In May and June of this year, Alisa Toney took her19-month old daughter, Camille, to the urgent care facility for unplanned visits because she had recurrent ear infections. Each visit cost $100. Ordinarily, these unforeseen visits would have placed a strain on her household budget. However, with the Flexible Spending Account (FSA) that she signed up for under Cigna with her employer, Spelman College, she was able to pay for Camille’s visits with a prepaid PayFlex MasterCard, which had a $1,000 limit she selected.
“I love the flexible spending account because of the ease it allows me to manage my budget for healthcare costs and its pre-tax benefits,†says Toney, 42, who is married and also has an older child, Thomas, 8.
Toney joins millions of Americans who are taking advantage of creative ways to cut huge 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%. Consumers themselves can control their expenses to a certain extent. There are several options for saving money on healthcare while getting the proper treatment needed.
Do your homework during initial or open enrollment. “Conducting the proper research before selecting benefits cannot only save money, but ensure your family’s needs are properly met,†says Matt Tassey, past chairman of Life and Health Insurance Foundation of Education (LIFE). Ask providers if they offer preventive care with no co-pays or before the deductible is reached. What incentives do they offer for nonsmoking or physically fit individuals? Ask employers about offers of lower deductions or various credits. Compare the premium, co-payments, out-of-pocket cost, deductibles, and lifetime or annual caps. Consider non-traditional care such as walk-in clinics at your local pharmacy or urgent care clinics.
Ask your accountant or tax advisor about tax breaks. “Individuals can write off as an itemized deduction all medical costs after they reach 7.5% of their adjusted gross income. For small businesses, all health insurance premiums are deductible. If you are an S Corporation, your medical premiums can be deducted at 100% for you, your spouse and dependents,†says Matthew Ware, an accountant and CEO of Ware’s Padgett Business Services. Itemized deductions can include medical and dental care, prescriptions, acupuncture, drug addition, weight loss program, false teeth, laser eye surgery, hearing aids, and meals and lodging with hospitalization. For additional approved deductions, see IRS publication 502.