Your budget will reveal the right health plan.
Healthcare spending is continuing to increase. Understanding how you spend your money usually helps to understand how to save money and get more of what you really want. Healthcare is no different.
Three categories of expenses to consider in your budget
People often think more is better because there is a co-relation between the amount you spend on premiums versus healthcare services.
The more you spend on premiums the less you spend on healthcare services. Richer plan benefits reduce the co-insurance, co-pay, deductible and out of pocket maximum amounts so that you pay less out-of-pocket. Conversely, the less you spend on health insurance, the more you on healthcare services.
2/ Healthcare Services
Spend a few minutes thinking about how you used the healthcare system last year and what you could do differently this year to reduce your costs.
For instance: Online visits are cheaper than primary care visits. Primary care visit are cheaper than urgent care visit. Urgent care visits and home visits are cheaper than ER Visits. Ambulatory Surgery Centers [ASCs] are cheaper than hospitals.
The amount you pay for these types of healthcare expenses are considered qualifying medical expenses for Healthcare Savings Accounts[HSA] and Medical Savings Accounts. HSA accounts enable you to save for and pay these expenses prior to tax.
3/ Complimentary Care + Self-Care
Compile a list of complimentary care services and self-care expenses not covered by your insurance last year. Many complimentary care services delivered by a Chiropractor, Acupuncturist, Naturopathic Doctor and therapists are considered qualifying medical expenditures for HSA and MSA accounts.
Gym membership dues may be paid at least in part by your insurance plan now. However, the amount you pay is not a qualifying medical expenditure.
Cosmetic services and health enhances expenses [aka: vitamins] that improve your appearance are not qualifying medical expenses. However, you should still include them in your healthcare budget to get the full picture.
Total each category
The total of each category should give you some insight into the right health plan. For instance:
- HDHP might be the right option if you a big Complimentary Care + Self-Care spender and can afford to fund a HSA account.
- HMO or EPO might be the right option if you incur high healthcare service costs and have a hard time paying off the expenses.
- PPO might be the right option if you spend the most on healthcare premiums and rarely use healthcare services.
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