Q: I have a small child and over the past few years my employer has really increased the amount their employees pay towards their health care cost. It’s getting to the point that it’s making my finances tight. Is there anything I can do to save on health care cost or should I just look for an employer with better health care benefits?
A: Medical cost can certainly put a pinch on your finances. However, there are several actions that you can take to try to keep things in line. The following are a few ideas to help you survive these rocky times:
Participate in a Flexible Spending Account. A flexible spending account (FSA) is a tax-advantaged savings account set up through one’s employer. It allows an employee to deduct an amount per family from their paycheck pre-tax and then spend it on qualified medical expenses. By deducting the money pre-tax, it is not subject to payroll tax, thus decreasing the amount of tax one has to pay on their income. This could reduce your income tax bill come tax time and result in a greater refund. The drawback to FSA’s is that the money must be spent within the plan year. Any money left unspent at the end of the year is forfeited; this is known as the “use it or lose it” provision.
Prior to the enactment of the Patient Protection and Affordable Care Act, the Internal Revenue Service permitted employers to enact any maximum annual election for their employees. The Act amended Section 125 such that FSAs may not allow employees to choose an annual election in excess of a limit determined by the IRS. The annual limit will be $2,500 for the first plan year beginning after December 31, 2012.
Review your coverage options. HMO or PPO? Premier level or standard level of coverage? Higher deductible or lower one? All of these questions should be reviewed annually to ensure that your health care coverage properly aligns with your current health status and budget. If you know you’re health is failing in a particular year you may want to contribute to a FSA, go with a PPO and pay the lower deductible for the next year if you foresee your problem continuing. In relatively good health and only plan on seeing the doctor for your annual physical? Increase the deductible, only fund the FSA with the cost of that visit and watch your health care cost fall that year. While these are condensed versions of what can be done, the benefits specialist of your HR department can help you review your options and make an accurate decision.
Get those routine check ups. When we’re younger, we often “hope” that whatever is wrong with us will just magically fix itself. Bad idea when it comes to your health as time may be of the essence when it comes to certain ailments. Ignoring a problem will not typically make it better; in fact it will almost always have the opposite effect. For example, Mr. Rogers often recants how he didn’t recall seeing a dentist any of the four years while he was away in college. Result? Two root canals, several treatments for periodontal disease, several “new” cavities and broken fillings and about $4,000 in dental cost that mostly had to be paid out of pocket because he exceeded the annual plan coverage amount. Thus, make it a point to go to the doctor/dentist at least annually and get your check up, as preventative maintenance is much less costly then fixing a major problem.
Live a healthy lifestyle. Healthy eating decisions, routine exercise and living a balanced life can help to significantly reduce health cost, stress and your overall living expenses. For example, “brown bagging it” for lunch can reduce your monthly budget and put you in control of healthier eating options. Mc Chicken sandwich or homemade tuna sandwich with a teaspoon of salad dressing and some relish? Cost wise they are about the same but the tuna sandwich is lower in sodium, fat and calories. Walking the last few blocks to the job versus taking the bus can reduce your weight and increase the efficiency of your cardio vascular system, which can in turn reduce stress and high blood pressure.
All of the above, when combine with the previous three options, can lead to decreased health care cost, less frequent doctors visits and a better state of health in general. But if your employer keeps raising cost at an unbearable rate, you might have to take these tactics to a new employer with better benefits and coverage.