5 easy ways to cut your health care costs

By Margarette Burnette Posted : 04/12/2011

Health care costsEvery year, health insurance premiums and medical care costs take a bigger bite of the average household's budget. But you can cut these costs without sacrificing good care.

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"There are opportunities to save on medical expenses, but not all of them are obvious," says Darcey Terris, an assistant professor of Health Policy and Management at the University of Georgia in Athens, Ga.

Whether you're weighing your options during employer-based health insurance open enrollment or searching for health insurance quotes, try these five tips to quickly and easily trim your health care expenses.

1. Put more money in your FSA

If you have access to a flexible spending account (FSA), don't leave money on the table. Maximize your contributions.

An FSA allows you to use pre-tax dollars to pay for expenses not covered by your health insurance. Such expenses include:

  • Health insurance deductibles
  • Doctor visit co-pays
  • Prescription drug purchases

Saving money in an FSA and applying it to your health expenses means you're effectively cutting your health costs – and keeping more of your take-home pay, she says.

"Depending on your tax bracket, the dollars in your FSA are actually worth 15 [percent] or 25 percent or more than [other] dollars that come from your net salary," Terris says.

The trickiest part of using an FSA is anticipating what your health costs will be in the coming year. Make sure you estimate carefully, because if there's any money left unspent at the end of the FSA qualifying period, you'll lose the remaining amount.

2. Switch to an HDHP

As the name implies, a high-deductible health plan (HDHP) is a type of health insurance that has steep annual deductibles of around $1,500 to $3,000, or more. So why would you choose such a plan if you are trying to save money? For a couple of reasons:

  • Premiums for HDHP health plans are generally lower than those for traditional health plans.
  • If you have an HDHP plan, you can use it to channel pre-tax money into a health savings account (HSA). "HSA money can grow tax-free, and can roll over from year to year," says Ellen Laden, a spokesperson for UnitedHealthcare's Golden Rule Insurance Co. in Indianapolis.

But they won’t save everyone money. HDHPs – which are sometimes known by the misnomer "catastrophic health insurance" – are a bit of gamble. They can be costly if you go to the doctor often, because your health care is paid out-of-pocket until you reach your deductible.

However, an HDHP can boost your financial bottom line if you're in relatively good health and don't need to visit the doctor often, Terris says.

"If you can get a high-deductible plan and keep yourself healthy, you're going to save a bundle," she says.

3. Stay in the network

One very simple way to cut your health care costs is to make sure you only see physicians who are in your plan's network, says Laden.

"In-network discounts can save you up to 50 percent on your health care even before you meet the deductible," she says.

Likewise, if you get a referral for a specialist, make sure that provider is in your network, too.

4. Exercise and eat right

Some of the methods in this list – such as maximizing FSA contributions – pay off quickly. Others also are likely to reduce health care costs, but it may be many years before you realize the savings.

For example, regular physical activity and eating a sensible diet can help ward off chronic illnesses that require regular visits to a doctor's office and the ongoing use of prescription medications.

Exercise and a healthful diet are known to reduce expensive health problems such as:

  • High blood pressure
  • High cholesterol
  • Diabetes
  • Heart disease

In addition, a growing number of employer health plans now offer financial incentives to employees who join a gym or participate in a weight-loss program, Terris says.  Companies reimburse a portion of the gym membership or let employees earn cash rewards for reaching activity and weight-loss goals, she says.  This money can go toward insurance premiums and reduce overall health care costs.

5. Visit retail health clinics

With names like MinuteClinic and RediClinic, these facilities are usually located within drugstores and supermarkets that have pharmacies. The centers provide routine health services such as flu shots and strep throat tests, says Terris.

Clinics are often staffed by nurse practitioners, and they typically accept insurance, Terris says. For people who don't have health insurance, there's a fee schedule, and many services are less than $100, she says.

"Retail clinics can be a cost-effective option, especially if you have an acute minor issue," she says.

Although clinics can be low-cost and convenient for short-term needs, you should still have a primary care physician who can keep track of longer term issues as they arise, she says.

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