This is the time of year when many employees need to make a decision about their health insurance and other health care benefits offered by their employer. This year, sticker shock is evident when the employees look at the proposed plans. Higher premiums, higher deductibles, and higher co-pays are the norm. In order to make the best decision for yourself and your family, there are several things to consider.

What are your expected annual medical costs?

  • If you rarely go to the doctor except for your annual exam, you may want to consider changing your plan to one with higher deductibles and higher co-pays. This will lower your premium. Put the money you save on the premium into a special savings account to use for any medical expenses you may have in the upcoming year.
  • On the other hand, if you make frequent trips to the doctor, have a medical condition that requires specialists or a certain doctor, or often have unexpected trips to urgent care or the emergency room, you may need to stay with a plan that has lower deductibles and lower co-pays. Your premium will be higher but your total out of pocket expense may be less because the insurance will pay for more of the costs.

What prescriptions do you take?

  • Many pharmacies offer prescription savings clubs for customers who don’t have prescription coverage through their insurance.
    • Call your pharmacy to see if they offer this service and then ask the cost of your regular prescriptions with the prescription savings club.
    • Compare those prices to what you are paying now or will be paying if you stayed with the same health insurance plan.
    • If the costs are similar, you may save money by switching to a health insurance plan that does not offer prescription coverage. Again, put the money you are saving on the premium into a savings account to pay for your prescriptions and for the cost of the prescription savings club.
  • If you take specialized medications, you may find you are better off with the higher-cost insurance plan that offers prescription coverage. However, you can still find ways to save on your prescriptions.
    • The pharmaceutical company may offer steep discounts.
    • Your doctor may have samples for you.
    • Your pharmacy may know of additional discounts or coupons.
    • Don’t be afraid to ask for discounts or for medicines that are less expensive (i.e. generic).

Does your plan qualify as a high-deductible health plan (HDHP)?

If your plan qualifies, consider setting up a health savings account.

  • Contributions are tax deductible
  • Contributions grow tax-deferred
  • As long as you use the funds for qualified medical expenses, you don’t have to pay income tax on the distributions.

For more information on Health Savings Accounts, see our blog from February 2016.

Need help deciding what to do about your health insurance? Contact us at [email protected] or 402-502-0250.

Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.

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