In May and June of this year, Alisa Toney took her 22-month-old daughter, Camille, to an urgent care facility to treat the toddlerâ€™s recurrent ear infections. With each visit costing $100, Toneyâ€™s household budget might have been strained. However, Toney, 42, is a leadership gifts officer at Spelman College, which provides a Flexible Spending Account that allows her to pay for Camilleâ€™s visits with a prepaid PayFlex MasterCard.
Toney joins millions of Americans who are taking advantage of creative ways to cut healthcare costs. According to the National Coalition on Health Care, employee contributions have increased more than 120% since 2000, while out-of-pocket expenses rose 115%. There are several options for saving money.
1. Do your homework during open enrollment. â€śConducting the proper research before selecting benefits not only saves money, but ensures your familyâ€™s needs are met,â€ť says Matt Tassey, former chairman of Life and Health Insurance Foundation for Education. Ask providers if they offer preventive care with no co-pays or before the deductible is reached. Also ask employers about lower deductions or various credits. Compare the premium, co-pays, out-of-pocket expenses, deductibles, and lifetime or annual caps.
2. Â Ask about tax breaks. â€śIndividuals can write off, as an itemized deduction, all medical costs after they reach 7.5% oftheir adjusted gross income. For small businesses, all health insurance premiums are deductible. If yours is an S corporation, your medical premiums are 100% deductible but they will be added to your W-2 as wages and deducted at 100% in adjustments on your 1040 tax return for you, your spouse, and dependents,â€ť says Matthew Ware, an accountant and CEO of Wareâ€™s Padgett Business Services. Itemized deductions can include medical and dental care, prescriptions, and weight loss programs.
3. Take advantage of a Health Savings Account. â€śThe HSA is like a personal savings account with investment options for healthcare, except itâ€™s all tax-free. Participation through payroll deductions allows employee contributions to be pretaxed,â€ť says Dr. Rhonda Medows, commissioner of the Georgia Department of Community Health. It also allows consumers to save for future medical and retiree health expenses. It rolls over each year.
4. Use a Flexible Spending Account. â€śAn FSA is an employee benefits program that allows employees to set aside a portion of their pretax earnings to pay for qualified expenses such as doctor co-pays and prescriptions.Â This account provides a substantial tax advantage since contributions are made before your paycheck is taxed,â€ť says Tassey. Unlike the HSA, if you donâ€™t use all the money in your account within the year, you lose it.
5. Carefully read your bill. â€śCheck to ensure that the services attributed to you were actually received by you. Review the bill to check for errors and duplications,â€ť says Medows. Save all receipts from the doctorâ€™s office, canceled checks, receipts, and billing statements. Once the insurance provider has paid and you have received your final bill, call the insurance company to go over the statement if you have concerns.
This article originally appeared in the September 2009 issue of Black Enterprise magazine.