Savings Ideas for Health Insurance
The growing cost of medical services and health insurance in the United States is a problem that is not isolated to a single demographic. Many people are impacted. The latest surveys of American businesses report that health insurance and benefits are one of their greatest expenses, second only to employee payroll.
Companies used to subsidize a greater share of the cost of insurance, but now employees – especially those with families – bear a far greater burden than ever before. As a result, households are paying more in out-of-pocket costs for health care whether they have employer-sponsored coverage or buy it on the individual market.
If health care expenses are increasingly taking up a larger portion of your household budget, we may be able to help. There are various types of insurance products and tax-advantaged savings accounts that can help defray out-of-pocket spending. It’s also worth consulting with a tax professional to assess how you may be able to deduct medical expenses from your return – one of the few deductions still available for those who itemize.
There is currently great debate over whether America’s system of paying for health care can be fixed or if it needs to be entirely overhauled. For years, the health insurance industry has pursued a strategy of encouraging their members to become more informed medical care consumers – to basically “shop” for lower prices and better value among providers and facilities. It’s true that many people are now more aware of how prices can vary, but this knowledge is often borne out of unfortunate experience.
There are ways to help fix the broken system. For example, pharmaceutical companies lack transparency in how they price drugs, and it seems they vary what they charge for the same medications based on who can afford to pay more. A study conducted in 2018 found that approximately one out of every five prescriptions requires a higher out-of-pocket payment for insured people than the standard retail price for uninsured patients.
To make matters worse, insurers made pharmacists agree not to inform customers of the discrepancy in price if they wanted to be included in the insurer’s network. Congress recently passed legislation negating this “gag order” on behalf of patients. However, the practice of charging the insured more than uninsured patients still exists, so you should always ask for a comparison between the two prices. Even if you have drug coverage, you are allowed to pay the uninsured price and cash in on those savings.
Another form of insurance that may need further scrutiny is dental. A basic dental insurance plan typically covers cleanings, fillings and other routine care. However, more complex procedures such as a crown, bridge or root canal may only be covered for half the cost – if any coverage is provided at all. Furthermore, dental insurance usually has pretty low annual caps compared to medical insurance, such as $1,000 or $1,500 per year.
One way to expand coverage for dental care is to see what your health care insurance plan might cover. Often these policies will provide at least some coverage for procedures deemed “medically necessary”, such as dental repair resulting from injury, some periodontal surgery and even appliances prescribed for sleep apnea. It’s a good idea to call your insurer and/or review your policy for dental services that are categorized as either covered or excluded services. Some dentist offices are starting to collect health insurance information from patients and even filing relevant claims on their behalf.
Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app.
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We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
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