related to his age, weight or stress, while she just takes a multivitamin. Different needs translate to a difference in value for the same plan. With many plans undergoing changes in response to the pandemic, now's a good time to review changes with workers and remind them to examine their needs ahead of the next annual enrollment cycle.
No ‘Right’ But There Is a ‘Wrong’
There’s a trade-off between premiums and deductibles, making this a basic factor in financial wellness. True of almost any insurance policy, it affects the profit/loss risks for the insurer. If your premiums are low, you’ll have a high deductible and vice versa. Neither is ‘right’ and, no, the insurance company isn’t trying to rip you off. If you anticipate seeing your doctor once a year only to be told, "you're doing great," then paying higher premiums may not make much sense. You’re not going to hit your deductible even if the cap is low. If you have a condition that requires regular visits and tests, go ahead and pay the high premiums. You’ll meet your deductible faster and more will get covered by your insurer.
Billing in medical care isn’t a science. Mistakes in coding, data entry and many other tasks can affect your bill. Check your bills. If you think something’s wrong, there’s a chance it is. Challenge the bill and you could get a reduction. Make sure you understand balance billing and how to read your explanation of benefits.
Finally, things change – a fact that also has a good shot at becoming the motto of 2020. The laws governing insurance allow you to change policies when you experience certain "life events," such as divorce, death of a spouse, the birth of a child, etc. If your situation has changed, the policy you had last year might not be the best for you this year. My dad started 1961 as a single man. He ended it married with a kid (me). That's a lot of change in a calendar year. In just 12 months, his needs were completely different.
“An ounce of prevention is worth a pound of cure,” as the old saying goes. While that’s usually said about physical health, it’s just as true of financial wellness. Your healthcare dollars can stretch further if you plan ahead and learn the rules.