4. Understand the Rules of Your Plan
Examine your plan to learn how to get the most out of it. Before consulting a specialist, for example, you may require pre-approval. Most health insurance plans pay a higher percentage of your medical bills if you use their approved or in-network doctors. If you visit an out-of-network doctor or medical facility, you will pay more—and you may be responsible for the entire bill.
5. Make use of a Tax-Advantaged Savings Account
Many tax-favored options can assist you in saving money for health care.
• Those with high-deductible health plans can use health savings accounts (HSAs) (HDHPs). You put money into the HSA and can withdraw it tax-free for qualified medical expenses, including deductibles, copayments, and coinsurance. Your employer may provide an HSA, but you can also open one on your own and keep the money.
• Employers set up and fund health reimbursement arrangements (HRAs). Workers cannot contribute money to their accounts, but they can withdraw funds for approved medical expenses.
• Employers provide flexible spending accounts (FSAs). Workers contribute pretax funds to the account and receive tax-free withdrawals for eligible medical expenses.
HRAs and FSAs do not necessitate the use of a high-deductible health plan. However, the funds must generally be spent by the end of the fiscal year, and if you leave your work, you forfeit the account.
6. Determine if your medical expenses are tax-deductible
You can deduct up to 7.5% of your adjusted gross income for eligible out-of-pocket medical costs (including health insurance) for yourself, your spouse, and your dependents. You must determine whether your itemized deductions are more than the basic deduction. That is $25,100 for married couples filing jointly in 2021 or $12,550 for single taxpayers and married couples filing separately.
7. Determine Your Eligibility for Government Aid
You may be eligible for government-funded health insurance through Medicaid or the Children’s Health Insurance Program, depending on your income (CHIP). If your income is too high, you may still be eligible for premium tax credits or cost-sharing subsidies to help pay for insurance purchased through the Marketplace.
The average Marketplace premium in early 2021 was $575 per month, but the average subsidy was $486 per month, lowering the out-of-pocket expense to just $89. The American Rescue Plan increased the availability of tax credits and subsidies for all income levels in March 2021, making Marketplace plans cheaper and, in some cases, free.
8. Check Your Insurance Policy Every Year
Every year, in preparation for open enrollment (the time of year when you can change your employer-provided or Marketplace health insurance), you should reassess your health insurance and review any new alternatives to verify you are still on the best plan.
Maintain Medical Cost Control
Health insurance can help you keep your healthcare spending under control. Without insurance, you risk incurring significant medical debt, which can harm your credit score as well as your health.
Consider setting up autopay from your bank account if you pay for your health insurance so you don’t miss a payment and risk losing insurance coverage or damaging your credit. Concerned that you may not always have enough money in your bank account to cover the premiums?
A credit card may be used to pay for health insurance. Just make careful to pay the total sum each month, as interest rates on an unpaid balance might wipe out any savings on your health insurance.