It’s not news that the cost of health care is breaking the bank, and not just for the government. About a quarter of American households have trouble paying medical bills, and that has a big impact: Many people put off vacations, cut back on basics like food or clothing, use up their savings, take another job, or rack up credit card debt. Even worse, people tend to put off needed medical or dental care or skip buying medicines when money is tight.
Even if things don’t get that bad, we’re all spending more than ever. Those of us with health insurance through our employers are paying nearly $5,000 a year in premiums alone — that’s a fixed cost whether we need any care or not. The average deductible (before insurance kicks in) is over $1,000, plus more for out-of-pocket costs like copays. And when you don’t have insurance, of course, you’re on the hook for all of it when the bills start coming in.
On the plus side, there are ways to spend less on your health care. Here’s advice from leading experts on how to save on your out-of-pocket costs without sacrificing the quality of the care you get:
1. Make friends with your primary care physician. Leslie Michelson, author of The Patient’s Playbook, says “an enduring relationship” with your doctor pays off. Your doc knows your full history and sees you regularly. That makes it more likely she’ll catch a health problem earlier, when it’s simpler and a lot less costly to treat. Elisabeth Leamy, author of Save Big: Cut Your Top 5 Costs and Save Thousands, suggests asking if your regular doctor (rather than a specialist) can handle maintenance care for a chronic condition like diabetes or asthma once you’re stabilized. Seeing pricey specialists can rack up big bills.
2. Work with your doctor. There’s another potential benefit of getting to know your physician (and office staff): She may be more open to negotiating with you for the cost of your care. If you’re paying some or all of your own bills and need a big-ticket procedure, try requesting the reduced Medicare rate or the “contracted rate” (what insurance companies pay). “This contracted rate can be two to five times less than the doctor’s regular rate,” notes Leamy. You can also ask your doc if it’s possible to be put on a payment plan or receive a discount if you pay upfront or with cash.
3. Get the right diagnosis. Clearly, the very best way to save on health care costs is to avoid getting care you don’t really need. “Studies demonstrate that about 30 percent of all medical care is unnecessary or counterproductive,” says Michelson. “The most certain way to make sure that you’re going to incur a lot of unnecessary costs and get a bad outcome is to start treatment without having a definitive diagnosis, so press really hard to get that.”
4. Go to the right doctor at the right facility. “Most people who are employed have reasonably good insurance, and if you live in or near a major city — which is now about 80 percent of the country — most major academic medical centers in these cities take insurance,” says Michelson. “It doesn’t cost more to be treated by a proficient expert in the specific condition that you have…when you get to people who are at the top of their game, everything becomes clearer.” That expertise often translates into better outcomes, quicker recovery, and fewer tests and treatments as well. If you have UnitedHealthcare, you can find doctors and check quality ratings and costs here.
5. Ask what your care will cost — then shop around. If you’ve just been in a car accident or cut yourself badly slicing a bagel, that’s not the time to haggle. But for routine care, you should. “You can ask what it’s going to cost if you need an X-ray or a colonoscopy,” recommends Michelson. “Make five phone calls [to compare prices and] you’ll be stunned at the differences. There’s no reason not to because there’s no demonstration in medicine that there’s a link between cost and quality.” Once you’ve priced your care at the facility you like, go ahead and get yourself a better deal, especially if you haven’t met your deductible yet. “You can even ask a hospital if they’re willing to offer you a flat fee or a percentage discount for the procedure you need,” adds Leamy.
6. Shop wisely for prescription drugs. First, find out your prescription deductible (it’s separate from your medical one) and the cost of your regular medicines with your insurance. A list of covered drugs and costs is called a “formulary” and should be on your health plan’s website. Keep in mind drug prices and formularies change each year — on average, drug prices grew 10 percent in 2015. Other ways to save: Ask your doctor if you’re able to swap your brand-name drug for a cheaper generic version; check Needymeds.org and the Partnership for Prescription Assistance (pparx.org) to see if you’re eligible for a hefty discount based on your income; and use online price-comparison tools like LowestMed.com and GoodRx.com to find better deals. “Some of the big-box retailers have unbelievably inexpensive drugs,” adds Michelson.
7. Check your bills carefully. Spend some time with the EOB or “explanation of benefits” you get from your insurance company every time you have a claim processed to make sure your bill is accurate. “It tells you what’s covered and what’s not,” explains Michelson. “Going through it can be tedious and boring, but you should figure out what’s really covered when you have a claim.” And if you do have a claim that gets denied, don’t give up, counsels Leamy. “One way to save big is to make sure your health insurer doesn’t deny eligible claims,” she notes. Every insurer has a way for you to file an appeal, and they often work — on appeal, 39 to 59 percent of denied claims are reversed in favor of the consumer.
8. If you’re eligible, take insurance tax credits. Under the Affordable Care Act, some Americans qualify for a tax benefit to offset the cost of insurance. (You can qualify if you bought insurance through a marketplace like healthcare.gov, no one in your family qualifies for an employer or government plan, and your household income is one to four times the Federal poverty line.) But not everyone is taking what’s owed them. “A large number of eligible taxpayers are unaware that they’re entitled to premium tax credits or are completely unaware of how to go about receiving a premium tax credit, especially if they’re preparing their tax returns on their own,” explains Scott.
9. Don’t miss out on other deductions. “One often overlooked area is that some taxpayers can deduct medical expenses they paid for some individuals who don’t qualify as their dependent,” says Rachel Scott, a tax expert and financial planner in Canoga Park, California. For example, if you provided over half the support for your parent and covered some medical bills, you may be able to deduct those medical costs — even though they do not count as your IRS dependent. Similarly, she says that many small business owners don’t realize they can deduct most health expenses easily. If you’re self-employed you can deduct your premiums and other expenses (as well as for your spouse and children under the age of 27). Talk to your tax preparer about specifics.
10. Take some time at open enrollment. Comparing insurance plans is probably not your idea of a good time. But really considering what coverage you need (as well as what you don’t) can potentially save you a lot. Look for two documents at open enrollment time: the summary of benefits and coverage (SBC) and a uniform glossary of terms to help you compare plans and decode jargon terms. Think about how you and your family use health care, and add up all the costs to get the full picture (premium, deductible, and out-of-pocket costs). You’ll also want to take advantage of employer-sponsored FSAs (flexible spending accounts) and HSAs (health savings accounts) that let you put away money for health expenses before they’re taxed.
There’s plenty you can do to be a smarter health care customer, but ultimately, what’s going to save you the most is staying healthy and avoiding costly chronic conditions. “There’s no medical intervention in the history of the world that’s nearly as effective in reducing the incidence of disease and the cost of care as leading a healthy lifestyle,” Michelson notes.
That means, of course, exercising regularly, eating a balanced diet, maintaining a healthy weight, getting regular preventive care like flu shots, not smoking, and taking care to avoid injury and accident. Says Michelson, “There is literally no more cost-effective way to reduce what you spend on health care than doing all of those things.”
Editor: Deepi Brar
Lorie Parch is a freelance health writer based in Long Beach, California.
Kaiser Family Foundation. 2015 Employer Benefits Survey. KFF.org.
Health Affairs and Robert Wood Johnson Foundation. Reducing Waste in Health Care (Policy Brief). December 13, 2012. HealthAffairs.org.
Pharmaceutical Research and Manufacturers of America. Fact Sheet: Out-of-Pocket Costs on Health Insurance Exchanges. PhRMA.org.