How to Save Money on Medical Costs
According to CNBC, the average household spends around $5,000 annually per person on medical expenses. Since these expenses make up a hefty amount of our annual spending, dedicating some time and attention to understanding your options is a big factor in saving money in the medical world. We've put together the best practices to take advantage of in order to save money on medical costs.
Negotiate Medical Bills
I learned something a few weeks ago listening to one of my favorite podcasts, the ChooseFI podcast. It is possible to negotiate your medical bills! If only I had known that before paying about $10,000 out-of-pocket for the birth of my children.
Hospitals and providers will often negotiate with you on the bill. The reason: They don't want to lose out on money. As the guys over at ChooseFI explain it, most hospitals have a fairly short turnover time between trying to collect on a bill internally and turning it over to a debt collector. Hospitals, in turn, lose out on a lot of money because even if the debt collector is successful in getting the bill paid by the debtor, they never get the original bill amount back due to fees and commissions from the collector. Therefore, it's in the hospital or medical provider's best interest to negotiate with you.
According to Steve Neeleman, a board-certified physician, the best time to negotiate your medical bills is in the morning a few weeks after you received the bill.
If you have the option to pay the bill in full, ask for a paid-in-full discount. Be kind and courteous, but start with a lowball discount offer. Just like in any haggling, if they say no, you can try to slowly go up and meet at a middle figure.
Set up a payment plan
There is nothing wrong with telling the billing department that you simply cannot afford to pay the hospital bill. You can ask them to reduce it, to be put on a payment plan (which often doesn't charge any interest), or ask about any available programs that may help you pay it off. Modest Needs is one such organization. They are a non-profit organization that gives financial assistance to individuals and families who work and live above the poverty level and therefore don't qualify for social assistance. Other growing sources of funding are sites like Go Fund Me, whereby many people ask for donations on medical-related expenses.
Thoroughly check over medical bills
Medical bills look completely foreign to most people. One public opinion study found that 72% of patients don't fully understand what they owe. I, for one, never can understand most of the medical codes and jargon listed on medical bills. And unfortunately, most people, like me, are apt to simply hand over our hard-earned cash and pay whatever that "amount due" box tells us to. However, the Patient Advocate Foundation estimates that at least half of all medical bills contain errors, so it's definitely worth taking a closer look at your bills.
Understand your bill
To start, it's best to always ask for the itemized statement for your bill to see exactly what you are being charged for. Just by doing so, you might find you were erroneously charged for a service or item. If you believe something is wrong, you always have the option to file an appeal against your health insurance for any denied claims.
Next, research current procedural terminology (CPT) used in coding medical bills. You can perform a Google search for individual codes on your bill. Fair Health is a great resource for looking up estimated costs on medical procedures.
Check to see if you were billed for an inpatient or outpatient service. For example, check to make sure you weren't wrongfully charged as an inpatient for an overnight visit to the ER, as this usually should be charged as an outpatient, which costs significantly less.
Match up the medical codes on your bill with the insurance claim to make sure they match. Likewise, check for upcoding errors. This occurs when an unwarranted higher diagnostic pay code is entered on your bill. Some examples are when codes for complex anesthesia are used when simple sedation was performed, or a procedure was billed as being performed by a doctor when it was actually done by a nurse.
A great resource for people that don't want to do the research themselves is CoPatient. They will do the digging and negotiating for you. However, they do collect a fee from the money saved, but only if they are successful.
Shop around for Medical Care
Compare Insurance Options
It's important to understand your options when choosing a health care plan. With employer-sponsored coverage, medicare, individual insurance, Medicaid, and children insurance plans, it can be confusing trying to figure out which is your best option. Before making any decisions, you should look into each of your options and compare costs and benefits. Usually, employer-sponsored plans are cheaper than individual plans. However, you shouldn't assume that the health insurance plan offered through your employer will be a better option than choosing Medicaid.
Not all hospitals are equal. Nonprofit hospitals almost always charge patients less than their for-profit counterparts. If possible, it's best to find out how much your hospital options will cost you beforehand. The New York Times has a great tool that lets you search for hospitals near you and compare average costs.
Research HSAs and FSAs
Health savings accounts (HSA) are pre-tax savings accounts that allow you to set aside money for medical expenses. The benefits: You won't pay taxes on that money, and it will grow in interest! Many employers will even match the money you put in your HSA or give an employer contribution to the HSA.
A flexible spending account (FSA) is similar to HSAs in that the money is pre-tax for medical expenses and often entails employer contributions; however, in most instances, funds in an FSA must be used by each year-end, or the money will be forfeited.
The United States spends more money on healthcare than any other country. Unfortunately, experts don't believe the considerable increases in health care costs will lessen anytime soon. In fact, studies believe that healthcare spending will increase by about 5% annually from 2020-2027. The key takeaway from all of this is to understand your options and rights when paying for medical costs.
If you're one of the 800 million employees who can expect to have their jobs taken over by robots by 2030, now might be a good time to look over those company policies regarding severance. There might be protections in place that will keep you from moving into the poor house even if you do find yourself out on the curb.
What Is Severance?
Severance is an employee benefit paid to workers who are laid off or terminated for matters unrelated to their job performance. Is your department being eliminated? You might get a severance package. Fired because you stole from the company? Or quitting to live your dream of #vanlife? Sorry, severance is likely not in the cards.
Who Gets It?
In general, companies aren't required to provide severance packages, and most employees do not have a legal right to a severance package when their employment ends. When companies do offer severance packages, it's not just to be nice. Severance agreements can help reduce an employer's legal liability, and as such, many companies will offer severance packages regardless of whether they are required to do so. Check your company's policy or the employee handbook to find out what's on offer.
When to Negotiate
There are two good opportunities to negotiate a severance package, Jaime Klein, founder, and president of Inspire HR, told Refinery29: At the beginning of the road, when you're hired, and at the end.
Bringing up severance during the hiring process is a little like asking someone to sign a prenup; it's a delicate subject at best. These days, though, with so many industries on shaky ground, Klein says it's usually okay to ask once an offer has been extended. After the layoff, remember to be polite and have a rationale for your negotiation request.
Remember: If your workplace is unionized, you will likely be able to negotiate better severance policies, and your right to do so is legally protected.
What Can You Expect in a Severance Package?
Severance packages usually include some form of payment based on length of employment, typically one to two weeks for each year you were with the company. It's given as a lump sum or paid over a number of weeks or months. Your severance agreement should also include any accrued but unpaid PTO or vacation pay.
Under the Consolidated Omnibus Budget Reconciliation Act of 1995 (COBRA), a terminated employee is entitled to continue medical/health coverage under the company's plans for up to 18 months after termination (or up to 29 months if the employee is disabled). These premium payments are your responsibility (Sound no bueno? See "What Else Can You Ask For?" below.).
You might be asked to sign a non-disclosure agreement (NDA) as a requirement to benefits like severance pay and COBRA. More on that below.
What Else Can You Ask For?
The agreement isn't cut and dry, notes Richard Harruch on Forbes, and there are a number of things you can ask for:
Can you get the severance in one all-cash lump sum upfront, instead of spreading it out over time?
Can the severance pay also include any partially or fully accrued but unpaid bonus?
If the severance pay is the continued salary for some period of time, does the continuation pay continue even if the employee gets a new job?
Can your employer cover the COBRA payments for anywhere from 6-18 months?
If your termination is a result of a "change in control" of the company (like a merger or other acquisition), you might successfully argue that the severance pay should be greater. But be aware that such change in control payments could rack up a 20% excise tax on the employee.
Go over any non-compete clauses of your severance or hiring package with special attention to geography, scope of the agreement, and duration. Many employers will be open to narrowing the scope of this after a layoff.
That NDA you had to sign? They might make it a two-way street, suggests Harruch. Language that some employers have approved is: "The Company shall not authorize and shall take reasonable measures to prevent its present or former officers or directors from making derogatory or disparaging statements regarding Employee to any third party."
You might go one step farther than including language that bars the company from speaking ill of you and require that a section of the severance agreement include language that requires your positive recommendation. For example, "company acknowledges and agrees that Employee has performed admirably in his/her work with the Company and Company will provide positive recommendations to any interested new employers of Employee." Or, you ask for glowing recommendation letters from supervisors and have the company provide those letters to any prospective new employer.
Know Your Rights
If your company has more than 100 employees and plans to lay off a lot of people, your employer is required to give you 60 days notice of a company closing or a large departmental closing. If they don't, you are legally entitled to severance pay, thanks to the W.A.R.N. Act (Worker Adjustment and Training Notification).
If you are over 40 years old and the company offers you a severance package, the company must give you at least 21 days to consider it and 7 days to revoke after you sign the package, thanks to age discrimination laws.
Some states, like California, have more protections in place for workers whose employment ends without cause. In other places, such as New York, employment is "at-will," and either employer or employee can end a working relationship for any reason. Wherever you live, research and familiarize yourself.
Look to the future
Getting laid off is like a breakup you didn't see coming. It's disorienting, can ruin your sense of self, and rock your most basic sense of security. It's also part of life and something you will survive.
"Getting reorganized, laid off, restructured happens to nearly everyone," Klein said, and it's rarely personal. "Unfortunately, companies have very little loyalty to employees anymore."
Once you've picked yourself up and dusted yourself off — and yeah, you might need to cry and sulk, just like your last broken heart — get back to work. Your job now is finding a new job, and often a former employer will offer outplacement services to help you spiff up your letters and resume. Even if they don't, work your network and keep your head high. You've gotten a job before, and you can do it again.
How to Buy Affordable Health Insurance
In many ways, purchasing health insurance in the age of the Affordable Care Act (ACA) is easier than ever. With an open marketplace, insurers are forced to compete with one another for your business. Still, it can be difficult to navigate a few key points: Are you choosing the right plan? When do you make your move? What is the best value for your specific health situation? Here are some resources and guidelines that are a great starting point when navigating the muddy insurance waters:
Step 1: Do your research!
The ACA allows many Americans to get subsidies for their monthly health insurance premiums. To see if you qualify for income-based savings in a Marketplace plan, use this tool:
Step 2: Understand the offerings in your home state!
Each state has a unique marketplace. Here's a comprehensive guide to understanding yours: State-by-State ACA Guide. The website that produces the independent and comprehensive guide, Healthinsurance.org, has been up and running since 1994. Their website offers state-by-state information about the open-enrollment application windows, FAQ's about the qualifying events and circumstances that can help you bypass the enrollment period (for example, if you get married, lose your job, or have a child, for example), and much more.
Each state has different health insurance statutes... research yours!upload.wikimedia.org
Step 3: Understand your other options
Are you a full-time employee, or is your spouse or domestic partner? It's possible that opting into a ESI (employee-sponsored) plan will be cheaper than searching on the marketplace during the open enrollment period. If you've been laid-off, it's worth checking out the Consolidated Omnibus Budget Reconciliation Act (COBRA) plan, which acts as a temporary bridge from your former employer sponsored health plan. It's important to understand that COBRA plans aren't necessarily the most affordable option, but they're great if you need quick access to the same doctors and treatments that you had under the ESI plans.
Step 4: Know the lingo
Choosing a health insurance plan can be complicated. Knowing just a few things before you compare plans can make it simpler. Here are some guidelines provided by Healthcare.gov:
The 4 "metal" categories: There are 4 categories of health insurance plans: Bronze, Silver, Gold, and Platinum. These categories show how you and your plan share costs. Plan categories have nothing to do with quality of care.
Your total costs for health care: You pay a monthly bill to your insurance company (a "premium"), even if you don't use medical services that month. You pay out-of-pocket costs, including a deductible, when you get care. It's important to think about both kinds of costs when shopping for a plan.
Plan and network types — HMO, PPO, POS, and EPO: Some plan types allow you to use almost any doctor or health care facility. Others limit your choices or charge you more if you use providers outside their network.
The HHS.gov (U.S. Department of Health and Human Services) also has a great resource that explains, state by state, who is eligible for Medicaid and the recently adopted Medicaid Expansions.
Step 5: Understand the differences between Medicare and Medicaid
HHS.gov sums it up like this:
Medicare is an insurance program. Medical bills are paid from trust funds which those covered have paid into. It serves people over 65 primarily, whatever their income; and serves younger disabled people and dialysis patients. Patients pay part of costs through deductibles for hospital and other costs. Small monthly premiums are required for non-hospital coverage. Medicare is a federal program. It is basically the same everywhere in the United States and is run by the Centers for Medicare & Medicaid Services, an agency of the federal government. For more information regarding Medicare and its components, please go to http://www.medicare.gov.
Medicaid is an assistance program. It serves low-income people of every age. Patients usually pay no part of costs for covered medical expenses. A small co-payment is sometimes required. Medicaid is a federal-state program. It varies from state to state. It is run by state and local governments within federal guidelines. To see if you qualify for your state's Medicaid (or Children's Health Insurance) program, see: https://www.healthcare.gov/medicaid-chip/eligibility/
Step 6: Know when to ask for help
There's no question that shopping for health insurance can be overwhelming. Fortunately, there are agents set up to help you across the nation that are free and knowledgeable. Use this website to type in your zip code and get access to your state's marketplace. Help is just a few clicks or a phone call away! https://localhelp.healthcare.gov/#/
WalletHub, a personal finance website just released an in-depth analysis of the highest and lowest uninsured rates by city andstate for 2016.
With the national uninsured rate for health coverage at a record low of 8.6% as per WalletHub, it's time to take a closer look into this trend and where the uninsured rates are the highest and lowest to make changes nationwide.
This topic is of great interest these days more than ever, due in part to the presidential campaigns and debates. Voters care about the future of healthcare and how they can get better coverage for themselves and their families.
Here is a summary of WalletHub's findings which was determined by city population size, age group, race/ethnicity, and household income, and was collected from the United States Census Bureau. Is your city or state featured as the highest or lowest when it comes to uninsured rates? If so, does your personal situation match the analytic findings?
States with the Lowest Uninsured Rates:
1. Massachusetts (2.82%)
2. Vermont (3.82%)
3. Hawaii (3.97%)
4. Minnesota (4.51%)
5. Iowa (5.03%)
6. Wisconsin (5.66%)
7. Rhode Island (5.71%)
8. Delaware (5.85%)
9. Connecticut (5.95%)
10. West Virginia (5.95%)
States with the Highest Uninsured Rates:
41. Wyoming (11.53%)
42. Montana (11.65%)
43. Louisiana (11.95%)
44. Nevada (12.28%)
45. Mississippi (12.69%)
46. Florida (13.33%)
47. Georgia (13.85%)
48. Oklahoma (13.90%)
49. Alaska (14.86%)
50. Texas (17.10%)
See all state findings here.
Cities with the Lowest Uninsured Rates:
1. Pleasanton, CA (1.17%)
2. Cambridge, MA (1.30%)
3. Naperville, IL (1.44%)
4. Highlands Ranch, CO (1.45%)
5. Newton, MA (1.47%)
6. Fishers, IN (1.57%)
7. Quincy, MA (1.62%)
8. Milpitas, CA (1.98%)
9. Alameda, CA (2.20%)
10. Waldorf, MD (2.33%)
Cities with the Highest Uninsured Rates:
539. Mesquite, TX (23.88%)
540. Pasadena, TX (24.64%)
541. Mission, TX (24.75%)
542. Edinburg, TX (24.76%)
543. McAllen, TX (25.05%)
545. Laredo, TX (26.01%)
546. Union City, NJ (26.41%)
547. Brownsville, TX (29.36%)
548. Pharr, TX (33.68%)
See all city results here.
These results are important due to the rising costs of healthcare and the burden many families without coverage are facing. Does your family have health insurance? You can find a health plan that's quality and affordable thanks to the Affordable Care Act, AKA ObamaCare.