Managing higher out-of-pocket medical costs

Financing health care can be a major cause of stress. Nearly half of US adults report that they have challenges affording their health care costs.¹ And for individuals who are on high deductible health plans (HDHPs), covering higher out-of-pocket expenses can add to that stress. Guardian research found that nearly 3 in 4 (74%) workers with high medical deductibles report high financial stress.²

As a result, many workers are skipping or delaying health care to avoid the associated medical cost. Two in five workers in high deductible health plans deferred health care to avoid out-of-pocket costs.³

Fortunately, there are steps you can take to plan and save, which can help you more easily cover higher out-of-pocket medical costs and prepare for your financial future.

• Save for your deductible
  Review your health insurance plan and get clear on what the out-of-pocket limit is. This is the maximum amount that you would have to pay for covered services annually. Create a savings plan to set aside funds toward this amount so you’ll be prepared should you need the money to cover your health care expenses.
• Start a Flexible Spending Account (FSA)
  An FSA allows you to set aside some of your earnings pre-tax and use that money to pay for qualifying expenses, most commonly for medical or dependent care expenses. If your company offers this program, you can participate through payroll deductions. Since the money isn't taxed, it'll cost you less than if you saved it post-tax.
• Use a Health Savings Account (HSA)
  If you have a high-deductible health plan with a Health Savings Account, use it to set aside money to help cover any out-of-pocket expenses. You can make pre-tax contributions into an HSA, which will help you save on taxes.
  
  Funds can be withdrawn tax-free to pay for or reimburse out-of-pocket medical, dental, and vision costs. But keep in mind: HSAs cannot be used to pay health insurance premiums, the monthly cost you pay for your coverage.

Serious illness or accidents can often result in high out-of-pocket medical costs. Supplemental health insurance can help offset additional medical expenses and is designed to provide coverage that your health insurance alone doesn’t cover. Based on your diagnosis or treatments and your specific plan, supplemental health insurance can entitle you to a lump sum payment beyond anything that might be paid as part of your primary medical plan. Several plans also cover preventive benefits for health screenings.

You can also use money received by supplemental health insurance in any way that you choose — to help cover the cost of your deductible, to pay for everyday expenses like groceries or rent, or even cover unexpected costs like travel, day care, or housecleaning services while you're recovering.

You can sign up for a plan that covers accidents, critical illness, cancer, or hospitalization. Many of these benefits are available for as little as the price of a few lattes a month, making them an affordable way to plan ahead. For help deciding which products are best for your needs, read more about how supplemental health insurance works.

Changes in our health care system can put more and more decisions in your hands. Your best defense is to take positive action and to arm yourself with the facts.

Make sure you thoroughly understand your coverage and your options so you can prepare yourself for the unexpected. Manage your care to help control costs and don't forget to take advantage of wellness benefits at work such as gym reimbursement, psychological assistance, and more, which can contribute to your overall health and well-being.