Many people avoid thinking about their healthcare budgets. People with insurance carefully consider the cost of their premiums when choosing their plans. Still, they often neglect the necessity of tallying up all of the extra expenses like copays and deductibles.
While no one wants to believe that they will be the victim of a serious health problem or disease, everyone should think about how they will combat these challenges in the future.
Francesca Gallardo provides a guide to budgeting for healthcare expenses, covering all of the basics that you need to know to estimate your liability over time.
Understand Your Plan
To understand how much your health insurance plan will cost you out of pocket over time, you need to comprehend the difference between a copay and a deductible.
A copay is a fixed fee that you must pay when you receive care, like an office visit or pick up a prescription. A deductible is the set amount of money you need to pay toward your covered benefits before health insurance starts paying. Your copay will generally not go toward your deductible.
For example, your plan may have a 20 percent copay on office visits but may also have a $5,000 deductible. This means that you are responsible for paying the total cost of the office visit until your deductible is met. Many people who have not had insurance in the past are surprised by this situation. It pays to understand the structure of the healthcare system and how you can budget for unexpected expenses.
Keep Preventive Care Going
If you see your doctor for preventive care at all recommended intervals, including screenings like mammograms and prostate exams, you may avoid expensive procedures in the future. Above all, make sure that you take care of your health and do all you can from a personal standpoint to reduce your costs.
If a 90 percent delivery rate on primary preventive services were in effect, healthcare expenditures could be reduced by as much as $53.9 billion each year.
Take Advantage of Tax-Deferred and Tax-Free Programs
If your employer offers an HSA (Health Savings Account) or an FSA (Flexible Spending Account), you should take advantage of it as soon as possible. HSAs are often employer-matched, meaning that if you put in a certain amount of money from each paycheck, your employer will put in the same amount as well up to a spending cap. HSAs and FSAs can be used to pay for expenses like copays, prescriptions, medical equipment, and in some cases, health and wellness purchases from drugstores and discount stores.
Taking advantage of an HSA or FSA program presents no risks and can only help you budget for unexpected healthcare expenses using pretax money. At the beginning of your coverage year, sit down and estimate the cost of care you have received over the past year. Many people choose to max out their contributions to their HSA or FSA each year.
In the case of an FSA, you need to watch out because this money does not roll over from calendar year to calendar year and cannot be carried with you from job to job. However, an HSA plan does roll over into the following year and can be transferred to a new employer.
Exercise and Lose Weight
Many health problems are connected with obesity. High blood pressure, diabetes, joint problems, and some cancers, among many other issues, could be caused by excess body weight. To reduce your healthcare expenses, try to lose weight until you are at a healthy BMI. Severe obesity, or a BMI over 40, is associated with a 20-year loss of life expectancy in men and a 5-year loss in women.
Regular exercise is key when it comes to preventing health problems. People who exercise at least 30 minutes, five days a week, are less likely to suffer from obesity or other serious health problems.
Understand Family History
It may be uncomfortable to look at your family medical history as a source of information for how much you should budget for healthcare, but it is a valuable tool.
For example, if you know that one of your parents had a heart attack at age 55, you should not only practice preventive measures but should plan to put more away in your health care savings accounts when you reach this age. Genetics plays a substantial role in which conditions are inherited.
Budgeting For Your Future
It may seem daunting to look into budgeting for healthcare years into the future, but you should sit down with your spouse or partner and discuss family history, preventive care, and the specifics of your health plan. Ensuring that you pay close attention to the copays and deductibles, you will be expected to pay over time, can help you plan and make sure that you have enough money to cope with potential future health problems.
Francesca Gallardo believes that preventive care is one of the most important considerations when reducing healthcare budgets. Having a solid preventive care plan may help you discover serious illnesses at an earlier stage when they are easier and cheaper to treat. In addition, lowering your BMI and making sure that you have a healthy exercise routine can significantly reduce your healthcare expenses over time.