How to save for medical expenses

It is not uncommon for a doctor to check with your insurance if he or she can do a knee infiltration, a colonoscopy if it hasn’t been long since your last one, or even a laryngoscopy. Sometimes the insurance refuses to pay for these procedures because they do not consider them necessary and their payment depends entirely on the client. Therefore, it is advisable to save for medical expenses. You never know when a medical emergency will arise.

In addition to possible extraordinary expenses arising from medical procedures not covered by insurance, there are other fixed expenses that insured people have to face when using medical services. These costs must be paid out of pocket and they are:

Copayments

It is a fixed fee that is paid before using a medical service. Its cost is determined by each insurance plan and is usually around $26 in the case of visits to a general practitioner, and between $40 and $50 in the case of specialists. Obamacare eliminated copayments for preventive services such as annual health exams, mammograms and immunizations.

Deductible

It is the amount that the policy holder has to pay before the insurance begins to pay. If the deductible is $3,000 for individual insurance or $7,000 for family insurance, that is the amount the client will pay out of pocket before the insurance covers the costs. The amount depends a lot on the premium, the lower it is, the higher the deductible. There are medical visits that are not included in the deductible, especially preventive ones, such as the annual gynecological check-up. Once the deductible has been paid, the patient only pays the copayment or coinsurance.

Coinsurance

It is a percentage of the medical expense that the client shares with the insurance once the total deductible has been paid. For example: If your dermatologist performed a biopsy for which he bills you $1,000 and you have 90/10 coinsurance, then the insurance will pay $900 and you will pay $100, after you have met your deductible on previous medical visits and procedures. . Until when are there copayments? Until the year as a policy-holder is over or you have reached the out-of-pocket limit established by your insurance (Important! There are limits, so check your contract). As with deductibles, insurance with low premiums typically has a high coinsurance, while those that cost more monthly have a lower cost in this shared bill.

The reality is that taking care of your health is not cheap, and a person who needs treatment will find themselves signing checks or pulling out their card repeatedly. To meet these payments there are two types of accounts that enjoy advantageous tax treatment.

The first is the Health Savings Account (HSA). This option has three important advantages. The first is that pre-tax income is deposited in it and is deductible, which helps lower the tax base. The second is that you can invest that money and potentially increase your savings. Finally, if the amount is not used in the fiscal year, it can be used in the next. You cannot pay the premium with it, but you can pay other health expenses.

The Health Savings Account is designed for those who have high deductibles, above $1,600 in individual cases and $2,300 in family cases, in addition to a maximum out-of-pocket limit of the insured of $8,050 each year, which doubles in the case of families.

The account is owned by the employee and both the employee and his or her employer can contribute up to a maximum of $4,150 per year, or double if the insurance is family-based. All of these amounts are reviewed annually and you have to pay attention to what the Internal Revenue Service (IRS) says in that regard. Self-employed people can also have this type of account.

The second type of account is the Flexible Spending Account (FSA). These accounts are opened by employers for their employees. A fixed portion of your salary can be allocated to this account for medical expenses and, as with HSAs, it is pre-tax and deductible money. The money deposited in this account must be used in the fiscal year, with a grace period of two and a half months.

Up to $3,200 can be saved in this account in 2024. (Review the amount each year, as it changes.) With the Flexible Spending Account you can also cover the health expenses of the spouse and children of the person whose name the account is in. For more details on how to use one of these accounts, it is advisable to inquire through your employer's human resources department.

Some companies offer Health Reimbursement Arrangements (HRAs). These are from the employer itself to reimburse medical expenses, including insurance premiums, in some cases, of workers. It is deductible for employers and the money that the insured receive is also deductible.

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