Recent news that the rising cost of healthcare in America may actually be slowing is being met with resounding elation by those looking for ways to save money on their medical insurance. For those with high deductible health plans (HDHPs) and other forms of consumer-driven healthcare, this comes as especially welcome news.
If sustained, this tempering of rising medical care costs will hopefully begin to curb an alarming trend, that being dangerous cost-avoidance practices by some covered individuals, which sometimes includes such dangerous practices as skipping medications and postponing necessary medical procedures. (Many have also skipped out on preventative care, despite the fact that most all of it is covered at 100%.) While in the short-term such actions will indeed bring down healthcare expenses, they are likely to trigger larger problems later on, which cost far more money.
There are much safer and more effective ways to curb healthcare expenses, but it takes a bit of effort and education to capitalize on them. Here are just a few we’ve found. Please feel free to use these money saving strategies with your workforce — and better yet — try them out yourself.
High deductible health plans allow people to enjoy lower insurance premiums, but they come with higher out-of-pocket expenses, such as a requirement that office visits and prescription drugs be paid at a considerably higher "nationally contracted price", rather than a much lower copay. (Copays don't kick-in until the deductible has been fully satisfied.)
As one might imagine, this shift in consumerism has brought about heightened awareness of the true costs of healthcare, and in particular, the true cost of prescription drugs. No longer do patients simply pay $35 for their monthly refill of Lipitor (typically categorized as a "preferred brand name drug", according to many Rx formularies). Rather, HDHP participants shell out nearly $165 for this same prescription until such time as they fulfill their deductible.
It's no wonder that this has led to a more conscious flight to generics (e.g. Atorvastatin, Lipitor's generic equivalent, can be purchased for as little at $8.95 for a 30 days supply). It has also led to the rise in services that help people find cheaper medications. Take for example the following three services;
GoodRx helps consumers more easily comparison shop to find the lowest price medications in their area. Walgreens may be cheaper than CVS in some cities, or vice versa. GoodRx even offers manufacturers’ coupons for some medications, saving people hundreds, if not thousands of dollars each year.
Even if consumers aren't enrolled in an HDHP, GoodRx is still a good way to save money on prescriptions. As tough as it is to fathom, there are situations where the price of medication is sometimes less than a plan participant's copay. Until just days ago, pharmacists, under "gag orders", weren't allowed to divulge that information, unless specifically asked by the patient. As of October 10th, that's no longer the case. Nevertheless, your local pharmacist still isn't under any obligation to tell you if a medication can be obtained for less from one of their competitors, so it pays to use GoodRx in these situations.
Familywize is another way to save money on prescription expenses. They negotiate with pharmacies across the country for lower drug prices and then pass the savings along to the consumer. Users can get a card that grants them discounts on prescriptions (for free) or enjoy the convenience of their mobile app.
Familywize also partners with United Way to help people in need across the country obtain medications, which is something we can all feel good about.
Using a mail order pharmacy service (like Express Scripts or CVS Caremark) is also a great way to save money, especially on monthly maintenance medications that consumers take regularly. Mail order pharmacies typically send a 3-month supply straight to the home for a single copay. This method is typically cheaper than filling prescriptions at brick and mortar pharmacies, but participants should always check the price of medications through their mail order service before going this route.
As mentioned earlier, high deductible health plans offer certain individuals significant cost saving opportunities. For those who are relatively healthy, they'll accrue savings in the form of lower monthly premiums. And for those who are frequent consumers of healthcare, they may save money as well, providing their cost of premium and their plan's maximum out-of-pocket limit is less than other options provided to them.
Participants in Qualifying HDHPs are also allowed to open Health Savings Accounts (HSAs), which allow them to make tax-free contributions into a real savings account. Funds in HSAs can be used to pay for a number of medical expenses, including prescriptions, doctor visits, hospital bills, and even dental and vision expenses. For 2019, individuals can contribute up to $3,500 per year and families can contribute up to $7,000.
Unlike FSAs, HSAs savings never expire, so any unused funds simply stay in the account and can be used in future years. In fact, HSAs can eventually become retirement savings accounts, which is especially helpful when you’re living on a fixed income and medical expenses are likely to be higher. Upon retirement, unspent HSA balances can also be used to pay for non-medical expenses, but they then lose their tax-advantaged status. HSA balances can also be past to beneficiaries upon death. Some go as far as arguing that HSAs may be superior to 401(k)s when saving for retirement and transferring wealth.
For those not enrolled in a qualified HDHP, flexible spending accounts (FSAs) are good alternatives to HSAs because their pre-tax balances can be used with any other type of health insurance plan to cover virtually the same medical expenses. (It's against the law for an employer to offer an FSA to HDHP plan participants.)
The major difference with FSAs is that they come with a “use it or lose it” clause, so if you don’t use your designated contributions, the benefits administrator keeps the money. For this reason, you should only use your FSA for anticipated expenses, like prescription copays, eye exams, contacts or glasses, and check-ups with a doctor that aren’t covered under preventative care.
And for those enrolled in an HDHP, there is a slightly modified version of an FSA for which they are qualified to participate, providing their employer offers one, that being a Limited Purpose FSA (LPFSA). As the name suggests, LPFSAs aren't intended to be used for the same wide range of expenses covered by FSAs. Instead, they're limited to just dental and vision expenses.
One of the best ways to save money on healthcare is by planning ahead. HSAs and FSAs lend themselves to this principle and even provide a tax-incentive in the process, but it's wise to always set money aside for the unexpected.
Having money in a savings account (or other liquid investment vehicle) for future medical expenses can save patients from paying bills with a credit card and incurring interest later on, as well as preventing a higher than necessary monthly bill if they have to finance it with their doctor or local hospital system.
And as always, when comparing plans for the upcoming year, healthcare consumers need to be sure to include all out-of-pocket expenses when making their assessments. A plan with a cheaper premium might look more appealing at first, but could end up costing them more in the long run if the deductible, copays, and coinsurance are higher. The same holds true for plans with more expensive premiums and lower deductibles and other out-of-pocket expenditures - it's the total out-of-pocket cost that matters above all else. Smart shoppers need to do the math to determine which is truly the better option for them and their families.
How are you finding ways to save money on healthcare? Leave us a comment below or contact us. We’d love to hear what’s working for you!