You know what you spend on housing, transportation, and utilities. But are you prepared to spend $100 for a doctor's office visit, $1,000 for diagnostic tests, or $10,000 for a hospital stay?
Many bankruptcies are the result of medical bills, according to a Harvard Report published in 2005 - even for people with health insurance.
Welcome to the new age of healthcare
With health insurance premiums rising more than three times the rate of workers' earnings, it's likely your share of the premium has gone up and so have your out-of-pocket costs.
If the projections hold true, within a decade healthcare will be almost a fifth of your family's budget.
Healthcare financial planning is a top priority
While good health is the top priority, good financial planning is a close second. It's essential to plan ahead for expenses and apply your savvy shopping skills to healthcare spending.
Here are two big steps you can take toward healthcare financial security and peace of mind:
- Budget for future healthcare expenses
- Save money on healthcare every day
Budget for future healthcare expenses
Having a healthcare budget - and sticking to it - could be the difference between being able to pay future bills and having to seek relief from creditors. Some costs, like what comes out of your paycheck, are the same whether you use healthcare services or not. Others tend to be stable from year to year, especially when you have health insurance to pick up some of the cost.
So, with some basic information about your premiums and your family's usual healthcare needs, you can at least get an estimate. You can't predict everything, of course, but a good estimate is better than nothing. After all, if you don't set aside money for healthcare, you may have to use money you intended to spend on vacation. No one wants to choose a colonoscopy over a trip to Cancun.
Items to include in a healthcare budget
Your family health budget should include all the ways you pay for healthcare :
- Premiums - The payment that entitles you to insurance benefits
- Out-of-pocket costs - Your out-of-pocket costs may include copayments for doctor's office visits and prescriptions, deductibles, and the coinsurance percentage you're responsible for paying
- Products and services - This category includes over-the-counter medications, dental care, and vision care
- Other healthcare costs - Other healthcare costs include fitness expenses, vitamins, or alternative medicine
Where to get help
FamilyHealthBudget.com is a user-friendly Website from Humana and the advocacy group Consumer Action. In the "Build a Budget" section of the Website, simply enter basic information about your healthcare usage and your family make-up.
The site crunches the numbers for you, taking into consideration the average costs for people with similar healthcare usage, and estimates how much you'll pay in a year.
The site also offers general information about health insurance, such as a comparison of plan types and spending accounts. FamilyHealthBudget.com is free and available to everyone, not just Humana members.
Save on healthcare this year
Here are some additional ideas for lowering your healthcare expenses throughout the year:
Talk to your doctor about lower-cost drug alternatives. If your doctor prescribes an expensive brand-name medication, ask about generic equivalents, therapeutic alternatives, and even over-the-counter options.
Use the ER only for emergencies. If you need non-emergency medical care, think about going to an urgent care center instead of the emergency room. Sometimes it's a tough call. But for something like a cold or a minor sprain, going to an urgent care center in your plan's network will probably save you money.
Look into free-standing surgery centers. If you need outpatient surgery, you may save money by having it done at an ambulatory surgery center - a free-standing clinic that isn't in a hospital or a facility operated by a hospital.
Check out free-standing diagnostic centers. Like free-standing surgery centers, these clinics usually charge less than hospital-run facilities. So if you need an MRI, CAT scan, X-ray, bone density scan, or other diagnostic test, check to see if you can get it at a free-standing clinic in your plan's network.
Ask your doctor about home testing and monitoring devices. Home tests for blood pressure, diabetes, and so on can help you make sure you're following doctor's orders, for less money than in-office testing. Just check with your doctor to make sure home tests are appropriate for you, report your results, and call your doctor if you see anything unusual.
Prepare for surgery. If surgery is in your future:
- Talk to your doctor about why you need the surgery
- Find out all the details about the surgery and recovery
- Ask friends and family for recommendations on hospitals and surgeons
- Talk to others who've had the surgery
- Read reviews
- Ask the hospital about the prices
- Check with your insurance company
- Evaluate prices and comparison shop for the best value
Remember, "value" doesn't mean cheap or low quality. In healthcare, as with other major expenses, the most costly option isn't always the best. The only way you'll know is to do your research.
Being a smart healthcare consumer takes a little time, but it pays off - in financial savings and confidence that you're making the right decision for you.
Bottom line
Healthcare costs are growing faster than inflation. Take control of your family's healthcare finances today. Start building your budget now and do what you can to save money through the year.
Additional resources
The Henry J. Kaiser Family Foundation
Centers for Medicare and Medicaid Services
